TSE: 1527 Annual Report: http://mops.twse.com.tw

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BASSO INDUSTRY CORP.

2018

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Printed on May 20, 2019

BASSO INDUSTRY CORP. 2018 Annual Report

1. Corporate Spokesperson

Name: Bo-yen Lai Title: President Tel: (04)2359-8877

Email: [email protected] Corporate Acting Spokesperson Name: Ying-zhu Chen Title: Finance & Accounting High Executive Tel: (04)2359-8877

Email: [email protected]

Headquarters Office and Plant

Headquarters Office and Plant 1: No.24, Road 36, Industrial Park, Taichung City Tel: (04)2359-8877

Plant 2: No.17, Road 36, Industrial Park, Taichung City Tel: (04)2359-8877 Plant 3: No.22, Road 34, Industrial Park, Taichung City Tel: (04)2359-8877 Plant 5: No.16, Road 35, Industrial Park, Taichung City Tel: (04)2359-8877 Plant 6: No.20, Road 34, Industrial Park, Taichung City Tel: (04)2359-8877 Plant 7: No.33, Road 37, Industrial Park, Taichung City Tel: (04)2359-8877 Plant 8: No.22, Road 36, Industrial Park, Taichung City Tel: (04)2359-8877

Stock Transfer Agency

Name: CAPITAL SECURITIES CORP (Stock Transfer Department)

Tel: (02)2702-3999

Add: B2, No.97,Sec.2, Dunhua South Road, Daan District, Taipei City Website: www.capital.com.tw

4. CPA

Name: KPMG

Auditors: Jun-yuan Wu, Shi-hua Guo

Add: 68F, No.7, Sec. 5, Xinyi Road, Xinyi District, Taipei City Tel: (02)8101-6666 Website: http://www.kpmg.com.tw

Overseas Securities Exchanges: None

Website: http ： //www.basso.com.tw

Table of Contents Page
1. Shareholders Report	1
1. 2018 Revenue Report	1
2. 2019 Business Plan Overview	3
3. Development & Prospects	4
4. Influences from external, legal, and overall business environment	4
2. Corporate Profile	5
1. Date Founded	5
2. Corporate Milestones	5
3. Corporate Governance Report	8
1. Corporate Organization	8
2. Directors, Supervisors, President, Deputy President(s), Associate Managers, Department and Division Supervisors	11
3. Implementation of Corporate Governance	29
4. Audit Fees	51
5. Auditor Change	52
6. Chairperson, president, finance or accounting manager who has been employed by the audit firm of its CPA or an affiliate in 2018	52
7. Transfer & pledge of stock equity by directors, supervisors, senior managers
who hold more than 10% of outstanding shares in 2018 or occurred prior to	52
prospectus printing
8. A related party, spouse or immediate relative within second degree kin who are also enlisted among the Top 10 shareholders	54
9. Total shares and equity held in any single enterprise by the company, its
directors and supervisors, managers, and any companies controlled directly or	55
indirectly by the company
4. Corporate Funding	56
1. Capital & Shares	56
2. Issuance of Corporate Bonds	62
3. Issuance of Preferred Shares	62
4. Issuance of Overseas Depositary Receipts	62
5. Issuance of Employee Stock Options	62
6. Implementation of Mergers (Mergers, Acquisitions, Reorganizations)	62
7. Implementation of Capitalization Programs	62
5. Business Operations Overview	63
1. Main Business Activities	63
2. Market & Industry Overview	66
3. 2016-2018 Employee Profile	72
4. Environmental Expenditures	72
5. Labor Relations	72
6. Important Agreements	75
6. Financial Status Overview	76
1. 2014-2018 Balance Sheet and Income Statement Brief	76
2. 2014-2018 Financial Analysis	82
3. 2018 Supervisors Report	88
4. 2018 Financial and Audit Report (Attachment 1: P.99-172)	90
5. If company and its affiliates have incurred any financial or cash flow difficulties
in 2018 or prior to prospectus printing, the effects on company’s financial	90
situation
7. Analysis of Financial Status & Performance and Risk Management	91
1. Financial Status Review and Analysis	91
2. Financial Performance Review and Analysis	92
3. Cash Flow Review and Analysis	94

4. Effects of major capital expenditures on financial situation in 2018	94
5. External investments with regards to financial gain/loss factors and corrective actions in 2018 and 2019 investment plan	94
6. 2018 Risk Management Review and Analysis	94
7. Other Important Reminders	97
8. Special Notes	98
1. Business Affiliates Data	98
2. 2018 Private Placement Securities, Capitalization Programs, Implementation Progress & Efficacy	98
3. 2018 Company shares held and/or traded by its subsidiaries	98
4. Other Supplementary Information	98
9. Events with major impact on shareholders’ equity or share prices in 2018	98
10. Attachments	173
1. Corporate Regulations Governing Procedure for Board of Directors	173

1. Shareholders Report

1. 2018 Revenue Report

2018 net profit reached NTD$3,733,320,000 . Among which, featured products such as pneumatic fastening tools and automotive air tools totaled to NTD$3,086,999,000 and other products (parts, commodities, magnesium and aluminum alloy parts, and heat treatment) earnings totaled to NTD$646,321,000, accounting for 82.69% and 17.31% of net profit respectively.

2018 Business Performance Unit: NTD (Thousand)

Item Year	2018	2017	Difference	Growth Rate (%)
Operating Revenue	3,733,320	3,836,257	(102,937)	( 2.68)
Gross Profit	1,117,939	1,113,859	4,080	0.37
Gross Profit Margin	29.94%	29.04%	0.90%	3.10
Operating Income	725,010	772,701	(47,691)	(6.17)
EBIT（Earnings Before Interest and Tax)	1,234,800	236,798	998,002	421.46
NIAT (Net Income After Tax)	1,031,765	203,973	827,792	405.83

(2) Budget Implementation Unit: NTD (Thousand)

Item	2018 Budget	2018 Revenue	Budget Achieving Rate (%)
RevenueNetProfit	3,800,000	3,733,320	98.25
Operating Costs	2,698,000	2,615,381	96.94
GrossProfit	1,102,000	1,117,939	101.45
OperatingExpenditures	380,000	392,929	103.40
OperatingIncome (Loss)	722,000	725,010	100.42
EBIT (Earnings Before TaxandInterests)	947,000	1,234,800	130.39
NIAT (Net Income After Tax)	757,600	1,031,765	136.19

(3) Financial Status and Profitability

	Item	2018	2017
Financial Structure	DebtRatio (%)	74.24	78.57
	Long-term Capital to Property, Plant and Equipment Ratio (%)	482.15	426.95
Solvency	CurrentRatio (%)	125.04	117.26
	Quick Ratio (%)	53.20	55.05
	TIE(Time Interest Earned)	13.08	3.24

ROA (Return on Assets) %	7.74	1.97
ROE(ReturnOn Equity) %	30.30	6.11
Pre-tax Income/Capital(%)	89.50	17.16
NetProfitMargin(%)	27.64	5.32
EPS(NTD)After Adjustment	7.48	1.48

(4) Research & Development

Basso is committed to new product development. In addition to following corporate guidelines to promote values such as“Quality Assurance, Innovative Technology, and Consumer Service”, Basso takes initiatives to invest in emerging market trends by launching innovative and distinctive featured products to enhance industry competitiveness. 1. New Product Development and Niche Market:

(1) Product Development: Accommodate to market change by modifying new product strategy to ensure competitiveness and profitability.
(2) New Product: New product service personnel collect market trends and perform analysis to seize market pulse in real-time and with precision. Inter-disciplinary product development enhances industry competitiveness and market profitability of new launched products.
(3) Business Sales: Upholding a pragmatic and demand-based principle permits Basso to stay connected while taking initiatives to expand clientele to increase marketshare.
(4) R&D: Prioritizing a quality-first and tech-centric approach, be it product modification, industrialization, and customization, contributes to the designing of more durable, humane, and creative products. Basso also applies new CAD software and analysis to improve product design and labor efficacy by launching products which meet market demands and maintain industry competitiveness.
(5) Patent: Patent specialists collect and analyze business development to gain insights on industry trends enabling Basso to improve decision-making in new product strategy. R&D enhances patent rights and offers an in-depth industry analysis enabling the production of customized patents which sets market distinction and thus creating high added-value products.
(6) Key Technology: A vertical integration of supply chain, high added-value facilities, and mold equipment investment enhance key parts manufacturing and thus improve key technology and quality.
(7) New Technology Development: Conduct research in processing and material to modify product form, structure, function to strengthen product distinction. Apply research to inter-disciplinary technology by recruiting employees of diverse backgrounds to enrich functions and features.
(8) Cost-effectiveness: Due to conflicting interests caused by rising supply costs and low-price demands, existing manufacturing facilities and new partnership development offer cost-effective solutions creating profitable and desirable business outcomes.
(9) Manufacturing Efficacy: Accommodate to client demand for small or large manufacturing production to boost manufacturing efficacy which meets business requirements.
(10) Quality Assurance: Exceed customer expectations by valuing quality assurance.
(11) Complete Post-sales Service: Set up a client service team offering instant solutions to client feedbacks to improve customer satisfaction.
(12) As stated, in such a highly competitive environment, Basso manages to achieve a high sales performance dominating the marketshare in product manufacturing and sales which substantiates decades of endeavors and efforts. With regards to future prospects, Basso insists on a pragmatic and innovative approach and a management principle promoting sustainable development to exceed client expectations.
R&D Prospects:
(1) New Product Development:

With regards to R&D prospects, in addition to optimizing existing product offerings, BASSO takes initiatives to invest in diversified product development by expanding clientele and creating market demand to enhance product added-value and prolong product life cycle, thus achieving profitability potential.

(2) New Product Form Design:
To set market distinction for existing product offerings to meet client demand, Basso fosters experts in industrial design to optimize product form design by providing products with multi-design options to facilitate sales promotion. Basso also outlines product form design for future products to offer comprehensive product line design and promote product image.
(3) CAE (Computer Aided Efficacy):
To meet demands for innovative and multi-functional products,Basso intends to increase design efficacy, reduce modification rate, update and upgrade CAE software,and introduce different analytical softwares to support new tasks and set market distinctions.
R&D Budget & Investment:

Due to new product launches, high-value patents are created to prevent market followers from gaining marketshare and profiting which generate expenditures in R&D and intellectual property maintenance.

Investment in upgrading CAD/CAE software and facilities aims to augment R&D efficacy and global presence. By fostering innovative R&D specialists to adopt a global outlook,Basso improves personnel deficits and increase product competitive edge. Indispensable to Basso, R&D investment is “necessary” and “mandatory”. R&D budget estimates to 2-4% of company revenue.

2. 2019 Business Operations Overview

(1) Management Guidelines

1.R&D plan in fastening tools product and manufacturing.
2.Air tools product line expansion, production, and sales promotion.
3.Key parts technology research enhances and increases self-manufactured rate.
4.R&D plan and sales performance of new gas gun.
5.Mold design research and mold manufacturing optimization and sales performance.
6.Manufacturing efficacy optimization and manufacturing process simplification.
7.R&D plan and market expansion of magnesium alloy parts.
8.Product quality and stability enhancement and production costs reduction.
9.Market expansion and marketshare enhancement.
10.Plant facilities provide OEM heat treatment parts and plastic parts serving multi-industry demands.

(2) Sales Performance Estimate

Factors such as China-US Trade War, rising FED interest, UK leaving EU, and marginal economy continue to influence consumer purchase decisions. Albeit micro-changes, Q1 YOY shows a slight growth. Basso plans to continue to launch new products to stimulate client purchase. In the second half of the year, the production of fastening tools and pneumatic products should contribute to sales performance. Thus, Basso remains optimistic to 2019 revenue earnings.

(3) Major Industry Policy

1.R&D plan in automotive air tools product line.

2.R&D plan in new gas gun and wireless fastening tools to expand market and increase marketshare.
3.Outsource manufacturing process to external vendors and deploy internally-operated parts production to deliver requisition orders to increase revenue and operation availability/uptime.
4.Increase automated facility purchase and enhance personnel training to improve product quality and production efficacy, thus lowering production costs and maintaining product competitive edge.
5.Develop industrial products such as furniture fastening tools, wrench, and air coil nailer to expand product line and add product value.
R&D plan in cycle die casting parts, OEM products, and PU products.
Self-manufactured machines replacements increase quality and reduce costs.

3.Future Development & Prospects

1.Expand air tools and OEM parts to provide new purchase options.
2.Improve production management and salesperson training to increase labor efficacy, thus enhancing product competitiveness.
3.R&D plan in innovative technology increases product distinction improving market segmentation.
4.Provide premium products, quality service, competitive price to meet client requirements.
Expand new market and clientele.

4. Influences from External, Legal, and Overall Business Environment

(1) External Environment: Alter wholesales retailer strategy to prioritize a quality-first approach which corresponds to the marketing strategy founded on niche market and premium product. Basso shall continue to invest in high-tier offering in industrial or professional market channels adopted two years ago as well as develop new product and innovative technology. Confronted with such fierce competition,Basso aims to avoid price warfare and improve market segmentation.
(2) Legal Environment: At the product R&D phase, Basso has already taken into account regional legal restrictions and patent demands complying to relevant rules and regulations.
(3) Overall Business Environment: In 2019, Basso plans to develop new products and innovative technology, as well as foster a flexible sales & marketing strategy intended to achieve a performance goal of exceeding the company’s 2018 revenue by 10%.

2. Corporate Profile

1. Date Founded

(1) Registered Date: July 2, 1983

2. Corporate Milestones

July 1983 -- In accordance to ROC Corporate Law, Basso Industry was founded on Zhongxiao East Road in Taipei City with a capital of NTD$2 million and shortly afterwhich was relocated to Dunhua South Road. Main product features included the export/import and selling/buying of air and electronic tools.
July 1987 -- Cash capital increase reached NTD$3,000,000, increasing paid-in capital to NTD$5,000,000.
September 1991 -- Cash capital increase reached NTD$7,000,000, increasing paid-in capital to NTD$12,000,000. Basso Industry was changed into Basso Industry Corp., and relocated to Dalong Road in Taichung City. Headquarters office was purchased.
November 1992 -- Main product feature was changed to “air tools buying/selling, manufacturing, and processing”.
March 1993 -- Awarded “PARTNERS IN QUALITY” Honors by CAMPBELL HAUSFELD.
October 1993 -- Purchased No.17, 36th Road, Industrial Park, Taichung City, which served as an assembly plant.
March 1994 -- Purchased No.24, 36th Road, Industrial Park, Taichung City, which served as headquarters office and parts processing center.
April 1994 -- Cash capital increase reached NTD$17,000,000, increasing paid-in capital to NTD$29,000,000.
August 1994 -- Cash capital increase reached NTD$17,000,000, increasing paid-in capital to NTD$46,000,000.
March 1995 - Approved by ROC-MOEA Bureau of Standards acquiring ISO 9001 certification for quality assurance.
April 1995 -- Approved by BSI BE acquiring EN ISO 9001 1994 certification for quality assurance and CNS 12681 certfication for quality assurance.
May 1995 -- Cash capital increase reached NTD$32,200,000, increasing paid-in capital to NTD$78,200,000.

June 1995 -- Awarded “PARTNERS IN PROGRESS” Honors by US SEARS.

October 1996 -- Purchased land and plant on No.21, 42nd Road, Industrial Park, Taichung City, which served as a manufacturing plant for plastic injection parts.
November 1996 -- Purchased land and plant on No.22, 34th Road, Industrial Park, Taichung City, which served as an automated warehouse and assembly plant.
December 1996 -- Awarded “PARTNERS OF EXCELLENCE” Honors by US PORTER CABLE.
May 1997 -- Cash capital increase reached NTD$75,000,000 and NTD$78,200,000 of profit was transferred to capital increase, increasing paid-in capital to

NTD$231,400,000. Public issuance was approved.

December 1997 -- Awarded “PARTNERS OF SUPPLIERS” Honors by US PORTER CABLE.
March 1998 -- 1st automated warehouse and smart production line launched, improving production efficacy.
April 1998 -- Compound materials production launched marking a milestone in the development of air fastening tools.

May 1998 -- Established partnership with HITACHI Japan.

August 1998 -- Approved by TPEx (Taipei Exchange), BASSO became a public company listed on TWSE (Taiwan Stock Exchange).
September 1998 -- Transferred NTD$196,690,000 of profit and NTD$23,140,000 of capital reserve to capital increase, increasing paid-in capital to NTD$451,230,000.

December 1998 -- TWSE/OTC listed company pre-launch press conference.

January 1999 -- Became an official TWSE/OTC listed company.

January 1999 -- Awarded “PARTNERS OF SUPPLIERS” Honors by US PORTER CABLE.
June 1999 -- Purchased land on No.16, 35th Road, which served as a processing center.
June 1999 -- Transferred NTD$262,519,000 of profit and employee bonus to capital increase, increasing paid-in capital to NTD$713,749,000.

July 1999 -- Approved by Taipei Exchange for margin trade and short sale stock practice. January 2000 -- Applied to TWSE for stock listing.

March 2000 -- Approved by TWSE for stock listing.

June 2000 -- Became an official TWSE/OTC listed company.

July 2000 -- Transferred NTD$362,443,500 of profit and employee bonus to capital increase, increasing paid-in capital to NTD$1,076,192,500.
August 2000 -- Plant on No. 17, 36th Road reconstructed for magnesium and aluminum alloy die-casting plant.
November 2000 -- Plant reconstruction on No. 17, 36th Road completed for magnesium and aluminum alloy production.

June 2001 -- Purchased No.20, 34th Road for plant expansion.

June 2001 -- Transferred NTD$221,557,500 of profit and employee bonus to capital increase, increasing paid-in capital to NTD$1,297,750,000.

August 2001 - Acquired ISO -9000 certification for quality assurance.

July 2002 -- Transferred NTD$13,472,000 of employee bonus to capital increase, increasing paid-in capital to NTD$1,311,222,000.

September 2002 -- No. 20, 34th Road heat treatment plant launched.

June 2003 -- Transferred NTD$14,580,000 employee bonus to capital increase, increasing paid-capital to NTD$1,325,802,000.
September 2003 -- No.20, 34th Road new automated warehouse and smart production line launched.

January 2004 -- Purchased No.22, 36th Road for plant expansion.

April 2004 -- No. 33, 37th Road plastic injection new plant officially launched.

June 2004 -- Transferred NTD$152,581,000 of profit and employee bonus to capital increase, increasing paid-in capital to NTD$1,478,383,000.
May 2005 -- Transferred NTD$46,568,000 of profit and employee bonus to capital increase, increasing a paid-in capital to NTD$1,524,951,000.
June 2005 -- Founded subsidiary YOKATA TOOL, INC. in California, USA with a capital of USD$2 million.

July 2005 -- No. 22, 36th Road assembly plant officially launched.

June 2006 -- Transferred NTD$337,245,000 of profit and employee bonus to capital increase, increasing paid-in capital to NTD$1,862,196,000.
November 2008 -- Canceled 7,993,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,782,266,000.
April 2009 -- Canceled 2,698,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,755,286,000.
August 2009 -- Canceled 2,010,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,735,186,000.
February 2010 -- Canceled 10,934,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,625,846,000.
July 2010 -- Canceled 2,954,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,596,306,000.
November 2010 -- Canceled 654,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,589,766,000.
March 2012 -- Canceled 3,092,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,558,846,000.
July 2012 -- Canceled 2,158,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,537,266,000.
December 2012 -- Canceled 437,000 shares of treasury stocks with a remaining paid-in capital of NTD$1,532,896,000.
August 2015 -- Cash capital reduced by 10% with a remaining paid-in capital of NTD$1,379,606,400.

Any material changes in operating methods or type of business; and any other matters of material significance which could affect shareholders' equity in 2018 and prior to prospectus printing: None.

3. Corporate Governance Report

1. Corporate Organization

(1) Organization Structure

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(2) Functions of Principal Divisions

Department	Department	Duties
Board of Directors		Determine business policies, review regulations and rules, assess budgets and accounting settlements, and exercise other functions of endowed bylaws and shareholders’ meetings.
Remuneration Committee		Professionally and objectively evaluate the policies and systems for compensation of the directors, supervisors, and managerial officers of company, and submit recommendations to the board of directors for its reference in decision making.
Internal Audit Office		Take charge of investigation and assessment of the implementation of internal control systems to evaluate business performance and offerproposals.
General Management Office		Enforce decisions and business strategies resolved in the board of directors and take responsibility to integrate business operations carried out by managerial officers of different divisions.
Environment and Safety Office		Maintain business environment security.
Business & Marketing Division		Promote product related business.
Research and Development Office		Command market and client demand and design new products.
Factory Manageme nt Office	Manufacturing Department	Assemble and inspect products.
	Aterials Department	Purchase materials, manage inventory, and supervise production line.
Magnesium Alloy Business Division	Mold Flow Research Unit	Provide pre-manufacturing mold analysis.
	Mold Department	Supervise mold production and non-company manufactured OEMproducts.
	Die-Casting Department	Supervise mold production and non-company manufactured OEMproducts.
	Painting Department	Supervise product manufacturing and non-company manufactured OEMproducts.
	Machining Department	Supervise machining process.
	Plastic Department	Supervise plastic parts production, foaming process, and non-companymanufactured OEMproducts.
Heat Treatment Department		Provide heat treatment for mold, parts and non-company manufactured products.
Quality Assurance Department		Ensure quality assurance (parts and products).
Human Resources Office		Manage human resources and office purchases.
General Affairs Office		Manage office maintenance and hygiene safety.

Accounting & Finance Department	Process account balance, tax dues, budget keeping, product cost computing, cost data, budget allocation, long and short-term investment.
Information Management Department	Manage software purchase, program update and maintenance, and company intranet functioning.
Planning Department	Manages projects & researches.

2. Directors, Supervisors, President, Deputy President, Assistant Managers, and Department and Division Supervisors

(1) Directors and Supervisors

Directors and Supervisors Data April 30, 2019

Title (Note 1)	Nationality or Place of Registratio n	Name	Sex	Date of Appointme nt	Ter m of App oint me nt	Date of Initial Appointme nt (Note 2)	Shareholding when appointed	Shareholding when appointed	Present shareholding	Present shareholding	Present shareholding of spouse & minor	Present shareholding of spouse & minor	Shares held in another’s name W	Shares held in another’s name W	ork Experiences nd Academic ualifications Note 3)	Position(s) concurrentl y held in this and/or other companies	With spouse or second degree relative who serves as company supervisors, directors or supervisor s	With spouse or second degree relative who serves as company supervisors, directors or supervisor s	With spouse or second degree relative who serves as company supervisors, directors or supervisor s
							Stock (shares)	Share holdin g (%)	Stock (shares)	Sharehol ding (%)	Stock (shares)	Shareho lding (%)	Stock (share s)	Shareho lding (%) Q			Title	Name	Relati ons
Director	ROC	Ba Wei Holding INC	--	June 28, 2018	Thr ee Yea rs	November 29, 1996	13,656,448	9.90	13,507,138	9.79	napplicabl e	Inapplic able	None	0	Inapplicable	Inapplicabl e	Inapplic able	Inapplic able	Inappl icable
Director’s judicial person representat ive	ROC	Ming-da Lai	Male				149,310	0.11	149,310	0.11			None	0	National Taichung University of Education (NTCU ) Taichung District Chief Judge	Chairperso n	Director Supervis or Director Director	Ming-xin g Lai Wei-ting Chang Bo-yan Lai Bo-feng Lai	Broth er Sister -in-la w Son Son
											1,093,534	0.79

Director	ROC	Ming-xing Lai	Male	June 28, 2018	Thr ee Yea rs	June 19, 2009	1,220,313	0.88	1,220,313	0.88			None	0	Drill Shun Industry Inc. President	Ding Xing Investment President	Chairper son Supervis or	Ming-da Lai Wei-ting Chang	Broth er Spous e
											1,378,100	1.00

Director	ROC	Zhong-xiung Hong	Male	June 28, 2018	Thr ee	May 27, 2003	93,275	0.07	93,275	0.07			None	0	Wei Chuan Foods Corp	None	Director	Xin-hua Tsai	Spous e
											3,514	0.003

					Yea rs
Director	ROC	Bo-yan Lai	Male	June 28, 2018	Thr ee Yea rs	May 27, 2003	2,097,831	1.52	2,097,831	1.52			None	0	NTU Law	President	Chairper son Director	Ming-da Lai Bo-feng Lai	Fathe r Broth er
											0	0

Director	ROC	Bo-feng Lai	Male	June 28, 2018	Thr ee Yea rs	June 22, 2015	2,971,826	2.15	2,971,826	2.15			None	0	Chienkuo Technology University Industrial Management	Deputy President	Chairper son Director	Ming-da Lai Bo-yan Lai	Fathe r Broth er
											0	0

Director	ROC	Qi-wen Lin	Male	June 28, 2018	Thr ee Yea rs	June 22, 2015	1,200	0.001	1,200	0.001			None	0	FI TOOLING Engineer	Quality Assurance Assistant Manager	None	None	None
											0	0

Director	ROC	Hong-yi Chen	Male	June 28, 2018	Thr ee Yea rs	Newly Appointed	0	0	0	0			None	0	Coretronic Corporation Project Manager	Business Manager	None	None	None
											0	0

Director	ROC	Fu-luo Huang	Male	June 28, 2018	Thr ee Yea rs	Newly Appointed	0	0	0	0			None	0	Kings Yao		None	None	None
																Heat
															Industrial
											0	0				Treatment
															Assistant to
																Manager
															President

Independe nt Director	ROC	Chun-zhong Lian	Male	June 28, 2018	Thr ee Yea rs	June 22, 2015	2,203	0.002	2,203	0.002			None	0	Certified Public Accountant (CPA)	Remunerati on Committee Member DataVan Internation	None	None	None
											0	0

																al Corporatio n Independe nt Director
Independe nt Director	ROC	Zheng-nan Shen	Male	June 28, 2017	On e Yea r	June 28, 2017	1,524	0.001	1,524	0.001			None	0	Cheng Shiu University Electrical Engineering Professor	Remunerati on Committee Member	None	None	None
											4,000	0.003

Supervisor	ROC	Wei-ting Chang	Femal e	June 28, 2018	Thr ee Yea rs	June 19, 2009	1,378,100	1.00	1,378,100	1.00			None	0	Kaohsiung Third Credit Co-operative	None	Chairper son Director	Ming-da Lai Ming-xin g Lai	Broth er-in-l aw Spous e
											1,220,313	0.88

Supervisor	ROC	Zi-ling Ye	Femal e	June 28, 2018	Thr ee Yea rs	Newly Appointed	0	0	0	0			None	0	Yu Feng Chemistry Industry Co.Accountant	None	None	None	None
											1,000	0

Supervisor	ROC	Xiao-ling Lin	Femal e	June 28, 2018	Thr ee Yea rs	Newly Appointed	0	0	0	0			None	0	Taichung Cheng Ching Hospital ICU Therapist	None	None	None	None
											0	0

Note 1: Judicial person shareholders should list shareholder name and representative separatetly (judicial person representatives should list name), and fill out Form 1.

Note: 2: Fill in initial appointment dates of directors or supervisor and note discrepancies, if any. Note 3: For any relevant experiences to current position at an auditor firm or an affiliate, describe position and assigned duties.

2. Directors’ Professional Qualifications and Independence Analysis

Criteria Name （Note 1）	A minimum of five years of working experience and relevant professional qualifications	A minimum of five years of working experience and relevant professional qualifications	A minimum of five years of working experience and relevant professional qualifications	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Concurrently serve as independent directors at other TWSE/OTC listed companies
	A lecturer (or higher -level teaching faculty) in Commerce, Law, Finance, Accounting, or other academic departments related to business needs at a public/private college or university	A judge, public prosecutor, attorney, CPA, or professional/techni cal specialist who has passed a state examination and been certified in a professional subject related to business needs	Have work experience in Commerce , Law, Finance, or Accounting , or other business-r equired work experience s	1	2	3	4	5	6	7	8	9	10
Ming-da Lai		�	�						�	�		�	�	None
Ming-xingLai			�		�			�	�	�		�	�	None
Zhong-xiung Hong			�	�	�	�	�	�	�	�		�	�	None
Bo-yan Lai			�						�	�		�	�	None
Bo-fengLai			�						�	�		�	�	None
Qi-wen Lin			�		�	�	�	�	�	�	�	�	�	None
Hong-yi Chen			�		�	�	�	�	�	�	�	�	�	None
Fu-luo Huang			�		�	�	�	�	�	�	�	�	�	None
Chun-zhong Lian		�	�	�	�	�	�	�	�	�	�	�	�	1
Zheng-nan Shen	�		�	�	�	�	�	�	�	�	�	�	�	None
Wei-tingChang			�	�	�			�	�	�		�	�	None
Zi-ling Ye			�	�	�	�	�	�	�	�	�	�	�	None
Xiao-lingLin			�	�	�	�	�	�	�	�	�	�	�	None

Note 1: Columns adjusted according to list.

Note 2: If directors and supervisors meet any of the following criteria during the two years prior to appointment and during appointment, please check “�” the corresponding boxes as appropriate.
(1) Not an employee of the company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates (the same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary).
(3) Not a natural person shareholder or spouse, minor children, or in another’s name directly or indirectly holding up to 1% of the total shares issued or ranking among the top ten natural person shareholders.
(4) Not a spouse, relative within the second degree of kin, nor lineal relative within the third degree of kin, of any of the above persons in the three preceding subparagraphs
(5) Not a director, supervisor, or employee of a corporate/institutional shareholder which directly holds 5% or more of the total number of issued shares of the company or ranks as of its Top Five Shareholders.
(6) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the company;
(7) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution which, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof. This restriction does not apply to any member of the compensation committee

who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Compensation Committees of Companies Whose Stock is Listed on the TWSE or Traded on the GTSM”;

(8) Not having a marital relationship, or a relative within the second degree of kin to any other director of the company.
(9) Not been a person of any conditions defined in Article 30 of the Company Law.
(10) Not a governmental, judicial person or its representative as defined in Article 27 of the Company Law
.

3. A Judicial Person Acts as a Primary Shareholder April 30, 2019

3. A Judicial Person Acts as a Primary	ShareholderApril 30,2019
Judicial Person Shareholder Name (Note 1)	A Judicial Person Acts as a Primary Shareholder (Note 2)
President -- Ba Wei Holding Representative: Ming-da Lai	Ming-da Lai (25.57%), Shu-xiang Liu (9.35%), Bo-yan Lai (33.62%), Bo-feng Lai (31.46%)

Note 1: Director, supervisor judicial person shareholder representative should fill in judicial person shareholder name.

Note 2: Fill in names of judicial person shareholders (ratio of Top 10 Shareholders) and shareholding ratio. If primary shareholder is a judicial person, fill out Form 2 .

4. A Judicial Person Acts as a Primary Shareholder

�Inapplicable

(2) President, Deputy President, Assistant Managers, Department and Division Supervisors

Title ~~（~~Note 1）	Nationalit y	Name	Sex -	Appointmen t Date	Shareholdings	Shareholdings	Spouse and Minor Shareholdings	Spouse and Minor Shareholdings	Shares held in another’s name	Shares held in another’s name	Work Experiences and Academic Qualifications （Note 2）	Current position in other company	With spouse or second degree relative who is a manager of the company	With spouse or second degree relative who is a manager of the company	With spouse or second degree relative who is a manager of the company	Emplo yee Stock Option
					Stock (shares)	Shareh olding %	Stock (shares)	Shareh olding %	Stock (shares )	Shareh olding %			Title	Name	Relatio ns
President	ROC	Bo-yan Lai	Male	August 23, 2018	2,097,831	1.52	0	0.00	None	0	National Taiwan University Law	None	Deputy Presid ent	Bo-feng Lai	Brother	None
Business Manager	ROC	Yao-sh eng Shen	Male	January 01, 2002	381,250	0.28	22,609	0.02	None	0	Nani Info Associate Manager	None	None	None	None	None
Magnesium Alloy Business Assistant Manager	ROC	Jin-xing Chen	Male	January 01, 2002	1,088	0.001	0	0.00	None	0	Taichi Machine Corporation Plant Manager	None	None	None	None	None
Plant Business Deputy President	ROC	Bo-fen g Lai	Male	May 01, 2016	2,971,826	2.15	0	0.00	None	0	Chienkuo Technology University Industrial Management	None	Presid ent	Bo-yan Lai	Brother	None
Quality Assurance Assistant Manager	ROC	Qi-wen Lin	Male	May 01, 2016	1,200	0.001	0	0.00	None	0	FI TOOLING INDUSTRIAL CO. Engineer	None	None	None	None	None
Heat Treatment Manager	ROC	Fu-luo Huang	Male	May 01, 2016	0	0	0	0.00	None	0	Kings Yao Industrial Assistant to President	None	None	None	None	None
Manufacturi ng Manager	ROC	Yi-zhen g Huang	Male	May 01, 2016	0	0	0	0.00	None	0	Fuxin Plastic Quality Assurance Engineer	None	None	None	None	None
Information Manageme nt Associate Manager	ROC	Ya-hui Lu	Fema le	May 01, 2008	0	0	0	0.00	None	0	Falcon Machine Tools Co. Program Designer	None	None	None	None	None

Finance & Accounting Associate Manager	ROC	Chi-pia o Chen	Fema le	June 01, 2018	5,042	0.004	0	0.00	None	0	Basso Industry Corp. Accounting Junior Manager	None	None	None	None	None
Audit Manager	ROC	Bao-yu an Wang	Male	December 3, 2007	0	0	0	0.00	None	0	Acer Computer Product Manager	None	None	None	None	None

Note 1: Include president, deputy president, associate managers, department and division managers information, and ranks equivalent to president, deputy president, associate managers. If any of the following applies to persons, regardless of rank, shall be disclosed.
Note 2: Any relevant experiences to current position at an audit firm or an affiliate, describe position and assigned duties.

(3) Remuneration to Directors, Supervisors, President, and Deputy President in 2018

1. Remuneration to Directors

Chart 1-2 (Remuneration Disclosure)

Remuneration to Directors (including Independent Directors), Supervisors, President, and Deputy President

If any of the following applies, name of each director and supervisor and the corresponding remuneration. The company may opt either to disclose aggregate remuneration information, with the name(s) indicated for each remuneration range, or to disclose the name of each individual and the corresponding remuneration amount (to disclose the name of each individual and the corresponding remuneration amount, fill in title, name, and amount. Range of renumeration is not required).
(1) A company which has posted after-tax deficits in the parent company only financial reports or individual financial reports within the most recent two fiscal years shall disclose the remuneration paid to individual directors and supervisors. This requirement, however, shall not apply if the company has posted net income after tax in the parent company only financial report or individual financial report for the most recent fiscal year and such net income after tax is sufficient to make up the accumulated deficits (Note 1).
(2) A company which has had an insufficient director shareholding percentage for three consecutive months or longer during the most recent fiscal year shall disclose the remuneration of individual directors; one which has had an insufficient supervisor shareholding percentage for three consecutive months or more during the most recent fiscal year shall disclose the remuneration of individual supervisors. (Note 2).
(3) A company which has had an average ratio of share pledging by directors or supervisors in excess of 50 percent in any three months during the most recent fiscal year shall disclose the remuneration paid to each individual director or supervisor having a ratio of pledged shares in excess of 50 percent for each month. (Note 3).
(4) If the total amount of remuneration received by all of the directors and supervisors in their capacity as directors or supervisors of all of the companies listed in the financial reports exceeds 2% of the net income after tax, and the remuneration received by any individual director or supervisor exceeds NT$15 million, the company shall disclose the remuneration paid to each individual director or supervisor.
【 Note1 】 In the 2014 Annual Report published by 2015 Shareholder Meeting , if the 2013 and 2014 parent company only or individual financial reports show an after-tax deficit, the remuneration paid to each of the directors and supervisors shall be disclosed; if the 2013 parent company only or individual financial report shows an after-tax deficit but the 2014 parent company only or individual financial report reports after-tax net profit sufficient to make up the accumulated deficit, the remuneration paid to each of the directors and supervisors shall be not be disclosed.

【 Note2 】 In the 2009 Annual Report published by 2010 Shareholder Meeting , if the directors and supervisors holding percentage is insufficient for three consecutive months or longer between January 2009-December 2009, the remuneration paid to each of the directors and supervisors shall be disclosed. If the directors and supervisors holding percentage has been insufficient for three consecutive months including January 2009 (November 2008-January 2009), the remuneration paid to each of the directors and supervisors shall be disclosed.
【 Note3 】 In the 2009 Annual Report published by 2010 Shareholder Meeting , if during 2009 in the months of February, May, and August, the remuneration paid to each of the directors having a ratio of pledged shares in excess of 50 percent for each month (February, May, and August 2009) shall be disclosed. The remuneration paid to each of the supervisors having a ratio of pledged shares in any three months is in excess of 50 percent shall be disclosed.
※ Board of Directors Monthly Ratio of Pledged Shares: Board of Directors shares increase in pledge/Directors shareholding (retain shareholding rights); Board of supervisors monthly ratio of pledged shares: Board of Supervisors shares increase in pledge/Supervisors shareholding (retain shareholding rights).

Remuneration (disclose aggregate remuneration information, with name indicated for each remuneration range) to Directors (including Independent Directors) Unit: NTD$ (Thousands)

Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	% of the total of items A, B, C, D to NIAT (Note 10)	% of the total of items A, B, C, D to NIAT (Note 10)	Remuneration paid to persons who hold positions in other companies	Remuneration paid to persons who hold positions in other companies	Remuneration paid to persons who hold positions in other companies	Remuneration paid to persons who hold positions in other companies	Remuneration paid to persons who hold positions in other companies	Remuneration paid to persons who hold positions in other companies	Remuneration paid to persons who hold positions in other companies	Remuneration paid to persons who hold positions in other companies	% of the total of items A, B, C, D, E, F, G to NIAT (Note 10)	% of the total of items A, B, C, D, E, F, G to NIAT (Note 10)
Compensation (A) (Note 2)		Retireme nt Pensions (B)		Remunerati on to Director (Note 3)		Business Expenditures (D) (Note 4)				Remuneration, Bonuses, and Allowances (E) (Note 5)		Retiremen t Pension (F)		Remuneration to Employees (G) (Note 6)
Basso	Comp anies listed in financi al report (Note 7)	B a s s o	Co mpa nies liste d in fina ncia l repo rt(N ote 7)	Bas so	Co mpa nies liste d in fina ncia l repo rt (Not e 7)	Bass o	Comp anies listed in financi al report (Note 7)	Bass o	Co mpa nies liste d in fina ncia l repo rt (Not e 7)	Basso	Comp anies listed in financi al report (Note 7)	Ba ss o	Co mpa nies liste d in fina ncia l repo rt (Not e 7)	Basso		Companies listed in financial report (Note 7)		Basso	Comp anies listed in financi al report (Note 7)
														Cas h Valu e	S t o c k V a l u e	Cash Value	Sto ck Val ue

Director	Ba Wei Hold	n g 16,427	16,427	0	0	8,000	8,000	1,680	1,680	2.53%	2.53%	17,517	17,517	0	0	2,535	0	2,535	0	4.47%	4.47%	None
Director’s judicial person representativ e	Ming-da Lai
Director	Ming-xing La
Director	Zhong-xiung Hong
Director	Bo-yan Lai
Director Resigned on June 28, 2018	Yao-sheng S
Director	Bo-feng Lai
Director	Qi-wen Lin
Director Newly Appointed on June 28, 2018	Hong-yi Che
Director Newly Appointed on June 28, 2018	Fu-luo Huan
Director Resigned on June 28, 2018	Xin-hua Tsai
Independent Director	Chun-zhong Lian
Independent Director	Zheng-nan S
In addition to the stated disclosures, remuneration paid to directors for services listed in financial report (e.g. non-employee consultant) in the preceding year: None.

Range of Remuneration Paid to Directors

	Range of Remuneration Paid to Directors	Range of Remuneration Paid to Directors	Range of Remuneration Paid to Directors	Range of Remuneration Paid to Directors
Range of Remuneration Paid to Directors	Name
	~~Total amount of the four preceding items A, B, C,~~ D		~~Total amount of the seven preceding items A, B,~~ C, D, E, F, G
	Basso (Note 8)	Companies listed in financial report (Note 9) H	Basso (Note 8)	Companies listed in financial report (Note 9) I
NTD$0 (and above) ~ 2,000,000 (below)	1. Ba Wei Holding 2. Zhong-xiung Hong 3. Chun-zhong Lian 4. Xin-hua Tsai 5. Zheng-nan Shen	1. Ba Wei Holding 2. Zhong-xiung Hong 3. Chun-zhong Lian 4. Xin-hua Tsai 5. Zheng-nan Shen	1. Ba Wei Holding 2. Zhong-xiung Hong 3. Chun-zhong Lian 4. Xin-hua Tsai 5. Zheng-nan Shen 6. Fu-luoHuang	1. Ba Wei Holding 2. Zhong-xiung Hong 3. Chun-zhong Lian 4. Xin-hua Tsai 5. Zheng-nan Shen 6. Fu-luoHuang
NTD$2,000,000（and above）～5,000,000 （below）	Ming-xing Lai	Ming-xing Lai	1. Ming-xing Lai 2. Yao-sheng Shen 3. Qi-wen Lin 4. Hong-yi Chen	1. Ming-xing Lai 2. Yao-sheng Shen 3. Qi-wen Lin 4. Hong-yi Chen
NTD$5,000,000（and above）～10,000,000 （below）			1. Bo-yan Lai 2. Bo-feng Lai	1. Bo-yan Lai 2. Bo-feng Lai
NTD$10,000,000（and above）～15,000,000 （below）	President -- Ba Wei Holding Representative: Ming-da Lai	Ba Wei Holding Representative: Ming-da Lai	Ba Wei Holding Representative: Ming-da Lai	Ba Wei Holding Representative: Ming-da Lai
NTD$15,000,000（and above）～30,000,000 （below）
NTD$30,000,000（and above）～50,000,000 （below）
NTD$50,000,000（and above）～100,000,000 （below）
NTD$100,000,000(above)
Total	7	7	13	13

Note 1: Directors should be listed individually (list judicial person shareholder name and representative separately) to disclose aggregate remuneration paid to directors. Directors whom also serve as president or deputy president should fill out chart (3-1) or (3-2).
Note 2: Remuneration paid to directors (including stipends, additional compensation, severance pay, bonuses, rewards etc) in the preceding year.
Note 3: Remuneration paid to directors approved by Board of Directors in the preceding year.
Note 4: Director’s business expenditures (honorarium, allowances, subsidies, accommodation, company automobile, etc). If housing, automobile, and other transports, or personal expenditures incur, estate details and costs, actual rent or rental value, fuel, and other subsidies shall be disclosed. If a company chaffeur is provided, details of chaffeur compensation should be provided but not included in remuneration paid.

Note 5: Directors whom also serve as employees (e.g. president, deputy president, managers, and employees) in the preceding year, remuneration paid to directors include stipends, additional compensation, severance pay, bonuses, rewards, honorarium, allowances, subsidies, accommodation, company automobile, etc. If housing, automobile and other transports, or personal expenditures incur, estate details and costs, actual rent or rental value, fuel, and subsidies shall be disclosed. If a company chaffeur is provided, details of chaffeur compensation should be provided but not included in remuneration paid. In accordance to IFRS2, “Share Issuance” listed under remuneration shall include, employee stock option, new employee restricted stock, and shares issued for cash capital increase.
Note 6: Directors whom also serve as employees (e.g. president, deputy president, managers, and employees) in the preceding year and receive remuneration to employee (including shares and cash), remuneration paid to employees approved by Board of Directors in the preceding year shall be disclosed. If an estimate is unavailable, draft this year’s remuneration according to the amount distributed in the preceding year and fill out Chart 1-3.
Note 7: In the combined company list compiled in report (including Basso), the total remuneration paid to directors shall be disclosed.
Note 8: The aggregate remuneration paid to each of the directors and the name of corresponding director shall be disclosed.
Note 9: In the combined company list compiled in report (including Basso), the aggregate remuneration paid to each of the directors and the name of corresponding director shall be disclosed.
Note 10: NIAT refers to the amount in the preceding year; for IFRS adopted companies, NIAF refers to the amount in parent company only financial reports or individual financial reports.
Note 11: a. This column should list remuneration paid to directors received from unincorporated joint ventures.
b. Directors whom receive remuneration from unincorporated joint ventures, should combine the remuneration from unincorproated joint ventures in the range of remuneration in Column I and change column to “All joint ventures”.
c. Remuneration refers to remuneration, additional compensation (e.g. employees, directors, and supervisors remuneration), and business expenditures paid to company directors who also serve as directors, supervisors, or managers at unincorporated joint ventures.
Remuneration disclosed in this chart differs from Income Tax Law which shall be used for disclosure purposes rather than tax purposes.

2. Remuneration Paid to Supervisors

Remuneration (disclose aggregated remuneration, with name indicated for each remuneration range) Paid to Supervisors

Unit: NTD$ (Thousands)

	Title	Name	Remuneration Paid to Supervisors	Remuneration Paid to Supervisors		% of the total of items A, B, C to NIAT (Note 8)	Remunerati on from Unincorpor ated Joint
			Compensation (A) (Note 2)	Remuneration (B) (Note 3)	Business Expenditures (C) (Note 4)

		Basso	Compani es listed in financial report (Note 5)	Basso	Companies listed in financial report (Note 5)	Basso	Compani es listed in financial report (Note 5)	Basso	Compani es listed in financial report (Note 5)	Ventures (Note 9)
Supervisor Resigned on June 28, 2018	Shu-xiang Liu	0	0	3,000	3,000	360	360	0.33%	0.33%	None
Supervisor	Wei-ting Chang
Supervisor Resigned on June 28, 2018	Bo-zhong Lai
Supervisor Newly Appointed on June 28, 2018	Zi-ling Ye
Supervisor Newly Appointed on June 28, 2018	Xiao-ling Lin

Range of Remuneration Paid to Supervisors

Range of remuneration paid to supervisors	Name	Name
	Total amount of the threeprecedingitems A,B,C
	Basso (Note 6)	Companies listed in financial report (Note7)D
NTD$0 (and above) ~ 2,000,000 (below)	1. Shu-xiang Liu 2. Wei-ting Chang 3. Bo-zhong Lai 4. Zi-ling Ye 5. Xiao-ling Lin	1. Shu-xiang Liu 2. Wei-ting Chang 3. Bo-zhong Lai 4. Zhi-ling Ye 5. Xiao-lingLin

NTD$2,000,000 （ and above ）～ 5,000,000 （ below ）

NTD$5,000,000 （ and above ）～ 10,000,000 （ below ）

NTD$10,000,000 （ and above ）～ 15,000,000 （ below ）

NTD$15,000,000 （ and above ）～ 30,000,000 （ below ）

NTD$30,000,000 （ and above ）～ 50,000,000 （ below ）

NTD$50,000,000 （ and above ）～ 100,000,000 （ below ） NTD$ 100,000,000 (above) Total 5 5

Note 1: Supervisors should be listed individually (judicial person shareholders should list shareholders name and representatives separately)
to disclose aggregate remuneration paid to supervisors.
Note 2: Remuneration paid to supervisors (including stipends, additional compensation, severance pay, bonuses, rewards, etc) in the preceding year.
Note 3: Remuneration paid to supervisors approved by Board of Directors in the preceding year.
Note 4: Supervisors’ business expenditures (honorarium, allowances, subsidies, accommodation, company automobile, etc). If housing, automobile and other transports, or personal expenditures incur, estate details and costs, actual rent or rental value, fuel, and other subsidies shall be disclosed. If a company chaffeur is provided, details of chaffeur compensation should be provided but not included in remuneration paid.
Note 5: In the combined company list compiled in report (including Basso), the total remuneration paid to supervisors shall be disclosed.
Note 6: The aggregate remuneration paid to each of the supervisors and the name of corresponding supervisor shall be disclosed.
Note 7: In the combined company list compiled in report (including Basso), the aggregate remuneration paid to each of supervisors and the name of corresponding supervisor shall be disclosed.
Note 8: NIAT refers to the amount in the preceding year; for IFRS adopted companies, NIAF refers to the amount in parent company only financial reports or individual financial reports.
Note 9: a. This column should list remuneration paid to supervisors received from unincorporated joint ventures.
b. Supervisors whom receive remuneration from unincorporated joint ventures, should combine the remuneration from unincorporated joint ventures in the range of remuneration in Column D and change column to “All joint ventures”.
c. Remuneration refers to compensation, remuneration (e.g. employees, directors, and supervisors remuneration), and business expenditures paid to supervisors whom also serve as directors, supervisors, or managers at unincorporated joint ventures.
Remuneration disclosed in this chart differs from Income Tax Law which shall be used for disclosure purposes rather than tax purposes.

(3) Remuneration Paid to President and Deputy President

Remuneration (disclose aggregate remuneration, with name indicated for each remuneration range) Paid to

President and Deputy President Unit: NTD$ (Thousands)

Title	Name	Stipends (A) （Note 2）	Stipends (A) （Note 2）	Retirement Pension (B)	Retirement Pension (B)	Rewards Allowances (C) （Note 3）	Rewards Allowances (C) （Note 3）	Remuneration Paid to Employees (D) （Note 4）	Remuneration Paid to Employees (D) （Note 4）	Remuneration Paid to Employees (D) （Note 4）	Remuneration Paid to Employees (D) （Note 4）	% of the total items A, B, C to NIAT (Note 8)	% of the total items A, B, C to NIAT (Note 8)	Remuneration from Unincorporated Joint Ventures (Note 9)
		Bass o	Compa nies listed in financial report （Note 5）	Ba sso	Compa nies listed in financial report （Note 5）	Basso	Companie s listed in financial report （Note 5）	Basso		Companies listed in financial report （Note 5）		Basso	Compa nies listed in financial report （Note 5）
								Cash Value	Stock Value	Cash Value	Stock Value
Presiden t Resigne d on August 16, 2018	Ming-xi ng Lai	5,734	5,734	0	0	11,507	11,507	1,000	0	1,000	0	1.77 %	1.77 %	None
New Presiden t Appointe d on August 23, 2018	Bo-yan Lai
Deputy Presiden t	Bo-fen g Lai

＊ Regardless of title, corporate executives with ranks equivalent to president and deputy president (ie. chairperson, chief executive officer,etc)

shall be disclosed.

President and Deputy Remuneration Range

	President and Deputy Remuneration Range	President and Deputy Remuneration Range
President and Deputy President Remuneration Range	President and Deputy President Name
	Basso (Note 6)	Companies listed in financial report (Note7)E
NTD$0 (and above) ~ 2,000,000 (below)
NTD$2,000,000（and above）～5,000,000 （below）	Ming-xing Lai	Ming-xing Lai
NTD$5,000,000（and above）～10,000,000 （below）	1. Bo-yan Lai 2. Bo-feng Lai	1. Bo-yan Lai 2. Bo-feng Lai
NTD$10,000,000（and above）～15,000,000 （below）
NTD$15,000,000（and above）～30,000,000 （below）
NTD$30,000,000（and above）～50,000,000 （below）
NTD$50,000,000（and above）～100,000,000 （below）
NTD$ 100,000,000 (above)
Total	3	3

Note 1: List president and deputy president name separately to disclose aggregate remuneration paid to president and deputy president. Directors who also serve as president or deputy president should fill out Chart (1-1) or (1-2).

Note 2: Stipends, additional compensation, severance pay paid to president and deputy president in the preceding year.

Note 3: Bonuses, rewards, honorarium, allowances, subsidies, accommodation, company automobile, and other remuneration paid to president and deputy president in the preceding year. If housing, automobile and other transports, or personal expenditures incur, estate details and costs, actual rent or rental value, fuel, and subsidies shall be disclosed. If a chaffeur is provided, details of chaffeur compensation should be provided but not included in remuneration paid. In accordance to IFRS2, “Share Issuance” listed under remuneration should include, employee stock option, new employee restricted stock, and shares issued for cash capital increase.

Note 4: Remuneration (including shares and cash) paid to president and deputy president approved by Board of Directors in the preceding year. If an estimate is unavailable, draft this year’s remuneration according to the amount distributed in the preceding year and fill out Chart 1-3. NIAT refers to the amount in the preceding year; for IFRS adopted companies, NIAF refers to the amount in parent company only financial reports or individual financial reports.

Note 5: In the combined company list compiled in report (including Basso), the aggregate remuneration paid to president and deputy president shall be disclosed.
Note 6: The aggregate range of remuneration paid to each president and deputy president and the name of corresponding president and deputy president shall be disclosed.
Note 7: In the combined company list compiled in report (including Basso), the aggregate remuneration paid to each president and deputy president and the name of corresponding president and deputy president shall be disclosed.
Note 8: NIAT refers to the amount in the preceding year; for IFRS adopted companies, NIAF refers to the amount in parent company only financial reports or individual financial reports.
Note 9: a. This column should list remuneration paid to president and deputy president received from unincorporated joint ventures.
b. President and deputy president whom receive remuneration from unincorporated joint ventures, should combine the remuneration from unincorporated joint ventures in the remuneration range in Column E and change column to “All joint ventures”.
c. Remuneration refers to stipends, additional compensation (e.g. employees, directors, and supervisors remuneration), and business expenditures paid to company president and deputy president whom also serve as directors, supervisors, or managers at unincorporated joint ventures.
Remuneration disclosed in this chart differs from Income Tax Law which shall be used for disclosure purposes rather than tax purposes.

Employee Bonus Paid to Managers, Names and Allocation:

Unit ： NTD$

(Thousands)

	Title （Note 1）	Name （Note 1）	Stock Value	Cash Value	Total	% of the total amount to NIAT
Managers	President	Bo-yan Lai	3,661	1,769	5,430	0.53%
	Plant Deputy President	Bo-feng Lai
	Business Manager	Yao-sheng Shen
	Magnesium Alloy Business Assistant Manager	Jing-xing Chen
	Quality Assurance Assistant Manager	Qi-wen Lin
	Accounting & Finance Associate Manager	Chi-piao Chen
	Information Management Associate Manager	Ya-hui Lu

Note 1: Disclose name and title of each manager to disclose aggregate bonuses alloted.

Note 2: Remuneration (including shares and cash) paid to managers approved by Board of Directors in the preceding year. If an estimate is unavailable, draft this year’s remuneration according to the amount distributed in the preceding year. NIAT refers to the amount in the preceding year; for IFRS adopted companies, NIAF refers to the amount in parent company only financial reports or individual financial reports.
Note 3: The definitions of managers are in accordance to Security and Future Bureau Regulation 3-0920001301 issued by Financial Supervisory Commission, or FSC on March 27, 2003, and are listed below:
(1) President and/or its equivalent
(2) Deputy President and/or its equivalent
(3) Assistant Managers and/or its equivalent
(4) Finance Supervisors
(5) Accounting Supervisors
(6) Other employees who serve managerial positions bearing signing rights
Note 4: Directors, president, and deputy president whom receive employee remuneration (including shares and cash) should fill out this chart in addition to Chart 1-2.

(4) Separately compare and describe total remuneration percentage of NIAT in the parent company only or individual financial reports during the past two fiscal years to its directors, supervisors, president, and deputy president to analyze and describe remuneration policies, standards and packages, the procedure for setting remuneration, and correlation to business performance.

Ratio Analysis Unit: NTD$ (Thousands)

	to business performance. 1. Ratio Analysis Unit:	to business performance. 1. Ratio Analysis Unit:	to business performance. 1. Ratio Analysis Unit:	to business performance. 1. Ratio Analysis Unit:	NTD$ (Thousands)	NTD$ (Thousands)	NTD$ (Thousands)	NTD$ (Thousands)
Year Item Title	2018				2017
	Basso		Companies listed in individual reports		Basso		Companies listed in individual reports
	Remuneration Total	% of the total amount to NIAT	Remuneration Total	% of the total amount to NIAT	Remuneration Total amount	to NIAT % of the total amount to NIAT	Remuneration Total amount	to NIAT % of the total amount to NIAT
Director	46,159	4.47%	46,159	4.47%	32,556	15.96%	32,556	15.96%
Supervisor	3,360	0.33%	3,360	0.33%	2,160	1.06%	2,160	1.06%
President, Deputy President	18,241	1.77%	18,241	1.77%	17,955	8.80%	17,955	8.80%

2. Remuneration policies, standards and packages, the procedure for setting remuneration, and correlation to business performance:

A. Remuneration paid to directors and supervisors, such as honorarium and additional compensation are documented in company charter. Honorarium reimbursement is documented in company charter and remuneration is determined by Board of Directors. Remuneration is paid to persons whom are assigned positions and perform respective duties in accordance to company salary and bonus management system.
B. Remuneration paid to president and deputy president should base on business performance, profitability in correlation to company salary and bonus management system. Board of directors is authorized to approve remuneration paid to president.

3. Corporate Governance

(1.) Implementation of Board of Directors

(2) Implementation of Board of Directors

Attendance status of directors and supervisors in the eight Board of Directors meetings hosted in the preceding year is as follows:

Title	Name(Note 1)	Attendance in Person (B)	Attended by Appointed Proxy	Attendance rate (%) 【Ｂ/Ａ】 (Note 2)	Note
Chairperson	Ba Wei Holding Representative: Ming-da Lai	8	None	100%	Re-appointed on June 28, 2018
Director	Ming-xing Lai	5	None	63%	Re-appointed on June 28, 2018
Director	Zhong-xiung Hong	4	None	50%	Re-appointed on June 28, 2018
Director	Bo-yan Lai	8	None	100%	Re-appointed on June 28, 2018
Director	Yao-sheng Shen	2	None	100%	Resigned on June 28, 2018
Director	Bo-feng Lai	8	None	100%	Re-appointed on June 28, 2018
Director	Qi-wen Lin	8	None	100%	Re-appointed on June 28, 2018
Independent Director	Chun-zhong Lian	8	None	100%	Re-appointed on June 28, 2018
Independent Director	Zheng-nan Shen	4	None	50%	Re-appointed on June 28, 2018
Director	Xin-hua Tsai	1	None	50%	Resigned on June 28, 2018
Director	Hong-yi Chen	5	None	83%	Newly Appointed on June28,2018
Director	Fu-luo Huang	6	None	100%	Newly Appointed on June28,2018
Supervisor	Shu-xiang Liu	2	None	100%	Resigned on June 28, 2018
Supervisor	Wei-ting Chang	3	None	38%	Re-appointed on June 28, 2018
Supervisor	Bo-zhong Lai	0	None	0%	Resigned on June 28, 2018
Supervisor	Zi-ling Ye	1	None	17%	Newly Appointed on June28,2018
Supervisor	Xiao-ling Lin	1	None	17%	Newly Appointed on June 28,2018

Other Special Notes

If any of of the following applies to Board of Directors, state dates of board meeting, sessions, resolutions, and suggestions of independent directors and suggestions made to independent directors by company:
(1) Items listed in Article 14 Act 3 of Securities and Exchange Act
(2) Written or otherwise recorded resolutions on which an independent director had a dissenting opinion or qualified opinion.
In 2018, with respect to all material resolutions passed by Board of Directors (including independent directors), there were no dissenting opinions recorded or declared in a written statement .
Withdrawal by directors from issues involving personal interests: include director name, resolution, personal interest,and the voting for this decision.
With respect to the resolutions approved by Board of Directors, there were no such issues involving personal interests.
An evaluation of targets for strengthening of the functions of the board during the current and immediate preceding fiscal years of Board of Directors and measures taken toward achievement (e.g. establish audit committee, increase data transparency).
�Comply to the “Regulations Governing Procedure for Board of Directors Meetings of TWSE/OTC Listed Companies” to draft “Procedure for Board of Directors Meetings” and disclose directors attendance on Market Observation Post System (MOPS) for public reference accordingly. Company has yet to establish an audit committee. Two independent directors have been appointed. A remuneration committee has been established to regularly review remuneration paid to directors and managers.
- Note 1: For directors, supervisors judicial person shareholders representatives, name and representative shall be disclosed.
- Note 2:(1) Prior to end of year, date of resignation of resigning directors and supervisors shall be recorded in Note. Attendance rate (%) shall be counted based on number of meetings and attendance during appointment .
```
- (2) Prior to end of year, if new directors and supervisors are appointed, a list of both new and old directors and supervisors shall be submitted. The appointment status of resigning, newly appointed, and re-appointed directors and supervisors and appointment date shall be noted in Note. Attendance rate (%) shall be counted based on number of meetings and attendance during appointment.
```

(2) Implementation of audit committee and supervisors participation in Directors Board:

 1. Implementation of Auditing Committee: No auditing committee has been established.

2. Supervisors Participation in Directors Board:

Supervisors Participation in Directors Board

Attendance of supervisors in the eight Board of Directors meetings hosted in the preceding year is as follows:

ollows:
Title	Name	Attendance in Person(B)	Attendance Rate% ((B/A)(Note)	Note
Supervisor	Shu-xiang Liu	2	100%	Resigned on June 28,2018

Supervisor	Wei-ting Chang	3	38%	Re-appointed on June 28, 2018
Supervisor	Bo-zhong Lai	0	0%	Resigned on June28,2018
Supervisor	Zi-ling Ye	1	17%	Newly Appointed on June28,2018
Supervisor	Xiao-ling Lin	1	17%	Newly Appointed on June28,2018
Other Special Notes: 1. Composition and duties of supervisors: (1) Communication channels with supervisors, employees, and shareholders (e.g. channels, methods for communication etc). �Hold regular labor relations mediation meetings to be attended by supervisors for the purpose of exchanging opinions with employees.Opinions shall be shared with shareholders via a spokesperson mailbox or annual shareholders meetings. (2) Communications between supervisors and internal audit supervisors (e.g. issues, methods, and results of financial and business status). �If necessary, supervisors may send feedbacks to internal audit supervisors via board meetings or email. After the CPA has completed the most recent year's or the half-year's auditor's report, or the most recent review report,auditors shall present audit results to managerial level personnels. If necessary, supervisors may express opinions at this meeting. 2. If supervisors do express opinion at board meetings, state meeting date, sessions, discussions, and resolutions, and feedbacks made to supervisors by company. �None of the aforementioned issues occurred.

Note :

＊ Prior to end of year, date of resignation of resigning supervisors shall be recorded in Note. Attendance rate (%) shall be counted based on number of meetings and attendance during appointment.
＊ Prior to end of year, if new supervisors are appointed, a list of both new and old supervisors shall be submitted. The appointment status of resigning, newly appointed, and re-appointed supervisors and appointment date shall be noted in Note. Attendance rate
(%) shall be counted based on number of meetings and attendance during appointment.

(3) Implementation of Company Governance and Discrepancies and Reasons of Departure from Guidelines for TWSE/OTC Listed Companies

mpanies
Assessment Items			Implement Status (Note)	Discrepancies and Reasons
	Yes	No	Description
1. Comply to Guidelines for TWSE/OTC Listed Companies to draft and disclose Corporate Governance Best-Practice Principles?	V		Company has drafted “Corporate Governance Best-Practice Principles” to realize corporate management philosophy, thus maximizing shareholder rights and corporate sustainable development.	No discrepancies.
2. Company’s Shareholding Composition and Shareholders’ Equity (1) Does the Company have an Internal Operation Procedures for handling shareholders’ suggestions, concerns, disputes, and litigation matters. If yes, has these procedures been implemented accordingly? (2) Does the Company possess a list of major shareholders and beneficial owners of these major shareholders? (3) Has the Company built and executed a risk management system and “firewall” between the company and its affiliates? (4) Has the Company established internalrules prohibiting insider trading on undisclosed information?	V V V V		(1) Company has yet to draft an Internal Operation Procedures for handling shareholders’ suggestions, concerns, disputes, and litigation matters but has set up a spokesperson system including an acting spokesperson hotline and an corporate email to deal with shareholders suggestions, inquiries, disputes, and litigations. (2) Company possesses a list of primary shareholders of judicial person director (Ba Wei Holding) (3) Company has drafted “Procedures of Related Party Transaction Management and“Operating Procedures for Handling Internal Material Information”. Company has no financial nor business engagements with judicial person director “Ba Wei Holding”. (4) Company has drafted “Directors and Managers Code of Ethics”and “Employee Code of Ethics”.	No discrepancies.

3. Board of Directors Composition and Duties (1) Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly? (2) Other than the Remuneration Committee and the Audit Committee which are required by law, does the Company planto set up other board committees? (3) Has the Company established methodology for evaluating the performance of its Board of Directors, on an annual basis? (4) Does the Company regularly evaluate its external auditors’ independence?	V V	V V	(1) Company has established a diversification policy complying to “Taiwan Corporate Governance Implementation”. A total of 10 directors have been appointed, two of which are independent directors. Board members are equipped with the necessary professional backgrounds which provide substantial contribution to improving business operations and management practices. (WWW.BASSO.COM.TWASSO.COM.TW Investors) (2) Company has yet to set up other board committees prior to prospectus printing. (3) Company has yet to draft methodology for evaluating the performance of its Board of Directors to be assessed on an annual basis. (4) Company’s Finance & Accounting has passed CPA independence analysis in 2018. Assessment results have been proposed and approved by Board of Directors on May 10, 2019. After the assessment made by company’s Finance & Accounting, KPMG Taiwan auditors Jun-yuan Wu and Shi-hua Guo have both qualified for independence analysis and provided a written declaration.(Noted below)	No discrepancies.

4. Does the Company established a full- (or part-) time corporate governance unit or personnel to be in charge of corporate governance affairs (including but not limited to furnish information required for business execution by directors, handle matters pertaining to board meetings and shareholders’ meetings according to laws, handle corporate registration and amendment registration, compile minutes of board meetings and shareholders meetings, etc.)?	V		Company’s Finance & Accounting is composed of numerous employees who are tasked with handling issues pertaining to corporate governance. On March 25, 2019, Board of Directors approved “Regulations Governing Procedure for Board of Directors”.	No discrepancies.
5. Has the Company established a means of communicating with its stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc.) or created a Stakeholders Section on its Company website? Does the Company address and respond to stakeholders’ questions on corporate responsibilities?	V		Company has created a Stakeholders Section on its company website to be handled by a dedicated personnel or unit. WWW.BASSO.COM.TW	No discrepancies.
6. Has the Company appointed a professional registrar for its Shareholders’ Meetings?	V		Company has appointed shareholders meeting affairs to Capital Securities Corp.	No discrepancies.

7. Information Disclosure (1) Has the Company established a corporate website to disclose information regarding its financial, business and corporate governance status? (2) Does the Company use other information disclosure channels (e.g. maintaining an English-language website, designating staff to handle information collection and disclosure, appointing spokespersons, webcasting investors conference etc.)?	V V		(2) Corporate Website: For relevant information, search onWWW.BASSO.COM.TW (2) Company has established a corporate website in Mandarin & English,appointed a dedicated contact person to handle information collection and disclosure, and implemented spokesperson system.	No discrepancies.

8. Has the Company disclosed other information to facilitate a better understanding of its corporate governance practices (e.g. including but not limited to employee rights, employee welfare, investor relations, supplier relations, rights of stakeholders, directors and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing liabilities insurance for directors and supervisors)?	V		Company hosts regular labor relations meetings which facilities communication between employers and employees, and has established welfare committee and retirement pension supervisory committee offering holiday bonuses, company outings, health screenings, scholarships, and retirement pension sto safeguard employee interests. Company hosts regular emergency response and disaster safety seminars. Company makes regular financial information disclosures. Company establishes long-term relationships with suppliers through a quality assurance system. Due to their hectic schedule, directors and supervisors did not attend the 2018 Corporate Governance Curriculum. All major decisions, after careful evaluation and board discussions, were approved and authorized by Board of Directors to reduce management risks. Company has been approved by ROC-MOEA Bureau of Standards acquiring ISO9001 certification (Quality Assurance) and ISO14001 certification (Quality Assurance). Clients reserve rights to file complaints via a customer complaints system. Directors and supervisors have yet to purchase liabilitiesinsurance prior to prospectus printing.	No discrepancies.
9. The improvement status for the result of Corporate Governance Evaluation announced by Taiwan Stock Exchange in 2018 and necessary corrective actions and countermeasures for improvements. (Companies which have yet to receive evaluation may skip the following) -> Shows improved results: 1. Drafted “Regulations Governing Procedure for Board of Directors”. 2. Company follows Corporate Governanceguidelines to establish corporategovernancepractices.
Note: Whether implement status is checked “YES” or “NO”, provide a brief description in the corresponding column.

Note:

2018 Evaluation of the External Auditor’s Independence

Assessment Items	Assessment Results	Independence Declaration(Note2)
1. Does the CPA have direct or indirect financial relations with company?	No	Yes
2. Does the CPA engage in financing activities with company or company directors?	No	Yes
3. Does the CPA have business affiliations or employee relations with the company?	No	Yes
4. Has the CPA or its audit committee member in the last two years held a position as corporate directors, managers or a position which might impact audit review?	No	Yes
5. Has the CPA provided non-audit services which might directly influence audit review?	No	Yes
6. Is the CPA invested in shares or securities issued by company?	No	Yes
7. Has the CPA experienced conflicts with a third party serving as company’s public defender or mediator relating to accounting principles or practices, financial report disclosure, or auditing scope or procedure?	No	Yes
8. Is the CPA an immediate relative of the company’s directors, managers, or executives whom might cause major impact on audit evaluation?	No	Yes
9. During audit period, has the CPA met requirements for CPA Code of Ethics or relevant rules and regulations and made replacement changes?	Yes	Yes

To: Basso Industry Inc.

Purpose: Basso Industry has appointed KPMG Taiwan to execute the audit of 2019 Financial Report. In accordance with Norm of Professional Ethics for Certified Public Accountant of the Republic of China, I am pleased to provide the following declaration of independence.

Summary: The independence declaration of KPMG Auditors include: independence of individuals (financial interests, financing guarantees, employer relations), commercial ties with clients, auditors alterations, and non-audit services policies and procedures. A brief summary of major governing guidelines and principles is as follows:

Independence Declaration
(1) Accounting firm, accounting firm employees, and other employees governed by independence declaration (including council members) are required to uphold the Professional Ethics for CPA to maintain its independence status.
(2) Employees are forbid to conduct (direct or indirect) insider trades, misuse insider information, or invest in any behaviors which might cause misguided conducts in securities or capital market. Each year, firm employees must obtain the statement for independence declaration policy and procedure.
(3) With regards to financial reports audits for TWSE/GTSM listed companies, if executing auditors, signing auditors, quality assurance auditors, and reviewing auditors from qualified subsidiaries have met requirements for service term defined in the CPA Professional Ethics or governing policies during audit period, alterations shall be made.
(4) If the acknowledgement and evaluation of offered services influence independence status, must take necessary or correction actions to eliminate or minimize such influence to an acceptable degree. And if necessary, terminate the tasked audit review.
Supervision of Independence Declaration
- (1) Firm may use an online system to monitor members’ implement status on the annual independence declaration statement.
- (2) Random reviews on employees’ independence status should be executed regularly and an individual investor management system may be used to check if managerial executives or above have updated investment changes in accordance with policy.
- (3) Monitor and random check on reviewing auditors’ alterations, including review period and the validity of non-audit services.
- (4) If the event of contravention occurrences against independence policy, employees (including firm partners) shall be placed in the charge of risk and independence evaluation committee and in compliance with independence policy, be penalized with appropriate sanctions for misconducts based on the severity of content and category.

In brief, KPMG Taiwan, appointed by Basso Industry to execute the audit of 2019 Financial Report, has in the judgment of fairness and spirit of independence declare there have been no contraventions defined in Article 10 of Norm of Professional Ethics for Certified Public Accountant of the Republic of China.

KPMG Taiwan

CPA : Jun-Yuan Wu / Shi-hua Guo April 17, 2019

(1) Remuneration Committee Member Data

Status cription （Note 1）	Criteria Name	A minimum of five years of working experience and relevant professional qualifications	A minimum of five years of working experience and relevant professional qualifications	A minimum of five years of working experience and relevant professional qualifications		Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)	Independence Declaration (Note 2)		Numb er of positi on held at other TWS E/OT C listed comp anies remu nerati on com mitte es
		A lecturer (or higher -level teaching faculty) in Commer ce, Law, Finance, Accounti ng, or other academi c departme nts related to business needs at a public/pri vate college or university	A judge, public prosecutor, attorney, CPA, or professional/ technical specialist who has passed a state examination and been certified in a professional subject related to business needs	Have work experie nce in Comme rce, Law, Financ e, or Accoun ting, or other busines s-requir ed work experie nces	1	2	3	4	5	6	7	8
Independ ent Director	Chun-z hong Lian		v		v	v	v	v	v	v	v	v	1
Others	Zheng- yong Huang			v	v	v	v	v	v	v	v	v	None
Independ ent Director	Zheng- nan Shen	v			v	v	v	v	v	v	v	v	None

Note1: For status description, fill in directors, independent directors, or others

Note 2: If directors, supervisors meet the following criteria in the two years prior to appointment and during appointment, check “�” box.

（1） Not an employee of the company or any of its affiliates.
（2） Not a director or supervisor of the company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.
（3） Not a natural person shareholder or spouse, minor children, or in another’s name directly or indirectly holding up to 1% of the total shares issued or ranking among the top ten natural person shareholders.
（4） Not a spouse, relative within the second degree of kin, nor lineal relative within the third degree of kin of any of the above persons in the three preceding subparagraphs.

（5） Not a director, supervisor, or employee of a corporate/institutional shareholder which directly holds 5% percent or more of the total number of issued shares of the company or ranks as of its Top Five Shareholders.
（6） Not a director, supervisor, officer, or shareholder holding 5% percent or more of the shares of a specified company or institution which has a financial or business relationship with the company;
（7） Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution which, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof.
（8） Not been a person of any conditions defined in Article 30 of the Company Law.

(2) Implementation of Remuneration Committee

1. A total of three members have been appointed on the remuneration committee. 2. Current term of office: August 8 2018-June 27, 2021. 2018 Remuneration Committee Meeting held Committee member attendance of the two meetings (A) held, is as follows:

Title	Name	Attendance in Person (B)	Attended by Appointed Proxy	Attendance Rate (%) (B/A) (Note)	Note
Convener	Chun-zhong Lian	3	0	100%	Re-appointed on August 8,2018
Committee Member	Zheng-yong Huang	2	0	67%	Re-appointed on August 8,2018
Committee Member	Zheng-nan Shen	3	0	100%	Re-appointed on August 8,2018
Other Special Notes: 一、If Board of Directors does not adopt or modify suggestions provided by remuneration committee, state board meeting date, sessions, motions, resolutions, and handling of opinions (if board meeting approves the remuneration which is higher than the suggested remuneration by committee, describe discrepancies and reasons). �Suggestions made by remuneration committee have been resolved and approved by Board of Directors. None. 二、With regards to remuneration committee resolutions, if a member opposes or reserves opinions and such is recorded or drafted in a written statement, provide board meeting date, sessions, motions, board opinions, and handling of opinions. �Remuneration committee resolutions have been resolved and approved by board members. None.

Note :

(1) Prior to end of year, date of resignation of resigning committee members shall be recorded in Note. Attendance (%) shall be counted based on number of board meetings and attendance during appointment .
(2) Prior to end of year, if new members are appointed, a list of both new and old members shall be submitted. The appointment status of resigning, newly appointed, and re-appointed members and appointment date shall be noted in Note. Attendance rate (%) shall be counted based on number of remuneration committee meetings and attendance during appointment.

(4) Implementation of CSR: Basso encourages community involvement to provide more career opportunities and protect consumer interests. Basso adheres to an eco-friendly principle in product design, values environmental guidelines in manufacturing production, and enhances environmental awareness in product packaging and services. Company complies to relevant laws and policies and implements business conduct guidelines and tax policies.

Assessment Items	Implement Status (Note1)	Implement Status (Note1)	Implement Status (Note1)	Discrepancies and Reasons
	Yes	No	Description(Note2)
1. Implementation of Corporate Governance (1) Does the Company have a corporate social responsibility policy and evaluate its implementation? (2) Does the Company hold regular CSR training? (3) Does the Company have a dedicated (or ad-hoc) CSR organization with Board of Directors authorization for senior management, which reports to the Board of Directors? (4) Does the Company set a reasonable compensation policy, integrate employee appraisal with CSR policy, and set clear and effective incentive and disciplinary policies?	V V V	V	(1) Company has drafted a “Corporate Social Responsibility Policy.” Following corporate management guidelines, company actively implements corporate social responsibilities to foster global corporate governance. (2) Company has yet to host regular CSR training. (3) Company has dedicated (or ad-hoc) CSR organization promoted by Finance & Accounting. No reports have been made to the Board of Directors prior to prospectus printing. (4) Company has established an “Employee Performance & Promotion and Appointment Policy” and “Remuneration Policy”. By hosting regular labor management meetings and mediation meetings, company promotes policies and practices to implement a clear and effective incentive and discipline system.	No discrepancies.

2. Environmental Sustainable Development (1) Is the Company committed to improving resource efficiency and to the use of renewable materials with low environmental impact? (2) Has the Company set an environmental management system designed to industry characteristics? (3) Does the Company track the impact of climate changes on business operations, carry out greenhouse gas inventories, and set energy conservation and greenhouse gas reduction strategy?	V V V		(1) Company is committed to improving resource efficiency by developing a paperless office environment, used papers, plastic goods, and aluminum cans recylcing, paperboxes reuse, and electricity and water resources controls. Such demand shall sustain in the future. With regards to raw materials, due to factors such as product life cycle and quality demands, regenerative materials are partially used in parts manufacturing. (2) Company has acquired ISO14001 certification (environmental management system) and is dedicated to environmental management and maintenance. (3) Company has yet to track carbon emission but has implemented energy conservation measures.	No discrepancies.

3. Promotion of Social Welfare (1) Does the company set policies and procedures in compliance with regulations and internationally recognized human rights principles? (2) Has the company established appropriately managed employee appeal procedures? (3) Does the Company provide employees with a safe and healthy working environment, with regular safety and health training? (4) Has the Company established a mechanism for regular communication with employees and use reasonable measures to notify employees of operational changes which may cause significant impact to employees? (5) Has the Company established effective career development training plans? (6) Has the Company set polices and consumer appeal procedures in its R&D, purchasing, production, operations, and service processes? (7) Does the Company follow regulations and international standards in the marketing and labelling of its products and services? (8) Does the Company evaluate environmental and social track records before engaging with potential suppliers? (9) Does the company’s contracts with major suppliers include termination clauses if they violate CSR policy and cause significant environmental and social impact?	V V V V V V	V V V	(1) Company complies to labor laws by drafting occupational guidelines to protect employee rights and recruiting persons with disabilities based on respective profession and expertise in accordance with division of labor. (2) Company has established “Labor Relations Mediation Committee”. Employee representatives are appointed through nomination, voting, and election. Company appoints mid-high managerial executives as company representative and hosts regular labor relations mediation meetings to facilitate employer-employee communications. (3) Company has set up a labor safety and hygiene office and established “Labor Safety and Hygiene Policy,” hosts regular labor health meetings, special crisis response drills, and labor health seminars. Each year, employee health screenings are held to follow up employees’ health and wellness. (4) As described in (2). (5) At the end of each year, each department proposes an annual training program to be implemented after board’s approval. Individuals may also apply for special training programs to be hosted by company based on actual demands. (6) No relevant consumer rights policy has been drafted. (7) Company follows regulations and international standards in the marketing and labelling of its products and services. (8) No existing evaluations are available. (9) None.	No discrepancies

4. Enhanced Information Disclosure (1) Does the Company disclose relevant and reliable CSR information on its website and the Taiwan Stock Exchange website?	V		Company has disclosed “CSR Code of Practice” on corporate website.	No discrepancies.
(5) If the Company has established its corporate social responsibility code of practice according to “Listed Companies Corporate Social Responsibility Code of Practice,” please describe any discrepancy between the policies and their implementation.	V		Company has drafted and implemented“Corporate Social Responsibility Code of Practice,” including “1. Care for Employees 2. Dedication to Clients 3. Commitment to Shareholders 4. Service to Charity 5. Development in Sustainable Environment .	No discrepancies.
6. Other important information to facilitate better understanding of the company’s implementation of corporate social responsibility:		V	None	No discrepancies.
7. Other information regarding “Corporate Responsibility Report” which is verified by certifying bodies:		V	None	No discrepancies.

Note 1: Whether checked “YES” or “NO”, provide a brief description in Implement Status. Note 2: Company has compiled a CSR Report. Summary may be replaced with methods to review CSR Report and a table of contents.

(5) Implementation of Ethical Corporate Management Policies

Assessment Items	Implement Status (Note 1)	Implement Status (Note 1)	Implement Status (Note 1)	Discrepancies and Reasons
	Yes	No	Description
1. Draft Code of Ethics and Business Conduct Policy and Practices (1) Does the Company have bylaws and publicly available documents addressing its corporate conduct and ethics policy and practices, and the commitment regarding implementation of such policy from the Board of Directors and the management team?	V		(1) Company has established “Code of Ethics and Business Conduct (the “Ethics Code”)” to uphold ethics value in corporate governance and implement ethical management principle at all administrative levels. (2) (3)Company has established “Directors and Managers Ethics Code” and “Employee Ethics Code” to uphold ethicvaluesincorporate	No discrepancies.

Assessment Items	Implement Status (Note 1)	Implement Status (Note 1)	Implement Status (Note 1)	Discrepancies and Reasons
	Yes	No	Description
(2) Does the Company establish relevant policies which are duly enforced to prevent unethical conduct and provide implementation procedures, guidelines, consequence of violation and complaint procedures in such policies? (3) Does the Company establish appropriate compliance measures for the business activities prescribed in paragraph 2, article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM listed companies and any other such activities associated with high-risk unethicalconducts?	V V		governance and implement ethical management principle at all administrative levels. An independent mailbox has been set up but no incidents of unethical conducts have been reported.
2. Implementation of Code of Ethics and Business Conduct Policy and Practices (1) Does the Company assess the ethics records of whom it has business relationship with and include business conduct and ethics related clauses in business contracts? (2) Does the Company set up a unit which is dedicated to or tasked with promoting the company’s ethical standards and reports directly to the Board of Directors with periodic updates on relevant matters? (3) Does the Company establish policies to prevent conflict of interests, provide appropriate communication and appeal channels and implement such governing policies? (4) To implement relevant policies on ethical conducts, does the Company establish effective accounting and internal control systems that are audited by internal auditors or CPA periodically? (5) Does the Company provide regular internal and external ethical conduct training programs?	V	V V V V	(1) Company has upheld ethics code in corporate governance and implemented ethical management principle at all administrative levels. Although no business conduct and ethics related clauses are prescribed in business contracts, company does not deal with persons with unethical conducts records. (2) Company has yet to set up a full- (part-) time unit which is dedicated to or tasked with promoting the company’s ethical standards and reports directly to the Board of Directors. (3) Company has established “Directors and Managers Code of Ethics” and “Employee Code of Ethics” and provided appropriate communication and appeal channels to implement such governing policies. (4) Currently, accounting and internal control systems are audited by internal auditors periodically. (5) Currently, company has yet to provide regular internal and external ethical conduct training programs.	No discrepancies.

Assessment Items	Implement Status (Note 1)	Implement Status (Note 1)	Implement Status (Note 1)	Discrepancies and Reasons
	Yes	No	Description
3. Implementation of Company Complaint Procedures (1) Does the Company establish specific complaint and reward procedures, set up convenient and accessible complaint channels, and designate dedicated individuals to handle the complaints received? (2) Does the Company establish standard operation procedures and relevant mechanisms for investigating the complaints received and ensuring such complaints are handled in a confidential manner? (3) Does the Company adopt proper measures to prevent a complainant from retaliation for his/her filing a complaint?		V V V	Company has yet to establish specific complaint and reward procedures, set up convenient and accessible complaint channels, and standard operation procedures and relevant mechanisms but has set up employee mailbox, spokesperson hotline, and email. No unethical conducts have been reported. Company has established a mediation committee composed of managerial level executives from different departments and divisions. Committee hosts regular meetings to implement a clear and effective incentive and discipline system.	No discrepancies.
4. Information Disclosure (1) Does the company disclose its guidelines on ethical management as well as information about implementation of such guidelines on its website and Market Observation Post System (“MOPS”)?	V		Company has already disclosed guidelines on “Code of Ethics and Business Conduct Policy”.	No discrepancies.
5. If the company has established corporate governance policies based on Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, please describe any discrepancy between the policies and their implementation. -> Company has drafted and implemented “Code of Ethics and Business Conduct Policy”. No discrepancies.
6. Other important information to facilitate better understanding of the company’s ethical management compliance practices (e.g., review the company’s Code of Ethics and Business Conduct Policy). ->None.
Note 1: Whether checked “YES” or “NO”, provide a brief description in Implement Status.

(6)If company has established ethical management principles and policies, methods to acquiring relevant information shall be disclosed: None.

(7) Other important information which facilitates corporate governance shall be disclosed: None.

(8) Implement Status of Internal Control Disclosure:

1. Statement of Internal Control System

Basso Industry Corp. Declaration on Internal Control Systems Date: March 25, 2019

On grounds of findings yielded by our autonomous evaluation, we hereby declare our internal control systems in 2018 as follows:

We are firmly aware of the establishment, enforcement, and maintenance of internal control systems are bounden duties of our board of directors and management. We have thus successfully established such system for the purposes of safeguarding by acknowledging the effectiveness and efficiency of business operation (including profitability, performance, and asset security), the reliability, immediacy, and transparency of financial statements, and the observance of laws concerned.

Internal control systems are subject to inherent restrictions. No matter how sounded and comprehensive the design, internal control systems could only secure the three aforementioned goals. Amidst the varied environments and situations, the performance of internal control systems may vary accordingly. Corporate’s sounded self-monitoring systems enable immediate corrective actions to be taken whenever an error is identified.

On grounds of the “Guidelines for Enforcement of Internal Control Systems by Public Offering Companies” (Hereinafter referred to as the Guidelines), we have established categories for effective assessment of internal control system to exercise professional judgment on whether internal control systems are effectively designed and enforced. Internal control systems have adopted the assessment items in “the Guidelines” and are classified into five components: 1. Control environments. 2. Risk evaluation. 3. Control operation. 4. Information and communications and 5. Supervision. Each component includes various sub-items. Please refer to the Guidelines for more details.

We have already adopted the aforementioned categories to assess internal controls to confirm the effectiveness of the design and enforcement of the systems.

On grounds of the results of above evaluations, we hereby confirm the internal control systems (including supervision and management over subsidiaries) surveyed on December 31, 2018, including acknowledging the effectiveness and efficiency of business operation, the reliability, immediacy, and transparency of financial statements, and the observance of laws concerned—effective and valid, capable of attaining prescribed objectives.

This Declaration forms an integral part of our Annual Report and Prospectus and is hereby made public. We further declare subject to all legal responsibilities under Articles 20, 32, 171, 174 of Securities and Exchange Law, the aforementioned contents made public are free of misrepresentation, concealment, or irregularities otherwise.

This Declaration was resolved by board of directors on March 25, 2019. In this event, a total of 10 present directors extended full agreement to the contents of this Declaration with no objections raised to the proposed content.

Basso Industry Corp. Chairperson: Ming-da Lai President: Bo-yan Lai

2. If company has appointed CPA to assess internal control system, audit report shall be disclosed: None .

(9) Penalty upon Basso and its personnel, Basso’s penalty upon its personnel for violations of the regulations governing internal control, the major defects and improvements in 2018 and prior to prospectus’ printing: None .

(10) Shareholders Meeting and Board of Directors Meeting major resolutions and Shareholders Meeting resolutions implement status in 2018 and prior to prospectus printing:

Shareholders Meeting and Board of Directors Meetings Major Resolutions

		Resolutions
Date	Meeting	Major Resolutions
March 19, 2018	2018 1st Board of Directors Meeting	1. Next Shareholders Meeting to be scheduled on June 28, 2018 10 AM at the 4F Conference Room of Headquarters Office (Location: No.24, 36th Road, Industrial Park, Taichung City). Shareholders proposals and independent directors nominations (attendance-based) from April 20, 2018-April 30, 2018. Location:No.24, 36th Road, Industrial Park, Taichung City. Book Closure Period from April 30, 2018-June 28, 2018 2. Approved 2017 Financial Report. 3. Approved 2018 Business Operations Plan 4. Approved 2017 Statement of Internal Control 5. Due to KPMG Taiwan’s company adjustments, former CPAs Han-yu Ceng and Yu-xin Chang have been replaced by successor CPAs Jun-yuan Wu and Shi-hua Guo as of 2018 Quarter 1 whom shall review subsequent financial reports. 6. Approved 2017 Remuneration to Directors and Supervisors and Bonus to Employees reviewed by Remuneration Committee. 7. Approved the appointment of (independent) directors and supervisors. ->Independent directors Chun-zhong Lian and Zhen-nan Shen whom attended meeting approved the aforementioned major resolutions.
May 09, 2018	2018 2nd Board of Directors Meeting	1. 2017 Capital Reserve Allocation 2. Proposed 2018 Q1 Financial Report 3. Assessed independent director candidates 4. Assessed the independence status of CPA 5. New appointment for the replacement of resigning finance supervisor -> Independent directors Chun-zhong Lian and Zhen-nan Shen whom attended meeting approved the aforementioned major resolutions.
June 28, 2018	Shareholders Meeting	1. Acknowledged 2017 Revenues Report and Budget -> Motion was approved by 82.67% of shareholders attendees. 2. 2017 Allocations of Earnings proposed and resolved: the distribution of cash dividend at a Value of NTD$1.4/share, totalling to NTD$193,144,896. -> Motion was approved by 86.57% of shareholders attendees. (Implement Status as noted) 3. Re-appointment of Directors and Supervisors
June 28, 2018	2018 3rd Board of Directors Meeting	1. Appointed a new Chairperson 2. New appointment for the replacement of resigning chairperson ->Independent director Chun-zhong Lian whom attended meeting approved the aforementioned major resolutions.
August 8, 2018	2018 4th Board of Directors Meeting	1. Approved 2018 Q2 Financial Report. 2. Set base date for September 8, 2018, book closure date for September 3, 2018,book closure period from September 4, 2018 to September 9, 2018. Relevant matters are to be handled by Chairperson as authorized. Cash dividend allocation date set for September 28, 2018. 3. Approved the appointment of Chun-zhong Lian, Zheng-nan Shen, and Zheng-yong Huang as the 4th Remuneration Committee members. 4. Approved and authorized chairperson and president to handle loan grant and mortgage grant with regards to needs related to financial institutes’ financing activities. -> Independent director Chun-zhong Lian whom attended meeting approved the aforementioned major resolutions.

August 23, 2018	2018 1st Special Board of Directors Meeting	Appointed a new president -> Independent director Chun-zhong Lian whom attended meeting approved the aforementioned major resolutions.
September 14, 2018	2018 5th Board of Directors Meeting	Approved remuneration to new appointed president -> Independent directors Chun-zhong Lian and Zhen-nan Shen whom attended meeting approved the aforementioned major resolutions.
November 7, 2018	2018 6th Board of Directors Meeting	1. Approved 2018 Q3 Financial Report 2. Approved 2019 Audit Plan ->Independent director Chun-zhong Lian whom attended meeting approved the aforementioned major resolutions.
December 27, 2018	2018 7th Board of Directors Meeting	1. Approved 2017 Remuneration to Directors and Supervisors and Bonus to Employees, and 2018 Bonus to Managers reviewed by Remuneration Committee. 2. Approved the amendment of internal control procedure. -> Independent directors Chun-zhong Lian and Zhen-nan Shen whom attended meeting approved the aforementioned major resolutions.
March 25, 2019	2019 1st Board of Directors Meeting	1. Next Shareholders Meeting to be scheduled on June 28, 2018 10 AM at the 4F Conference Room of Headquarters Office (Location: No.24, 36th Road, Industrial Park, Taichung City). Shareholders proposals (attendance-based) from April 19, 2018- APril 29, 2018. Location: No.24, 36th Road, Industrial Park, Taichung City. Book Closure Period from April 29, 2018-June 27, 2018 2. Approved 2018 Financial Report. 3. Approved 2018 Allocation of Earnings. 4. Approved 2018 Remuneration to Directors and Supervisors and Bonus to Employees reviewed by Remuneration Committee. 5. Approved 2019 Business Operations Plan. 6. Approved 2018 Statement of Internal Control. 7. Approved “Procedures for Assets Acquisition and Disposal ”. 8. Approved “Regulations Governing Procedure for Board of Directors”. ->Independent directors Chun-zhong Lian and Zhen-nan Shen whom attended meeting approved the aforementioned major resolutions.
May 09, 2018	2019 2nd Board of Directors Meeting	1. Proposed 2019 Q1 Financial Report. 2. Assessed the independence declaration of CPA. ->Independent directors Chun-zhong Lian whom attended meeting approved the aforementioned major resolutions.

Note: 2018 Allocations of Earnings proposed and resolved: the distribution of cash dividend at a value NTD$1.4/share, totalling to NTD$193,144,896. Set base date for September 8, 2018 and cash dividend allocation date for September 28, 2018 in the Board of Directors Meeting held on August 8, 2018 as authorized. Distributions have been fully implemented in accordance with the resolution.

(11) A director or supervisor has expressed a dissenting opinion with respect to a resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration in 2018 and prior to prospectus printing, disclose the principal content thereof: None.
(12) A summary of the resignation of relevant employees (including directors, president, accounting supervisors, finance supervisors, internal audit supervisors, and R&D supervisors) in 2018 and prior to prospectus’ printing:

Resigned Employees Status

April 30, 2019

				April 30, 2019
TITLE	NAME	APPOINTMENT DATE	RESIGNATION DATE	REASON FOR RESIGNATION OR RETIREMENT
President	Ming-xing Lai	October 15, 1992	August 16, 2018	Retired
Finance & Accounting Supervisor	Ru-zhen Hu	January 1, 2002	May 31, 2018	Retired

Note: Refers to relevant employees including chairperson, president, accounting supervisors, finance supervisors, internal audit supervisors, and R&D supervisors.

4 Audit Fees

(1) When non-audit fees paid to the CPA, the accounting firm of the CPA, and/or to any affiliates of accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed.

CPA Fee Range (Check appropriate range or fill in amount)

Auditor Firm	CPA	CPA	Audit Period	Note
KPMG Taiwan	Jun-yuan Wu	Shi-hua Guo	January 1, 2018~December 31,2018

Notes: If company changes CPA or accounting firm, please list audit periods separately and describe reasons for change in Note.

Unit: NTD$ (Thousands)

Audit Items Fee Range	Audit Items Fee Range	Audit Fees	Non-Audit Fees	Total
1	NTD$0 (and above) ~ 2,000,000	V	V	1,426
2	NTD$2,000(and above)~ 4,000
3	NTD$4,000 (and above) ~ 6,000
4	NTD$6,000(and above)~ 8,000
5	NTD$8,000 (and above) ~ 10,000
6	NTD$ 10,000 (above)

Audit Fees

Unit: NTD$ (Thousands)

Auditor Firm	Audito rs	Audit Fees		Non-Audit	Non-Audit	Fees		Audit Period	Note
			Mecha nism Design	Compa ny Registr ation	Human Resour ces	Other （Not e 2）	Total
KPMG Taiwan	Jun-yu an Wu Shi-hua Guo	1,410		11		5	16	January 01, 2018~ December 31, 2018	Non-Audit Fees- Other： Transportation Fees and Proof of Certificate

Note 1: When the company changes its CPA or accounting firm, list audit period separately and describe the reasons for change in Note. The amounts of both audit and non-audit fees shall be disclosed in the respective order.
Note 2: When non-audit fees paid to the CPA, the accounting firm of the CPA, and/or to any affiliates of accounting firm are one quarter or more of the audit fees paid thereto, details of non-audit services shall be disclosed.
(2) When the company changes its auditor firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of both pre-change and post-change audit fees and reason(s) shall be disclosed. -> None .
(3) When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 15 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed. -> None .

5. Auditors Change

Due to KPMG Taiwan’s company adjustments, 2018 Q1 and subsequent financial
reports shall be reviewed by successor CPAs Jun-yuan Wu and Shi-hua Guo.

6. Where the company's chairperson, president, or any managers in charge of finance or accounting matters has in the most recent year held a position at the auditing firm of its CPA or at an affiliate of such auditor firm, the name and position of the person, and the period during which the position was held, shall be disclosed: None.

7. Any transfer, pledge of shares by directors, supervisors, managers, and primary shareholders holding over 10% of the total shares in the preceding year and prospectus printing:

Changes in Shareholding of Directors, Supervisors, Managers, and

Primary Shareholders

Title	Name	2018	2018	As of April 30, 2018	As of April 30, 2018
		Increase (decrease) of shareholdin g	Increase (decrease) of shares pledged	Increase (decrease) of shareholding	Increase (decrease) of shares pledged
Director	Ba Wei Holding Representative: Ming-da Lai	0	0	0	0
Chairperson	Ming-da Lai	0	0	0	0
Director	Ming-xing Lai	0	0	0	0
Director	Zhong-xiungHong	0	0	0	0
Director	Xin-hua Tsai	0	0	0	0
Director and President	Bo-yan Lai	0	0	0	0
Magnesium Alloy Business Assistant Manager	Jing-xing Chen	0	0	0	0
Director and Deputy President	Bo-feng Lai	0	0	0	0
Business Assistant Manager	Yao-sheng Shen	(264,000)	0	0	0
Director and Quality Assurance Assistant Manager	Qi-wen Lin	0	0	0	0
Director and Business Manager	Hong-yi Chen	0	0	0	0
Director Heat Treatment Manager	Fu-luo Huang	0	0	0	0
Independent Director	Chun-zhong Lian	0	0	0	0
Independent Director	Zheng-nan Shen	0	0	0	0
Supervisor	Wei-tingChang	0	0	0	0
Supervisor	Zi-ling Ye	0	0	0	0
Supervisor	Xiao-ling Lin	0	0	0	0
Finance & Accounting Associate Manager	Qi-piao Chen	0	0	0	0
Information Management Associate Manager	Ya-hui Lu	0	0	0	0

Note1: Major shareholders who hold over 10% of the company’s total shares shall be listed respectively. Note 2: If cause of equity transfer or equity pledge is affiliation, please fill the form in the below. → None

8. Top 10 Shareholders and Affiliations:

April 30, 2019

					April 30, 2019	April 30, 2019
Name（Note 1）	Shareholder Present Shareholdings		Spouse and Minor Shareholdings		Shares Held in Another’s Name		If the person is the spouse of, or related within the second degree of kinship to, another Top 10 Shareholder, set forth the job title and name of the other person and specify the relationship. 1040724 （Note 3）		Note -
	Stock (shares)	Shareholding %	Stock (shares)	Shareholding %	Stock (shares)	Shareholding %	Title (Name)	Relations
Ba Wei Holding Representative: Ming-da Lai	13,507,138	9.79%	Inapplicable	0	None	0	Inapplicable	Inapplicable	Representative Present Shareholding
Ming-da Lai	149,310	0.11%	1,093,534	0.79%	None	0	Bo-yan Lai Bo-feng Lai	Son Son
Fubon Life Assurance Co.	8,250,000	5.98%	Inapplicable	Inapplicable	Inapplicable	0	None	None
HSBC Trust Value Partners Group Investors	7,828,000	5.67%	Inapplicable	Inapplicable	Inapplicable	--	None	None
JPMorgan Securities Trust JPMorgan Funds Investors	5,718,000	4.15%	Inapplicable	Inapplicable	Inapplicable	0	None	None
JPMorgan Securities Trust Aviera Investment Investors	3,157,699	2.29%	Inapplicable	Inapplicable	Inapplicable	--	None	None
Bo-feng Lai	2,971,826	2.15%	None	0	None	0	Ming-da Lai Bo-yan Lai	Father Brother
Citibank Trust Norges Bank Investors	2,195,900	1.59%	Inapplicable	Inapplicable	Inapplicable	0	None	None
Bo-yan Lai	2,097,831	1.52%	None	0	None	0	Ming-da Lai Bo-fengLai	Father Brother
HSBC Trust Aberdeen Investment Funds ICVC	2,083,000	1.51%	Inapplicable	Inapplicable	Inapplicable	--	None	None

	JPMorgan Securities Trust King Investment Investors	2,052,000	1.49%	Inapplicable	Inapplicable	Inapplicable	--	None	None

Note 1: List Top 10 shareholders. For judicial person shareholders, list shareholder name and representative separately. Note 2: Shareholding (%) should be counted based on shares held in one's name, spouse, minor, or another’s name. Note 3: Disclosure of listed judicial and natural person shareholders must comply to issuer’s financial report policy.

9.The total number of shares and held in any single enterprise by the company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the company, and calculating the consolidated shareholding percentage of the preceding categories.

� Company has no joint ventures.

4. Funding

1. Capital & Shares

(1) Sources of share capital: shares issued in 2018

Date/ Month	Issue Price	Authorized Share Capital	Authorized Share Capital	Capital Stock	Capital Stock	Note	Note	Note
		Stock (shares)	Amount	Stock (shares)	Amount	Sources of Capital	Capital Increase by Assets Other than Cash	Other
April 2019	Face Value NTD$ 10	186,219,600	1,862,196,000	137,960,640	1,379,606,400	--	None	A total of 32,930,000 shares of treasury stock canceled, cash to capital decrease 15,328,960 shares

Note 1: Shares are shown in the year of prospectus printing.

Note 2: Capital increase should include date of approval & approval document no.

Note 3: For shares issued which are lower than face value, indicate in highlight.

Note 4: Describe the equity capital to be contributed other than cash by shareholders which may be in the form of monetary credit extended to technical know-how required by the business of the company, and business credential, and specify type and amount. Note 5: For private placement, indicate in highlight.

Stock Type of Stocks	Authorized Share Capital	Authorized Share Capital	Authorized Share Capital	Note
	Issued (Listed) Shares (Note)	Unlisted Shares	Total
Common Stock	137,960,640	48,258,960	186,219,600	A total of 32,930,000 shares of treasury stock canceled under unlisted stock shares and cash to capital decrease 15,328,960 shares

Note: Issued shares are listed stocks.

(2) Composition of Shareholders April 30, 2019

Shareholder Composition Number of Shareholders	Government Agencies	Financial Institutions	Other Judicial Persons	Domestic Natural Persons	Foreign Institutions and Natural Persons	Total
Persons	0	6	120	20,567	112	20,805
Shareholding	0	8,682,000	15,045,534	67,095,733	47,137,373	137,960,640
Holding Percentage	0.00%	6.29%	10.91%	48.63%	34.17%	100.00%
TWSE/OTC listed companies should disclose Chinese investors holding percentage; in accordance with Article 3 of the Measures Governing Investment Permit to the People of Mainland Area, Chinese investors refer to Chinese nationals, judicial persons, groups, other organizations, or corporates making investments outside the territory of the Republic of China.

(3) Distribution of Share Ownership

1. Common Share: April 30, 2019

1. Common Share:			April 30, 2019
Shareholding Scale	Number of Shareholders	Shareholding	Holding Percentage
1--------999	8,126	1,188,539	0.86%
1,000------5,000	10,307	20,867,428	15.13%
5,001-----10,000	1,334	10,455,571	7.58%
10,001-----15,000	372	4,738,912	3.44%
15,001-----20,000	241	4,410,083	3.20%
20,001-----30,000	160	4,082,977	2.96%
30,001-----50,000	108	4,302,423	3.12%
50,001----100,000	72	5,012,487	3.63%
100,001----200,000	34	4,988,302	3.62%
200,001----400,000	19	5,226,414	3.79%
400,001----600,000	4	2,002,000	1.45%
600,001----800,000	4	2,809,200	2.03%
800,001--1,000,000	2	1,939,900	1.40%
Over 1,000,001 Shares	22	65,936,404	47.79%
Total	20,805	137,960,640	100.00%

2. Preferred Share: None

(4) Primary Shareholders April 30, 2019

(4) Primary Shareholders		April 30, 2019
Primary Shareholders	Shareholding	Holding Percentage
Ba Wei Holding	13,507,138	9.79%
Fubon Life Assurance Co.	8,250,000	5.98%
HSBC Trust Value Partners Group Investors	7,828,000	5.67%
JPMorgan Securities Trust JPMorgan Funds Investors	5,718,000	4.15%
JPMorgan Securities Trust Aviera Investment Investors	3,157,699	2.29%
Bo-fengLai	2,971,826	2.15%
Citibank Trust Norges Bank Investors	2,195,900	1.59%
Bo-yen Lai	2,097,831	1.52%
HSBC Trust Aberdeen Investment Funds ICVC	2,083,000	1.51%
JPMorgan Securities Trust King Investment Investors	2,052,000	1.49%

List all shareholders with a shareholding ratio of 5%or greater, or the names of the Top 10 shareholders, specifying the number of shares held and shareholding ratio of each shareholder on the list.

(5) 2017-2018 Market Price, Net Worth, Earnings, and Dividends Per Share Prices for the Past Two Years Unit:NTD$

Year Item	Year Item	Year Item	2018 (Distributed in 2019)	2017 (Distributed 2018)	As of March 31, 2019
Market Price Per Share (Note 1)	Highest		70.70	102.00	58.70
	Lowest		40.35	63.20	43.60
	Average		58.58	85.92	52.12
Net Worth Per Share (Note 2)	Pre-distribution		27.75	21.61	29.50
	Post-distribution		Not Yet Distributed	20.21	Not Yet Distributed
Earnings Per Share	Weighted Average Shares		137,960,640	137,960,640	137,960,640
	Earnings Per Share (Note 3)		7.48	1.48	1.74
Dividends Per Share	Cash Dividend		4.00	1.40	Not Yet Distributed
	Stock Dividend	Resulted from Earnings	0	0	Not Yet Distributed
		Resulted from Surplus	0	0	Not Yet Distributed
	Accumulated Unpaid Dividend(Note 4)		None	None	None
Return on Investment Analysis	Price/Earnings Ratio (Note 5)		7.83	58.05	29.95
	Price/Dividend Ratio (Note 6)		14.65	61.37	Not Yet Distributed
	Cash Dividend Yield (%) (Note 7)		6.83	1.63	Not Yet Distributed

If shares are distributed from profit & surplus capital increase, disclose the adjusted market price and cash dividend of allocated shares.

Note 1: The highest and lowest market prices per common share for each year, and calculate each year's average market price based the transaction value and transaction volume in the various years.

Note 2: Use the number of issued shares at year end as the basis for calculating two separate

figures for net worth per share, one each for pre-distribution and post-distribution shareholder's equity as resolved in the shareholders’ meeting held in the ensuing year

Note 3: Should stock dividend distribution be adjusted, list the earnings per share before and after

adjustment.

Note 4: Set forth the cash dividend and stock dividend for each year. If there is any accumulated

unpaid dividend, disclose the accumulated unpaid amount.

Note 5: Price/Earnings Ratio = Average Market Price/ Diluted Earnings Per Share

Note 6: Price/Dividend Ratio = Average Market Price/Cash Dividends Per Share

Note 7: Cash Dividend Yield = Cash Dividends Per Share/Average Market Price Note 8: For net worth per share and earnings per share, list the amount published in the financial report reviewed by CPA in the most recent quarter prior to prospectus printing. For figures in other columns, list the annual amount published prior to prospectus printing.

(6) Dividend Policy and Distribution of Earnings

1. Corporate Dividend Policy

According to Articles of Incorporation Article 26 and Act 1 of Article 26:

Annual earnings shall be allocated as such: a minimum of .5% to employee bonus and a maximum of 3% to remuneration paid to directors and supervisors. Unless losses have been covered, company shall not make distribution of surplus profit. Retained earning shall be withheld as capital reserve. Employee share or cash bonus must be granted to qualified employees. With regards to annual retained earnings allocation, company must first pay business income tax. To cover previous losses, withhold 10% for legal capital reserves but such does not apply if legal capital reserve equivocates the corporate’s paid-in capital. Special capital reserve shall be allocated based on business operation needs and in accordance with relevant laws or regulations or as requested by the authorities in charge. If retained earnings accumulated with undistributed earnings from the beginning of year, Board of Directors shall propose earnings allocation to be resolved by Shareholders Meeting.

According to governing authorities, factors such as allowances for decline in value of long-term investment and cumulative translation adjustments contribute to the deduction of shareholders’ equity. Before allocating retained earnings, the same amount of earnings shall be reserved as special reserve on the grounds of the deduction of shareholders’ equity

(1) If the deduction of shareholders’ equity is resulted from the current year, the special reserve withheld shall not exceed the aggregate of net income after tax and previous year’s accumulated undistributed dividend.

(2) If the deduction of shareholders’ equity is resulted from the previous year, it shall not exceed the amount derived from deducting item (1) from the previous year’s accumulated undistributed dividend.

(3) For the subsequent decrease in the deduction amount to stockholders’ equity, any special reserve appropriated may be reversed to the extent which the net debit balance reverses. According to Article 27, corporate’s dividend policy could be adjusted in accordance with the scale of business operation and for the need of cash flow. Cash dividend shall account for over 10% of the shares distributed to shareholders. The distribution of stock dividend, in general, accounts for 70% of the operating profit after tax. Distribution could also be adjusted in

accordance with business performance (e.g. exchange gains or losses).

2. Implementation of Dividend Allocation in Shareholders Meeting:

In 2018, a total of NTD$1,645,469,347 retained earnings can be allocated. Allocation:

Shareholders are allocated cash dividend at a value of NTD$4/share, totalling to

NTD$551,842,560.

(Note: Remuneration to directors and supervisors totalling to NTD$11,000,000 and bonus to

employee totalling to NTD$40,000,000).

(7) The Impact of Stock Dividend Distribution to Business Performance and Earnings Per Share:

No stock dividend allocation plan was proposed in this shareholders meeting. Such is inapplicable.

(8) Bonus to Employee and Remuneration to Directors and Supervisors:

1. Bonus to Employee and Remuneration to Directors and Directors Amount or Range Recorded in Articles of Incorporation:

According to Articles of Incorporation Article 26 and Act 1 of Article 26:

Based on annual profit, before paying dividends or bonuses to shareholders, company shall set aside no less than 0.5% to employees as profit sharing bonus and no more than 3% of annual profit to directors as remuneration. Unless losses have been covered, company shall not make distribution of surplus profit. Retained earning shall be withheld as capital reserve. Employee share or cash bonus must be granted to qualified employees.

2. Bonus to employees and remuneration to directors and supervisors were expensed based

on a certain percentage of 2018 profit. If the actual amount of bonus to employee subsequently paid differs from the above estimated amounts which is allocated in stock bonus, differences shall be recorded in the year paid as a change in accounting estimate:

(1) 2018 Bonus to employees and remuneration to directors and supervisors were allocated NTD$51,000,000 based on a certain percentage of 2018 profit and factors such as legal reserve specified in Articles of Incorporation and listed under estimates for operating costs and operating expenses in the current year. If the actual amount of bonus to employee subsequently paid differs from the above estimated amounts which is allocated in stock bonus, differences shall be recorded under 2018 net loss.

3. Remuneration Approved by Board of Directors:

(1) On March 25, 2019, Board of Directors approved 2018 bonus to employee and remuneration to directors and supervisors:

Unit: NTD$; Shares

	Bonus to Employee	Bonus to Employee		Renumeration to Directors and Supervisors	Difference	Difference
Cash Value	Stock Value	Stock (shares)	Total	Cash Value	Difference	Allocation
8,097,000	31,903,000	610,000	40,000,000	11,000,000	No discrepancies	Inapplicable

Note: The amount for bonus to employee and remuneration to directors and supervisors is the same as 2018 estimate.

(2) The number of shares to be distributed as compensation of employees in the form of stock in ratio to the accumulated sum of the total amount to net income after tax and the total amount to bonus to employee:

Number of Shares Distributed as Employees Compensation in the Form of Stock	Total Amount to NIAT	Total Amount to Bonus to Employee
31,903,000	3.09%	79.76%

4. Allocation of 2018’s net profit for bonus to employees and remuneration to directors

and supervisors: bonus to employee NTD$ 8,000,000 and remuneration to directors and supervisors NTD$ 6,600,000 were distributed. The allocated amount was as approved and resolved by Board of Directors.

(9) Company Shares Repurchase: None .

2. Status of Corporate Bonds: None.

3. Status of Preferred Shares: None.

4. Status of GDR: None.

5. Status of Employee Stock Options:

Status of Employee Stock Options: None.
Employee Stock Options Granted to Management Team and to Top 10 Employees, Include Names, Grants, and Status: None.
Status of Employee Restricted Stock: None.
Employee Restricted Stock Granted to Management Team and to Top 10 Employees, Include Names and Grants: None.

6. Mergers (Mergers, Acquisitions, Reorganizations) : None.

7. Implementation of Financing Plan

(1) Proposal: With respect to each incomplete public issue or private placement of securities, and to such issues and placements which were completed in the most recent three years but have not yet fully yielded the planned benefits, the annual report shall provide a detailed description of the plan for each such public issue and private placement: None.
(2) Implement Status: (As proposed)

5. Business Operations Overview

1. Main Business Activities

(1) Business Scope

1. Main Business Activities

(1.) Electric nailer, pneumatic nailer, and the manufacturing, machining, packaging, and trading of other pneumatic, electric machinery.
(2.) The manufacturing, machining, packaging, and trading of pneumatic tools, electric tools and handtools, and machinery.
(3.) Machining, packaging, and trading of construction materials.
(4.) The manufacturing, machining, packaging, and trading of related product parts and hardware parts in the above categories.
(5.) The import/export of products, parts, and hardware parts in the above categories.
(6.) The handling of sales leads, bids, and sales businesses (excluding futures) of domestic and overseas manufacturers.
(7) CA02020 Aluminum and Copper Products Manufacturing
(8) CQ01010 Die Manufacturing
(9) CB01010 Machinery and Equipment Manufacturing
(10.) CB01020 Office Machines Manufacturing
(11.) CC01030 Electrical Appliances and Manufacturing
(12.) CC01050 Data Storage Media Units Manufacturing
(13.) CD01030 Automobiles and Parts Manufacturing
(14.) CD01040 Motor Vehicles and Parts Manufacturing
(15.) CD01050 Bicycles and Parts Manufacturing
(16.) CE01010 Precision Instruments Manufacturing
(17.) CE01030 Photographic and Optical Equipment Manufacturing
(18.) CP01010 Hand Tool Manufacturing
(19.) CH01010 Sporting and Athletic Articles Manufacturing
(20.) CH01040 Toys Manufacturing
(21.) C805030 Plastic Made Grocery Manufacturing
(22.) C805050 Industrial Plastic Products Manufacturing
(23.) CA01100 Aluminum Rolling, Drawing and Extruding
(24.) CA01990 Other Non-metal Industry (using rolling, drawing, forging, and extruding to manufacture magnesium and magnesium alloy)
(25.) CA03010 Metal Heat Treating
(26.) CA04010 Metal Surface Treating
(27.) ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

2. Percentage of Business:

Unit: NTD$ (Thousands)

			Unit: NTD$ (Thousands)	Unit: NTD$ (Thousands)
Sales Unit and % of Total Sales Product	2017		2018
	Sales Unit	% of Total Sales	Sales Unit	% of Total Sales
Air nailerand otherairtools	3,197,323	83.34	3,086,999	82.69
Others	638,934	16.66	646,321	17.31
Total	3,836,257	100.00	3,733,320	100.00

3. Company Products (Services) Features:

(1) Air Nailer, Gas Nailer
(2) Automotive Air Impact Wrench, Air Ratchet Wrench

(3) Smart Industrial Nailer

(4) Air Saw and Air Hammer

(5) Air Sander

(6) Air Grinder
(7) Air Carton Closer
(8) Magnesium and Aluminum Alloy Die-Casting Parts
(9) High-pressure Air Nailer and Equipment

4. New Products (Services) Features Development:

(1) Automotive Maintenance, Vessel, Aviation Air Tools
(2) Wireless Nailer, Wireless Impact Wrench
(3) RC Construction Tools
(4) Industry-specific Maintenance Tools

(2) Industry Overview

1. Industry Overview and Development:

Factors such as China-US Trade War, rising FED interest, UK leaving EU, marginal economy continue to influence consumer purchase decisions. Albeit micro-changes, Basso plans to continue to launch new products to stimulate client purchase. Q1 YOY shows a slight growth. Pneumatic fastening tools manufacturing should contribute to sales increase in the second half of the year. Basso remains optimistic to 2019 revenue earnings.

In the global market, high-tier pneumatic fastening tools feature quality assurance valuing quality, durability, and safety. Basso collaborates with major global brands in ODM partnership and has received international recognition in R&D, improving global competitiveness.

Company has shown dedicated efforts to launch innovative products and reduce costs. A large budget is allocated to R&D personnel training, R&D testing, and key technologies in the manufacturing process to optimize production efficacy, achieving demands for “mass production and quality & reliability”, creating a reliable and professional corporate image, and thus enhancing client satisfaction. On such basis, Basso is invested in developing more new products to provide diversified value offerings and insists quality reliability and cost-reduction to provide reliable products and competitive prices. A continuous dedication to meet industry standards and demands for “small productions with multi-designs packaging” enables Basso to maximize shareholders’ benefits and profits.

2. Industry Upper, Middle, Lower Supply Chain:

Company manufactures aluminum alloy ingots and magnesium alloy ingots, synthetically produced air nailer and automotive air tools. Upper supply chain provides aluminum alloy ingots, magnesium alloy ingots, and plastic pellets. Middle and lower supply chain can be classified into manufacturing, machining, and user-end. Each vendor is assigned respective tasks and functions according to division of labor. For a detailed illustration, see below:

==> picture [399 x 439] intentionally omitted <==

----- Start of picture text -----

Air Tools Upper, Middle, Lower Supply Chain Diagram
Upper Middle Lower
Raw Materials Manufacturing User-end
Aluminum and
Magnesium Die-Casting ODM Clients
Alloy Ingots
↓
Lost Wax
Metal Materials → → Consumers
Casting
↓
Industrial Plastic
Machining Importers
Pellets
↓
Hardware
Painting
Chains
↓
Heat Treatment
↓
Assembling
↓
Testing
↓
Packaging
----- End of picture text -----

3. Product Development Prospects:

As society progresses, high performance equipment should be made available. Product development prospects:

(1) Light in weight: new materials features (light and durable)
(2) High in capacity: new function features (compact with high capacity)
(3) Multi-purpose in design: multi-purposes machines
(4) Large nails: do not affect the equilibrium of nailer
(5) Low in cost: reliability in quality
(6) Low in energy consumption: optimize efficacy
(7) Wireless: compact in size
(8) Customized design features

4. Market Competition:

Because the domestic market features ODM air tools, competition is derived primarily from major foreign brands and manufacturers (e.g. US: SBDK,, SENCO, ITW PASLODE, Japan: MAX, HITACHI, MAKITA, Europe: PREBENA, BeA, and others).

(3) Technology and R&D Overview

1. R&D Expenditures

Technology and R&D Overview 1. R&D Expenditures	Technology and R&D Overview 1. R&D Expenditures	Technology and R&D Overview 1. R&D Expenditures
Unit: NTD$ (Thousands)
Year	2018	March 31, 2019
R&D Expenditures	153,414	41,447

2. High Performance Technology or Products

(1) 19 air nailers.
(2) 30 automotive air tools.

(4) Mid- and Long-term, Short-term Sales Development

1. Mid- and Long-term Development

(1) To become the global leading professional air tools manufacturer.
(2) To develop other air tools.

2. Short-term Development

(1) R&D investment in new gas nailer and wireless nailer to expand market and increase marketshare.
(2) R&D investment in automotive air tools.
(3) To enhance personnel training to improve product quality and production efficacy, thus lowering production costs and maintaining market advantages.
(4) To analyze and expand market opportunities and increase marketshare.
(5) To develop industrial products, such as furniture nailer, pallets, and air carton closers to expand product lines and increase value-added product offerings.
(6) To develop bicycle parts.

2. Market and Industry Overview

(1) Market Analysis:

1. Primary Products (Services) Sales Regions:

Unit: NTD$ (Thousands)

Year Region	2018	2018	2017	2017
	Amount	Product Sales (%)	Amount	Product Sales (%)
TheAmericas	1,848,016	49.50	1,885,179	49.14
Europe	1,215,452	32.56	1,268,875	33.08
Asia	364,717	9.77	428,200	11.16
Domestic	21,219	0.57	28,415	0.74
Others	283,916	7.60	225,588	5.88
Total	3,733,320	100.00	3,836,257	100.00

2. Marketshare and Market Demand and Supply Prospects:

(1) Global Demand and Supply

With regards to global demand and supply, pneumatic fastening tools manufactured in Mainland China trail closely behind fastening tools made in Taiwan. In the last two years, due to the increase of labor and production costs in Mainland China and the improved and innovative manufacturing technology in Taiwan, major US brands have resorted to requisition purchases from Taiwanese manufactures or outsourced manufacturing process to Taiwanese

partners, making Taiwan the largest global supplier. US still remains Taiwan’s primary export market, Europe which is supplied by German and Italian manufacturers ranks second, followed by Japan which ranks third. Japanese vendors focus on the domestic market with US being its primary export market.

Because of the required advanced pneumatic fastening tools technology and high user-demand for product assurance, the global market is dominated by countries such as Taiwan, US, Italy, and Japan which have developed sounded markets. The following chart indicates the major brands from each region.

Country	Major Brands
Taiwan	Basso,De Poan
US	SBDK、SENCO、ITW PASLODE
Japan	MAX、HITACHI、MAKITA
Europe	PREBENA、BeA

(2) Domestic Demand and Supply
A competitive air nailer market in the global industry, Taiwan focuses on exporting while imports remain relatively low. In 2018, domestic pneumatic nailer and stapler production reached 1.6-2 million. Based on recent market developments, the domestic market forecasts a steady growth. The domestic market focuses on domestically-manufactured products with a low dependency on imported pneumatic fastening tools.
(3) Market Demand and Supply
US is the largest pneumatic fastening tools market in the world because the majority of its dwelling units are wooden constructions furnished with wooden furniture. Influenced by factors such a flourishing estate market, low construction costs, short construction time, high replacement rate, as well as high renovation frequencies in springs and summers, US dominates the global pneumatic nailer and stapler market.

Due to US’ stable economic recovery, construction marketshare and new housing trade, as well as new housing construction rate have increased which resulted in a boost in air nailer trade. Company adopts a quality-first and fair price policy to appeal to more vendor requisitions in North America and boost existing retail channels direct trade. In times of economic depression, Basso extend business partnership with clients to eliminate competition and expand marketshare.

In the future, Basso intends to achieve higher marketshare through new product sales, new retail channels, and clientele expansion.

3. Competitive Advantages:

(1) One of the leading manufacturers in global pneumatic fastening tools, Basso applies vertical integration to production to achieve low-cost offerings, mass production, and quality assurance.
(2) Meet demands for “small productions with multi-designs packaging” product offerings.
(3) Augmenting key technology self-manufacturing rate, improving quality, and designing competitive product offerings to appeal to more clients from Europe and the Americas enable Basso to enhance business scope and scale.
(4) Company owns a professional business management team which has

acquired an in-depth knowledge of market changes and industry trends and is capable of designing and implementing sustainable corporate strategies.

4. Strengths and Weaknesses of Development and Corresponding Action Plans and Measures:

(1) Strengths
A. Company has acquired ISO9001 certification (Quality Assurance) and ISO14001 certification (Environmental Management), to ensure quality, delivery date, post-sales services, and makes commitments to take environmental conservation initiatives.
B. One of the leading manufacturers in domestic fastening tools production and trade, Basso is invested in automated equipment and facilities to increase productivity and efficacy, improve self-manufacturing rate, and integrate production to overcome future market expansions and diversified demands.
C. Introduce advanced aluminum and magnesium alloy die-casting machines and computer processors to provide clients an integrated ONE-STOP-SHOPPING solution.
D.Company commands key fastening tools technology and produce self-manufactured products in corporate plants.
E. Continue to develop other air tools, bicycle parts, 3C product parts.
F. Key technology such as mold development time, mold analysis enhance production efficacy and product quality.
(2) Weaknesses
A. Fierce market price wars.
B. Decrease in work hours and an increase in salary costs.
C. Fierce price competitions caused by domestic and Chinese manufacturers have led to a decrease in gross profit.
D. Variables such as currency affect price and profit.
(3) Based on the above weaknesses analysis, corresponding action plans and measures are as follows:
A. Design more innovative and professional industrial value-added products to prevent price-oriented competitions.
B. Utilize new exterior designs and high-efficacy manufacturing facilities to increase production efficacy and integrate manufacturing process to lower production costs and improve quality, thus overcoming developing multifarious and price competitions.
C. Develop other air tools and bicycle parts, to diversify product offerings and satisfy client demands.

(2) Product Functions and Production Process

1. Product Features & Functions:

Products	Product Features&Functions
Air Nailer, Gas Nailer High-pressure Air Nailer	Applications: the manufacturing and construction of various furniture, housing renovations, wooden houses, pallets, floors, woodenboxes
Automotive Air Tools, Impact Wrenches	Applications: the loosening and fastening of various automotive tires and engine screws
Air Saws	Applications: pneumatic metal plate maintenance, metal plate cutting , construction hose cutting
Air Hammers	Applications: rust removal, housing renovations, pneumatic metalplate cutting,hardware cutting
Air Carton Closers	Applications: seal cartons

Air Sanders Applications: wooden surface finish or car wax Air Grinder Applications: engraving and metal surface grinding

2. Production Process:

==> picture [508 x 138] intentionally omitted <==

----- Start of picture text -----

●Purchased
Purchased Parts Purchased
Raw Molded
●Machining Assembled Assembled Selli
●Painting
●Heat
Treatment
----- End of picture text -----

(3) Supply of Primary Raw Materials

Primary raw materials include aluminum ingots, magnesium ingots, metal materials, plastic injection products, aluminum die-casting products, magnesium die-casting products, wax removals, etc. and 95% of which can be procured in Taiwan. Because the majority of the plants are located in Central Taiwan, due to its convenient location and accessible logistics delivery, Basso has secured long-term contracts and sound relationships with suppliers. Demands for quality, delivery date, and costs exceed company standards and expectations. No suspensions nor other disputes have been reported.

(4) Clients Whom Account for Over 10% of Total Net Annual Sales in the Last Two Years

1. Clients Whom Account for Over 10% of Total Net Annual Sales in the Last Two Years, Include Name, Amount, % of Total Net Annual Sales, and Reasons Leading to Change:

Unit ： NTD$ (Thousands)

Primary Clients Data in the Last Two Years

	2017	2017	2017	2017	2018	2018	2018	2018	As of 2019 Q1 (Note 2)	As of 2019 Q1 (Note 2)	As of 2019 Q1 (Note 2)	As of 2019 Q1 (Note 2)
Client	Name	Amount	% of Total Net Annual Sales (%)	Relations with Issuer	Name	Amount	% of Total Net Annual Sales (%)	Relatio ns with Issuer	Name	Amount	% of Total Net Annual Sales (%)	Issuer
-	A	596,103	15.54	None	A	639,231	17.12	None	A	156,344	16.97	None
	-	-	-		-	-	-		-	-	-	-
	Total Net Annual Sales	3,836,257	100		Total Net Annual Sales	3,733,320	100		Total Net Annual Sales	921,356	100

Note 1: List clients whom account for over 10% of total net annual sales in the last two years, the name, amount, and % of total net annual sales. In accordance with agreement, clients whom are individuals and non-related parties should not be disclosed but represented in codes. Note 2: For TWSE/GTSM listed companies whom have available audit or financial reports reviewed by CPAs prior to prospectus printing, reports should be disclosed.

2. Vendors Whom Account for Over 10% of Total Net Annual Purchases in the Last Two Years, Include Name, Amount, % of Total Net Annual Purchases, and Reasons Leading to Change:

�In 2017 and 2018, there were no vendors whose procurements account for over 10% of Total Net Annual Purchase.

(5) Output Volume and Value in the Last Two Years

Output Volume & Value in the Last Two Years Unit: NTD $ (Thousands)

Year		2017			2018
Output Volume and Value Primary Products	Capital	Volume	Value	Capital	Volume	Value
Air Nailer and Other Air Tools	2,630,000	1,514,667	2,223,354	2,630,000	1,497,378	2,197,714
Total	2,630,000	1,514,667	2,223,354	2,630,000	1,497,378	2,197,714

Note 1: Capital refers to the production quantity produced by utilizing existing manufacturing facilities under normal operating conditions after assessing factors such as suspensions and holiday breaks.

Note 2: For the manufacturing of products with replacement offerings which may be counted with capital, provide a brief description.

(6) Sales Unit and Value in the Last Two Years

Sales Unit and Value in the Last Two Years Unit: NTD$ (Thousands)

Year			2017				2018
Sales Unit Value Primary Products	Domestic Unit Value		Export Unit Value		Domestic Unit Value		Export Unit Value
Air Nailer and
Other Air	12,627	46,630	1,523,354	3,150,692	11,871	35,715	1,472,426	3,051,284
Tools
Total	12,627	46,630	1,523,354	3,150,692	11,871	35,715	1,472,426	3,051,284

3. Employee Profile in the Last Two Years

Item	Year	2017	2018	As of March31,2019
Number of Employ ees -	Administration Personnel	239	239	259
	Retail Personnel	39	37	37
	Production Personnel	453	450	452
	Total	731	726	748
Average Years of Age		37.5	38.04	38.17
Average Years of Service		8.06	8.36	8.49
Acade mic Qualific ations Percent age (%)	Master	31	35	36
	Bachelor	328	324	332
	Senior High	180	190	192
	Senior High or Below	192	177	188

Note: Fill in data from the current year prior to prospectus printing.

4. Environmental Expenditures

Company has designated a dedicated personnel to handle matters regarding environmental management, offer strict plant controls on the disposal and emission of plant waste residues or pollutants. The total amount of loss (including indemnity), penalty incurred by pollution and environment over the past two years and as of prospectus printing: None.
Company has been approved by ROC-MOEA Bureau of Standards acquiring ISO14001 certification (Environmental Management) in April 2014.

5. Labor Relations

(1) List employee benefit programs, further education, training programs, retirement benefit plan and relevant implement status, as well as employer-employee agreements and measures taken to safeguard labor interests.

Various employee benefit programs: Welfare committee is tasked with organizing employee benefit programs, emergency relief, holiday bonuses, and birthday gift certificates. Each year, company hosts company outings, health screenings, etc.
Further education and training programs: At the end of each year, managerial-level supervisors from each department propose an annual training program which includes a standard procedure: submit applications, grant approval, and provide training, to be implemented by Human Resources based on actual demands. Human Resources and

each department also host special training sessions to enrich employee’s professional knowledge.

  - �Retirement pension policy: Company allocates retirement pension and has established a retirement pension supervisory committee offering a complete retirement benefit plan.

  - �Employer-employee agreements and labor rights: Company has established a “Labor Relations Mediation Committee”. Employee representatives are appointed through nomination, voting, and election and designated to host regular labor relations mediation meetings which facilitate communications serving as a channel of communications for corporate policy or management guidelines, employee suggestions, and company feedbacks. An individual mailbox is set up by Human Resources to handle disputes. As of prospectus printing, no labor disputes have been reported.

(2) List all losses caused by labor disputes occurred prior to prospectus printing and disclose current or possible expenditures estimates and corresponding action plans and measures. If no estimates can be provided, describe reasons for a failure to do so.
- Company values and facilitates employer-employee communications: None.
(3) List Safety Measures in Office Environment and Personnel Safety
�Company has set up a “Labor Safety and Hygiene” Office under President’s Office.
�Company has been approved by ROC-MOEA Bureau of Standards acquiring ISO14001 certification (Environmental Management) in April 2014.
Labor Safety and Hygiene Measures
- a. Establishing Labor Safety and Hygiene Policy:

To promote labor safety and hygiene, amend Labor Law by accommodating to social development to enhance labor safety and hygiene management and performance.

b. TOSHMS (Taiwan Occupational Safety and Health Management System) certification: Approved by Ministry of Labor Occupational Safety and Health Administration (OHSA) acquiring TOSHMS (Taiwan Occupational Safety and Health Management System) certification and provide periodic inspections.
c. Risk Evaluation and Corresponding Action Plans and Measures: Each quarter, company hosts labor safety and hygiene inspections to survey potential risks or violations and drafts relevant action plans and measures.
d. Reduce Occupational Hazards

To effectively minimize occupational hazards, company offers regular training programs, including crisis management, emergency response, and safety procedures and protocols. Implement regular high-risk exposure machinery inspections, maintenance, and auto inspections. All chemical products are indicated with respective category, warning, and substance property labels.

e. Labor Environment Assessment:

Based on “Labor Environment Assessment and Implementation”, appoint governing authorities to implement labor environment assessments pertaining to chemical analysis and physical measurement in labor environments exposed to high-temperature,

high-decibel noise, powder and dust, specific chemical material, organic solvent, and ionizing radiation in accordance with relevant law and regulations.

f. Labor Health:
Complying to “Labor Health Policy”, company hosts regular and special health screenings to assign appropriate jobs and tasks and to follow up on the health and wellness of employees.
Labor Safety Controls
a. Implement “Labor Safety and Hygiene Policy” by appointing labor safety and hygiene inspectors to supervise projects pertaining to overhead operations, organic solvents, electric operations, flaming operations, confined spaces, ionizing radiation, etc.
b. Host regular inspections for high-risk exposure machinery and equipment. Operating personnel should acquire professional permits and attend regular training programs to ensure operating safety.
c. Follow up on disability-induced injuries, non-disability injuries, and false-reported incidents to make continuous improvements in eliminating toxic chemical and physical hazards.
d. Ensure safety on labor environment and vendors’ plants premises and at nearby intersections by assigning guards to patrol traffic at plant entrances and exits. Promote personnel traffic safety awareness by penalizing driving misconducts and providing correction action plans and measures.
e. Designated safety and hygiene personnel should voluntarily inspect business activities on plant premises and take actions to correct and improve hazardous conducts and conditions. In the event of plant emergencies, provide auxilliary and relief support.
f. Labor Safety and Hygiene Office has implemented on-site supervisions for units with high-risk disability injuries by prioritizing crisis management and risk management, training programs, contractor management and purchase management, and safety procedures and auto inspections.

6. Important Agreements

�As of prospectus printing, company has preserved exiting or expired contracts in the most recent fiscal year, including supply/distribution contracts, technical partnership contracts, long-term loan contracts, engineering/construction contracts, and other contracts which would affect shareholders' equity.
(1) Supply/distribution contracts, technical partnership contracts, ngineering/construction contracts, and other contracts which would affect shareholders' equity: None.
(2) Long-term Loan Deeds:

Unit: NTD$ (Thousands)

			Unit：NTD$ (Thousands)March 31, 2019	Unit：NTD$ (Thousands)March 31, 2019	Unit：NTD$ (Thousands)March 31, 2019
Agreement	Bank Name	Agreement Term	Content		Restrictions
			Interest	Loan Amount in NTD
Secured Loans	First Bank	September 28, 2018-February 1, 2021	0.95%	380,000	USD Deposit Savings

Chapter 6. Financial Overview

I. Information of the Condensed Balance Sheet and Composite Income Statement for the Last Five Years

1. (I) Concise Balance Sheet - Consolidated

Unit: NTD$ (Thousands)

Year Item	Year Item	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Current Year Up To March 31, 2019 Financial Information (Note 3)
		2014	2015	2016	2017	2018
Current Asset		11,712,913	12,815,508	14,514,137	11,863,062	13,223,316	13,398,519
Real Estate, Plant and Equipment(Note 2)		965,727	916,468	890,199	890,017	889,073	885,980
Intangible Assets		6,095	3,027	8,749	27,737	22,693	20,905
Other Assets(Note 2)		577,250	993,288	339,277	1,135,982	726,600	719,494
Total Assets		13,261,985	14,728,291	15,752,362	13,916,798	14,861,682	15,024,898
Current Liability	Before Distribution	9,457,754	10,172,866	11,799,880	10,116,890	10,575,024	10,538,551
	After Distribution	9,917,623	10,628,136	12,365,519	10,310,035	Undistributed	Undistributed
Non-Current Liability		605,157	1,025,603	254,216	818,072	458,074	417,165
Total Liabilities	Before Distribution	10,062,911	11,198,469	12,054,096	10,934,962	11,033,098	10,955,716
	After Distribution	10,522,780	11,653,739	12,619,735	11,128,107	Undistributed	Undistributed
Equity Attributable to Owners of Parent Company		3,199,074	3,529,822	3,698,266	2,981,836	3,828,584	4,069,182
Share Capital		1,532,896	1,379,606	1,379,606	1,379,606	1,379,606	1,379,606
Capital Surplus		305	305	305	305	593	593
Retained Earnings	Before Distribution	1,554,819	2,084,000	2,549,074	2,186,368	2,486,945	2,727,543
	After Distribution	1,094,950	1,628,730	1,983,435	1,993,223	Undistributed	Undistributed
Other Equities		111,054	65,911	(230,719)	(584,443)	(38,560)	(38,560)
TreasuryStock		0	0	0	0	0	0
Non-Controlling Interest		0	0	0	0	0	0
Equity Total Amount	Before Distribution	3,199,074	3,529,822	3,698,266	2,981,836	3,828,584	4,069,182
	After Distribution	2,739,205	3,074,552	3,132,627	2,788,691	Undistributed	Undistributed

＊ If the company has prepared individual financial reports, it shall prepare a concise balance sheet
and consolidated income statement for the last five years.
＊ If the financial information under International Financial Reporting Standards is less than five years old, the following Table (2) shall be prepared separately for the financial information under the R.O.C.'s financial accounting standards.
Note 1: The year in which has not been certified by an accountant shall be indicated. → The financial information of the last five years shall be verified by the accountant.
Note 2: Where the asset revaluation has been carried out in the current year, the date of handling and the
revaluation value added shall be indicated. → No asset revaluation has been made.
Note 3: A company whose listed shares or shares have been purchased or sold at the business premises of a securities firm as of the date of publication of the annual report shall disclose any financial information recently audited or certified by an accountant. → On March 31, 2019, the financial information was reviewed by the accountant.
Note 4: The abovementioned distribution figures shall be filled in in accordance with the resolutions of the shareholders' meeting of the following year.
Note 5: The financial information shall be corrected or re-edited by the competent authority upon notification, and shall be presented with the corrected or re-edited figures, indicating the circumstances and reasons.

(II) Concise Composite Income Statement - Consolidated

Unit: NTD$ (Thousands)

Year Items	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Current Year Up To March 31, 2019 Financial Information (Note 2)
	2014	2015	2016	2017	2018
OperatingRevenue	3,143,228	3,494,759	4,056,397	3,836,257	3,733,320	921,356
OperatingMargin	892,659	1,037,462	1,265,699	1,113,859	1,117,939	264,766
Operating Profit and Loss	598,462	691,201	917,770	772,701	725,010	162,840
Non-Operating Income and Expenditure	569,415	573,493	171,394	(535,903)	509,790	137,907
Net Profit Before Tax	1,167,877	1,264,694	1,089,164	236,798	1,234,800	300,747
Income from Continuing Operation after tax	967,721	995,371	949,844	203,973	1,031,765	240,598
Loss from Discontinued Operations	-	-	-	-	-	-

Current Net Profit (Loss)	967,721	995,371	949,844	203,973	1,031,765	240,598
Current Other Comprehensive Profit and Loss (Net Amount After Tax)	232,398	(51,464)	(326,130)	(354,765)	7,840	-
Current Total Comprehensive Profit and Loss	1,200,119	943,907	623,714	(150,792)	1,039,605	240,598
Net Profit Attributable to Owners of the Parent Company	1,200,119	943,907	623,714	(150,792)	1,039,605	240,598
Net Profit Attributable to Non-Controlling Interests	-	-	-	-	-	-
Total Comprehensive Profit and Loss Attributable to Owners of Parent Company	1,200,119	943,907	623,714	(150,792)	1,039,605	240,598
Total Comprehensive Income Attributable to Non-Controlling Interests	-	-	-	-	-	-
Earnings Per Share	6.31	6.75	6.88	1.48	7.48	1.74

＊ If the company has prepared individual financial reports, it shall prepare a concise balance sheet
and consolidated income statement for the last five years.
＊ If the financial information under International Financial Reporting Standards is less than five years old, the following Table (2) shall be prepared separately for the financial information under the R.O.C.'s financial accounting standards.
Note 1: The year in which has not been certified by an accountant shall be indicated. → The financial information of the last five years shall be verified by the accountant.
Note 2: A company whose listed shares or shares have been purchased or sold at the business premises of a securities firm as of the date of publication of the annual report shall disclose any financial information recently audited or certified by an accountant. → On March 31, 2019, the financial information was reviewed by the accountant.
Note 3. Losses of a closed business entity shall be shown on a net basis after deduction of income tax.
Note 4: The financial information shall be corrected or re-edited by the competent authority upon

notification, and shall be presented with the corrected or re-edited figures, indicating the circumstances and reasons.

(III) Concise Balance Sheet - Individual

Unit: NTD$ (Thousands)

		Unit: NTD$(Thousands)	Unit: NTD$(Thousands)	Unit: NTD$(Thousands)	Unit: NTD$(Thousands)	Unit: NTD$(Thousands)
Year Item		Financial Information for the Most Recent 5 Years (Note 1)					Current Year Up To March 31, 2019 Financial Information (Note 3)
		2014	2015	2016	2017	2018
Current Asset		11,712,913	12,815,508	14,514,137	11,863,062	13,223,316	13,398,519
Real Estate, Plant and Equipment(Note 2)		965,727	916,468	890,199	890,017	889,073	885,980
Intangible Assets		6,095	3,027	8,749	27,737	22,693	20,905
Other Assets(Note 2)		577,250	993,288	339,277	1,135,982	726,600	719,494
Total Assets		13,261,985	14,728,291	15,752,362	13,916,798	14,861,682	15,024,898
Current Liability	Before Distribution	9,457,754	10,172,866	11,799,880	10,116,890	10,575,024	10,538,551
	After Distribution	9,917,623	10,628,136	12,365,519	10,310,035	Undistributed	Undistributed
Non-Current Liability		605,157	1,025,603	254,216	818,072	458,074	417,165
Total Liabilities	Before Distribution	10,062,911	11,198,469	12,054,096	10,934,962	11,033,098	10,955,716
	After Distribution	10,522,780	11,653,739	12,619,735	11,128,107	Undistributed	Undistributed
Equity Attributable to Owners of Parent Company		3,199,074	3,529,822	3,698,266	2,981,836	3,828,584	4,069,182
Share Capital		1,532,896	1,379,606	1,379,606	1,379,606	1,379,606	1,379,606
Capital Surplus		305	305	305	305	593	593
Retained Earnings	Before Distribution	1,554,819	2,084,000	2,549,074	2,186,368	2,486,945	2,727,543
	After Distribution	1,094,950	1,628,730	1,983,435	1,993,223	Undistributed	Undistributed
Other Equities		111,054	65,911	(230,719)	(584,443)	(38,560)	(38,560)
TreasuryStock		0	0	0	0	0	0
Non-Controlling Interest		0	0	0	0	0	0
Equity Total Amount	Before Distribution	3,199,074	3,529,822	3,698,266	2,981,836	3,828,584	4,069,182
	After Distribution	2,739,205	3,074,552	3,132,627	2,788,691	Undistributed	Undistributed

＊ If the company has prepared individual financial reports, it shall prepare a concise balance sheet and consolidated income statement for the last five years.
＊ If the financial information under International Financial Reporting Standards is less than five years old, the following Table (2) shall be prepared separately for the financial information under the R.O.C.'s financial accounting standards.
Note 1: The year in which has not been certified by an accountant shall be indicated. → The financial information of the last five years shall be verified by the accountant.
Note 2: Where the asset revaluation has been carried out in the current year, the date of handling
and the revaluation value added shall be indicated. → No asset revaluation has been made.
Note 3: A company whose listed shares or shares have been purchased or sold at the business premises of a securities firm shall also list the companies as of the quarter prior to the publication date of the annual report, and whether financial data has been certified, reviewed or neither should be noted. → On March 31, 2019, the financial information was reviewed by the accountant.
Note 4: The abovementioned distribution figures shall be filled in in accordance with the resolutions of the shareholders' meeting of the following year.
Note 5: The financial information shall be corrected or re-edited by the competent authority upon notification, and shall be presented with the corrected or re-edited figures, indicating the circumstances and reasons.

(IV) Concise Composite Income Statement - Individual

Unit: NTD$ (Thousands)

Year Items	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Financial Information for the Most Recent 5 Years (Note 1)	Current Year Up To March 31, 2019 Financial Information (Note 2)
	2014	2015	2016	2017	2018
OperatingRevenue	3,143,228	3,494,759	4,056,397	3,836,257	3,733,320	921,356
OperatingMargin	892,659	1,037,462	1,265,699	1,113,859	1,117,939	264,766
Operating Profit and Loss	598,462	691,201	917,770	772,701	725,010	162,840
Non-Operating Income and Expenditure	569,415	573,493	171,394	(535,903)	509,790	137,907
Net Profit Before Tax	1,167,877	1,264,694	1,089,164	236,798	1,234,800	300,747
Income from Continuing Operation after tax	967,721	995,371	949,844	203,973	1,031,765	240,598

Loss from Discontinued Operations	-	-	-	-	-	-
Current Net Profit (Loss)	967,721	995,371	949,844	203,973	1,031,765	240,598
Current Other Comprehensive Profit and Loss (Net Amount After Tax)	232,398	(51,464)	(326,130)	(354,765)	7,840	-
Current Total Comprehensive Profit and Loss	1,200,119	943,907	623,714	(150,792)	1,039,605	240,598
Net Profit Attributable to Owners of the Parent Company	1,200,119	943,907	623,714	(150,792)	1,039,605	240,598
Net Profit Attributable to Non-Controlling Interests	-	-	-	-	-	-
Total Comprehensive Profit and Loss Attributable to Owners of Parent Company	1,200,119	943,907	623,714	(150,792)	1,039,605	240,598
Total Comprehensive Income Attributable to Non-Controlling Interests	-	-	-	-	-	-
Earnings Per Share	6.31	6.75	6.88	1.48	7.48	1.74

＊ If the company has prepared individual financial reports, it shall prepare a concise balance sheet and consolidated income statement for the last five years.
＊ If the financial information under International Financial Reporting Standards is less than five years old, the following Table (2) shall be prepared separately for the financial information under the R.O.C.'s financial accounting standards.
Note 1: The year in which has not been certified by an accountant shall be indicated. → The financial information of the last five years shall be verified by the accountant.
Note 2: A company whose listed shares or shares have been purchased or sold at the business premises of a securities firm shall also list the companies as of the quarter prior to the publication date of the annual report, and whether financial data has been certified, reviewed

or neither should be noted. → On March 31, 2019, the financial information was reviewed by the accountant.

Note 3. Losses of a closed business entity shall be shown on a net basis after deduction of income tax.
Note 4: The financial information shall be corrected or re-edited by the competent authority upon notification, and shall be presented with the corrected or re-edited figures, indicating the circumstances and reasons.

(V) Name and Audit Opinion of CPA for the Last Five Years

1. (II) Name and Audit Opinion of the Accountant

Name of CPA Firm	Name of CPA	Audit Opinion
KPMG	Chun-Man Chen, Shih-Hua Kuo
		Unqualified Opinion

KPMG	Chun-Man Chen, Shih-Hua Kuo
		Unqualified Opinion

KPMG	Chun-Man Chen, Tzu-Hsin Chang
		Unqualified Opinion

KPMG	Tzu-Hsin Chang, Mei-Yu Tseng
		Unqualified Opinion

KPMG	Chun-Yuan Wu, Shih-Hua Kuo
		Unqualified Opinion

II. Financial Analysis for the Last Five Years

1. Financial Analysis - Consolidated

Year (Note 1) Analysis Items(Note 3)	Year (Note 1) Analysis Items(Note 3)	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Current Year Up To March 31, 2019 (Note 2)
		2014	2015	2016	2017	2018
Fina ncial Struc ture (%)	Ratio of Liabilities to Assets	75.88	76.03	76.52	78.57	74.24	72.92
	Ratio of Long-Term Capital to Real Estate Plant, and Equipment	393.92	497.06	444.00	426.95	482.15	506.37
Debt -Payi ng Capa city %	Current Ratio	123.84	125.98	123.00	117.26	125.04	127.14
	Quick Ratio	51.11	60.86	55.37	55.05	53.20	56.41
	Interest Coverage Ratio	12.32	12.19	10.94	3.24	13.08	13.03

Oper ating Capa city	Receivables Turnover Rate (Times)	5.63	4.83	4.93	4.93	4.46	4.29
	Average Collection Days	65	75.56	74.03	74.03	81.83	85.08
	Inventory Turnover Rate(Times)	3.24	3.44	4.08	4.52	4.21	3.95
	Payables Turnover Rate(Times)	9.26	8.85	8.18	7.31	7.99	10.79
	Average Days for Sale	113	106.10	89.46	80.75	86.69	92.41
	Real Estate Plant, and Equipment Turnover Rate (Times)	3.11	3.71	4.49	4.31	4.20	4.15
	Total Asset Turnover Rate (Times)	0.25	0.25	0.27	0.26	0.26	0.25
Profit abilit y Capa city	Rate of Return on Assets(%)	8.25	7.78	6.83	1.97	7.74	6.98
	Rate of Return on Equity (%)	32.87	29.58	26.28	6.11	30.30	24.37
	Net Pretax Profit to Paid-in Capital Ratio(%) (Note 7)	76.19	91.67	78.95	17.16	89.50	87.20
	Profit Margin(%)	30.79	28.48	23.42	5.32	27.64	26.11
	Earnings Per Share (NT$)	6.31	6.75	6.88	1.48	7.48	1.74
Cash Flow	Cash Flow Ratio (%)	7.65	14.01	8.92	3.35	8.55	12.27
	Cash Flow AdequacyRatio(%)	139.48	203.17	143.73	115.97	134.89	222.52
	Cash Flow Reinvestment Ratio (%)	0.65	17.39	10.45	(4.59)	12.14	21.27
Degr ee of Leve rage	Degree of Operating Leverage	2.38	2.19	2.07	2.33	2.25	2.72
	Degree of Financial Leverage	1.21	1.20	1.14	1.16	1.16	1.18

Please explain the reasons for the changes in financial ratios in the latest two years: (analysis is not necessary if the increase or decrease is not up to 20%)

The reasons for the increase in 2018 Interest coverage ratio, return on assets, return on equity, net pretax profit to paid-in capital ratio, profit margin, earnings per share, compared with that in 2017 are due to the exchange loss and profit reduction caused by the depreciation of USD in 2017, while the the USD appreciated in 2018 with the substantial recovery of profit due to the exchange gains.
The increase in cash flow ratio and cash reinvestment ratio in 2018 compared with 2017 is due to the increase in net cash flow of operating activities.

2.Financial Analysis - Individual

Year (Note 1) Analysis Items(Note 3)	Year (Note 1) Analysis Items(Note 3)	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Current Year Up To March 31, 2019 (Note 2)
		2014	2015	2016	2017	2018
Fina ncial Struc ture (%)	Ratio of Liabilities to Assets	75.88	76.03	76.52	78.57	74.24	72.92
	Ratio of Long-Term Capital to Real Estate Plant, and Equipment	393.92	497.06	444.00	426.95	482.15	506.37
Debt- Payi ng Capa city %	Current Ratio	123.84	125.98	123.00	117.26	125.04	127.14
	Quick Ratio	51.11	60.86	55.37	55.05	53.20	56.41
	Interest Coverage Ratio	12.32	12.19	10.94	3.24	13.08	13.03
Oper ating Capa city	Receivables Turnover Rate (Times)	5.63	4.83	4.93	4.93	4.46	4.29
	Average Collection Days	65	75.56	74.03	74.03	81.83	85.08
	Inventory Turnover Rate(Times)	3.24	3.44	4.08	4.52	4.21	3.95
	Payables Turnover Rate(Times)	9.26	8.85	8.18	7.31	7.99	10.79
	Average Days for Sale	113	106.10	89.46	80.75	86.69	92.41

	Real Estate Plant, and Equipment Turnover Rate (Times)	3.11	3.71	4.49	4.31	4.20	4.15
	Total Asset Turnover Rate (Times)	0.25	0.25	0.27	0.26	0.26	0.25
Profit abilit y Capa city	Rate of Return on Assets(%)	8.25	7.78	6.83	1.97	7.74	6.98
	Rate of Return on Equity (%)	32.87	29.58	26.28	6.11	30.30	24.37
	Net Pretax Profit to Paid-in Capital Ratio(%) (Note 7)	76.19	91.67	78.95	17.16	89.50	87.20
	Profit Margin(%)	30.79	28.48	23.42	5.32	27.64	26.11
	Earnings Per Share (NT$)	6.31	6.75	6.88	1.48	7.48	1.74
Cash Flow	Cash Flow Ratio (%)	7.65	14.01	8.92	3.35	8.55	12.27
	Cash Flow AdequacyRatio(%)	139.48	203.17	143.73	115.97	134.89	222.52
	Cash Flow Reinvestment Ratio (%)	0.65	17.39	10.45	(4.59)	12.14	21.27
Degr ee of Leve rage	Degree of Operating Leverage	2.38	2.19	2.07	2.33	2.25	2.72
	Degree of Financial Leverage	1.21	1.20	1.14	1.16	1.16	1.18
Please explain the reasons for the changes in financial ratios in the latest two years: (analysis is not necessary if the increase or decrease is not up to 20%) 1. The reasons for the increase in 2018 Interest coverage ratio, return on assets, return on equity, net pretax profit to paid-in capital ratio, profit margin, earnings per share, compared with that in 2017 are due to the exchange loss and profit reduction caused by the depreciation of USD in 2017, while the USD appreciated in 2018 with the substantial recovery of profit due to the exchange gains. 2. The increase in cash flow ratio and cash reinvestment ratio in 2018 compared with 2017 is due to the increase in net cash flow of operatingactivities.

＊ If the company has prepared the individual financial report, it shall prepare the individual financial ratio analysis of the company separately.
＊ If the financial information under International Financial Reporting Standards is less than five years old, the following Table (2) shall be prepared separately for the financial information under the R.O.C.'s financial accounting standards.

Note 1: The year in which has not been certified by an accountant shall be indicated.

Note 2: A company whose listed shares or shares have been purchased or sold at the business

premises of a securities firm as of the date of publication of the annual report shall analyze any financial information recently audited or certified by an accountant.

Note 3: At the end of this table of the annual report, the following calculation formula should be listed:

Financial Structure
(1) Liabilities to Assets Ratio = Total Liabilities / Total Assets.
(2) Long-Term Capital to Property, Plant, and Equipment Ratio = (Total Equity + Non-Circulating Liability) / Net Amount of Property, Plant and Equipment.
Solvency
(1) Current Ratio = Current Asset / Current Liability.
(2) Quick Ratio = (Current Asset – Inventory – Prepaid Expense) / Current Asset.
(3) Interest Coverage Ratio = Net Profit Before Income Tax and Interest Expense / Current Interest Expenditure
Operating Performance
(1) Accounts Receivable (including receivable and bills receivable arising from business operations) Turnover Rate = Net Sales / Balance of Average Receivable in Various Periods (including accounts receivable and bills receivable arising from business operations).
(2) Average Collection Days = 365 / Receivables Turnover Rate.
(3) Inventory Turnover Rate = Cost of Goods Sold / Average Inventory Value.
(4) Accounts Payable (including payable and bills payable arising from business operations) Turnover Rate = Cost of Goods Sold / Balance of Average Payable in Various Periods (including accounts payable and bills payable arising from business operations).
(5) Average Days of Sales = 365 / Inventory Turnover Rate.
(6) Property, Plant and Equipment Turnover Rate = Net Sales / Average Net Amount of Property, Plant and Equipment.
(7) Total Asset Turnover Rate = Net Sales / Average Total Assets.
Profitability Capacity
(1) Return on Asset = [Post-Tax Profit or Loss + Interest Expense (1–Tax Rate)] / Average Total Assets.
(2) Return on Equity = Post-Tax Profit or Loss / Average Total Equity.
(3) Net Profit Rate = Post-Tax Profit or Loss / Net Sales.
(4) Earnings Per Share = (Gain or Loss Attributable to Owners of the Parent Company – Preference Dividend) / Weighted Average Number of Issued Shares. (Note 4)
Cash Flow
(1) Cash Flow Ratio = Net Cash Flow from Operating Activities / Circulating Liability.
(2) Net Cash Flow Adequacy Ratio = Net Cash Flow from Operating Activities for the Past 5 Years / (Capital Expenditure + Inventory Increase + Cash Dividends) for the Past 5 Years.
(3) Cash Flow Reinvestment Ratio = (Net Cash Flow from Operating Activities – Cash Dividend) / (Gross Property, Plant and Equipment + Permanent Investment + Other Non-Current Assets + Operating Capital). (Note 5)
Degree of Leverage
(1) Degree of Operating Leverage = (Net Operating Income - Variable Operating Costs and

Expenses) / Operating Profit

(2) Degree of Financial Leverage = Operating Profit / (Operating Profit - Interest Expense).
Note 4: The above formula for earnings per share shall be calculated with special attention to the following matters:
The weighted average is based on the number of ordinary shares, not the number of issued shares at the end of the year.
Traders with cash additions or treasury stocks shall calculate the weighted average shares, taking into account their period of circulation.
Where there is surplus to capital increase or capital reserve to capital increase, when calculating the earnings per share of previous years and half years, it shall be retroactively adjusted according to the proportion of capital increase, and it is not necessary to consider the issuance period of such capital increase.
If the preferred stocks are non-convertible accumulated special stocks, the current year dividend (whether or not issued) shall be deducted from the net after-tax profit or increased net after-tax loss. If the preferred stocks are non-cumulative in nature, the dividend of the preferred stocks shall be deducted from the net after-tax profit if there is net after-tax profit; If it is a loss, it needs not be adjusted.
Note 5: The cash flow analysis shall be calculated with special attention to the following matters:
Net cash flow of operating activities refers to the net cash inflow of operating activities in the cash flow table.
Capital expenditure refers to the annual cash outflow from capital investment.
The inventory on hand increase is only recorded when the ending balance is greater than the opening balance. If the inventory decreases at the end of the year, it will be counted as zero.
Cash dividends include cash dividends for ordinary shares and preferred stocks.
Gross property, plant and equipment refers to the total amount of property, plant and equipment before the deduction of accumulated depreciation.
Note 6: The issuer shall classify the various operating costs and operating expenses into fixed and variable according to their nature, and shall pay attention to the reasonableness and maintain the consistency if it involves estimation or subjective judgment.
Note 7: Where the shares of the company are not in nominal amount or in nominal amount other than NT$ 10 per share, the aforementioned ratio of paid-in capital shall be calculated on the basis of the equity ratio attributable to the owners of the parent company on the balance sheet.

III. 2018 Supervisor Review Report:

The Supervisor Review Report BASSO INDUSTRY CORP.

The Board of Directors has sent the business report in 2018. The surplus allocation table and the balance sheet, the income statement, statement of the changes in the equity of the shareholders, the cash flow statement, etc., which have been checked by the accountant, according to the company's Article 219 report .

Sincerely

BASSO INDUSTRY CORP 2019 Annual Meeting of Shareholders

Supervisor: Chang Wei Ting

March 25[th] , 2019

The Supervisor Review Report BASSO INDUSTRY CORP.

The Board of Directors has sent the business report in 2018. The surplus allocation table and the balance sheet, income statement, statement of the changes in the equity of the shareholders, the cash flow statement, etc., which have been checked by the accountant, according to the company's Article 219 report .

Sincerely

BASSO INDUSTRY CORP 2019 Annual Meeting of Shareholders

Supervisor: Lin Xiao Ling

March 25[th] , 2019

The Supervisor Review Report BASSO INDUSTRY CORP.

Sincerely

BASSO INDUSTRY CORP 2019 Annual Meeting of Shareholders

Supervisor: Ye Zig Lin

March 25[th] , 2019

IV. Individual financial report certified by an accountant of the most recent year: For

details, see Annex I (pp. 99-172).

V. For the most recent year and up to the date of publication of the annual report, in the event of financial turnover difficulties, the impact on the company's financial position:
→ No such situation.

Chapter 7. Review and Analysis of Financial

Position and Performance and Risk Items

I. Review and Analysis of Financial Position

Comparative Analysis of Financial Position Unit: NTD$ (Thousands)

Year Items	2017	2018	Difference	Difference
			Amount	%
Current Asset	11,863,062	13,223,316	1,360,254	11.47
Real Estate, Plant and Equipment	890,017	889,073	(944)	(0.11)
Intangible Assets	27,737	22,693	(5,044)	(18.19)
Other Assets	1,135,982	726,600	(409,382)	(36.04)
Total Assets	13,916,798	14,861,682	944,884	6.79
Current Liability	10,116,890	10,575,024	458,134	4.53
Non-Current Liability	818,072	458,074	(359,998)	(44.01)
Total Liabilities	10,934,962	11,033,098	98,136	0.90
Share Capital	1,379,606	1,379,606	0	0.00
Capital Surplus	305	593	288	94.43
Retained Earnings	2,186,368	2,486,945	300,577	13.75
Other Equities	(584,443)	(38,560)	545,883	(93.40)
TreasuryStock	--	--	--	--
Total Shareholder Equity	2,981,836	3,828,584	846,748	28.40
(I) Item explanation of the company's major changes in assets, liabilities and shareholders' equity in the latest two years (the change in the earlier and later period is more than 20%, and the change amount is NT$ 10 million) 1. Decrease of other assets and non-current liabilities in the current period: Refers to the fixed deposit of pledged long-term loans, because long-term borrowings are transferred to short-term borrowings, non-current liabilities are reduced, while the fixed deposit of pledged assets is transferred to current assets, thus reducing other assets in the current period. 2. Other equities increased during the current period: It is caused by the adjustment expression of the profit and loss of IFRS bond evaluation transferred to the income statement. 3. Increase of current retained earnings: It is caused by increase of current profit. (II) The main causes and effects of changes in the current liabilities of the company in the latest two years and the long-term liabilities due within one year, and future contingency plan: �The increase of current liabilities and the decrease of non-current liabilities are caused by the long-term loan liabilities being transferred to the loans within one year. �It will not have a significant impact on the company's financial structure.

II. Review and Analysis of Financial Performance

(I) Comparative Analysis of Financial Performance Unit: NTD$ (Thousands)

Year Items	2017	2018	Increased (Decreased) Amount	Percentage of Change %
Total OperatingIncome	3,847,649	3,748,295	(99,354)	(2.58)
Minus: Sales Return	949	865	(84)	(8.85)
Sales Allowance	10,443	14,110	3,667	35.11
Operating Revenue Net Amount	3,836,257	3,733,320	(102,937)	(2.68)
OperatingCost	2,722,398	2,615,381	(107,017)	(3.93)
Operating Margin	1,113,859	1,117,939	4,080	0.37
OperatingExpenses	341,158	392,929	51,771	15.18
OperatingProfit	772,701	725,010	(47,691)	(6.17)
Non-Operating Income and Expenditure	(535,903)	509,790	1,045,693	(195.13)
Net Profit Before Tax on Continuing Operations	236,798	1,234,800	998,002	421.46
Income Tax Expense (Profit)	32,825	203,035	170,210	518.54
Current Net Profit	203,973	1,031,765	827,792	405.83
Current Other Comprehensive Profit and Loss (Net Amount After Tax)	(354,765)	7,840	362,605	(102.21)
Current Total Comprehensive Profit and Loss	(150,792)	1,039,605	1,190,397	(789.43)
1. Analysis of the change in the proportion of increase or decrease (the change in the earlier and later period is more than 20%, and the change amount is NT$ 10 million): (1) Increase of non-operating income: Due to the exchange profit caused by depreciation of NTD. (2) Increase of net profit before tax: Due to the sharp depreciation of NTD and exchange profit withdrawal. (3) Income tax expense increase: Due to the 2018 income tax rate raised to 20%. (4) Increase of current net profit: Due to the sharp depreciation of NTD and exchange profit withdrawal. (5) Other comprehensive profit and loss increase in the current period: Due to the depreciation of the NTD, and the profit was greatly increased.

The expected sales volume and its basis, the possible impact on the company's future financial business and the contingency plan.
(1) Reasons for the change of main business contents of the company (if the change is caused by adjustment of price or cost, increase or decrease of production/marketing mix and quantity or replacement of old and new products); in the event of a material change in operating policy, market conditions, economic environment or other internal or external factors that has occurred or is expected to occur, the facts and implications of such a change and its possible impact on the company's future financial business and its response plan: The Company still focuses on pneumatic nailing machines and pneumatic tools for vehicles, and continues to develop a series of industrial tools to attract new customers and develop new products and expand market share.
(2) The China–United States trade war, the FED rate hike, the possible hard Brexit and geopolitical and economic instability continue to affect consumer expectations. Regardless of changes in the environment, BASSO will continue to innovate through new products to stimulate customer procurement. The first quarter grew slightly compared with the same period last year, and the company is cautiously optimistic about revenue in 2019 as it expects new nail gun and pneumatic products to be produced in volume after the middle of this year to inject revenue.

(II) Analysis of Operating Margin Changes:

Unit: NTD$ (Thousands)

		Unit: NTD$(Thousands)	Unit: NTD$(Thousands)	Unit: NTD$(Thousands)	Unit: NTD$(Thousands)
Items	Increment (Decrement) Change in the Earlier and Later Periods	Reasons for the Difference
		Price Difference	Cost Price Difference	Sales Mix Difference	Amount Difference
Pneumatic
Nailing
Machine and
	(37,150)	(19,957)	12,255	(530)	(28,918)
Other

Pneumatic
Tools
Others	41,230	-	-	-	-
Description: Operating gross profit for 2018 and 2017 was NT$ 1,117,939,000 and NT$
1,113,859,000, respectively, an increase of NT$ 4,080,000. The operating gross profit for 2018
was 0.37%.

III. Cash Flow Analysis

(I) Analysis of Recent Annual Cash Flow Changes

Year Items	2017	2018	Increase or Decrease Proportion %
Cash Flow Ratio	3.35	8.55	155.22
Cash Flow Adequacy Ratio	115.97	134.89	16.31
Cash Reinvestment Ratio	(4.59)	12.14	(364.49)
1. Analysis of the change in the proportion of increase or decrease:
1. Increase in cash flow ratio and cash reinvestment ratio: Due to pretax net profit and
increased net cash flow from operating activities.
2. Liquidity shortage improvement plan: The Company has sufficient working capital and there is
no shortage of liquidity.

(II) Analysis of Cash Liquidity in the next Year

Unit: NTD$ (Thousands)

Beginning Cash Balance (1)	Expected Net Cash Flow from Operating Activities Throughout the Year (2)	Expected Full-Year Net Cash Flow Amount (3)	Expected Cash Surplus (Shortfall) Amount (1)+(2)-(3)	Expected Remedial Measures for Cash Shortfall	Expected Remedial Measures for Cash Shortfall
				Investment Plan	Financial Plan

253,364	610,000	551,000	312,364	-	-

IV. The Impact of Recent Material Capital Expenditures on Financial Operations:

The Company has no significant capital expenditure for the construction of new plant in the recent year, but it needs to invest in the replacement of old equipment.

V. Recent Annual Reinvestment Policy, Main Reason for Income or Loss, Its

Improvement Plan and Investment Plan for the Next Year

The Company has no other investment plans for the recent year or the next year.

VI. Risk Analysis and Assessment for the Most Recent Year and up to the Date of Publication of the Annual Report

(I) Impacts on interest rate, fluctuation in exchange and inflation on corporate gains and losses and future countermeasures:

According to the Company's composite income statement for 2018, the interest income was

NT$ 376,454,000, the financial cost was NT$ 102,235,000, and the profit on exchange was NT$ 278,150,000. As of the first quarter of fiscal year 2019, interest income was NT$ 110,612,000, interest expense was NT$ 25,008,000, profit on exchange was NT$ 31,124,000 and financial asset appraisal interest was NT$ 20,597,000. The Company has a sound financial structure and abundant self-owned capital. The short-term loan of the bank is due to the fixed deposit of more USD, which is needed for daily operation. Although the interest rate of the loan is still low, it has been gradually repaid. The exchange benefit in 2018 is mainly caused by the large depreciation of NTD against USD. Due to the impact of international economic changes, international events and outward/inward remittances of foreign investment in Taiwan stock and foreign exchange markets, there are many uncertainties and it is difficult to predict. Therefore, the Company will timely adjust its holdings of USD assets to reduce the exchange risk.

(II) Policies on high-risk, highly leveraged investments, capital loans for others, endorsements, and derivative transactions, major causes of profits or losses and future countermeasures:

The Company is not engaged in high-risk, highly leveraged investment, capital loans for others, and endorsements. The company has a conservative policy regarding high-risk, highly leveraged investments, capital loans for others, endorsements, and derivative transactions, and will continue to do so in the future.

(III) Future R&D plan and expected invested R&D cost:

Future R&D Plan:
(1) Innovative Product Development:
In the future, in addition to improving the quality of existing products, we should also develop new products in different fields, so as to develop more customers, create new market demand, enhance higher added value of products and longer product life cycle, so as to achieve higher profits for the company.
(2) Providing Appearance for New Products:
In order to make the appearance of existing product sales clearly divided, so as to facilitate the sales of different customers, train industrial design related personnel, provide the energy of appearance design, towards a single product multiple appearance options, so that business development can run more smoothly. We also plan a new generation of appearance for the future new products, provide a whole series of family-based appearance design, in order to improve the product image.
(3) CAE (Computer-Aided Analysis) Performance Enhancement:
In order to meet the diversified needs of innovative products in the future, improve the design efficiency, and reduce the probability of design modification, the existing CAE software continues to upgrade the efficiency, and import various types of analysis software, in order to fully support the related innovation work and open the technical threshold of the industry competition.
�Expected R&D investment:

As a result of new product output, value patents are constantly created and issued. In order to prevent followers from eroding product market profits, patents, derivative related development and intellectual property rights maintenance costs need to be constantly produced.

In addition, the CAD/CAE related software and equipment used in the R&D need to be gradually updated to improve the development efficiency and connect with the world, and train the R&D personnel to think in many ways, connect with the world, make up their own shortcomings, and make the output products more competitive.

The company's expenditure on R&D has always been based on the principles of "need" and "necessity".

The estimated investment in R&D accounts for about 2-4% of the operating revenue.

(IV) The impact of important domestic and foreign policies and laws on the

company's financial business and countermeasures:

In case of important policy and legal changes, we always discuss with accountants, stock agents and lawyers about the countermeasures immediately. In addition, if there are material differences, the financial impact on the business will be disclosed in the financial statements.
Up to the date of publication of the annual report, there is no such situation.

(V) Impact of technology changes on the company's financial business and countermeasures:

The Company is not affected by any change in technology to the company's financial business.

(VI) Impact of corporate image change on corporate crisis management and countermeasures:

The corporate image of the Company has not changed. The Company still takes "Honesty, Responsibility, Stability and Innovation" as its business philosophy, and there is no corporate crisis.

(VII) Anticipated benefit, possible risks of the merger and acquisition and countermeasures:

There is no merger or acquisition by the Company.

(VIII) Anticipated efficiency, possible risks of the expanded plants and

countermeasures:

There was no plant expansion in 2018.

(IX) Risks associated with the concentration of purchases or sales and

countermeasures:

There is no concentration of the Company's purchase in the recent year. In the sales part, the percentage of sales customers to the company's net operating income has been reduced to less than 10% except for one customer. There is no risk of concentration of sales under the

expansion of new tools, new markets and new customers.

(X) The impact and risk of a substantial transfer or replacement of the shares of directors, supervisors or major shareholders holding more than 10% of the shares on the company, and countermeasures:
The Company has no such situation.

(XI) Impact of the change of management right on the company, risks and countermeasures:

The Company has no such situation.
(XII) The company and its directors, supervisors, general managers, substantial heads, major shareholders holding more than 10% of the shares of the company and its subsidiaries shall be listed in the litigation or non-litigation and administrative disputes in which the company has determined or is still in possession. Where the outcome may have a material impact on shareholders' equity or securities prices, it shall disclose the facts of the dispute, the target amount, the commencement date of the lawsuit, the major litigants involved and the disposition as of the date of publication of the annual report:
- �The Company has no such situation.

(XIII) Other important risks: � None.

VII. Other important items: � None.

VIII. Special Noted Items

I. Related Information on Affiliated Enterprises:

(I) Consolidated Business Report of Affiliated Enterprises

1. Affiliated Enterprise Profile

The Company has no affiliated enterprises.

(II) Consolidated Financial Statement of Affiliated Enterprises

The Company does not need to prepare consolidated statements of affiliated enterprises.

II. For the year of 2018 and up to the date of the publication of the annual report, the handling of private offering marketable securities, the utilization of funds and the progress of plan implementation: The Company does not handle private offering marketable securities.

III. For the year of 2018 and up to the date of publication of the annual report, the status of holding or disposing of the Company's shares by a subsidiary: The Company has no such situation.

IV. Other necessary supplementary notes: None .

IX. The most recent year and up to the date of publication of the annual report, items that have a significant impact on shareholders' equity or securities prices: None .

Independent Auditors ＇ Report

To the Board of Directors of Basso Industry Corporation:

Opinion

We have audited the financial statements of Basso Industry Corporation (“the Company＂), which comprise the balance sheets as of December 31, 2018 and 2017, the statement of comprehensive income, changes in equity and cash flows for the years ended then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards ( “ IFRSs ＂ ), International Accounting Standards (“IASs＂). Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC＂) or the former Standing Interpretations Committee (“SIC＂) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the 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 Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code＂), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Emphasis of Matter

We draw attention to Note 3(a) of the financial statements, the company first applied the International Financial Reporting Standard No. 9 “Financial Instruments＂ on January 1, 2018 and chose not to rewrite the comparison period.Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.We have determined the matters described below to be the key audit matters to be communicated in our report.

1. Revenue recognition

For the accounting policies relating to income recognition, please refer to Note 4 (m).

Description of key audit matter:

Part of the sales of The Company is subject to the discount, return, warranty (according to the contract) or sales contracts that are consignment transactions provided to the customer based on the contractual agreement or commercial practice. The estimated series of the above matters of the company's management is the deduction of income. So there is a risk of error in the correctness of the recognition of sales revenue. Therefore, the test of income recognition is an important part of the accountant＇s implementation of the individual financial report of The Company.

How the matter was addressed in our audit

Our principal audit procedures included: Test the effectiveness of the internal control system design and implementation of the sales and collection operations cycle Understand whether the relevant customer's major sales contract or external order assessment income recognition has been handled in accordance with the relevant regulations. To understand the sales revenue of the top ten sales customers, compare the actual difference with the same period last year to assess whether there are any major abnormalities. Select sales during the period before and after the shipment deadline ,and check the relevant documents to assess the correctness of the income recognition period, and understand whether there is a major return after the period.

2. Inventory evaluation

For the accounting policies of inventories, please refer to Note 4 (g); For the accounting estimates and assumptions uncertainty of inventory evaluation, please refer to Note 5; For the description of the inventory evaluation, please refer to Note 6(h).

Description of key audit matter:

The inventory of The Company is measured by the lower cost and net realizable value. In recent years, the global market has become more active, which has led to an increase in the market demand for pneumatic nailing machines. The competition in the international markets is fierce, driving the design and manufacturing technology of pneumatic nailing machines to change rapidly. The introduction of new products may change the needs of European and American brand manufacturers and consumers, and the original product is outdated or no longer meets market demand.Sales of related products may fluctuate drastically. The risk that the cost of the inventory may exceed its net realizable value. Therefore, the inventory evaluation is performed by the accountant.

How the matter was addressed in our audit

The main audit procedures of the accountant for the above key audit matters include: assessing the rationality of the inventory evaluation accounting policy. Review the inventory age report, analyze the inventory age change, and evaluate whether the inventory evaluation has been handled according to accounting policies. Understand and assess the rationality of the net realizable value basis adopted by management, select samples, and check relevant documents to test the correctness of the amount.Assess whether the management's disclosure of the relevant inventory evaluation is acceptable.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, 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 financial statements that are free from material misstatement, whether due to fraud or error.

100

In preparing the financial statements, management is responsible for assessing the Company＇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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

＇ Those charged with governance (including the supervisors) are responsible for overseeing the Company s financial reporting process.

Auditor ＇ s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 auditing standards generally accepted 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 financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the 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.
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 Company＇s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 the Company＇s 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 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 Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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.

101

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period 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.

The engagement partners on the audit resulting in this independent auditors＇ report are Chun-Yuan, Wu and Shyh-Huar, Kuo.

KPMG

Taipei, Taiwan (Republic of China) March 25, 2019

Notes to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and its 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 audit such financial statements are those generally accepted and applied in the Republic of China.

The independent auditors ＇ report and the accompanying 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 ＇ report and financial statements, the Chinese version shall prevail.

102

(English Translation of Financial Statements and Report Originally Issued in Chinese) BASSO INDUSTRY CORPORATION

Balance Sheets

December 31, 2018 and 2017

(expressed in Thousands of New Taiwan dollars)

Assets Current assets: Cash and cash equivalents (note 6 (a)) Current financial assets at fair value through profit or loss (note 6 (b) and 8) Current available-for-sale financial assets (note 6 (c) and 8) Notes receivable, net (note 6) Accounts receivable, net (note 6 (f)) Other receivables (note 6 (g)) Inventories (note 6 (h)) Other current financial assets (note (k)) Other current assets (note 6 (k) and 8) Non-current assets: Non-current financial assets at fair value through other comprehensive income (note 6 (d)) Non-current financial assets at cost, net (note 6 (e)) Property, plant and equipment (note 6 (e)) Intangible assets (note 6 (f)) Deferred tax assets (note 6 (m)) Other non-current financial assets (note 6 (k) and (8)) Other non-current assets (note 6 (k)) Total assets	December 31, 2018	December 31, 2017 Amount % 161,550 1 - - 3,624,654 26 10,906 - 747,054 6 150,804 1 434,905 3 6,708,313 48 24,876 -
	Amount % $ 253,364 2 3,755,830 25 - - 9,858 - 882,436 6 172,003 1 547,552 4 7,575,465 51 26,808 -
	13,223,316 89	11,863,062 85
	10 - - - 889,073 6 22,693 - 222,963 2 473,011 3 30,616 -	- - 10 - 890,017 7 27,737 - 240,867 2 883,574 6 11,531 -
	1,638,366 11	2,053,736 15
	$ 14,861,682 100	13,916,798 100

Liabilities and Equity Current liabilities: Short-term borrowings (note 6 (l) and 8) Notes payable Accounts payable Other payables Contract liabilities Current income tax liabilities Provisions (note 6(r)) Advanced receipts Long-term borrowings, current portion (note 6 (j) and 8) Other current liabilities Non-Current liabilities: Long-term borrowings (note 6 (m) and 8) Defined benefit liabilities, net (note 6 (n)) Total liabilities Equity attributable to owners: (note 6 (p)) Ordinary share Capital surplus Retained earnings Other equity interest Total equity Total liabilities and equity	December 31, 2018
	Amount %
	, , 10575024 71 10116890 72
	,, ,, 420,000 3 769,000 6 38,074 - 49,072 -
	458,074 3 818,072 6
	11,033,098 74 10,934,962 78
	1,379,606 9 1,379,606 10 593 - 305 - 2,486,945 17 2,186,368 16 (38,560) - (584,443) (4)
	3,828,584 26 2,981,836 22
	$ 14,861,682 100 13,916,798 100

See accompanying notes to financial statements.

103

(English Translation of Financial Statements and Report Originally Issued in Chinese) BASSO INDUSTRY CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

(expressed in Thousands of New Taiwan dollars , except for earnings per share)

2018	% 100 -	2017	% 100 -
Amount $ 3,748,295 865		Amount 3,847,649 949
14,110	-	10,443	-
3,733,320 2,615,381	100 70	3,836,257 2,722,398	100 71
1,117,939	30	1,113,859	29
154,110 85,405 153,414	4 2 6	160,791 68,276 112,091	4 2 3
392,929	12	341,158	9
725,010	18	772,701	20
376,454 235,571 (102,235)	10 6 (3)	339,922 (770,001) (105,824)	9 (20) (3)
509,790	13	(535,903)	(14)
1,234,800 203,035	31 6	236,798 32,825	6 1
1,031,765	25	203,973	5
7,840 -	- -	(1,041) -	- -
7,840	-	(1,041)	-
- -	- -	(426,173) 72,449	(11) 2
7,840	-	(354,765)	(9)
$ 1,039,605	25	(150,792)	(4)
$	7.48		1.48
$	7.43		1.48

See accompanying notes to financial statements.

104

(English Translation of Financial Statements and Report Originally Issued in Chinese) BASSO INDUSTRY CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan dollars)

Balance at January 1, 2017 Profit for the year ended December 31, 2017 Other comprehensive income for the year ended December 31, 2017 Comprehensive income for the year ended December 31, 2017 Appropriation and distribution of retained earnings: Legal reserve Special reserve Cash dividends of ordinary shares Balance at December 31, 2017 Balance on January 1, 2018 Effects of retrospective application Balance on January 1, 2018 after adjustments Profit for the year ended December 31, 2018 Other comprehensive income for the year ended December 31, 2018 Comprehensive income for the year ended December 31, 2018 Appropriation and distribution of retained earnings: Legal reserve Special reserve Cash dividends of ordinary shares Other changes in capital surplus Balance at December 31, 2018	Ordinary shares Capital surplus	Retained earnings Legal reserve Special reserve Unappropriated retained earnings Total retained earnings
	$ 1,379,606 305
	- - - -	- - 203,973 203,973 - - - 203,973 - - (1,041) (1,041) - (353,724) (353,724) (354,765)
	- -	- - 202,932 202,932 - (353,724) (353,724) (150,792)
	- - - - - -	94,984 - (94,984) - - - - - - 230,719 (230,719) - - - - - - - (565,638) (565,638) - - - (565,638)
	1,379,606 305	679,341 230,719 1,276,308 2,186,368 - (584,443) (584,443) 2,981,836
	1,379,606 305 - -	679,341 230,719 1,276,308 2,186,368 - (584,443) (584,443) 2,981,836 - - (545,883) (545,883) (38,560) 584,443 545,883 -
	1,379,606 305	679,341 230,719 730,425 1,640,485 (38,560) - (38,560) 2,981,836
	- - - -	- - 1,031,765 1,031,765 - - - 1,031,765 - - 7,840 7,840 - - - 7,840
	- -	- - 1,039,605 1,039,605 - - - 1039,605
	- - - - - - - 288	20,397 - (20,397) - - - - - - 353,724 (353,724) - - - - - - - (193,145) (193,145) - - - (193,145) - - - - - - - 288
	$ 1,379,606 593	699,738 584,443 1,202,764 2,486,945 (38,560) - (38,560) 3,828,584

105

(English Translation of Financial Statements and Report Originally Issued in Chinese)

BASSO INDUSTRY CORPORATION

Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(expressed in Thousands of New Taiwan dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Net loss (gain) on financial assets or liabilities at fair value through profit or loss Interest expense Interest revenue Loss (gain) on disposal of property, plan and equipment Loss (gain) on disposal of investments overdue dividends Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Decrease in notes receivable Decrease(increase) in accounts receivable Decrease(increase) in other receivables Decrease(increase) in inventories Decrease (increase) in other current assets Changes in operating assets Changes in operating liabilities: Increase in contract liability Increase (decrease) in notes payable Increase in accounts payable Increase (decrease) in other payable Increase (decrease) in provisions Increase in advanced receipts Increase (decrease) in other current liabilities Decrease in net defined benefit liability Changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Decrease (increase) in other financial assets Decrease in other non-current assets Increase in prepaid equipment Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term loans Repayments of short-term borrowings Increase in long-term borrowings Repayments of long-term borrowings Cash dividends paid Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2018	2017 236,798
	$ 1,214,800
	85,469 11,676 46,055 102,235 (376,454) (2,175) - 288	80,441 9,324 - 105,824 (339,922) (1,638) 73,768 -
	(132,906)	(72,203)
	1,048 (135,382) 517 (125,214) (1,932)	2,651 13,984 (4,549) 136,164 18,685
	(260,963)	166,935
	(8,031) (139,273) 41,890 85,057 (108) - (875) (3,158)	- 2,641 4,545 (9,084) 1,900 (22,794) 133 (2,851)
	(24,498)	(25,510)
	(285,461)	141,425
	(418,367)	69,222
	816,433 354,738 (100,757) (166,247)	306,020 320,465 (101,302) (186,322)
	904,167	338,861
	(673,869) 496,638 - - (19,753) 2,910 (6,632) (456,589) 275 (74,188)	- - (30,620) 458,923 (14,257) 1,870 (28,312) 668,799 (43,444) -
	(731,208)	1,012,959
	310,000 (428,000) 230,000 - (193,145)	360,000 (1,270,000) 150,000 (300,000) (565,638)
	(81,145)	(1,625,638)
	91,814 161,550	(273,818) 435,368
	$ 253,364	161,550

106

＄

(English Translation of Financial Statements and Report Originally Issued in Chinese) BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2018 and 2017

(expressed in Thousands of New Taiwan dollars, Unless Otherwise Specified)

(1) Company history

Basso Industry Corporation (the “Company＂) was incorporated on July 2, 1973 as a Group limited by ＇ shares and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company s registered office is No. 24, 36th Rd., Taichung Industrial Park, Taichung, 40768 Taiwan, R.O.C. The Company primarily is involved in the manufacturing and selling of nailing machine and pneumatic tools.

(2) Approval date and procedures of the financial statements

The financial statements were authorized for issuance by the Board of Directors on March 25, 2019.

(3) New standards, amendments and interpretations adopted

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

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2018.

New, Revised or Amended Standards and Interpretations
Amendment to IFRS 2“Clarifications of Classification and Measurement of
Share-based Payment Transactions＂
Amendments to IFRS 4“Applying IFRS 9 Financial Instruments with IFRS 4
Insurance Contracts＂
IFRS 9“Financial Instruments＂
IFRS 15“Revenue from Contracts with Customers＂
Amendment to IAS 7“Statement of Cash Flows -Disclosure Initiative＂
Amendment to IAS 12“Income Taxes- Recognition of Deferred Tax Assets
for Unrealized Losses＂
Amendments to IAS 40“Transfers of Investment Property＂
Annual Improvements to IFRS Standards 2014–2016 Cycle:
Amendments to IFRS 12
Amendments to IFRS 1 and Amendments to IAS 28
IFRIC 22“Foreign Currency Transactions and Advance Consideration＂

Effective date
per IASB

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2017
January 1, 2018
January 1, 2018

Except for the following items, the Company believes that the adoption of the above IFRSs would not have any material impact on its financial statements. The extent and impact of signification changes are as follows:

(Continued)

107

BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

(i) IFRS 15 “Revenue from Contracts with Customers＂

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces the existing revenue recognition guidance, including IAS 18 “Revenue＂ and IAS 11 “Construction Contracts＂. The Company applies this standard retrospectively with the cumulative effect, it need not restate those contracts, but instead, continues to apply IAS 11, IAS 18 and the related Interpretations for comparative reporting period. The Company recognizes the cumulative effect upon the initially application of this Standard as an adjustment to the opening balance of retained earnings on January 1, 2018.

The Company uses the practical expedients for its completed contracts, which means it need not restate those contracts that have been completed on January 1, 2018.

The following are the nature and impacts on the changing of accounting policies:

1) Sales of goods

Revenue is currently recognized when the goods are delivered to the customers＇ premises, which is taken to be the point in time at which the customer accepts the goods and the related risks and rewards of ownership transfer. Revenue is recognized at this point provided that the revenue and costs can be measured reliably, the recovery of the consideration is probable and there is no continuing management involvement with the goods. Under IFRS 15,

2) Impacts on financial statements

＇ The following tables summarize the impacts of adopting IFRS15 on the Company s financial statements:

Impacted line items on the balance sheet Current contract liabilities Advanced receipts Impact on liabilities	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2018
	Balances prior to the adoption of IFRS 15 $ - (43,252)		Impact of changes in accounting policies (43,252) 43,252		Balance upon adoption of IFRS 15	Impact of changes in accounting policies (51,283) 51,283
	(43,252)		-		(43,252) (51,283)	-	(51,283)

(ii) IFRS 9 “Financial Instruments＂

IFRS 9 replaces IAS 39 “Financial Instruments: Recognition and Measurement＂ which contains classification and measurement of financial instruments, impairment and hedge accounting.

(Continued)

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Notes to the Financial Statements

As a result of the adoption of IFRS 9, the Company adopted the consequential amendments to IAS 1 “Presentation of Financial Statements＂ which requires impairment of financial assets to be presented in a separate line item in the statement of profit or loss and OCI. Previously, the Company＇s approach was to include the impairment of trade receivables in administrative expenses. Additionally, the Company adopted the consequential amendments to IFRS 7 Financial Instruments: Disclosures that are applied to disclosures about 2018 but generally have not been applied to comparative information.

The detail of new significant accounting policies and the nature and effect of the changes to previous accounting policies are set out below:

1) Classification of financial assets and financial liabilities

IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The standard eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never bifurcated. Instead, the hybrid financial instrument as a whole is assessed for classification. For an explanation of how the Company classifies and measures financial assets and accounts for related gains and losses under IFRS 9, please see note 4(f).

The adoption of IFRS 9 did not have any a significant impact on its accounting policies on financial liabilities.

2) Impairment of financial assets

IFRS 9 replaces the ｀incurred loss＇ model in IAS 39 with the ｀expected credit loss＇ (ECL) model. The new impairment model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under IFRS 9, credit losses are recognized earlier than they are under IAS 39 – please see note 4(6).

3) Transition

The adoption of IFRS 9 have been applied retrospectively, except as described below,

‧ Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 are recognized in retained earnings and reserves as on January 1, 2018. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9 and therefore is not comparable to the information presented for 2018 under IFRS 9.
‧The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.
－ The determination of the business model within which a financial asset is held.

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Notes to the Financial Statements

－ The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL.

  - － The designation of certain investments in equity instruments not held for trading as at FVOCI.

‧If an investment in a debt security had low credit risk at the date of initial application of IFRS 9, then the Company assumed that the credit risk on its asset will not increase significantly since its initial recognition.
4) Classification of financial assets on the date of initial application of IFRS 9

The following table shows the original measurement categories under IAS 39 and the new measurement categories under IFRS 9 for each class of the Company＇s financial assets as of January 1, 2018. The type of measurement and book value of financial liabilities have not changed.

IAS39 Measurement categories Financial Assets Cash and equivalents Loans and receivables Debt securities Available-for-sale (Note 1) Equity instruments Measured by cost (Note 2) Trade and other receivables Loans and receivables (Note 3) Other financial assets (Refundable deposits and time cleposits) Loans and receivables	IAS39			IFRS9	Carrying Amount 161,550 3,624,654 10 908,764 7,593,396
	Measurement categories	Carrying Amount		Measurement categories
		161,550 Amortized cost 3,624,654 Designated as at FVTPL 10 FVOCI 908,764 Amortized cost 7,593,396 Amortized cost

Note1: The corporate debt securities categorized as available-for-sale under IAS 39 are held by the Company＇s treasury unit in a separate portfolio to provide interest income; however, they may be sold to meet liquidity requirements arising in the normal course of business. The Company considers that these securities are held within a business model whose objective is achieved both by collecting contractual cash flows and by selling securities. The corporate debt securities mature in one to two years and the contractual terms of these financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. These assets have therefore been classified as financial assets at FVOCI under IFRS 9. An allowance for impairment of $584,443 thousand was recognized in opening retained earnings on transition to IFRS 9 on January 1, 2018.

(Continued)

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Notes to the Financial Statements

Note2: These equity securities (including financial assets measured at cost) represent investments that the Company intends to hold for the long term for strategic purposes. As permitted by IFRS 9, the Company has designated these investments at the date of initial application as measured at FVOCI.Accordingly, no increase were recognized in total assets and retained earnings, as well as no decrease was recorded in reserves. However, an amount of $38,560 was recognized in non-controlling on January 1, 2018.

Note3: Trade, lease and other receivables that were classified as loans and receivables under IAS 39 are now classified at amortized cost.

The following table reconciles the carrying amounts of financial assets under IAS 39 to the carrying amounts under IFRS 9 upon transition to IFRS 9 on 1 January, 2018.

	2017.12.31 IAS 39 Carrying Amount - -	Reclassifications - 3,624,654	Remeasurements - -	2018.1.1 IFRS 9 Carrying Amount	2018.1.1 Retained earnings - (584,443)	2018.1.1 Other equity - 584,443
$
$	-	3,624,654	-	3,624,654	(584,443)	584,443
$	3,624,664 - -	(10) - 10 (3,624,654)	- - -		- 38,560 -	- (38,560) -
$	3,624,664	(3,624,654)	-	10	38,560	(38,560)
	$ 8,663,710	-	-	8,663,710	-	-

(iii) Amendments to IAS 7 “Disclosure Initiative＂

The amendments require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes.

To satisfy the new disclosure requirements, the Company present a reconciliation between the opening and closing balances for liabilities with changes arising from financing activities as note 6(y).

(iv) Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Loss＂

The amendments clarify that deferred income tax assets will be recognized for unrealized losses if certain conditions are met and the calculation of "future taxable income".The Company has retrospectively applied the amendments. There is no change in deferred income tax assets, other equity items and retained earnings as of January 1 and December 31, 2017.Therefore,there were no impact on the Company's income tax expenses, basic earnings per share and cash flow statements in 2017.

(Continued)

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Notes to the Financial Statements

In addition, if the Company had applied its previous accounting policy, there would have been no changes in its deferred income tax assets, other equity items and retained earnings as of January 1 and December 31, 2018.Therefore, there were no impact on the Company's income tax expenses, basic earnings per share and cash flow statement in 2018.

(b) The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019 in accordance with Ruling No. 1070324857 issued by the FSC on July 17, 2018:

New, Revised or Amended Standards and Interpretations
IFRS 16“Leases＂
IFRIC 23“Uncertainty over Income Tax Treatments＂
Amendments to IFRS 9“Prepayment features with negative compensation＂
Amendments to IAS 19“Plan Amendment, Curtailment or Settlement＂
Amendments to IAS 28“Long-term interests in associates and joint ventures＂
Annual Improvements to IFRS Standards 2015–2017 Cycle

Effective date
per IASB

January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019

Except for the following items the Company believes that the adoption of the above IFRSs would not have any material impact on its financial statements.

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

New, Revised or Amended Standards and Interpretations Amendments to IFRS 3“Definition of a Business＂ 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＂ Amendments to IAS 1 and IAS 8“Definition of Material＂	Effective date per IASB
	January 1, 2020 Effective date to be determined by IASB January 1, 2021 January 1, 2020

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

(Continued)

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Notes to the Financial Statements

(4) Summary of significant accounting policies

The accompanying 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 financial statements, the Chinese version shall prevail.

The significant accounting policies presented in the financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “ the Regulations ＂) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed by the Financial Supervisory Commission, R.O.C..

(b) Basis of preparation
(i) Basis of measurement

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

1) Fair value through other comprehensive income (Available-for-sale financial assets) are measured at fair value.
2) The defined benefit liability (asset) is recognized as the fair value of the plan assets, less, the present value of the defined benefit obligation.
(ii) Functional and presentation currency

The functional currency of each Group is determined based on the primary economic environment in which the entities operates. The financial statements are presented in New Taiwan dollars, which is the Company＇s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(c) Foreign currencies

Transactions in foreign currencies are translated to the respective functional currencies of the Company entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for the effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the period.

(Continued)

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Notes to the Financial Statements

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation.

Foreign currency differences arising on retranslation are recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

Available-for-sale equity investment;
A financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
Qualifying cash flow hedges to the extent the hedge is effective.
(d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as noncurrent.

(i) It is expected to be realized, or intended to be sold or consumed , in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

An entity shall classify a liability as current when:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(e) Cash and cash equivalents

Cash and cash equivalents comprise cash, cash in bank, and short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(Continued)

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Notes to the Financial Statements

(f) Financial instruments

(i) Financial assets (policy applicable from January 1, 2018)

Financial assets are classified into the following categories: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL).

The Company shall reclassify all affected financial assets only when it changes its business model for managing its financial assets.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL：

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting.

2)
Fair value through other comprehensive income (FVOCI )

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL：

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment＇s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

(Continued)

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Notes to the Financial Statements

A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at fair value. Interest income is calculated using the effective interest method, foreign exchange gains and losses, and impairment losses. Other net gains and losses of financial assets measured at FVOCI are recognized in OCI. On derecognition, gains and losses accumulated in OCI of debt investments are reclassified to profit or loss. However, gains and losses accumulated in OCI of equity investments are reclassified to retain earnings instead of profit or loss.

A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using settlement date accounting.

Dividend income derived from equity investments is recognized on the date that the Company＇s right to receive payment is established, which in the case of quoted securities is normally the exdividend date.

3)
Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets and accounts receivable, which is presented as accounts receivable. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured at fair value, which take into account (any dividend and interest income), are recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting.

4) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivables, other receivables, leases receivable, guarantee deposits paid and other financial assets), debt investments measured at FVOCI, accounts receivable measured at FVOCI and contract assets.

The Company measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL：

debt securities that are determined to have low credit risk at the reporting date；and
other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

(Continued)

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Notes to the Financial Statements

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company ＇ s historical experience and informed credit assessment as well as forward-looking information.

The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ｀investment grade which is ＇＇ considered to be BBB- or higher per Standard & Poor s, Baa3 or higher per Moody s ＇ or twA or higher per Taiwan Ratings .

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than a year past due.

The Company considers a financial asset to be in default when the financial asset is more than a year past due or the borrower is unlikely to pay its credit obligations to the Company in full.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ｀credit-impaired＇ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data：

significant financial difficulty of the borrower or issuer；
a breach of contract such as a default or being more than a year past due；

(Continued)

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Notes to the Financial Statements

the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider；
it is probable that the borrower will enter bankruptcy or other financial reorganization；or
the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Company recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company＇s procedures for recovery of amounts due.

5) Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from the assets expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets.

On derecognition of a debt instrument in its entirety, the Company recognizes the difference between its carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and presented in “other equity – unrealized gains or losses on fair value through other comprehensive income＂, in profit or loss, and presented it in the line item of non-operating income and expenses in the statement of comprehensive income.

On derecognition of a financial asset other than in its entirety, the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss, and presented in the line item of non-operating income and expenses. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

(Continued)

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Notes to the Financial Statements

(ii) Financial assets (policy applicable before January 1, 2018)

Financial assets are classified into the following categories: financial assets at fair value through profit or loss, available-for-sale financial assets and loans and receivables.

1) Availablefor sale financial assets

Availableforsale financial assets are nonderivative financial assets that are designated as available for sale or are not classified in any of the other categories of financial assets. Availableforsale financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, interest income calculated using the effective interest method, dividend income, and foreign currency differences on availableforsale debt instruments, are recognized in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognized, the gain or loss accumulated in equity is reclassified to profit or loss, and included in the statement of comprehensive income. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting.

Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured, are measured at amortized cost, and are included in financial assets measured at cost.

Dividend income is recognized in profit or loss on the date that the Company＇s right to receive payment is established, which in the case of quoted securities is normally the exdividend date.

Interest income from investment in bond security is recognized in profit or loss, under other income of nonoperating income and expenses.

2)
Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables other than insignificant interest on shortterm receivables are measured at amortized cost using the effective interest method, less any impairment losses. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting.

Interest income is recognized in profit or loss, and it is included in non-operating income

and expense.

(Continued)

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Notes to the Financial Statements

3) Impairment of financial assets

Except for financial assets at fair value through profit or loss, financial assets are assessed for impairment at each reporting date. A financial asset is impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ｀loss event＇) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is considered objective evidence of impairment.

All individually significant receivables are assessed for specific impairment. Receivables that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management＇s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than the those suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset＇s original effective interest rate.

An impairment loss in respect of a financial asset measured at cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

An impairment loss in respect of a financial asset is deducted from the carrying amount except for accounts receivable, for which an impairment loss is reflected in an allowance account against the receivables. When it is determined a receivable is uncollectible, it is written off from the allowance account. Changes in the amount of the allowance account are recognized in profit or loss.

Impairment losses on availableforsale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss.

If, in a subsequent period, the amount of impairment loss on a financial asset measured at amortized cost decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the decrease in impairment loss is reversed through profit or loss to the extent that the carrying value of the asset does not exceed its amortized cost before the impairment was recognized at the reversal date.

(Continued)

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Notes to the Financial Statements

Impairment losses recognized on an availableforsale equity security are not reversed through profit or loss. Any subsequent recovery in the fair value of an impaired availableforsale equity security is recognized in other comprehensive income, and accumulated in other equity. If, in a subsequent period, the fair value of an impaired availableforsale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed, with the amount of the reversal recognized in profit or loss.

Bad debt expenses and reversal of allowance for doubtful debts for trade receivables are

recognized in general and administrative expenses while impairment losses and reversal

of impairment for financial assets other than receivables are recognized under nonoperaating income and expenses.
4) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash inflow from the assets are terminated, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and presented in “other equity – unrealized gains or losses on available-for-sale financial assets＂ in profit or loss is included in .

The Company separates the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part derecognized and the sum of the consideration received for the part derecognized, and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income, shall be recognized in profit or loss.

(iii) Financial liabilities and equity instruments
1) Classification of debt or equity

Debt or equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreement.

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

Interest related to the financial liability is recognized in profit or loss, and included in non-operating income and expenses.

On conversion, the financial liability is reclassified to equity, and no gain or loss is recognized.

(Continued)

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Notes to the Financial Statements

2) Other financial liabilities

Financial liabilities not classified as held for trading or designated as at fair value through profit or loss are measured at fair value, plus any directly attributable transaction costs at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method. Interest expense not capitalized as capital cost is recognized in profit or loss.

3) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligation has been discharged or cancelled, or has expired.

The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in non-operating income or expenses.

4) Offsetting of financial assets and liabilities

The Company presents financial assets and liabilities on a net basis when the Company has the legally enforceable right to offset, and intends to settle such financial assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted-average method and includes the expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less, the estimated costs of completion and selling expenses.

(h) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, less, accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless, the useful life and depreciation method of that significant part are the same as those of another significant parts of that same item.

The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized in profit or loss, under net other income and expenses.

(Continued)

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Notes to the Financial Statements

(ii) Subsequent cost

Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. The carrying amount of those parts of fixed assets that are replaced is derecognized. Ongoing repairs and maintenance are expensed as incurred.

(iii) Depreciation

Depreciation is calculated on the cost of an asset, less, its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an items of property, plant and equipment. Items of property, plant and equipment with the same useful life may be grouped in determining the depreciation charge. The remainder of the items may be depreciated separately.

Land has an unlimited useful life, and therefore, is not depreciated.

The estimated useful lives for the current and comparative years of significant items are as follows:

1) buildings and structures:2~57 years
2) machinery and equipment:1~21 years
3) other equipment:1~21 years

Buildings and structures constitute mainly of building and building repair project. Each such part depreciates based on its useful life of 51~57 years and 2~56 years, respectively.

Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in an accounting estimate.

(i) Lease

Leases in which the Company assumes substantially all of the risks and rewards of ownership are classified as finance leases. On initial recognition, the lease asset is measured at an amount equal to the lower of its fair value or the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset.

Other leases are operating leases and are not recognized in the Company＇s balance sheets.

Payments made under operating leases (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

(j) Intangible assets
(i) Research and development

During the research phase, activities are carried out to obtain and understand new scientific or technical knowledge. Expenditures during this phase are recognized in profit or loss as incurred.

(Continued)

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Notes to the Financial Statements

Expenditures arising from the development phase shall be recognized as an intangible asset if all the conditions described below can be demonstrated; otherwise, they will be recognized in profit or loss as incurred.

1) The technical feasibility of completing the intangible asset so that it will be available for use or sale.
2) The intention to complete the intangible asset and use or sell it.
3) The ability to use or sell the intangible asset.
4) How the intangible asset will generate probable future economic benefits.
5) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
6) The ability to measure reliably the expenditure attributable to the intangible asset during its development.

Capitalized development expenditure is measured at cost, less, accumulated amortization and any accumulated impairment losses.

(ii) Other intangible assets

Other intangible assets that are acquired by the Company are measured at cost, less, accumulated amortization and any accumulated impairment losses.

(iii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iv) Amortization

The amortizable amount is the cost of an asset less its residual value.

Expect for goodwill and intangible assets with in definite useful lives, amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

1) Computer software:1~10 years

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be reviewed at least annually at each fiscal year end. Any change shall be accounted for as a changes in accounting estimates.

(Continued)

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Notes to the Financial Statements

(k) Impairment of non-financial assets

The Company assesses non-derivative financial assets for impairment (except for inventories, assets arising from construction contracts, deferred income tax assets and employee benefits) at every reporting date, and estimates its recoverable amount. If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for the individual asset, then the Company will have to determine the recoverable amount for the asset's cash-generating unit (CGU).

The recoverable amount for an individual asset or a CGU is the higher of its fair value, less, costs to sell and its value in use.

If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount; and that reduction will be accounted as an impairment loss, which shall be recognized immediately in profit or loss.

The Company assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset. An impairment loss recognized in prior periods for an asset other than goodwill shall be ＇ reversed if, and only if, there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount, as a reversal of a previously recognized impairment loss. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset＇s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(l) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

Warranty liability provisions are recognized when selling goods or services, and the liability provision is weighted by its associated probability based on historical warranty information and all possible outcomes.

(m) Revenue from contracts with customers

1.Revenue from contracts with customers(policy applicable from January 1, 2018)

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company＇s main types of revenue are explained below.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

1) Sale of goods

The Company manufactures and sells nail machine and pneumatic tools. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer＇ s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

2) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(ii) Revenue (policy applicable before January 1, 2018)

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts, and volume rebates. Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that a discount will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue as the sales are recognized.

The timing of the transfers of risks and rewards varies depending on the individual terms of the sales agreement. For international shipments, transfer occurs upon loading the goods onto the relevant carrier at the client＇s designated location. Generally for such products, the customer has no right of return.

(n) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(Continued)

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Notes to the Financial Statements

(ii) Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company＇s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets are deducted.The discount rate is the yield at the reporting date (market yields of high-quality corporate bonds or government ＇ bonds) on bonds that have maturity dates approximating the terms of the Company s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. If the calculation results in a benefit to the Company, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In calculating the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Company. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities.

If the benefits of a plan are improved, the pension cost incurred from the portion of the increased benefit relating to past service by employees is recognized immediately in profit or loss.

Remeasurements of the net defined benefit liability (asset), which comprise (1) actuarial gains and losses, (2) the return on plan assets (excluding interest) and (3) the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Company reclassify the amounts recognized in other comprehensive income to retained earnings. The Company recognizes all actuarial gains and losses arising subsequently from defined benefit plans in other comprehensive income.

The Company recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting changes in the fair value of plan assets, any changes in the present value of the defined benefit obligation, and any related actuarial gains or losses and past service cost that had not previously been recognized.

(iii) Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

(o) Income taxes

Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) Assets and liabilities that are initially recognized but are not related to the business combination and have no effect on net income or taxable gains (losses) during the transaction.
(ii) Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.
(iii) Initial recognition of goodwill.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, which are normally the tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

(i) The entity has the legal right to settle tax assets and liabilities on a net basis; and
(ii) The taxing of deferred tax assets and liabilities fulfills one of the below scenarios:
1) Levied by the same taxing authority; or
2) Levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched.

A deferred tax asset is recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences are also reevaluated every year on the financial reporting date, and adjusted based on the probability that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

(p) Earnings per share

The Company discloses the Company＇s basic and diluted earnings per share attributable to ordinary shareholders the Company. The calculation of basic earnings per share is based on the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, such as employee bonus and employee stock options.

(q) Operating segments

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Company). The Company＇s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance regulatory reviews operating results of the operating segment. Each operating segment consists of standalone financial information.

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

The preparation of the financial statements in conformity with the Regulations and the IFRSs 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 management continues to monitor the accounting estimates and assumptions. It recognizes any changes in accounting estimates during the period and the impact of those changes in the accounting estimates in the following period.

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Please refer to note 6 (h) for further description of the valuation of inventories.

The Company＇s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the assets or liability that are not based on observable market data.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to Note 6(v) for assumptions used in measuring fair value.

(6) Explanation of significant accounts

(a) Cash and Cash Equivalents

Cash on hand Demand deposits and time deposits Foreign currency deposits Cash and cash equivalents	December 31, 2018 $ 611 80,722 172,031	December 31, 2017 903 117,260 43,387
	$ 253,364	161,550

Please refer to note 6(v) for the interest rate risk and sensitivity analysis of the financial assets and 。 liabilities of the Company

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

Financial assets designated as at fair value through profit or loss Foreign bonds	December 31, 2018 $ 3,755,830

The investments were classified as available-for-sale financial assets on December 31, 2017.

For market risk, please refer to note 6 (v).

As of December 31, 2018, the financial assets at fair through profit or loss of the Company had been pledged as collateral for long-term borrowing; please refer to note 8.

Available-for-sale financial assets Foreign bond	December 31, 2017 $ 3,624,654

These investments were classified as financial assets at fair value through profit or loss on December 31, 2018; please refer to note 6 (b).

(Continued)

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Notes to the Financial Statements

The Company holds its debt instrument investment to obtain interest income as follows:

Available-for-sale financial assets For market risk, please refer to note 6 (v).	December 31, 2017 Interest rate range Maturity period 2.674%~7.625% 2018~2023	December 31, 2017 Interest rate range Maturity period 2.674%~7.625% 2018~2023
	Interest rate range 2.674%~7.625%
		2018~2023

As of December 31, 2017, the available-for-sale financial assets of the Company had been pledged as collateral for long-term borrowings; please refer to note 8.

(d) Financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income Domestic unlisted stock-COTA Commercial bank Domestic unlisted stock-GATETECH technology Inc. Total	December 31, 2018 $ 10 - $ 10

On January 1, 2018, the Company designated its investments shown above as equity securities as at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term for strategic purposes. These investments were classified as available-for-sale financial assets on December 31, 2017.

No strategic investments were disposed as of December 31, 2018, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

For market risk; please refer to note 6 (v).

As of December 31, 2018, the financial assets at fair value through other comprehensive income of the Company had not been pledged as collateral for long-term borrowings.

(e) Financial assets measured at cost

Domestic unlisted common shares	December 31, 2017 $ 10

The Company assessed and recognized its impairment for investment in shares amounting to $38,560 thousand.

The aforementioned investments held by the Company were measured at amortized cost as of December 31, 2017, given the range of reasonable fair value estimates is large and the probability for each estimate cannot be reasonably determined; therefore, the Company's management had determined that the fair value cannot be measured reliably. These investments were classified as financial assets at fair value through other comprehensive income on December 31, 2018. please refer to note 6(d).

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

For market risk, please refer to note 6 (v).

The financial assets of the Company above had been pledged as collateral.

(f) Note and trade receivables

Note receivables–measured as amortized cost Trade receivables–measured as amortized cost Less: Loss allowances	December 31, 2018 $ 9,858	December 31, 2017 10,906 758,346 (11,292) 747,054 757,960
	893,728 (11,292)
	882,436
	$ 892,294

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables on December 31, 2018. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision in Taiwan as of December 31, 2018 was determined as follows:

Current 1 to 90 days past due 91 to 180 days past due 181 to 365 days past due More than a year past due Total	Gross carrying amount	Weighted-avera ge loss rate Loss allowance provision	Weighted-avera ge loss rate Loss allowance provision
	$ 694,575 - % - 184,453 - % - 12,760 - % - 11,599 95.64% 11,093 199 100% 199 $ 903,586 11,292
			11,292

As of December 31, 2017, the Company applies the incurred loss model to consider the loss allowance provision of notes and trade receivable, and the aging analysis of notes and trade receivable, which were past due but not impaired, was as follows:

Overdue 1 to 90 days

2017 $ 61,388

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

The movement in the allowance for notes and trade receivables was as follows:

Balance on January 1, 2018 and 2017 per IAS 39 Adjustment on initial application of IFRS 9 Balance on January 1, 2018 per IFRS 9	2018		2017 Individually assessed impairment 11,292

	$ 11,292 -

	$ 11,292

The Company does not hold any collateral for the collectible amounts.

For further credit risk information, please refers to note 6 (v).

(g) Other receivables

Other accounts receivable—interests receivable Others Less: Loss allowance	December 31, 2018 $ 164,824 7,179 -	December 31, 2017 143,108 7,696 -
	$ 172,003	150,804

As of December 31, 2017, the aging analysis of other receivables, which were past due but not impaired.

For further credit risk information, please refers to note 6 (v).

(h) Inventories

Finished goods Work in progress Raw materials Commodity	December 31, 2018 $ 84,921 269,876 192,753 2	December 31, 2017 61,633 223,495 149,734 43
	$ 547,552	434,905

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

As of December 31, 2018 and 2017，the detail of inventory write-downs as follows:

Provisions (reversal of provision) for inventory valuation and obsolescence Losses on disposal of scrap inventory losses (profit) Gains on disposal of miscellaneous warranty preparation Others	For theyears ended December 31 2017 2016 $ 16,378 50,218 5,532 6,006 (7) (1) (23,706) (21,280) (108) 1,900 (1,683) (1,981) $ (3,594) 34,862

As of December 31, 2018 and 2017, the Company did not provide any inventories as collateral for its loans.

(i) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2017 and 2016 were as follows:

Land $ 305,349 - - -	Buildings and Structures 657,083 2,541 (1,735) 7,742	Machinery and Equipment 1,796,780 10,903 (43,108) 52,007	Other Equipment 185,326 4,421 (29,806) 7,646	Total
				2,944,538 17,865 (74,649) 67,395
$ 305,349	665,631	1,816,582	167,587	2,955,149
$ 305,349 - - -	648,883 5,070 - 3,130	1,783,074 9,820 (50,832) 54,718	178,559 6,127 (986) 1,626	2,915,865 21,017 (51,818) 59,474
$ 305,349	657,083	1,796,780	185,326	2,944,538
$ - - -	266,634 16,487 (1,735)	1,622,631 61,174 (42,373)	165,256 7,808 (29,806)	2,054,521 85,469 (73,914)
$ -	281,386	1,641,432	143,258	2,066,076
$ - - -	251,488 15,146 -	1,615,883 57,348 (50,600)	158,295 7,947 (986)	2,025,666 80,441 (51,586)
$ -	266,634	1,622,631	165,256	2,054,521

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

Carrying amounts: Balance at December 31, 2018 Balance at December 31, 2017 Balance at January 1, 2017	Land $ 305,349	Buildings and Structures 384,245	Machinery and Equipment 175,150	Other Equipment 24,329	Total 889,073
	$ 305,349	397,395	167,191	20,264	890,199
	$ 305,349	390,449	174,149	20,070	890,017

As of December 31, 2017 and 2016, the property, plant and equipment of the Company had been pledged as collateral for borrowings; please refer to Note 8.

(j) Intangible Assets

The costs of intangible assets, amortization, and impairment loss of the Company for the years ended December 31, 2017 and 2016 were as follows:

Costs: Balance at January1, 2018 Additions Disposals Balance at December 31, 2018 Balance at January1, 2017 Additions Disposals Balance at December 31, 2017 Amortization and Impairment Loss: Balance at January1, 2018 Amortization for the year Disposals Balance at December 31, 2018 Balance at January1, 2017 Amortization for the year Disposals Balance at December 31, 2017 Carrying amounts: Balance at December 31, 2018 Balance at January 1, 2017 Balance at December 31, 2017	Computer software $ 35,832 6,632 (1,715)
	$ 40,749
	$ 10,196 28,312 (2,676)
	$ 35,832
	$ 8,095 11,676 (1,715)
	$ 18,056
	$ 1,447 9,324 (2,676)
	$ 8,095
	$ 22,693
	$ 8,749
	$ 27,737

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

(i) Amortization

The amortizations of intangible assets were included in the statement of comprehensive income:

Operating costs Operating expenses	2018	2017 2,094 7,230
	$ 2,928 8,748
	$ 11,676	9,324

(ii) Disclosures on pledges

As of December 31, 2017 and 2016, none of the intangible assets of the Company had been pledged as collateral.

(k) Other current assets and other non-current assets

The other current assets and other non-current assets of the Company were as follows:

Current other financail assets Noncurrent other financail assets Prepaid equipment Refundable deposits Other-current Other-non current	December 31, 2018 $ 7,575,465 473,011 28,949 1,509 26,808 158	December 31, 2017 6,708,313 883,574 9,589 1,509 24,876 433
	$ 8,105,900	7,628,294

Other financial assets are restricted bank deposits and bank time deposits with maturities of more than three months, which are provided as collateral guarantees. Please refer to note 8.

(l) Short-term borrowings

The short-term borrowings were summarized as follows:

December 31, 2018 $ 8,743,000 250,000	December 31, 2018 $ 8,743,000 250,000	December 31, 2017 8,631,000 480,000
$ 8,993,000		9,111,000
$ 2,152,000		1,534,000
	0.95%~1.06%	0.95%~1.17%

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

For the collateral for short-term borrowings, please refer to note 8.

(m) Long-term borrowings

The details were as follows:

	December	31, 2018	Amount $ 1,189,000 (769,000) $ 420,000
Currency	Rate	Maturity year
	0.95%~1.01% December	109.12.28 31, 2017
			$ 811,000 Amount $ 959,000 (190,000) $ 769,000
Currency	Rate	Maturity year
	0.87%~1.01%	108.12.29
			$ 241,000

For the collateral for long-term borrowings, please refer to note 8.

(n) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2018
	$ 38,074 49,072

The Company＇s employee benefit liabilities were as follows:

Short-term vacation liability	December 31, 2018 $ 13,052	December 31, 2017 12,147

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company＇s Bank of Taiwan labor pension reserve account balance amounted to 93,879 thousands at the report date. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Company were as follows:

Defined benefit obligations at January 1 Current service costs and interest costs Remeasurements loss (gain): －Return on plan assets excluding interest income Actuarial loss (gain) arising from: －demographic assumptions －financial assumptions Benefits paid Defined benefit obligations at December 31	2018 $ 143,088 2,714 (9,746) 487 4,001 (7,984)	2017 142,195 3,355 (4,000) 500 4,044 (3,006)
	$ 132,560	143,088

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets at January 1 Interest income Remeasurements loss (gain): -Return on plan assets excluding interest income Amount that has been allocated to the plan Benefits paid Fair value of plan assets at December 31	2018 $ 94,016 1,188 2,582 4,684 (7,984)	2017 91,313 1,389 (497) 4,817 (3,006) 94,016
	$ 94,486

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

4) Expenses recognized in profit or loss

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

Current service costs Net interest of net liabilities for defined benefit obligations Operating cost Selling expenses Administration expenses Research and development expenses	2018 $ 942 584	2017 1,238 728
	$ 1,526	1,966
	$ 1,009 63 205 249	1,286 98 269 313
	$ 1,526	1,966

5) Remeasurement of net defined benefit liability (asset) recognized in other comprehensive income

The Company＇s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2018 and 2017, was as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	2018 $ (61,312) 7,840	2017 (60,271) (1,041)
	$ (53,472)	(61,312)

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Increase in future salary rate	2018 2017
	1.00% 1.25% 2.00% 2.00%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is 4,395 thousands.

The weighted average lifetime of the defined benefits plans is 12 years.

(Continued)

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Notes to the Financial Statements

7) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

benefit obligation shall be as follows:
December 31, 2018: Discount rate Future salary increasing rate December 31, 2017: Discount rate Future salary increasing rate		Influences of defined benefit obligations
	Increased 0.25% $ (4,021) 4,142 (4,066) 4,195		Decreased 0.25% 4,195 (3,992) 4,238 (4,046)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There were no changes in the method and assumptions used in the preparation of sensitivity analysis for 2018 and 2017.

(ii) Defined contribution plans

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

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to 14,381 thousands and 13,900 thousands for the years ended December 31, 2018 and 2017, respectively.

(o) Income Taxes

According to the amendments to the "Income Tax Act” enacted by the office of the President of the

Republic of China (Taiwan) on February 7, 2018, an increase in the corporate income tax rate from 17% to 20% is applicable commencing 2018.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

1.Income taxes

The components of income tax in the years 2018 and 2017 were as follows:

Current tax expense Current period Adjustment for prior periods Deferred tax expense Origination and reversal of temporary differences Adjustment in tax rate Tax expenses	2018 $ 185,946 (815)	2017 162,098 (8,389) 153,709 (120,884) - (120,884) 32,825
	185,131
	60,410 (42,506)
	17,904
	$ 203,035

The amount of income tax recognized in other comprehensive income for 2018 and 2017 was as follows:

2018 Items that may be reclassified subsequently to profit or loss: Unrealized gains (losses) on availableforsale financial assets $ -	2017 72,449

Reconciliation of income tax and profit before tax for 2018 and 2017 is as follows:

Profit excluding income tax Income tax using the Company＇s domestic tax rate Adjustment in tax rate The amount of tax adjusted according to the tax law Recognition of previously unrecognized tax profits Undistributed surplus plus 10% Others	2018 $ 1,234,800	2017 236,798
	246,960 (42,506) (604) (815) - -	40,256 - (475) (8,389) 2,900 (1,467)
	$ 203,035	32,825

(Continued)

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Notes to the Financial Statements

(ii) Deferred tax assets and liabilities

Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2018 and 2017 were as follows:

Deferred Tax Assets:

Inventory price loss	Unrealized exchange loss	Convert-tible Bonds	Others	Total
$ 20,535 97,095 119,705 3,532 240,867 6,900 (33,801) 8,216 781 (17,904)
$ 27,435 63,294 127,921 4,313 222,963
Inventory price loss	Unrealized exchange loss	Convert-tible Bonds	Others	Total
$ 11,997 - 47,256 1,615 60,868 8,538 97,095 - 1,917 107,550 - - 72,449 - 72,449
$ 20,535 97,095 119,705 3,532 240,867

Deferred Tax Assets:

Balance at January 1, 2017 Recognized in profit or loss Balance at December 31, 2017	Unrealized exchange profit Others Total
	$ 47,334 (34,000) 13,334 (47,334) 34,000 (13,334)
	$ - - -

(iii) Examination and Approval

The Company＇s tax returns for the years through 2016 were examined and approved by the Taipei National Tax Administration.

(p) Capital and Other Equity

As of December 31 2017 and 2016, the number of authorized ordinary shares was 137,961 thousands shares at par value of $10 per share, amounting to $1,862,196 thousands.

(Continued)

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Notes to the Financial Statements

Reconciliation of shares outstanding for 2017 and 2016 was as follows:

Balance on December 31		Ordinary Shares 2018 2017	Ordinary Shares 2018 2017
		2018
		137,961	137,961

(i) Capital surplus

The balances of capital surplus as of December 31, 2017 and 2016 were as follows:

Gain on disposal assets Overdue dividends	December 31, 2018 $ 305 288	December 31, 2017 305 -
	$ 593	305

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the capital increase, by transferring the capital surplus in excess of the par value, should not exceed 10% of the total common stock outstanding.

(ii) Retained Earnings

The Company's article of incorporation stipulate that Company's net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders＇ meeting for approval.

The Company's dividend policy depends on the Company's capital expenditure budget and reqiured working capital. The remaining earnings will be distributed either in cash or in stock dividends, or both. However, the cash dividend can not be less than 10% of the total dividends distributed.

1) Legal reserve

According to the amendment of the R.O.C. Company Act in January 2012, the Company must retain 10% of its after-tax annual earnings as legal reserve until such retention equals the amount of total capital. When a company incurs no loss, it may, pursuant to a resolution by a shareholders＇ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

(Continued)

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Notes to the Financial Statements

2) Special reserve

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of the current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders＇ equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders ＇ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders＇ equity shall qualify for additional distributions.equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net.The special reserve for the years ended December 31, 2018 and 2017 were $584,443 thousand and $230,719 thousand, respectively.

3) Earnings distribution

Earnings distribution for 2017 and 2016 were decided via the general meeting of the shareholders held on June 28, 2018 and June 28, 2017, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to common shareholders Cash	2017	2017		2016	2016	2016
	Amount per share	Total amount 193,145		Amount per share		Total amount 565,638
	$ 1.4			4.1

(iii) OCI accumulated in reserves, net of tax

Balance at January 1, 2018 Effects of retrospective application Balance at January 1, 2018 after adjustments Balance at January 1, 2017 Unrealized gains (losses) on availableforsale financial assets Balance at December 31, 2017	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income
	$ (38,560) - (38,560)
	$ - (230,719) (230,719) - (353,724) (353,724)
	$ - (584,443) (584,443)

(Continued)

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Notes to the Financial Statements

(q) Earnings per Share

The calculation of basic earnings per share and diluted earnings per share for the year 2018 and 2017 are as follows:

Basic earnings per share Profit of the Company for the year Weighted average number of Diluted earnings per share Profit attributable to ordinary shareholders of the Company (diluted) Weighted average number of ordinary shares (diluted) at December 31 Effect of employee share bonus WWeighted average number of ordinary shares (diluted) at December 31	2018	2017 203,973
	$ 1,031,765
	137,961	137,961
	$ 7.48	1.48
	$ 1,031,765	203,973
	137,961 908	137,961 138
	138,869	138,099
	$ 7.43	1.48

(r) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets United States German Taiwan Japan Belgium Other Major products Stapler gun Pneumatic tool Magnesium alloy products Other	2018 $ 1,810,089 405,669 329,097 139,026 113,721 935,718
	$ 3,733,320
	$ 1,937,998 1,149,001 203,197 443,124
	$ 3,733,320

For details on revenue for the year ended December 31, 2017, please refer to note 6 (n).

(Continued)

145

Notes to the Financial Statements

BASSO INDUSTRY CORPORATION

(ii) Contract balances

Contract liabilities	December 31, 2018 $ 43,252	January 1, 2018 51,283

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

The amount of revenue recognized for the year ended December 31, 2018 that was included in the contract liability balance at the beginning of the period was $34,036 thousand.

(s) Revenue

The details of revenue for the year ended December 31, 2017 was as follows:

Sale of goods	2017 $ 3,836,257

Details of Revenue for 2018; please refer to note 6 (r).

(t) Employee compensation, Directors' and supervisors' remuneration

The Company's articles of incorporation, which were authorized by the board of directors but has yet to be approved by the shareholders, require that earnings shall first be offset against any deficit, then, a minimum of 0.5% will be distributed as employee remuneration, and a maximum of 3% will be allocated as remuneration to directors and supervisors. Employees who are entitled to receive the above mentioned employee remuneration, in share or cash, include the employees of the Company's subsidiaries who meet certain specific requirements.

For the years ended December 31, 2018 and 2017, the Company accrued and recognized its employee remuneration amounting to $40,000 thousand and $8,000 thousand, respectively, as well as its remuneration to directors and supervisors amounting to $11,000 thousand and $6,600 thousand, respectively. These amounts were calculated by using the Company's pre-tax net profit for the period before deducting the amounts of the remuneration to employees, directors and supervisors, multiplied by the distribution of ratio of the remuneration to employees, directors and supervisors based on the Company's articles of incorporation, and expensed under operating costs or expenses. If there would be any changes after the reporting date, the changes shall be accounted for as changes in accounting estimates and recognized as profit or lost in the following year.

(u) Non-operating Income and Expenses

(i) Other income

The details of other income were as follows:

Interest income: Bank deposits and foreign bonds	2018 $ 376,454	2017 339,922

(Continued)

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Notes to the Financial Statements

(ii) Other gains and losses

The details of other gains and losses were as follows:

Foreign exchange gains or loss, net Miscellaneous income Loss on disposals of property, plant and equipment Gains or losses on fair value through profit or loss financial assets Loss on disposal of financial assets (iii) Finance costs The details of financial costs were as follows: Interest expenses: Bank loans	2018 $ 278,150 1,301 2,175 (46,055) -	2017 (699,566) 1,695 1,638 - (73,768)
	$ 235,571	(770,001)
	2018 $ 102,235	2017 105,824

(v) Financial Instruments

(i) Credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to credit risk.

(ii) Concentration of credit risk

The major customers of the Company are centralized in the hightech computer industry. To minimize credit risk, the Company periodically evaluates their financial positions and the possibility of collecting trade receivables.Besides, the Company monitors and reviews the recoverable amount of the trade receivables to ensure the uncollectible amount are recognized appropriately as impairment loss.As of December 31, 2018 and 2017, 46% and 39%, respectively, of accounts receivable were three and two customers. Thus, credit risk is significantly centralized.

(iii) Receivables and debt securities

For credit risk exposure of note and trade receivables, please refer to note 6(f).

Other financial assets at amortized cost includes other receivables and time deposits. For the details on investments and loss allowance on December 31, 2017, please refer to note 6(g) and (k).

(Continued)

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Notes to the Financial Statements

All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. (Regarding how the financial instruments are considered to have low credit risk, please refer to note 4(f).)

(iv) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying amount	Within 6 months	6 months-1 years	1 -2 years	2 -5 years	Over 5years
$ 9,932,000 9,951,028 250,000 250,111 278,822 278,822 208,043 208,043	8,830,117 250,007 278,822 208,043	694,489 - - -	426,422 - - -	- - - -	- - - -
$ 10,668,865 10,688,004	9,567,093	694,489	426,422	-	-
$ 9,590,000 9,610,314 480,000 480,205 376,205 376,205 169,165 169,165	8,757,486 480,205 376,205 169,165	70,705 - - -	782,123 - - -	- - - -	- - - -
$ 10,615,370 10,635,889	9,783,061	70,705	782,123	-	-

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

(v) Currency risk
1) Exposure to foreign currency risk

The Company＇s significant exposure to foreign currency risk was as follows:

December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2017	December 31, 2017
Foreign currency	Exchange rates	TWD	Foreign currency	Exchange rates
		12,771,385 $ 400,952		29.76

(Continued)

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Notes to the Financial Statements

2) Sensitivity analysis

The Company＇s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade and other receivables, financial assets at fair value through other comprehensive income (available-for-sale financial assets) loans and borrowings; and trade and other payables that are denominated in foreign currency.The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. A strengthening (weakening) of 3% of the USD as of December 31, 2018 and December 31, 2017 would have increased (decreased) the equity by 306,513 and 206,861 thousand and the net profit after tax by 0 and 90,254 thousand. The analysis is performed on the same basis for prior year.

3) Foregin exchange gain and loss on monetary items

Since the Company transacts in different functional currencies, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years 2018 and 2017, the foreign exchange gain (loss) (including realized and unrealized portions) amounted to $193,677 thousand, respectively. please refer to note 6(u).

(vi) Interest rate risk

Please refer to the notes on liquidity risk management and interest rate exposure of the Company＇s financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.5% when reporting to management internally, which also represents the Company management's assessment of the reasonably possible interest rate change.

If the interest rate had increased / decreased by 0.5 basis points, the Company＇s net income would have increased / decreased by $6,181 thousand and $3,111 thousand for the year ended December 31, 2018 and 2017, respectively, with all other variable factors remaining constant. This is mainly due to the Company＇s borrowing at variable rates.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

(vii) Fair value of financial instruments
1) Fair value hierarchy

The fair value of financial assets and liabilities at fair value through profit or loss, derivative financial instruments used for hedging, and financial assets at fair value through other comprehensive income (availablefor sale financial assets )is measured on a recurring basis. The carrying amount and fair value of the Company＇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 for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required :

	December 31, 2018	December 31, 2018	December 31, 2018
Book Value		FairValue
	Level 1	Level 2	Level 3
$ 3,755,830 3,755,830 -			-
10 - -
253,364 - - 1,064,297 - - 7,575,465 - - 473,011 - -
$ 13,121,977 3,755,830 -
$ 8,993,000 - - 670,611 - - 769,000 - - 420,000 - -
$ 10,852,611 - -

(Continued)

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Notes to the Financial Statements

	December 31, 2017	December 31, 2017	December 31, 2017
Book Value		FairValue
	Level 1	Level 2	Level 3	Total 3,624,654 - 3,624,654 - - - - - 3,624,654 - - - - -
$ 3,624,654 3,624,654 - 10 - -			- -
3,624,664 3,624,654 -			-
161,550 - - 908,764 - - 6,708,313 - - 883,574 - -			- - - -
8,662,201 - -			-
$ 12,286,865 3,624,654 -			-
$ 9,111,000 - - 683,347 - - 190,000 - - 769,000 - -			- - - -
$ 10,753,347 - -			-

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

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

Financial assets measured at amortized cost (held-to-maturity financial assets). If quoted prices in active markets are available, the market price is established as the fair value. However, if quoted prices in active markets are not available, the estimated valuation or prices used by competitors are adopted.

3) Valuation techniques for financial instruments measured at fair value

Non-derivative financial instruments financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm＇s-length basis. Whether transactions are taking place ｀regularly＇ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

(Continued)

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BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

4) Transfers between Level 1 and Level 2

There were no transfers from one Level to another Level in 2018 and 2017.

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

The Company＇s financial instruments that use Level 3 inputs to measure fair value include “ financial assets measured at fair value through profit or loss – debt investments＂ and “fair value through other comprehensive income (available-for-sale ＂ financial assets) – equity investments .

The Company's equity investment instruments that are not available for active market quotes and are not for short-term trading purposes, the management adopts the recent financial report of the investee company to assess the industry development and view publicly available information, and to examine and Evaluate the operating status and future operating performance of the investee company to assess the fair value of the investee company. Generally, changes in industry and market prospects are highly positively correlated with changes in the operating and future performance of the investee company.

Item	Valuation technique	Significant unobservable inputs	Inter-relationship between significant unobservable inputs and fair value measurement
Financial assets at fair value through other comprehensive income (Non-current financial assets measured at cost) equity investments without an active market	Net Asset Value Method	• Net Asset Value	Not applicable

(w) Financial Risk Management

(i) Overview

The Company is exposed to the following risks from its financial instruments:

1) Credit risk
2) Liquidity risk
3) Market risk

(Continued)

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Notes to the Financial Statements

The following likewise discusses the Company＇s objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects on these risks exposures, please refer to the respective notes in the accompanying financial statements.

(ii) Structure of risk management

The Company＇s finance department provides business services for the overall internal department. It coordinates the domestic and international financial market operations, as well as supervises and manages the financial risks related to the Company＇s operation based on the internal risk report on exposure to risk with the analysis of the extent and the width of the risk. Operation of derivative financial instruments is subject to the policy approved by the Board of Directors, which is the documentation regarding exchange rate risk, interest risk, credit risk , operation of derivative and non-derivative financial instruments and investment in the remaining current capital. The internal auditors of the Company continue with the review of the compliance with the policy and the extent of the exposure to risk. The Company has no transactions in financial instruments (including derivative financial instruments) for the purpose of speculation.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to financial ＇ instruments fails to meet its contractual obligations that arise principally from the Company s receivables from customers and investments in debt securities.

1) Trade and other receivable

The Company established a credit policy to obtain the necessary collateral to mitigate risks arising from financial loss due to default risk. The Company will transact with corporations having credit ratings equivalent to investment grade, and such ratings are provided by independent rating agencies. When it is not possible to obtain such information, the Company will assess the ratings based on other publicly available financial information and records of transactions with its major customers. The Company continuously monitors its exposure to credit risk and counterparty credit ratings, and establishes sales limits based on credit rating for each of its approved customer. The credit limits for each counterparty are approved and reviewed annually by the Risk Management Committee.

The Company did not have any collateral or other credit enhancements to avoid credit risk of financial assets.

2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Company＇s finance department. The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company expects the counterparties above to meet their obligations; hence, there is no significant credit risk arising from these counterparties.

(Continued)

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Notes to the Financial Statements

3) Guarantee

As of December 31,2018 and 2017, there were no guarantees that were outstanding for both years.

(iv) Liquidity risk

The Company manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. Its management supervises the banking facilities and ensures compliance with the terms of loan agreements.

Loans and borrowings from the bank form an important source of liquidity for the Company. As of December 31, 2018 and 2017, the Company's unused credit lines amounted to $2,152,000 thousand and $1,534,000 thousand, respectively.

(v) Market risk

Market risk is a risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, which affects the Company＇s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Company is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of the Company＇s entities, primarily US Dollars (USD).

2) Interest rate risk

The Company adopts a policy of ensuring that 0.87-1.17% of its exposure to changes in interest rates on borrowings is on a floating-rate basis

3) Other market price risk

The Company is exposed to equity price risk due to the investments in equity securities. This is a strategic investment and is not held for trading. The Company does not actively trade in these investments as the management of the Company minimizes the risk of holding different investment portfolios.

(x) Capital Management

The Company＇s objective is to manage its capital to safeguard its capacity to continue to operate, and provide a return on shareholders, as well as to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to its shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabiltiies.

(Continued)

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Notes to the Financial Statements

The Company and other entities in the same industry use the debt-to-equity ratio to manage their capital. This ratio is the total net debt, divided by the total capital. The net debt from the balance sheet is derived from the total liabilities, less, cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity, plus, net debt.

As of December 31, 2017, the Company＇s capital management strategy is consistent with that of the prior year, and the debt to equity ratio is maintained within 50% to 100% to ensure financing at reasonable cost. The Company＇s debt to equity ratio at the end of the reporting period was as follows:

December 31, 2018 $ 11,033,098 (253,364)	December 31, 2018 $ 11,033,098 (253,364)	December 31, 2017 10,934,962 (161,550)
$ 10,779,734		10,773,412
$ 3,828,584		2,981,836
$ 14,608,318		13,755,248
73.79%	78.32%

(y) Non-cash trading investing and financing activities

The adjustment of liabilities from financing activities are as follows:

January 1, 2018 $ 959,000 9,111,000	Cash flow statement	Change of non-cash Acquisition Change of exchange rate Change of fair value - - - - - -	Change of non-cash Acquisition Change of exchange rate Change of fair value - - - - - -	Change of non-cash Acquisition Change of exchange rate Change of fair value - - - - - -	December 31, 2018 1,189,000 8,993,000
			Change of exchange rate - -
	230,000 (118,000)	- -
$ 10,070,000	112,000	-	-	-	10,182,000

(7) Related-party transactions:
(a) Key management personnel compensation

Key management personnel compensation comprised of the following:

Short-term employee benefits Post-employment Benefits Termination benefits Other long-term employee benefits Share-based paymen	2018	2017 32,556 546 - - - 33,102
	$ 46,159 527 - - -
	$ 46,686

(Continued)

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Notes to the Financial Statements

(8) Pledged assets:

The carrying values of pledged assets were as follow:

Pledged assets	Object	December 31, 2018 $ 105,388 171,400 7,511,578 3,699,194 -	December 31, 2017 105,388 176,586 6,733,311 - 3,567,957
Land Buildings and structures Other financial assets-current Financial assets at fair thorugh profit or loss Available-for-sale financail assets	Guarantee for bank loans Guarantee for bank loans Guarantee for bank loans Guarantee for bank loans Guarantee for bank loans
		11,487,560	10,583,242

(9) Commitments and contingencies:None

(10) Losses Due to Major Disasters: None.

(11) Subsequent Events:None

(12) Other:

A summary of current-period employee benefits, depreciation, depletion, and amortization, by function its as follows:

as follows:
By function Byitem	2018			2017
	Operating Costs	Operating Expenses	Total	Operating Costs	Operating Expenses	Total
Employee benefits
Salary	329,748	137,532	467,280	314,121	113,384	427,505
Labor and health insurance	27,424	8,931	36,355	26,549	8,854	35,403
Pension	11,660	4,247	15,907	11,548	4,318	15,866
Director's remuneration	-	26,107	26,107	-	13,175	13,175
Others	12,333	2,255	14,588	12,279	2,272	14,551
Depreciation	64,803	20,666	85,469	67,298	13,143	80,441
Amortization	2,928	8,748	11,676	2,094	7,230	9,324

The number of employees in the company in 2018 and 2017 was 759 and 743 respectively, of which the number of employees who did not have concurrent employees was five.

(Continued)

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Notes to the Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:None

The following is the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers＂ for the Company:

(i) Loans to other parties:None
(ii) Guarantees and endorsements for other parties:None
(iii) Securities held as of December 31, 2018 (excluding investment in subsidiaries, associates and joint ventures):

(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)
Name of holder	Category and name of security	Relationship with company	Account title	Endingbalance
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Note
The company	UBS Float 08/15/23 Corp	None	FVTPL	-	408,663	-%	408,663
The company	UBS 4.875% 04/08/2020	None	FVTPL	-	497,138	-%	497,138
The company	UBS T 7.125 02/15/23 Gort	None	FVTPL	-	1,961,752	-%	1,961,752
The company	UBS Float 02/01/22 Corp	None	FVTPL	-	62,235	-%	62,235
The company	UBS Float 05/23/23 Corp	None	FVTPL	-	183,580	-%	183,580
The company	UBS Float 04/14/21 Corp	None	FVTPL	-	124,905	-%	124,905
The company	UBS T 7.625 11/15/22 Gort	None	FVTPL	-	517,557	-%	517,557
The company	Stock-COTA commercial bank	None	FVOCI	1	10	-%	13	Note 1
The company	Stock-GATETECH	None	FVOCI	203	-	0.39%	11	Note 1

Note 1: The stock has not been publicly traded, and there is no clear market price available. Therefore, the proporation of shares held had been disclosed on December 31, 2018.
(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-part y	Relationship with the company	BeginningBalance	BeginningBalance	BeginningBalance	Purchases	Purchases	Sales	Sales	Sales	EndingBalanc	EndingBalanc
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
The company	UBS 5.75% 04/25/2018	FVTPL	UBS	None	-	504,327	-	-	-	496,638	607,237	(110,599)	-	-
The company	UBS Float 08/15/23 Corp	FVTPL	UBS	None	-	-	-	408,669	-	-	-	-	-	408,663

(Continued)

157

BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:None
(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:None
(ix) Trading in derivative instruments:None
(x) Business relationships and significant intercompany transactions:None
(b) Information on investment in mainland China:None
(c) Significant transactions:None

(14) Segment information:

(a) General information

The Company has one reportable segment, the pneumatic hand tool. This segment is mainly involved in manufacturing and selling Nail machine and pneumatic tools, providing products and manage relevant skills and marketing strategies.

(b) Information about reportable segments and their measurement and reconciliations

The Company uses the internal management report that the chief operating decision maker reviews as the basis to determine the resource allocation and make a performance evaluation. The internal management report includes profit before taxation.

The segment profit includes depreciation and amortization expenses, income tax expense (income), unusual profit (loss), and other significant non-monetary items. The reporting amount is the same with that of the chief operating decision maker's.

There is no inconsistency between the accounting principles of the operating segment and the accounting principle described in Note 4. All reportable segments of the Company is consistent with the financial statements. Please refer to the balance sheet and comprehensive income statement.

(Continued)

158

BASSO INDUSTRY CORPORATION

Notes to the Financial Statements

(c) Production and service information

Revenue from the external customers of the Company was as follows:

Product and services Stapler gun Pneumatic tool Magnesium alloy products Others	2018 $ 1,937,998 1,149,001 203,197 443,124	2017 1,922,227 1,275,096 149,649 489,285
	$ 3,733,320	3,836,257

(d) Geographic information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers and segment assets are based on the geographical location of the assets.

Geographical information United States German Taiwan England Japan Beliguim Switzerland Other countries rrent assets: Geographical information Taiwan	2018 2017 $ 1,810,089 1,840,149 405,669 437,301 329,097 163,993 113,528 124,660 139,026 114,757 113,721 112,995 99,032 107,543 723,158 934,859
	$ 3,733,320 3,836,257
	2018

Non-current assets:

Taiwan

Non-current assets include property, plant and equipment, investment property, intangible assets, and other assets; excluding financial instruments, deferred tax assets, pension fund assets, and rights arising from an insurance contract (non-current).

(e) Major customers

A customer of pneumatic hand tool division	2018 $ 639,231		2017 596,103

159

Basso Industry Corporation List of cash and bank deposits

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item Cash Bank deposits	Description Petty cash Foreign currency(USD6,317.74×30.7664 JPY96,000× 0.2710 EUR3,680× 35.3804 HKD640× 3.9422 CNY3,607.5 ×4.8103 KRW568,000×0.0291 GBP3,000× 41.218) Demand deposit and time deposit Foreign currency(USD3,490,550.93×30.715 JPY2,145,328×0.2782 EUR1,824,484.4×35.2 CAD×22.58)	Amount $ 100 511 80,722 172,031 $ 253,364

160

Basso Industry Corporation

List of current financial assets at fair value through profit or loss

For the years ended December 31, 2018 (expressed in thousands of New Taiwan dollars)

Financial product name Description Denomination (thousand) Beneficiary certificate UBS 4.875% 04/08/2020 Foreign bond USD15,800 UBS Float 08/15/2023 Corp Foreign bond USD13,580 UBS T7.625% 11/15/2022 Govt Foreign bond USD14,200 UBS T7.125% 02/15/2023 Govt Foreign bond USD54,150 UBSFloat 04/14/2021 Corp Foreign bond USD3,980 UBS Float 05/23/2023 Corp Foreign bond USD6,000 UBS Float 02/01/2022 Corp Foreign bond USD2,000	Rate Acquisition cost 4.875% $ 546,172 3.566% 408,669 7.625% 652,634 7.125% 2,418,304 4.216% 126,181 3.897% 182,048 4.071% 61,426	Acquisition cost	Fair value 497,138 408,663 517,557 1,961,752 124,905 183,580 62,235	Situation of provide gurantee or pledge Partial pledge Pledge Pledge Pledge Pledge Pledge Pledge

$ 4,395,434 3,755,830

161

Basso Industry Corporation

List of nots and accounts receivable

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Client's name Notes Receivable： Menards, Inc. Others (Note) Accounts Receivable： Techtronic Trading Ltd Professional Tool Products LLC. Taiwan branch B&D MACAO COM'L OFFSHORE LTD KOKI HOLDINGS AMERICA LTD Others (Note) Allowance lost	Description Operating " Operating " " " "	$	Amount
			3,450 6,408
		$	9,858
		$	304,278 57,397 46,625 45,375 440,053
			893,728 (11,292)
		$	882,436

Note:If the amount does not exceed 5% of the balance of the account, it will not be listed seperately.

Other receivable list

Item Other receivable	Description	$	Amount
	Interest receivable and others		172,003

162

Basso Industry Corporation

List of other current financial assets

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item	Description	Amount $ 7,038,567 536,898	Amount
Other financial assets "	Restricted deposit Time deposits with maturities of more than three months
		$ 7,575,465

Inventory list

Amount

		Amount
Item	Cost	Market price - 104,619 270,034 248,381 623,034	Notes
Commodity Financial goods Work in process Raw materials Allowance for sluggish loss	$ 3 90,281 290,051 304,390 684,725 (137,173) $ 547,552		Net realizable value Net realizable value Net realizable value Replacement cost

163

Basso Industry Corporation

List of prepaid expenses and other current assets

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item Prepayments Tax refund Other current assets	Description Prepaid receipts Other prepaid expenses Business tax Temporary payment	$	Amount
			3,629 7,424
			11,053
			14,983 772
			15,755
		$	26,808

164

Basso Industry Corporation

List of changes in P.P.E and accumulated depreciation

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item	Opening balance $ 305,349 657,083 1,796,780 185,326	Increased	Decreased	Reclassify	Ending balance
Cost： Land Building and structure Machinery equipment Other equipment Accumulated depreciation： Building and structure Machinery equipment Other equipment		- 2,541 10,903 4,421	- 1,735 43,108 29,806	- 7,742 52,007 7,646	305,349 665,631 1,816,582 167,587
	2,944,538	17,865	74,649	67,395	2,955,149
	266,634 1,622,631 165,256	16,487 61,174 7,808	1,735 42,373 29,806	- - -	281,386 1,641,432 143,258
	2,054,521	85,469	73,914	-	2,066,076
	$ 890,017	(67,604)	735	67,395	889,073

Note1：The depreciation of fixed assets is based on the straight-line method at the cost of the following estimated years of durability.
(1)Building and structure：2~57 years
(2)Machinery equipment：1~21 years
(3)Other equipment：1~21 years
Note2：The reclassify of this period consisted of the transfer of prepaid equipment into the amount of 54,828 thousand and the transfer of inventory to 12,567 thousand.

List of changes in intangible assets

Please refer to 6 (i) for related information.

165

Basso Industry Corporation

List of Non-current financial assets

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item				Description
						Amount
Other	non-current	financial	assets	Restricted deposits	$	473,011
				List of other non-current assets
Item				Description
						Amount
Other	Non-current	assets		Refundable deposits	$	1,509
				Prepaid equipment		28,949
				Prepayment		158
					$	30,616

166

Basso Industry Corporation

List of short-term borrowings

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Creditor Taishin International Bank CTBC Bank Co. UBS CTBC Bank Co. YUANTA Bank Taishin International Bank	Loan nature Credit loan Secured loan Secured loan Secured loan Secured loan Secured loan	Ending balance Contract term $ 250,000107.12.17~108.01.17 400,000107.10.26~108.03.21 2,795,000107.10.31~108.01.31 1,941,000107.10.12~108.03.21 1,717,000107.11.16~108.01.15 1,890,000 107.12.17~108.01.17 $ 8,993,000	Contract term	Interset rate range % Mortgage or collateral 0.95% None 0.97%~1% Land 1.03% FVTPL 0.97%~1% Current other financial assets 1.06% Current other financial assets 0.95% Current other financial assets

List of notes and accounts payable

Supplier's name	$	Amount
Notes payable WESUN ENTERPRISE. CO, LTD YOU ZHEN Co., LTD SIN TE LIN Co., LTD Other (Note) Account payable CHANG HANG ENTERPRISE Co., LTD Other (Note)		602 586 462 6,370
	$	8,020
	$	28,620 242,182
	$	270,802

Note:If the amount does not exceed 5% of the balance of the account, it will not be listed seperately.

167

Basso Industry Corporation

List of accured expenses and other current liabilities

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item Other payable Other current liabilities	Description Payroll payable Processing fee payable Employee bonus and director's compensation payable Advertising payable Other (Note) Temporary payment－other Collection payment	$	Amount
			119,199 83,870 51,000 47,340 90,380
			391,789
			449 812
			1,261
		$	393,050

Note: If the amount does not exceed 5% of the balance of the account, it will not be listed seperately.

List of long-term borrowings and long-term loans due withing one year

Loan amount

Loan Bank Loan nature First commercial Bank Secured loan	Expired part withing a year $ 769,000	More than one year due 420,000	Contract term 106.02.02~109.12.29	Rate 0.95~1.01%	Collateral
					Other non-current financial assets

168

Basso Industry Corporation List of net operating income

(expressed in thousands of New Taiwan dollars)

Item Nail gun Pneumatic tools Magnesium alloy products Other	Quantity 863,370 620,927 1,934,272	$	Amount
			1,937,998 1,149,001 203,197 443,124
		$	3,733,320

169

Basso Industry Corporation List of cost of goods sold

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item Commodity Beginning commodity Plus：Current purchase Less：Ending commodity Cost of goods sold Raw materials Beginning raw materials Plus：feed Inventory profit Less：Ending raw materials Sale of raw materials Scrapped Other Raw materials used Direct labor Manufacturing expenses Manufacturing costs Plus：Beginning work-in-process Less：Ending work-in-process Cost of finished goods Plus：Beginning finished goods Purchase finished goods Less：Ending finished goods Scrapped Transfer of fixed assets Other Self-made sales cost Sale of raw material Inventory profit Revenue from sale of scraps Preparation for warranty Scrapped Inventory decline and sluggish loss Other Operating cost	$	Amount
		44 7,508 (3)
		7,549
		252,799 1,647,039 7 (304,390) (199,938) (5,320) (22,757)
		1,367,440 162,293 963,447
		2,493,180 235,424 (290,051)
		2,438,553 67,433 22,011 (90,281) (212) (12,567) (13,449)
		2,411,488
		199,938 (7) (23,706) (108) 5,532 16,378 (1,683)
	$	2,615,381

170

Basso Industry Corporation

List of operating expenses

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item Salary expenditure Freight Employee benefits Depreciation Advertising expense Sample fee Inventory transfer Commision Export fee Labor costs Repair fee Amortization Mold fee Other expenses(note)	Sales expense $ 34,036 16,557 355 1,675 41,709 16 1,883 14,568 21,963 - 523 264 - 20,561 $ 154,110	Administration 61,521 - 5,102 1,004 - - - - - 6,643 424 328 - 10,383 85,405	Research expense 71,442 - 509 17,987 - 14,105 7,029 - - - 7,274 8,156 9,430 17,482
			153,414

Note: If the amount does not exceed 5% of the balance of the account, it will not be listed seperately.

171

Basso Industry Corporation

List of non-operating income and expenses

For the years ended December 31, 2018

(expressed in thousands of New Taiwan dollars)

Item Non-operating income： Interest revenue－bank deposits and bonds Profit on exchange Other (note) Non-operating expense： Interest expense－bank loan Financial assets valuation loss	Description Non-operating " " " "	Amount $ 376,454 278,150 3,476	Amount
		$ 658,080
		$ 102,235 46,055
		$ 148,290

Note: If the amount does not exceed 5% of the balance of the account, it will not be listed seperately.

172

X. Annexes:

BASSO Industry Corporation

Standard Operating Procedures for Handling Directors' Requests

Article I. In order to establish good corporate governance of the Company, assist the directors in performing their duties and enhance the effectiveness of the board of directors, this procedure is hereby formulated and followed.
Article II. Unless otherwise provided in the statute or the articles of association, the Company shall comply with the provisions of this procedure in dealing with matters related to directors' requirements.
Article III. The Company shall provide the directors with such information as may be appropriate and timely, in such form and in such quality as to enable the directors to make decisions with such information in hand and to discharge their duties as directors. However, the Company may not provide the information required by the directors in case of any violation of duties or any violation of laws and regulations.
Article IV. The unit designated by the board of directors of the Company shall be the Finance Department, which shall draw up the content of the board of directors' discussion and provide sufficient meeting materials, which shall be sent together with the convention notice. If the director considers that the meeting materials are insufficient, he/she can notify the Finance Department in writing or by email to ask for supplement, and the Finance Department shall provide the information within 2 working days after receiving the notice. If the directors think the meeting materials are insufficient, they may postpone the proposal after the board of directors’ resolution.
Article V. The Company does not have a director of corporate governance, so the Finance Department is responsible for dealing with the matters required by the directors, and in accordance with the principle of immediately and effectively assisting the directors to perform their duties, shall deal with the matters as soon as possible within 5 working days after receiving the written or e-mail notice from the directors.
Article VI. The directors shall keep confidential the information provided by the Company and shall not disclose it to others without authorization of the company or use it for other purposes other than for their duties.
Article VII. This procedure shall come into force after being approved by the board of directors and shall be amended accordingly.
Article VIII. This procedure is set on March 25, 2019.

173

BASSO Industry Corporation Person in Charge: Ming‐Ta Lai

AI assistant

BASSO — Annual Report 2018

51850_rns_2019-07-24_31c0b7b7-952e-4073-9128-4a8770ce72ef.pdf

BASSO INDUSTRY CORP.

2018

BASSO INDUSTRY CORP. 2018 Annual Report

1. Corporate Spokesperson

4. CPA

1. Shareholders Report

1. 2018 Revenue Report

(3) Financial Status and Profitability

(4) Research & Development

2. 2019 Business Operations Overview

(1) Management Guidelines

(2) Sales Performance Estimate

(3) Major Industry Policy

3.Future Development & Prospects

4. Influences from External, Legal, and Overall Business Environment

2. Corporate Profile

1. Date Founded

2. Corporate Milestones

3. Corporate Governance Report

1. Corporate Organization

(1) Organization Structure

2. Directors, Supervisors, President, Deputy President, Assistant Managers, and Department and Division Supervisors

(1) Directors and Supervisors

2. Directors’ Professional Qualifications and Independence Analysis

3. A Judicial Person Acts as a Primary Shareholder April 30, 2019

4. A Judicial Person Acts as a Primary Shareholder

(2) President, Deputy President, Assistant Managers, Department and Division Supervisors

(3) Remuneration to Directors, Supervisors, President, and Deputy President in 2018

1. Remuneration to Directors

Range of Remuneration Paid to Directors

2. Remuneration Paid to Supervisors

Range of Remuneration Paid to Supervisors

(3) Remuneration Paid to President and Deputy President

President and Deputy Remuneration Range

(Thousands)

2. Remuneration policies, standards and packages, the procedure for setting remuneration, and correlation to business performance:

3. Corporate Governance

(1.) Implementation of Board of Directors

(2) Implementation of Board of Directors

Other Special Notes

2. Supervisors Participation in Directors Board:

Supervisors Participation in Directors Board

(3) Implementation of Company Governance and Discrepancies and Reasons of Departure from Guidelines for TWSE/OTC Listed Companies

Note:

2018 Evaluation of the External Auditor’s Independence

To: Basso Industry Inc.

KPMG Taiwan

(1) Remuneration Committee Member Data

(2) Implementation of Remuneration Committee

1. A total of three members have been appointed on the remuneration committee. 2. Current term of office: August 8 2018-June 27, 2021. 2018 Remuneration Committee Meeting held Committee member attendance of the two meetings (A) held, is as follows:

Note :

(5) Implementation of Ethical Corporate Management Policies

(8) Implement Status of Internal Control Disclosure:

1. Statement of Internal Control System

2. If company has appointed CPA to assess internal control system, audit report shall be disclosed: None .

(10) Shareholders Meeting and Board of Directors Meeting major resolutions and Shareholders Meeting resolutions implement status in 2018 and prior to prospectus printing:

Shareholders Meeting and Board of Directors Meetings Major Resolutions

Resigned Employees Status

4 Audit Fees

CPA Fee Range (Check appropriate range or fill in amount)

Audit Fees

5. Auditors Change

Changes in Shareholding of Directors, Supervisors, Managers, and

Primary Shareholders

8. Top 10 Shareholders and Affiliations:

9.The total number of shares and held in any single enterprise by the company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the company, and calculating the consolidated shareholding percentage of the preceding categories.

4. Funding

1. Capital & Shares

(1) Sources of share capital: shares issued in 2018

(3) Distribution of Share Ownership

1. Common Share: April 30, 2019

2. Preferred Share: None

(4) Primary Shareholders April 30, 2019

(6) Dividend Policy and Distribution of Earnings

1. Corporate Dividend Policy

2. Implementation of Dividend Allocation in Shareholders Meeting:

(7) The Impact of Stock Dividend Distribution to Business Performance and Earnings Per Share:

BASSO Annual Report 2018