LOTES - Interim / Quarterly Report 2020

Stock Symbol: 3533

LOTES CO., LTD. and Subsidiaries

Consolidated Financial Statements and Independent Auditor's Report

Second Quarter 2020 and 2019

`Notice to Readers`

For the convenience of readers, the Consolidated Financial Statements and Accountant ’ s Review Report have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors ’ report and financial statements shall prevail.

Company Address: No. 15, Wuxun St., Anle Dist., Keelung City 204 Tel: (02)2433 1110

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Table of Content

Contents I. Cover page II. Table of Content III. Independent Auditor’s Report IV. Consolidated Balance Sheet V. Consolidated Statement of Comprehensive Income VI. Consolidated Statement of Changes in Equity VII. Consolidated Statement of Cash Flows VIII. Notes to the Consolidated Financial Statements (I) Company History (II) Date and Procedures of Approval of Financial Statement (III) Application of New and Revised Standards and Interpretations (IV) Summary of Major Accounting Policies (V) Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties (VI) Descriptions for Important Accounting Items (VII) Related Party Transactions (VIII) Pledged Assets (IX) Significant Contingent Liabilities and Unrecognized Contractual Commitments (X) Significant Disaster Loss (XI) Significant Post-period Events (XII) Others (XIII) Disclosing Information (1) Major Transaction Details (2) Information on Reinvestment Business (3) Investment in Chinese Company (4) Principal Shareholder Information (XIV) Segmental Information	Page
	1 2 3 4 5 6 7 8 8 8-9 9-13 13 13-53 53 53 53-54 54 54 54-55 55-63 64-65 66-67 67 68-69

Contents
I.
Cover page
II.
Table of Content
III. Independent Auditor’s Report
IV. Consolidated Balance Sheet
V. Consolidated Statement of Comprehensive Income
VI. Consolidated Statement of Changes in Equity
VII. Consolidated Statement of Cash Flows
VIII. Notes to the Consolidated Financial Statements
(I) Company History
(II) Date and Procedures of Approval of Financial Statement
(III) Application of New and Revised Standards and Interpretations
(IV) Summary of Major Accounting Policies
(V) Primary Sources of Major Accounting Judgment, Estimate and
Assumption Uncertainties
(VI) Descriptions for Important Accounting Items
(VII) Related Party Transactions
(VIII) Pledged Assets
(IX) Significant Contingent Liabilities and Unrecognized Contractual
Commitments
(X) Significant Disaster Loss
(XI) Significant Post-period Events
(XII) Others
(XIII) Disclosing Information
(1) Major Transaction Details
(2) Information on Reinvestment Business
(3) Investment in Chinese Company
(4) Principal Shareholder Information
(XIV) Segmental Information

Page

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55-63
64-65
66-67
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Independent Auditor’s Report

To the Board of Directors, Lotes Co., Ltd.:

Foreword

We have reviewed the Consolidated Balance Sheet of Lotes Co., Ltd. and its subsidiaries as of June 30, 2020 and 2019, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows for the three months and six months ended June 30, 2020 and 2019, and the Notes to the Consolidated Financial Statements (including important accounting policies summary). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope

We conducted our reviews in accordance with Statements on Auditing Standards No. 65, “ Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of the consolidated financial statements consists of inquiries (primarily of persons responsible for financial and accounting matters), analytical procedures and other review procedures. A review is substantially less in scope than an audit, and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Lotes Co., Ltd. and its subsidiaries as of June 30, 2020 and 2019, and of its consolidated financial performance and its consolidated cash flows for the three months and six months ended June 30, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

KPMG Taiwan

CPAs:

Competent : CHIN-KUAN-CHENG-SHEN Authority of TZU No. 1000011652 Securities (88) TAI-TSAI-CHENG (VI) Approval No. 18311 Certificate No August 11, 2020

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June 30, 2020 and 2019, reviewed only and not audited in accordance with generally accepted auditing standards (GAAS)

LOTES CO., LTD., and Its Subsidiaries

Consolidated Balance Sheet

June 30, 2020, December 31, 2019, and June 30, 2019

Unit: NT$1000

Jun. 30, 2020 Amount % $ 3,939,306 21 16,458 - 1,669 - 33,882 - 6,373,641 34 271,427 2 - - 2,268,534 12 169,464 1 83,736 1 14,269 -	Dec 31, 2019 Amount % 2,845,994 17 240,034 1 6,438 - 15,257 - 5,949,268 37 219,031 1 758 - 1,976,021 12 137,348 1 - - 10,563 -	Jun. 30, 2020 Amount % $ 46,000 - 58,815 - 16,515 - 2,616,501 14 2,067,499 11 392,716 2 90,983 1 148,318 1 22,452 - 32,074 -	Dec 31, 2019 Amount % 29,980 - 19,947 - 19,000 - 1,885,062 12 964,415 6 436,898 3 94,851 1 157,256 1 23,337 - - -	Jun. 30, 2019 Amount % 232,988 2 2,158 - 6,638 - 1,682,436 11 1,855,994 12 278,901 2 103,969 1 72,623 - 12,731 - - -
		5,491,873 29	3,630,746 23	4,248,438 28
		68,694 - 41,708 - 28,049 - 22,869 - 74,225 1 78,408 1	- - 41,729 - - - - - 60,560 - 1,932 -	- - 40,564 - - - 923 - 87,023 1 1,990 -
13,172,386 71	11,400,712 69
3,872,318 21 384,043 2 377,795 2 125,085 1 116,108 1 - - 427,963 2	3,514,714 22 383,426 2 283,002 2 99,789 1 123,925 1 85,923 1 388,701 2
		313,953 2	104,221 -	130,500 1
		5,805,826 31	3,734,967 23	4,378,938 29
		1,034,779 6 3,961,826 21 7,687,244 42 (840,116) (5)	1,034,779 6 3,959,560 24 7,471,519 46 (650,532) (4)	1,034,779 7 3,766,109 24 6,129,779 40 (242,241) (2)
5,303,312 29	4,879,480 31
		11,843,733 64	11,815,326 72	10,688,426 69
		826,139 5	729,899 5	383,400 2
		12,669,872 69	12,545,225 77	11,071,826 71
$ 18,475,698 100	16,280,192 100	$ 18,475,698 100	16,280,192 100	15,450,764 100

(Please refer to the Consolidated Financial Notes for details) Manager: He, De-yo

Accounting Supervisor: Liu, Xing-xia

Director: Zhu, De-xiang

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Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS) LOTES CO., LTD., and Its Subsidiaries Consolidated Statement of Comprehensive Income

April 1 to June 30, 2020 and 2019 and January 1 to June 30, 2020 and 2019

Unit: NT$1000

Apr-Jun 2020 Amount % $ 4,735,231 100 2,706,916 57	Apr-Jun 2020 Amount % $ 4,735,231 100 2,706,916 57	Apr-Jun 2019 Amount % 3,608,936 100 2,426,658 67	Apr-Jun 2019 Amount % 3,608,936 100 2,426,658 67	Jan-Jun 2020 Amount % 7,872,071 100 4,721,318 60	Jan-Jun 2020 Amount % 7,872,071 100 4,721,318 60	Jan-Jun 2019 Amount % 6,861,815 100 4,666,027 68	Jan-Jun 2019 Amount % 6,861,815 100 4,666,027 68
Amount $ 4,735,231 2,706,916		Amount 3,608,936 2,426,658		Amount 7,872,071 4,721,318		Amount 6,861,815 4,666,027
2,028,315	43	1,182,278	33	3,150,753	40	2,195,788	32
153,332 281,229 366,677 (2,604)	3 6 8 -	134,846 242,548 266,357 16	4 7 7 -	271,277 526,551 656,429 (929)	3 7 8 -	264,623 497,113 499,255 309	4 7 7 -
798,634	17	643,767	18	1,453,328	18	1,261,300	18
1,229,681	26	538,511	15	1,697,425	22	934,488	14
9,696 8,385 73,016 (82,134) (4,752) 3	- - 2 (2) - -	10,380 - 33,737 29,670 (6,000) (488)	- - 1 1 - -	18,101 8,385 107,767 (53,217) (7,344) 2,509	- - 2 (1) - -	17,252 - 89,036 (65) (13,866) (415)	- - 2 - - -
4,214	-	67,299	2	76,201	1	91,942	2
1,233,895 286,127	26 6	605,810 177,449	17 5	1,773,626 393,734	23 5	1,026,430 266,337	16 4
947,768	20	428,361	12	1,379,892	18	760,093	12
	- -	(2,233) -	- -	91 -	- -	2,176 -	- -
2,783	-	(2,233)	-	91	-	2,176	-
	(3) -	(66,889) -	(2) -	(205,499) (4,303)	(3) -	73,238 -	2 -
(163,100)	(3)	(66,889)	(2)	(201,196)	(3)	73,238	2
(160,317)	(3)	(69,122)	(2)	(201,105)	(3)	75,414	2
$ 787,451	17	359,239	10	1,178,787	15	835,507	14
$ 899,485 48,283	19 1	416,011 12,350	12 -	1,312,383 67,509	17 1	733,385 26,708	12 -
$ 947,768	20	428,361	12	1,379,892	18	760,093	12
$ 739,258 48,193	16 1	347,559 11,680	10 -	1,112,659 66,128	14 1	808,164 27,343	13 1
$ 787,451	17	359,239	10	1,178,787	15	835,507	14
$	8.69		4.02		12.68		7.12
$	8.67		4.01		12.65		7.11

(Please refer to the Consolidated Financial Notes for details) Manager: He, De-yo Accounting Supervisor: Liu, Xing-xia

Director: Zhu, De-xiang

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Unit: NT$1000

Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS) LOTES CO., LTD., and Its Subsidiaries

Consolidated Statement of Changes in Equity

January 1 to June 30, 2020 and 2019

		Equity allocated to the owner of theparent	Equity allocated to the owner of theparent	Equity allocated to the owner of theparent	Equity allocated to the owner of theparent	company	company		Non-contro lequity	Total equity
Share capital		Capital reserves	Retained earnings			Other equity items		Total equity attributable to owners of the parent
						Exchange difference between foreign operating office’s statement	Unrealized gain or loss on Financial assets measured at FVTOCI
Ordinary share capital	Share capital received in advance		Legal reserve	Special reserve	Undistribut ed earnings
$ 934,779 - -	125,638 - -	2,466,109 - -	931,082 - -	255,202 - -	5,110,368 733,385 -	(314,561) (2,459) - - 72,603 2,176		9,506,158 733,385 74,779	365,324 26,708 635	9,871,482 760,093 75,414
-	-	-	-	-	733,385	72,603 2,176		808,164	27,343	835,507
- - - 100,000 -	- - - (125,638) -	- - - 1,300,000 -	160,857 - - - -	- 61,818 - - -	(160,857) (61,818) (900,258) - -	- - - - - - - - - -		- - (900,258) 1,274,362 -	- - - - (9,267)	- - (900,258) 1,274,362 (9,267)
$ 1,034,779	-	3,766,109	1,091,939	317,020	4,720,820	(241,958) (283)		10,688,426	383,400	11,071,826
$ 1,034,779 - -	- - -	3,959,560 - -	1,091,939 - -	317,020 - -	6,062,560 1,312,383 -	(631,970) (18,562) - - (199,815) 91		11,815,326 1,312,383 (199,724)	729,899 67,509 (1,381)	12,545,225 1,379,892 (201,105)
-	-	-	-	-	1,312,383	(199,815) 91		1,112,659	66,128	1,178,787
- - - - - - -	- - - - - - -	- - - 2,266 - - -	207,604 - - - - - -	- 333,513 - - - - -	(207,604) (333,513) (1,086,518) - - (10,140) -	- - - - - - - - - - - 10,140 - -		- - (1,086,518) 2,266 - - -	- - - - 79,229 - (49,117)	- - (1,086,518) 2,266 79,229 - (49,117)
$ 1,034,779	-	3,961,826	1,299,543	650,533	5,737,168	(831,785) (8,331)		11,843,733	826,139	12,669,872

(Please refer to the Consolidated Financial Notes for details) Manager: He, De-yo

Accounting Supervisor: Liu, Xing-xia

Director: Zhu, De-xiang

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Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS) LOTES CO., LTD., and Its Subsidiaries Consolidated Statement of Cash Flows January 1 to June 30, 2020 and 2019

Net cash flow from operating activities: Net profit before tax Items of adjustment: Income and expenses Depreciation expense Amortization expense Expected credit losses (gains) Depreciation expense Amortization expense Disposition of Property, plant and equipment Net loss on financial assets measured at FVTPL Losses on the price fall and scraping of inventory Bargain purchase gains Total income and expenses Change in assets/liabilities related to operating activities: Net change in operating assets: Loss (gain) of receivable notes Decrease (increase) in accounts receivable Decrease (increase) in other receivables Decrease (increase) in inventories Increase in payments in advance Decrease (increase) in other current assets Decrease (increase) in other financial assets Total net change in operating assets Net change in operating liabilities: Increase (decrease) in contract liabilities Decease in notes payable Increase (decrease) in accounts payable Other increase (decrease) in accounts payable Increase (decrease) in provisions Decease in Other current liabilities Decrease in refund liability Increase in other non-current liabilities Total net change in operating liabilities Total net changes in operating assets and liabilities Total adjustments Cash in flow generated by operating activities Interests received Paid interests Income tax paid Net cash inflow from operating activities Net cash flow in investing activities: Acquisition of financial assets measured at FVTPL Acquisition of financial assets measured at FVTPL Disposal of financial assets measured at FVTPL Acquisition of real estate, plant and equipment Disposition of Property, plant and equipment Increase in intangible assets Cash outflows due to consolidation Increase in other non-current liabilities Cash flow of investment activities (Outflow) Cash flows in fundraising activities: Loss of short-term loan Proceeds from long-term debt Repayment of long-term debt Repayments of lease liabilities Cash capital increase Variance of non-control equity Changes in subsidiaries, associates and joint ventures accounted for under the equity method Net cash inflow (outflow) in financing activities Change of exchange rate effecting cash and cash equivalents Increase of cash and cash equivalents Balance of cash and cash equivalents at the beginning of the term Balance of cash and cash equivalents at the end of the term	Jan-Jun 2020 $ 1,773,626 508,959 6,495 (3,438) 7,344 (18,101) 3,364 1,184 (4,256) (8,385)	Unit: NT$1000 Jan-Jun 2019 1,026,430 622,596 6,435 724 13,866 (17,252) 15,016 545 30,004 -
	493,166	671,934
	(10,026) (317,338) (47,861) (144,107) (19,819) (3,706) 4,954	4,744 200,287 35,512 214,883 (21,172) 2,327 (1,322)
	(537,903)	435,259
	4,587 (10,150) 654,964 (93,614) (21) (885) (8,938) 285	(4,002) (38,758) (61,036) 116,757 42 (4,932) (14,260) 264
	546,228	(5,925)
	8,325	429,334
	501,491	1,101,268
	2,275,117 17,073 (7,407) (364,284)	2,127,698 25,669 (14,560) (216,050)
	1,920,499	1,922,757
	4,860 - 222,392 (626,501) 27,809 (31,664) (59,647) (83,856)	- (68,530) 126,575 (753,841) 4,207 (38,494) - (154,930)
	(546,607)	(885,013)
	(20,660) 60,215 (88,991) (62,394) - 30,180 2,266	(686,655) - - (49,958) 1,274,362 (9,267) -
	(79,384)	528,482
	(201,196) 1,093,312 2,845,994	73,238 1,639,464 1,448,071
	$ 3,939,306	3,087,535

(Please refer to the Consolidated Financial Notes for details)

Director: Zhu, De-xiang Manager: He, De-yo Accounting Supervisor: Liu, Xing-xia

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Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS)

LOTES CO., LTD., and Its Subsidiaries Consolidated Financial Statement Notes

Second Quarter 2020 and 2019

(Except as otherwise indicated, the unit for all amounts in this document is NT$1,000)

I. Company History

Lotes Co., Ltd. (hereinafter referred to as the “Company”) was incorporated on Aug. 23, 1986 in accordance with the provisions of the Company Law and was approved for registration with its registered office at No.15, Wuxun Street, Anle District, Keelung City. The Company and its subsidiaries (hereinafter referred to as the “Consolidated Company”) are principally engaged in the sale and purchase of various hardware parts and components, the manufacturing and processing of various terminals and their connectors, the import and export business in connection with the preceding item and the agency of the preceding item in connection with the tender quotation and distribution of products of domestic and foreign manufacturers. Please refer to Note 14 for further details.

II. Date and Procedures of Approval of Financial Statement

The Consolidated Financial Statement was approved and released by the Board of Directors on Aug 11, 2020.

III. Application of New and Revised Standards and Interpretations

(1) Influence of the Adoption of New and Revised Standards and Integrations Approved by the Financial Supervisory Commission

Since 2020, the Consolidated Company has fully adopted the International Financial Report Standards which is approved by the Financial Supervisory Commission (hereinafter referred to as FSC) to come into effect to compile Consolidated Financial Statements, with relevant new, amended and revised standards and interpretations listed as follows:

New release/revision/amendment of guidelines and interpretations Amendments to IFRS 3 Definition of a Businesses Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform Amendments to IAS 1 and IAS 8 Definition of Material Amendments to IFRS 16, “COVID-19 Related Rent Concessions”	Effective date upon promulgation by the IASB
	Jan. 1, 2020 Jan. 1, 2020 Jan. 1, 2020 Jan. 1, 2020

The Consolidated Company considers that the application of the aforementioned newly recognized IFRSs will not result in significant changes to the Consolidated Financial Statements.

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(2) New and revised standards and interpretations not yet recognized by the FSC

The following table sets out the standards and interpretations that have been issued and revised by the International Accounting Standards Board (hereinafter referred to as the Board) but not yet endorsed by the FSC.

New release/revision/amendment of guidelines and interpretations

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 “Classification of Liabilities as Current or Non-current”

Amendments to IAS 1 “Property, plant and equipment - proceeds before reaching intended use condition”

Amendments to IAS 37 “Onerous contract - costs to perform contracts”

Annual Improvements to IFRS® Standards 2018–2020 Amendments to IFRS 17 “Insurance Contracts”

Effective date upon promulgation by the IASB To be determined by the Board

Jan. 1, 2023 Jan. 1, 2023

Jan. 1, 2022

Jan. 1, 2022 Jan. 1, 2022 Jan. 1, 2023

The following may be of interest to the Consolidated Company:

Release

Date New or Amended Standards January 1, Amendments to IAS 1 2020 “Classification of Liabilities as Current or Non-current”

Major Amendments

The purpose of the amendment is to improve the consistency in the application of the standard and to assist enterprises in determining whether a debt or other liability with an indefinite date of settlement should be classified as current (due or likely to be due within one year) or non-current on the balance sheet.

The amendment also clarifies the classification of debts that may be settled by converting them into equity.

The Consolidated Company is continuously evaluating the impact of the above criteria and explanations on the Consolidated Company’s financial position and results of operations.

IV. Summary of Major Accounting Policies

(1) Compliance Statement

The Consolidated Financial Statement was compiled in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the Regulations Governing the Preparation) and IAS 34 “Interim Financial Reporting” which is effective upon endorsement and issuance by the Financial Supervisory

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Commission. The Consolidated Financial Statements do not include all of the information required to be disclosed in the full annual Consolidated Financial Statements prepared in accordance with the following, as recognized by the Financial Supervisory Commission (FSC): International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC). Except as described below, the significant accounting policies used in this Consolidated Financial Statement are the same as those used in the 2019 Consolidated Financial Statement; see Note 4 to the 2019 Consolidated Financial Statements for related information.

(2) Consolidation Foundation

1. Subsidiary listed in the Consolidated Financial Statements

The including subsidiaries listed in the Consolidated Financial Statement are as follows:

llows:
Name of Investment Company	Name of Subsidiary	Place of Incorporatio n	Shareholding percentage	Note
			Jun. 30, 2020 Dec. 31, 2019 Jun. 30, 2019
	Lotes Investments Limited Good Hope Investments Limited Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. Lotes USA, Inc LOTES EU GmbH Lerain Technology Co., Ltd. Loteson International Investments Limited Lotes Guanghou Co., Ltd Lotes Hengnan Co., Ltd. Shenzhen Deyi Automation Technology Co., Ltd. Lotes Zhongshan Co., Ltd Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Hengnan Deyi Property Development Co., Ltd.			(Note 1)
The Company `〞` `〞` `〞` `〞` `〞` `〞` `〞` Lotes Investments Limited Loteson International Investments Limited Lotes Guanghou Co., Ltd `〞` `〞` `〞` `〞`			100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 33.92% - % - % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 50.00% 50.00% 50.00% 100.00% 100.00% - % 100.00% 100.00% - %
		Samoa `〞` `〞` Anguilla Taiwan America Germany Taiwan Hong Kong China " `〞` `〞` `〞` `〞`

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

`〞`	Guangzhou Leside Technology	`〞`	100.00%	100.00%	100.00%	100.00%
	Co., Ltd.
Guangzhou	Chongqing Fuxinrui Electronic	`〞`	51.00%	51.00%	51.00%
Leside	Technology Co., Ltd.
Technology
Co., Ltd.
Lotes Suzhou	Lotes Zhongshan Co., Ltd	`〞`	50.00%	50.00%	50.00%
Co., LTD
Good Hope	Xincheng Development Co.,	Samoa	100.00%	100.00%	100.00%
Investments	Ltd.
Limited
`〞`	REKA Technology Co., Ltd.	Hong Kong	100.00%	100.00%	100.00%
Guansi	Jae You Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Development
Co., Ltd.
Jae You Co.,	Lotes Suzhou Co., LTD	China	100.00%	100.00%	100.00%
Ltd.
Zhaxi	Wangden Investments Limited	Hong Kong	100.00%	100.00%	100.00%
Investment
Co., Ltd.
Wangden	Zongka Technology (Shenzhen)	China	100.00%	100.00%	100.00%
Investments	Co., Ltd.
Limited
Jiayu	Ememe Robot Co., Ltd	Taiwan	94.37%	94.37%	94.37%
Investment
Co., Ltd.
`〞`	Compertum Microsystems Inc.	`〞`	31.38%	46.74%	-	% (Note 1)
`〞`	GOOD NEWS MEDICAL CO.,	`〞`	5.00%	- %	-	% (Note 1)
	LTD.
`〞`	Lintes Technology Co., Ltd	`〞`	52.13%	52.13%	58.36%
Lintes	Jiajyun Investment Co., Ltd.	`〞`	100.00%	- %	-	%
Technology
Co., Ltd
`〞`	GENIE PRECISION	`〞`	63.93%	- %	-	% (Note 2)
	MACHINING CO., LTD.
`〞`	Compertum Microsystems Inc.	`〞`	10.46%	- %	-	% (Note 1)
`〞`	Jilong Co., Ltd.	Samoa	100.00%	100.00%	100.00%
Jilong Co.,	Rihui Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Ltd.
Rihui Co.,	Lintes Technology (Suzhou)	China	100.00%	100.00%	100.00%
Ltd.	Co., Ltd.

Note 1: Although the Consolidated Company does not hold more than one half of the voting shares of the company, the Consolidated Company is included as a subsidiary in the Consolidated Financial Statements because the Consolidated Company has control over its major operating activities and

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

other decisions.

Note 2: Please refer to Note 6 (5) for details of how the Consolidated Company obtained control of the company.

2. Subsidiary not listed in the Consolidated Financial Statements: none.

(3) Business Combination

The Consolidated Company first obtained control of other companies through acquisitions in the second quarter of 2020, and therefore, the accounting policies related to business combinations were applied beginning January 1, 2020.

The Consolidated Company uses the acquisition method for each business combination. Goodwill is measured at the fair value of the consideration transferred at the acquisition date, including the amount attributable to any noncontrolling interest in the acquirer, less the net identifiable assets acquired and liabilities assumed (generally, fair value). If the balance after

deductions is negative, the gain on a bargain purchase is recognized in profit or loss only after the Consolidated Company reassesses whether all acquired assets and all assumed liabilities have been correctly identified.

Transaction costs associated with business combinations, other than those related to the issuance of debt or equity instruments, should be recognized as an expense of the Consolidated Company immediately upon occurrence.

Of the non-controlling interests in the acquiree that are current ownership interests and whose holders are entitled to a pro rata share of the net assets of the enterprise upon the occurrence of a liquidation, the Consolidated Company elects, on a transaction by transaction basis, to measure them either at fair value at the acquisition date or at the pro rata share of the current ownership instrument's recognized amount of the acquiree's identifiable net assets. Other noncontrolling interests are measured at either their fair value at the acquisition date or on such other basis as prescribed by IFRS as recognized by the FSC.

(4) Employee benefits

The defined benefit plan pension for the interim period is calculated based on the actuarial pension cost ratio from the previous year’s reporting date to the end of the current period and adjusted for significant market fluctuations, and significant curtailment, liquidation or other significant one-time events after the reporting date.

(5) Income Tax

The Consolidated Company’s income tax expense for the interim period is measured and disclosed in accordance with B12 of IAS No. 34 “Interim Financial Reporting”.

Income tax expense, which is recognized directly in equity or other comprehensive income, is measured as the temporary difference between the carrying amount of the related

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

assets and liabilities for financial reporting purposes and their tax bases at the applicable tax rates that are expected to apply when the related assets and liabilities are realized or settled.

V. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

The preparation of the Consolidated Financial Statements in conformity with the Regulations Governing the Preparation of Financial Statements and IAS 34 “Interim Financial Reporting” which is approved by the FSC, requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from the estimates.

The significant judgments made by management in the preparation of the Consolidated Financial Statements and the key sources of estimation uncertainty in the adoption of the Consolidated Company’s accounting policies are consistent with Note 5 to the 2019 Consolidated Financial Statements.

VI. Descriptions for Important Accounting Items

Except as noted below, the description of significant accounting items in this Consolidated Financial Statement is not yet materially different from the 2019 Consolidated Financial Statement, see Note 6 to the 2019 Consolidated Financial Statement for related information.

(1) Cash and cash equivalents

Petty cash Checks and demand deposits Time deposits Cash and cash equivalents listed on the Statement	Jun. 30, 2020 $ 2,194 2,367,649 1,569,463		Dec. 31, 2019 3,660 1,560,714 1,281,620		Jun. 30, 2019 2,139 1,251,824 1,833,572 3,087,535
	$ 3,939,306		2,845,994

Please refer to Note 6 (26) for the disclosure of the interest rate risk and sensitivity analysis of the financial assets of the Consolidated Company.

(2) Financial assets and liabilities
Financial assets and liabilities measured at FVTPL

Financial assets mandatorily measured at FVTPL: Non-derivative financial assets: Listed stocks Linked deposits	Jun. 30, 2020 $ 16,458 -	Dec. 31, 2019 20,931 219,103	Jun. 30, 2019 23,971 13,558

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Total	$		16,458	240,034	37,529
The Consolidated Company’s linked deposits are initially recognized					on the basis of
the principal amount of the deposit contract, and			the interest rate is calculated based on the
change in the subject matter of the	linked	deposits,		and the Consolidated Company
receives the Interest income on a regular basis.
. Financial assets measured at FVTOCI
	Jun. 30,		2020	Dec. 31, 2019	Jun. 30, 2019
Equity instruments measured at
FVTOCI:
Domestic unlisted stocks`－`Kuang	$	-		4,507	14,717
Ying Computer Equipment Co.,
Ltd.
Domestic unlisted stocks`－`AICP			1,669	1,931	10,000
Technology Corporation
Total	$		1,669	6,438	24,717

Financial assets measured at FVTOCI

The Consolidated Company’s investments in these equity instruments are held as long-term strategic investments and are not held for trading purposes and therefore have been designated as measured at fair value through other comprehensive income.

The Consolidated Company had no dividend income from Equity instruments measured at FVTOCI in the periods from January 1 to June 30, 2020 and from January 1 to June 30, 2019.

On May 8, 2020, the Consolidated Company, due to asset allocation considerations and adjustment of the investment portfolio to diversify risk, disposed of Kuang Ying Computer Equipment Co., Ltd. which was designated to be carried at FVTOCI. The fair value at the time of disposal was $4,860 and the cumulative loss on disposal was $10,140, therefore, the cumulative loss on disposal was transferred from other equity to retained earnings.

As of June 30, 2020, December 31, 2019 and June 30, 2019, the Consolidated Company’s financial assets had not been pledged as security.

(3) Notes, accounts receivable and other receivables

Receivable notes Accounts receivable Other accounts receivable Less: Provisions	Jun. 30, 2020 $ 33,882 6,382,025 272,195 (9,152)		Dec. 31, 2019 15,257 5,957,860 222,320 (11,881)		Jun. 30, 2019 11,371 5,099,866 183,727 (9,949)

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

$ 6,678,950 6,183,556 5,285,015

Please refer to Note 6 (26) - 1. (3) Statement of Changes in Notes and Accounts Receivable and Provisions as of June 30, 2020, December 31, 2019 and June 30, 2019 for details.

The Consolidated Company assesses that a portion of the accounts receivable and other receivables held by the Consolidated Company under the operating model of collecting cash flows and sales are measured at fair value through other comprehensive income as of June 30, 2020, December 31, 2019 and June 30, 2019, of which $187,629, $497,928, and $618,133 respectively are accounts receivable.

Information of the factoring of accounts receivable of the Consolidated Company is provided below: Unit: 1,000 TWD ／ 1,000 in foreign currency

		Jun. 30, 2020	Jun. 30, 2020
Factored to	Amount derecognized $ -	Amount can be provided as advance Amount provided as advance Transferred to other receivables Interest rate range Other importa nt matters 740,750 - - - None USD 25,000 Unit: 1,000 TWD`／`1,000 in foreign currency Dec. 31, 2019	Amount provided as advance		Interest rate range	Other importa nt matters
CTBC Bank
Factored to	Amount derecognized $ -	Amount can be provided as advance 749,500 USD 25,000	Amount provided as advance -	Transferred to other receivables -	Interest rate range -	Other importa nt matters
CTBC Bank						None

Unit: 1,000 TWD ／ 1,000 in foreign currency Jun. 30, 2019

Factored to	Amount derecognized $ -	Amount can be provided as advance 776,500 USD 25,000	Amount provided as advance -	Transferred to other receivables -	Interest rate range -	Other importa nt matters
CTBC Bank						None

The above quota is used in a circular manner, and the outstanding accounts receivable sold by the Consolidated Company are purchased by China Trust without recourse. In accordance with the terms of the sale and surrender contract, losses arising from commercial disputes (such as return of sales or concessions, etc.) shall be borne by the Consolidated

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Company and losses arising from credit risk shall be borne by such Banks.

As of June 30, 2020, December 31, 2019 and June 30, 2019, there were no retained accounts receivable for sale and transferred to other receivables.

(4) Inventory

) Inventory
Merchandise Finished goods Work in progress Raw materials Goods in transit	Jun. 30, 2020 $ 654,455 654,242 447,765 510,148 1,924		Dec 31, 2019 494,396 706,097 444,416 292,094 39,018		Jun. 30, 2019 532,361 621,685 530,975 285,212 12,707 1,982,940
	$ 2,268,534		1,976,021

The Consolidated Company’s inventories as of June 30, 2020, December 31, 2019 and June 30, 2019 including an allowance for inventory losses are $268,646, $271,717, and $279,103, respectively.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

The Consolidated Company recognized inventory-related expenses and gains as follows:

follows:
Cost of goods sold Shutdown cost Losses on the price fall and scraping of inventory (gain on reversal) Income from the sales of scraps and waste Total	Apr. to Jun. 2020 $ 2,797,999 - (23,015) (68,068)	Apr. to Jun. 2019 2,499,007 - 5,128 (77,477)	Jan. to Jun. 2020 4,758,801 90,799 (4,256) (124,026)	Jan. to Jun. 2019 4,788,635 - 30,004 (152,612) 4,666,027
	$ 2,706,916	2,426,658	4,721,318

As of June 30, 2020, December 31, 2019, and June 30, 2019, the Consolidated Company’s inventories were not pledged as security.

(5) Changes in ownership interest in subsidiaries
Acquisition of subsidiaries

On May 13, 2020, the Consolidated Company acquired control of GENIE PRECISION MACHINING CO. by obtaining 63.93% of the shares of it. GENIE PRECISION MACHINING CO., LTD. is a manufacturer of ultra-precision optical and automation equipment and acquiring control of this company will allow the Consolidated Company to expand its automotive electronics operations.

For the period from the acquisition date to June 30, 2020, the revenue and net profit contributed by the GENIE PRECISION MACHINING CO. were $55,488 and $13,985, respectively. If the acquisition had occurred on January 1, 2020, management estimates that the Consolidated Company's revenue and net profit for the period from January 1, 2020 to June 30, 2020 would have been $7,971,386 and $1,389,583, respectively. These amounts do not reflect the actual revenue and operating results that would have been generated by the Consolidated Company if the business combination had been completed at the beginning of the fiscal year in which the acquisition occurred and should not be used to predict future operating results.

The costs incurred in connection with this acquisition transaction have been recognized in the Consolidated Statement of Comprehensive Income under “Administrative expenses”.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

The major categories of the transfer consideration, assets acquired and liabilities assumed and amounts recognized at the acquisition date are as follows:

(1) Net cash outflows from acquired subsidiaries

Consideration for cash payments Less: Cash acquired and cash equivalents balance	$ 78,533 (18,886)
	$ 59,647

(2) Identifiable assets acquired and liabilities assumed

) Identifiable assets acquired and liabilities assumed
The details of the fair value of the identifiable assets	acquired and liabilities
assumed at the date of acquisition are as follows:
Current assets
Cash and cash equivalents	$	18,886
Financial assets measured at amortized cost		5,009
Notes receivable, accounts receivable and other receivables		116,145
Inventory		144,150
Other current assets		12,297
Non-current assets
Property, plant, and equipment		207,880
Intangible assets		127
Deferred tax assets		6,191
Other non-current assets		53,032
Current liabilities
Short-term loan	$	(36,680)
Contract liabilities - current		(34,282)
Notes payable, accounts payable and other payables		(142,001)
Current income tax liabilities - current		(7,955)
Long-term loans due within one year		(29,491)
Other non-current liabilities - other		(1,097)
Non-current liabilities
Long-term loans		(100,053)
Other non-current liabilities		(76,191)
Fair value of identifiable net assets	$	135,967

The Consolidated Company will review the above matters on an ongoing basis during the measurement period. Accounting for acquisitions will be modified if new information

～ 19 ～

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

relating to facts and circumstances existing at the acquisition date becomes available within one year of the acquisition date that identifies adjustments to the above provisional amounts or any additional liability provisions that existed at the acquisition date.

(3) Bargain purchase gains

The gains on bargain purchase recognized as a result of the acquisition are as follows:

Transfer consideration Plus: Non-controlling interests Less: Fair value of identifiable net assets Bargain purchase gains	$ 78,533 49,049 (135,967) $ (8,385)

The gain of $8,385 resulting from the acquisition of GENIE PRECISION MACHINING CO. was reported in the Consolidated Statement of Comprehensive Income as "Bargain purchase gains".

Cash capital increase by subsidiaries, which was not subscribed by the Consolidated Company in proportion to its shareholding and did not result in loss of control

Compertum Microsystems Inc. issued an additional 1,379,000 new shares on April 30, 2020 for total gross proceeds of $13,786. The Consolidated Company reduced its interest in Compertum Microsystems Inc. by 9.91% as a result of not subscribing.

The effect of changes in the Consolidated Company's ownership interest in the subsidiaries listed above on the owner's equity attributable to the parent is as follows:

Jan. to Jun. 2020 Capital surplus - recognition of changes in ownership interests in $ 2,266 subsidiaries

(6) Subsidiaries with significant non-controlling interests

The non-controlling interests of subsidiaries that are material to the Consolidated Company are as follows:

Company are as follows:
Name of Subsidiary Lintes Technology Co., Ltd	Main business place/ The country where the company registered Taiwan	The percentage of ownership interests and voting interests in all non-controlling interests
		Jun. 30, 2020 Dec 31, 2019	Jun. 30, 2019
		47.87% 47.87%	41.64%

The aggregate financial information of the above subsidiaries is as follows. The

～ 20 ～

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs) approved by the Financial Supervisory Commission (FSC), and the financial information represents amounts before the elimination of intercompany transactions:

1. Comprehensive financial information of Lintes Technology Co., Ltd.:

Current assets Non-current assets Current liabilities Non-current liabilities Less: Non-controlling interests Interests attributable to the owner of Lintes Technology Co., Ltd. Book value of non-controlling interests at the end of the period	Jun. 30, 2020 $ 2,326,420 433,612 (949,406) (208,372) 54,087	Dec 31, 2019 1,985,182 165,502 (649,878) (11,443) -	Jun. 30, 2019 1,621,946 167,622 (855,380) (9,254) - 924,934 382,713
	$ 1,548,167	1,489,363
	$ 741,143	714,874

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Apr. to Jun. 2020 $ 750,026	Apr. to Jun. 2019	Jan. to Jun. 2020 1,150,914
	632,121
$ 112,713	33,595	167,097
$ 5,045	-	5,045
$ (3,542)	(1,257)	(5,693)
$ (7)	-	(7)
$ 109,171	32,338	161,404
$ 5,038	-	5,038
$ 48,474	12,493	76,733
$ 48,413	11,819	75,385
		Jan. to Jun. 2020 $ 233,180 (61,771) (95,372) (23)
		$ 76,014

(7) Property, plant, and equipment

The changes in the costs of the property, plant and equipment, losses on depreciation

～ 22 ～

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

and impairment of the Consolidated Company are as follows:

Cost or deemed cost: Balance on Jan. 1, 2020 Addition Prepayment for equipment transferred in Acquired by Business Combination Completion of construction in progress and acceptance of equipment to be examined Disposal Effect of change in exchange rate Balance on Jun. 30, 2020	Land $ 49,655 - - - - - (250)	Buildings 759,739 - - - - - (18,223)		Machinery 2,698,613 30,566 1,423 213,892 - (118,351) (62,813)		Others 2,740,900 86,796 1,085 96,686 356,658 (576,904) (63,314)	Constructio n in progress and equipment to be examined		Total 7,005,638 797,054 2,457 310,578 - (695,255) (170,553)
							756,731 679,692 (51) - (356,658) - (25,953)
	$ 49,405	741,516		2,763,330		2,641,907	1,053,761		7,249,919

～ 23 ～

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

$ 76,980 - - - - 246	804,451 870 - - - 7,435	2,680,672 87,777 662 9,177 (38,216) 25,329	2,430,461 308,461 13,091 250,861 (478,597) 21,883	498,134 297,435 - (260,038) - 4,405	6,490,698 694,543 13,753 - (516,813) 59,298
$ 77,226	812,756	2,765,401	2,546,160	539,936	6,741,479
$ - - - - -	266,518 19,449 - - (6,753)	1,595,925 122,619 62,001 (93,995) (36,650)	1,628,481 383,456 40,697 (570,087) (34,060)	- - - - -	3,490,924 525,524 102,698 (664,082) (77,463)
$ -	279,214	1,649,900	1,448,487	-	3,377,601
$ - - - -	241,559 18,734 - 2,004	1,455,245 120,927 (24,983) 13,258	1,443,734 392,503 (472,607) 14,410	- - - -	3,140,538 532,164 (497,590) 29,672
$ -	262,297	1,564,447	1,378,040	-	3,204,784
$ 49,655	493,221	1,102,688	1,112,419	756,731	3,514,714
$ 49,405	462,302	1,113,430	1,193,420	1,053,761	3,872,318
$ 76,980	562,892	1,225,427	986,727	498,134	3,350,160
$ 77,226	550,459	1,200,954	1,168,120	539,936	3,536,695

Subsidiary, Lotes Zhongshan Co., Ltd, acquired the land use rights for the construction of the new plant in 2017, and the acquisition cost was $183,934 to list right-of-use assets in the account. As of June 30, 2020, December 31, 2019, and June 30, 2019, the accumulated expenditures (tax included) for the construction of the new plant were $695,515, $622,147, and $451,045, respectively.

In April 2019, subsidiary, Lotes Zhongshan Co., Ltd, signed the pre-purchase contract and decoration contract with Zhongshan Weili Real Estate Development Co., Ltd.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

and Tianjin Xinhongyuan Building Decoration Engineering Co., Ltd., respectively. As of June 30, 2020, has to pay the price of RMB 10,881,000 and RMB 3,285,000 respectively (account listed as other non-current assets), is expected to transfer the property in December 2020.

As of June 30, 2020, December 31, 2019 and June 30, 2019, real estate, plant, and equipment were used as collateral for short-term loans and financing lines. Please refer to Note 8 for details.

(8) Right-of-use assets

The changes in the costs of the lease of lands, buildings, machinery and other equipment, losses on depreciation and impairment of the Consolidated Company are as follows:

Land $ 236,908 - - (6,108)	Buildings 254,674 73,783 (24,438) (6,853)	Machinery 687 - (683) (4)	Others 5,181 - (596) (123)	Constructio n in progress and equipment to be examined 497,450 73,783 (25,717) (13,088)
$ 230,800	297,166	-	4,462	532,428
$ - 246,746 - - 2,392	- 235,843 2,894 (650) 2,134	- 243 482 - (2)	- 5,396 - - 51	- 488,228 3,376 (650) 4,575
$ 249,138	240,221	723	5,447	495,529
$ 5,150 2,559 - (183)	105,843 58,446 (24,438) (1,540)	687 - (683) (4)	2,344 867 (596) (67)	114,024 61,872 (25,717) (1,794)
$ 7,526	138,311	-	2,548	148,385
$ - 2,740 - (30)	- 56,465 (272) (608)	- 365 - (4)	- 1,565 - (18)	- 61,135 (272) (660)

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Balance on Jun. 30, 2019	$	2,710	55,585	361	1,547	60,203
Book value:
Jun. 30, 2020	$	223,274	158,855	-	1,914	384,043
Jun. 30, 2019	$	246,428	184,636	362	3,900	435,326
(9) Investment property
The changes in the investment		property of	the Consolidated Company are as			follows:
	Self-owned		Assets	Right-of-use
				Assets
	Land		Buildings	Land		Total
Cost or deemed cost:
Balance on Jan. 1, 2020	$	248,200	39,285	-		287,485
Increase		-	-	97,557		97,557
Effect of change in		-	-	(1,944)		(1,944)
exchange rate
Balance on Jun. 30, 2020	$	248,200	39,285	95,613		383,098
Balance on Jan. 1, 2019	$	221,400	23,428	-		244,828
Balance on Jun. 30, 2019	$	221,400	23,428	-		244,828
Losses on depreciation and
impairment:
Balance on Jan. 1, 2020	$	-	4,483	-		4,483
Depreciation		-	479		348	827
Effect of change in		-	-		(7)	(7)
exchange rate
Balance on Jun. 30, 2020	$	-	4,962		341	5,303
Balance on Jan. 1, 2019	$	-	2,333	-		2,333
Depreciation		-	285	-		285
Balance on Jun. 30, 2019	$	-	2,618	-		2,618
Book Value:
Jan. 1, 2020	$	248,200	34,802	-		283,002
Jun. 30, 2020	$	248,200	34,323	95,272		377,795
Jan. 1, 2019	$	221,400	21,095	-		242,495
Jun. 30, 2019	$	221,400	20,810	-		242,210
Fair value:
Jan. 1, 2020					$	322,604
Jun. 30, 2020					$	418,217
Jan. 1, 2019					$	282,694
Jun. 30, 2019					$	282,694

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

As of June 30, 2020, December 31, 2019 and June 30, 2019, the Consolidated Company’s investment properties were not pledged as security. (10) Intangible assets

The changes in the cost and amortization of the intangible assets of the Consolidated Company are as follows:

$	Computer Software 166,221 34,148 4,127 (412) (2,484)	Others 600 - - - -

$	201,600	600
$	114,181 38,316 (590) 178	600 - - -
$	152,085	600
$	67,032 7,529 4,000 (412) (1,034)	- - - - -
$	77,115	-
$	55,254 6,262 (590) 173	- - - -
$	61,099	-
$	99,189	600
$	124,485	600
$	58,927	600

～ 27 ～

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Balance on Jun. 30, 2019 $ 90,986 600 91,586

The amortization	expenses of the	expenses of the	intangible assets of the Consolidated	intangible assets of the Consolidated	Company was
recognized in the following items in the			Consolidated Statement of Comprehensive Income:
		Apr. to Jun.	Apr. to Jun.	Jan. to Jun.	Jan. to Jun.
		2020	2019	2020	2019
Operating costs	$	323	338	629	468
Operating expense	$	3,632	3,250	6,900	5,794

(11) Other financial assets

The details of the other financial assets of the Consolidated Company are as follows:

Jun. 30, 2020 Dec 31, 2019 Jun. 30, 2019

Other financial assets - current Time deposits Restricted deposit Total Other financial assets - non-current Time deposits	$ 83,734 2	- -	- - - 135,577
	$ 83,736	-
	$ -	85,923

As of June 30, 2020, December 31, 2019, and June 30, 2019, except for the restricted deposit, none of the Consolidated Company’s other financial assets had been pledged as security.

(12) Short-term loans

The details, conditions, and terms of the short-term loans of the Consolidated Company are as follows:

	Jun. 30, 2020		Amount $ 46,000
Currency NTD	Interest rate range 0.85%~2.55% Dec 31, 2019	Maturity year 109

			$ 1,525,490
			Amount $ 29,980
Currency USD	Interest rate range 2.54% Jun. 30, 2019	Maturity year 109

			$ 3,158,700
			Amount $ 232,988
Currency USD	Interest rate range 3.36%～3.89%	Maturity year 108

			$ 2,763,192

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Please refer to Note 6 (26) for more information on the Consolidated Company’s exposure to interest rate and foreign currency risk, Note 8 for information of the Consolidated Company’s assets pledged as collateral for short-term borrowings, and Note 9 for information of the Company’s bank loans and financing facilities are pledged as guaranteed notes.

(13) Long-term loans

The details of the Consolidated Company's long-term loans were as follows:

Bank loans - credit loans (Due Oct. 2020 – Jun. 2022) Bank loans - secured loans (Due Sep. 2020 – Jan. 2025) Other loans - secured loans (Due Apr. 2021 – Feb. 2026) Subtotal Less: Portion due within one year Total Credit not yet used Interest rates	Jun. 30, 2020 $ 6,926 38,465 55,377
	100,768 32,074
	$ 68,694
	$ 87,416
	2.34%~7.54%

The Consolidated Company's pledge of assets as collateral for bank loans is described in Note 8.

(14) Lease liabilities

The book values of the lease liabilities of the Consolidated Company are as follows:

Current Non-current	Jun. 30, 2020 $ 90,983	Dec 31, 2019 94,851	Jun. 30, 2019 103,969 87,023
	$ 74,225	60,560

For the maturity analysis, please refer to Note 6 (26).

The amounts recognized in the profit and loss are as follows:

Interest expense for lease liabilities Income from the sublease of right-of-use assets Expenses for short-term leases	Apr-Jun 2020	Apr-Jun 2019	Jan-Jun 2020
	$ 3,682 3,550 7,364 6,754
	$ 257 389 668 1,023

The amounts recognized in the Statement of Cash Flows are as follows:

Jan. to Jun. Jan. to Jun.

～ 29 ～

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Total cash outflow for leases	2020 2019 $ 67,814 57,259

1. Lease of land, premises, and buildings

The Consolidated Company leases land, premises and buildings for plant, office space and staff quarters. The lease term of the plant and office space is usually one to ten years, and the lease term of the staff quarters is three to eight years. Part of the lease includes an option to extend the lease at the end of the lease term. In cases where it is not reasonably determined to exercise an optional extension of Lease term, the relevant benefits for the period covered by the option are not included in the Lease liabilities.

The Consolidated Company is a sublease of right-of-use assets by business lease.

2. Other leases

The leasing period of machines and other equipment leased by the Consolidated Company shall be two to six years. In addition, the Lease term of some Lease contracts of the Consolidated Company is one year, and these leases are short-term subject leases. The Consolidated Company chooses to apply the exemption of relevant right-of-use assets and lease liabilities.

(15) Refund liabilities - current

Refund liabilities - current	Jun. 30, 2020 $ 148,318	Dec 31, 2019 Jun. 30, 2019 157,256 72,623

The refund liabilities are mainly the prepayments to customers for the sales discount and defects of electronic components.

(16) Provisions

Provisions - non-current Employee benefits	Jun. 30, 2020 $ 41,708	Dec 31, 2019 Jun. 30, 2019 41,729 40,564

Employee benefits are estimated under the Consolidated Company’s defined benefit plan.

(17) Operating lease

1. Lessor lease

The Consolidated Company leases its investment real estate, which is classified as an operating lease because almost all risks and rewards belonging to the ownership of the underlying asset have not been transferred. Please refer to Note 6 (9) for details of the investment real estate.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Due date analysis of lease benefits to report the total amount of undiscounted lease benefits received in the future is shown in the following table:

Not more than 1 year 1-2 years Total undiscounted lease payment	Jun. 30, 2020 $ 3,504 -	Dec 31, 2019 5,821 593	Jun. 30, 2019 5,562 3,245
	$ 3,504	6,414	8,807

In the periods from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019, the income tax generated in the investment property from rentals were $1,217, $1,325, $2,603, and $2,636. respectively, and the direct operating expenses (including maintenance) incurred in the investment property from rentals were $203, $143, $410, and $286, respectively.

(18) Employee benefits

1. Defined benefit plans

The Consolidated Company used actuarially determined pension costs as of December 31, 2019 and 2018 to measure and disclose pension costs for the interim period as there were no significant market fluctuations and no significant curtailments, settlements, or other significant one-time events subsequent to the prior fiscal year reporting date.

The Consolidated Company recognized $232, $248, $465, and $496 of expense in profit or loss from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019, respectively.

2. Defined contribution plan

As to the defined contribution plan, the Consolidated Company shall contribute the retirement funds of employees to the individual accounts for labor retirement funds of the Bureau of Labor Insurance according to 6% of the monthly salaries of labors under the provisions of Labor Pension Act. Under this plan, after contributing fixed amount to the Bureau of Labor Insurance, the Consolidated Company will not assume the legal or constructive obligations of paying extra amount.

The pension expense under the defined contribution retirement funds of the Consolidated Company from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019 were $3,295, $2,222, $5,702, and $4,452, respectively, which have been contributed to the Bureau of Labor Insurance.

In accordance with the pension insurance system established by the government of the People’s Republic of China, the subsidiaries in Mainland China make monthly contributions to employees’ pension insurance based on a certain percentage of their salaries and wages. The monthly pension plan is administered and arranged by the

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

government, and the above-mentioned company has no further obligation other than to make monthly contributions. The related pension expense from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019 were $9,384, $48,283, $48,725, and $92,503, respectively.

(19) Income tax

1. The details of the income tax expense Apr. to Jun. 2020 Income tax expense in the year Income tax generated in the year $ 284,481 Increase in tax on undistributed earnings 23,963 Adjustment of the income tax in the previous year (42,716) 265,728 Deferred income tax expense Other deferred income tax expense (income) 20,399 Income tax expense$ 286,127	of the Consolidated Company are as follows: Apr. to Jun. 2019 Jan. to Jun. 2020 Jan. to Jun. 2019 144,549 372,444 232,695 28,248 23,963 28,248 1,090 (42,716) 7,255 173,887 353,691 268,198	of the Consolidated Company are as follows: Apr. to Jun. 2019 Jan. to Jun. 2020 Jan. to Jun. 2019 144,549 372,444 232,695 28,248 23,963 28,248 1,090 (42,716) 7,255 173,887 353,691 268,198
265,728
	3,562 40,043	(1,861)
$ 286,127	177,449 393,734	266,337

No income tax benefit or expense was recognized in equity and other comprehensive income from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019.

3. Income Tax Approval

The approval on the filing of final income tax return of the Company has been approved through 2017 as required by the taxing authority.

The income tax returns of the domestic subsidiaries: Jiayu Investment Co., Ltd., Ememe Robot Co., Ltd., and GENIE PRECISION MACHINING CO., LTD. has been approved through 2018. The income tax returns of Lintes Technology Co., Ltd. has been approved through 2017.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(20) Capital and other equity

As of June 30, 2020, December 31, 2019, and June 30, 2019, the total authorized share capital of the Company was $1,550,000, with a par value of $10 per share, and the actual amount issued were all $1,034,779.

On August 9,2018 and November 19, 2018, the Company’s Board of Directors resolved to issue 10,000,000 new shares with a par value of $10 per share and an issue price of $140 per share by cash capital increase, with January 10, 2019 as the base date for the capital increase. This capital increase has been approved by the Financial Supervisory Commission and the statutory registration process was completed on January 23, 2019.

1. Capital reserve

The components of the Company’s capital reserve are as follows:

Premium of issued shares Change in the net value of the stock of subsidiaries and associates accounted for using the equity method Employee stock options	Jun. 30, 2020 $ 3,577,768 368,659 15,399		Dec 31, 2019 3,577,768 366,393 15,399		Jun. 30, 2019 3,577,768 172,942 15,399 3,766,109
	$ 3,961,826		3,959,560

In accordance with the Companies Act, capital surplus is required to cover losses first before new shares or cash can be issued in proportion to the shareholders’ original shares. Realized capital surplus referred to in the preceding paragraph includes premiums from the issuance of shares in excess of par value and proceeds from gifts received. In accordance with the Regulations Governing the Issuer’s Offerings and Issuance of Marketable Securities, the aggregate amount of capital surplus that may be capitalized each year shall not exceed 10% of the paid-in capital.

2. Retained earnings

In accordance with the Company’s Articles of Incorporation, the Company shall, after the final settlement of each year’s earnings, first complete tax contributions, make up for prior years’ deficits and set aside 10% as legal reserve, except when the legal reserve has reached the level of total capital; the Company is required by law to set aside or reverse special reserve. In the case of unappropriated earnings for the same period, the Board of Directors shall propose a proposal for the distribution of earnings to the shareholders for resolution, and the dividend to be distributed shall not be less than 20% of the net profit for the year after taxation, after deducting the net income provided for by

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

law.

The Company will take into account the environment and growth of the Company and the distribution of earnings should take into account the Company’s future capital expenditure budget and capital requirements, and pay cash dividends of not less than 10% of the dividends distributed in the current year.

(1) Legal reserve

If the Company has no deficit, it may, by resolution of the shareholders in general meeting, issue new shares or cash out of the legal reserve to the extent that such reserve exceeds 25% of the paid-in capital.

(2) Special reserve

When the Company distributes distributable earnings, the Company accounts for other shareholders’ equity in the current year and provides a special reserve of the same amount from current period’s profit or loss as the prior period’s undistributed earnings, and a special reserve of the same amount from prior period’s undistributed earnings is not distributed. If there is a subsequent reversal in the amount of other decreases in shareholders’ equity, the reversal may be distributed in the form of a surplus.

(3) Earnings distribution

The dividends to be distributed to the owners of the Company in respect of the 2019 and 2018 profit distributions resolved by the shareholders at their ordinary meetings held on June 19, 2020 and June 14, 2019 are as follows:

2019 2018 Payout ratio Amount Payout ratio Amount (TWD) (TWD)

Distributed to the

holders of ordinary

Cash $ 10.50 1,086,518 8.70 900,258

Information on the distribution of earnings as proposed by the Board of Directors and resolved by the Shareholders’ Meeting is available on the “Public Information Observation Post System”.

3. Other Equity

Unrealized gain Exchange or loss on differences on Financial assets translation of measured at foreign operations FVTOCI Total

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Balance on Jan. 1, 2020
Exchange differences arising from
the translation of the net assets
of foreign operations
Unrealized losses from financial
assets measured at FVTOCI
Disposal of equity instruments
measured at FVTOCI
Balance on Jun. 30, 2020
Balance on Jan. 1, 2019
Exchange differences arising from the
translation of the net assets of
foreign operations
Unrealized losses from financial assets
measured at FVTOCI
Balance on Jun. 30, 2019

$ (631,970)
(18,562)
(650,532)
(199,815)
-
(199,815)
-
91
91
-
10,140
10,140
$
(831,785)
(8,331)
(840,116)
$ (314,561)
(2,459)
(317,020)
72,603
-
72,603
-
2,176
2,176
$
(241,958)
(283)
(242,241)

(21) Share-based payment

The following share-based payment transactions were performed by the Consolidated Company:

Cash capital increase reserved for employees to subscribe Subsidiary

Date of offering Amount offered Target of offering

Vesting condition

Nov. 29, 2019 436,000 shares Current employees of subsidiaries Immediate vesting

Lintes Technology Co., Ltd. estimated the fair value of the above Cash capital increase stock option to be $10.8 and recognized the cost of Share-based payment Compensation of employees from the Cash capital increase stock option to be $4,709 in 2019.

(22) Earnings per share

The basic earnings per share and diluted earnings per share of the Consolidated Company were calculated as follows:

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Apr. to Jun. 2020	Apr. to Jun. 2019 416,011	Jan. to Jun. 2020 1,312,383	Jan. to Jun. 2019
$ 899,485			733,385
103,478 262	103,478 221	103,478 262	102,981 221
103,740	103,699	103,740	103,202
$ 8.69	4.02	12.68	7.12
$ 8.67	4.01	12.65	7.11

(23) Revenue from contracts with customers
Please refer to Note 14 (3) and (4) for the disclosure of disaggregation of revenue for the major products and major regional markets.
Balance of Contract

Contract liabilities	Jun. 30, 2020	Dec 31, 2019 19,947	Jun. 30, 2019 2,158
	$ 58,815

The amounts of beginning balances of contractual liabilities as of January 1, 2020 and January 1, 2019 were respectively recognized as income of $14,171, $141, $18,318, and $5,981 for the period from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019.

(24) Non-operating income and expense
Interest income

The details of interest income of the Consolidated Company are as follows:

Bank deposit interest	Apr. to Jun. 2020	Apr. to Jun. 2019 10,380	Jan. to Jun. 2020 18,101	Jan. to Jun. 2019 17,252
	$ 9,696

2. Other income

The details of other income of the Consolidated Company are as follows:

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Income from molding Compensation from suppliers Income from rentals Income from the sales of R&D products Income from subsidies Others	Apr. to Jun. 2020 $ 30,313 2,820 6,880 802 823 31,378	Apr. to Jun. 2019 6,851 2,006 6,875 446 199 17,360	Jan. to Jun. 2020 34,949 3,210 13,900 3,285 1,011 51,412	Jan. to Jun. 2019 29,221 3,322 13,502 4,596 7,033 31,362 89,036
	$ 73,016	33,737	107,767

3. Other income and losses

The details of other income and losses of the Consolidated Company are as follows:

Foreign exchange gain (loss) Net loss from financial assets (liabilities) measured at FVTPL Profit from the disposal of property, plant, and equipment Others Total	Apr. to Jun. 2020 $ (80,706) 6,510 (3,061) (4,877)	Apr. to Jun. 2019 37,986 (1,208) (5,988) (1,120)	Jan. to Jun. 2020 (38,460) (1,184) (3,364) (10,209)	Jan. to Jun. 2019 25,459 (545) (15,016) (9,963)
	$ (82,134)	29,670	(53,217)	(65)

4. Financial cost

The details of the financial cost of the Consolidated Company are as follows:

Interest expense	Apr. to Jun. 2020 $ 4,752	Apr. to Jun. 2019 6,000	Jan. to Jun. 2020 7,344	Jan. to Jun. 2019 13,866

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(25) Compensation for employees, directors, and supervisors

In accordance with the Company’s Articles of Incorporation, no less than 3% of the Company’s annual profits shall be appropriated to the compensation of employees and no more than 3% to the compensation of Directors and Supervisors; however, if the Company has accumulated losses, it shall retain the amount of compensation in advance and appropriate the compensation of employees and Supervisors in proportion to the aforementioned. The former compensation of employees to whom stock or cash is issued may include employees of a subordinate company who meet certain criteria.

The estimated amount of compensation of employees for the period from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019 was $29,843, $12,500, $48,093, and $25,000 respectively, and the estimated amount of compensation to directors and supervisors was $1,120, $1,120, $2,240, and $2,240, respectively. The Company’s Net profit before tax for the period is estimated by multiplying the amount of the Company’s Net profit before issuing the compensation of employees and directors and supervisors by the proportion of the Company’s compensation distribution to employees and directors and supervisors as provided in the Company’s Articles of Incorporation, and is reported as operating costs or expenses for that period. If there is a difference between the actual distribution amount and the estimated amount for the following year, the change in accounting estimate is adjusted and the difference is recognized in profit or loss for the following year. In the event that the Board of Directors resolves to grant a compensation of employees by way of stock, the number of shares of stock-based compensation is calculated based on the closing price of the common stock on the day before the Board of Directors’ resolution.

The actual allotment of compensation to employees, directors and supervisors for the year ended December 31, 2018 did not differ from the amount estimated in the Company’s annual financial statements, and was paid in cash. The difference between the amount approved by the Board of Directors for the remuneration of employees, directors, and supervisors in 2019 and the estimated amount in the individual financial statements in 2020 was $46.

(26) Financial instruments and fair value information

1. Credit risk

(1) Credit risk exposure

The carrying amount of a financial asset represents the maximum amount of credit risk. The maximum amount of credit risk exposure was $10,699,798, $9,330,916, and $8,519,546 as of June 30, 2020, December 31, 2019, and June 30, 2019, respectively.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(2) Credit risk concentration risk

The customers of the Consolidated Company are concentrated in the high-tech computer industry. In order to reduce the credit risk of accounts receivable, the Consolidated Company continuously evaluates the financial position of the customers and adjusts the transaction terms if necessary. The Consolidated Company on June 30, 2020, December 31, 2019, and June 30, 2019, a single customer is more than 5% of the total accounts receivable, accounts receivable balance for 6, 5, and 4 different customers, respectively, the Consolidated Company regularly assesses the possibility of accounts receivable collection and allowance for loss, and the total loss of total within the authorities expected.

(3) Impairment loss

The Consolidated Company for all notes receivable and accounts receivable adopts simplified approach to estimate the expected credit losses, i.e. using the term forecast credit losses measure, measure for this purpose, such as the notes receivable and accounts receivable department press on behalf of clients according to the terms of the contract to pay all amount due ability of credit risk characteristics shall be grouped together, and has set up into a forward-looking information. The expected credit loss analysis of notes receivable and accounts receivable of the Consolidated Company is as follows:

	Jun. 30, 2020	Expected credit loss in the duration of provision 937 313 119 508 101 48 - 6,358
Book value of Notes and accounts receivable $ 6,218,330 144,252 43,195 3,229 383 160 - 6,358	Weighted average expected credit loss rate
	0.02% 0.22% 0.28% 15.73% 26.37% 30.00% 100.00% 100.00%
$ 6,415,907		8,384

Dec 31, 2019

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Not past due 1-30 days past due 31-60 days past due 61-120 days past due 121-180 days past due 181-270 days past due 271-365 days past due More than 365 days past due	Book value of Notes and accounts receivable $ 5,558,158 328,542 79,760 614 381 - 50 5,612	Weighted average expected credit loss rate		Expected credit loss in the duration of provision 983 1,327 538 32 53 - 47 5,612
		0.02% 0.39% 0.67% 5.21% 13.91% 50.00% 94.00% 100.00%
	$ 5,973,117			8,592

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

	Jun. 30, 2019	Expected credit loss in the duration of provision 1,027 241 208 1,358 59 - 1,096 4,639
Book value of Notes and accounts receivable $ 4,903,962 153,762 37,150 10,405 223 - 1,096 4,639	Weighted average expected credit loss rate
	0.02% 0.16% 0.56% 13.05% 26.46% 44.48% 100.00% 100.00%
$ 5,111,237		8,628

The changes in the provisions for notes and accounts receivable of the Consolidated Company are as follows:

Opening balance Acquired from business mergers and acquisitions Recognized impairment loss (gain on reversal) Current write off Foreign currency translation gains and losses Closing balance	Jan. to Jun. 2020
	$ 8,384 8,628

2. Liquidity risk

The contracts of financial liabilities are sorted by their maturity dates as follows. The estimated interests are included, but the effect of net value agreement is excluded.

Book Value $ 46,000 100,768 16,515 2,616,501 2,067,499 165,208	Cash flow from the contract 46,099 107,779 16,515 2,616,501 2,067,499 160,753	Within	6-12 months - 15,141 - - - 35,690	1-2years - 40,384 - - - 28,661	2-5years - 31,549 - - - 38,223	More than 5 years - 758 - - - -
		6 months 46,099 19,947 16,515 2,616,501 2,067,499 58,179
$ 5,012,491	5,015,146	4,824,740	50,831	69,045	69,772	758
$ 29,980 19,000	30,172 19,000	30,172 19,000	- -	- -	- -	- -

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Accounts payable Other payables Lease liabilities	1,885,062 964,415 155,411	1,885,062 964,415 165,242	1,885,062 964,415 54,559	- - 46,417	- - 41,233	- - 23,033	- - -
	$ 3,053,868	3,063,891	2,953,208	46,417	41,233	23,033	-

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Jun. 30, 2019 Non-derivative financial liabilities: Short-term loan Notes payable Accounts payable Other payables	Book Value $ 232,988 6,638 1,682,436 1,855,994	Cash flow from the contract 234,325 6,638 1,682,436 1,855,994	Within 6 months 234,325 6,638 1,682,436 1,855,994	6-12 months - - - -	1-2years - - - -	2-5years - - - -	More than 5 years - - - -
	$ 3,778,056	3,779,393	3,779,393	-	-	-	-

The Consolidated Company does not anticipate that the cash flows analyzed at maturity date will alter significantly or that the actual amounts will vary significantly.

Market risk - exchange rate risk
(1) Exposure to exchange rate risk

The Consolidated Company’s financial assets and liabilities exposed to significant foreign currency exchange rate risk are as follows:

	Financial assets Currency USD RMB HKD JPY EURO INR VND Financial liabilities Currency USD RMB HKD JPY	Jun. 30, 2020	Jun. 30, 2020	TWD 11,266,969 727,460 74,010 44,198 46,271 2 22 5,275,797 225 12,017 25,618
		Foreign Currency (Note) $ 380,255 173,784 19,359 160,663 1,391 4 17,980 $ 178,056 54 3,143 93,124	Rate 29.6300 4.1853 3.8230 0.2751 33.2700 0.4791 0.0012 29.6300 4.1853 3.8230 0.2751

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

	Financial assets Currency USD RMB HKD JPY EURO INR VND Financial liabilities Currency USD RMB HKD JPY EURO MOP VND Financial assets Currency USD RMB HKD JPY EURO INR Financial liabilities Currency USD	Dec 31, 2019	Dec 31, 2019	TWD 11,624,983 744,979 27,904 23,054 80,425 2 22 6,665,126 160 7,793 6,590 1,531 3 17 TWD 10,545,845 368,966 11,366 416 62,115 2 5,446,724
		Foreign Currency (Note) Rate $ 387,757 29.9800 173,383 4.2975 7,250 3.8490 83,529 0.2760 2,394 33.5900 4 0.4791 17,980 0.0012 $ 222,319 29.9800 37 4.2975 2,025 3.8490 23,878 0.2760 46 33.5900 1 3.8490 14,361 0.0012 Jun. 30, 2019
		Foreign Currency (Note) $ 339,531 81,657 2,858 1,442 1,756 4 $ 175,361	Rate 31.0600 4.5180 3.9770 0.2886 35.3800 0.4791 31.0600

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

HKD	2,872	3.9770	11,422
JPY	12,843	0.2886	3,706
EURO	31	35.3800	1,099

Note: The foreign currencies denominated in the non-functional currencies of the consolidated entities include items that have been eliminated in the consolidated financial statements for inter-group transactions.

Because the Consolidated Company has a wide range of functional currencies, it has adopted a consolidated approach to disclose exchange gain or loss on monetary items, with foreign currency exchange gains or losses (realized and unrealized) of losses of $80,706, gains of $37,986, losses of $38,460, and gains of $25,459 for the period from April 1 to June 30, 2020 and 2019 and from January 1 to June 30, 2020 and 2019, respectively.

(2) Sensitivity analysis

The Consolidated Company’s exchange rate risk primarily comes from foreign currency-denominated cash and cash equivalents, accounts receivable and other receivables, loans, accounts payable and other payables, resulting into gains and losses of conversion of foreign currency when exchanging. As of June 30, 2020 and 2019, if NTD had depreciated or appreciated by 1% relative to foreign currencies held by the Company and all other factors remained constant, net income would have increased or decreased by $54,762 and $44,206 respectively for the years ended June 30, 2020 and 2019. The same basis is used for both phases of analysis.

Market risk - changes in interest rates

The interest rate risk of the Consolidated Company mainly comes from the bank deposit and short-term loan of floating rate, so the interest rate change will cause the effective interest rate of bank deposit and short-term loan to change accordingly, and the future cash flow will fluctuate.

The following sensitivity analysis is based on the risk of interest rate shocks reported by financial instruments on the date of coverage. For floating rate liabilities, the analysis is based on the assumption that the reported amount of daily outstanding liabilities is current throughout the year. The rate of change used by the Consolidated Company in reporting interest rates to the main management is 1% up or down, which represents the management’s assessment of the reasonable range of possible interest rate changes.

The Consolidated Company’s financial assets with variable interest rates on June 30, 2020, December 31, 2019, and June 30, 2019 were $2,492,485, $1,882,046, and $1,798,616 respectively, and its financial liabilities were $55,391, $0, and $170,868,

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

respectively. If interest rates had increased or decreased by 1%, the Consolidated Company’s net income would have increased or decreased by $9,748 and $6,511 for the years ended June 30, 2020 and 2019, respectively, with all other variables held constant.

Market risk - fair value
(1) Fair value and carrying amount

The management of the Consolidated Company believes that non-derivative short-term financial instruments should be estimated at their fair value based on their book value on the balance sheet, and that their book value should be a reasonable basis for the estimated fair value because of the near maturity of such commodities. This method is applied to cash and equivalent cash, notes receivable and payable, accounts receivable and payable, other receivables and payables, deposit margin and short-term borrowings.

In addition to the above financial instruments, the fair value and book value information of the remaining financial instruments and investment real estate of the Consolidated Company on the financial reporting date are as follows:

The parts measured at fair value: Financial assets: Financial assets measured at FVTPL - current Financial assets measured at FVTOCI - current	Jun. 30, 2020 Book Value Fair value $ 16,458 16,458 1,669 1,669	Dec 31, 2019 Book Value Fair value 240,034 240,034 6,438 6,438	Jun. 30, 2019 Book Value Fair value 37,529 37,529 24,717 24,717
	Book Value $ 16,458 1,669	Book Value 240,034 6,438	Book Value 37,529 24,717

Not measured at fair value: Non-financial assets: Investment property 377,795 418,217 283,002 322,604 242,210 282,694

(2) The evaluation techniques used to determine fair value are as follows
A. When financial assets are quoted publicly in an active market, this market price is the fair value. When market prices are not available, estimates are made by reference to quoted counterparties or using valuation techniques. The estimates and assumptions used are consistent with the information used by market participants as estimates and assumptions in pricing financial instruments.
B. The fair value of investment properties is based on the evaluations of independent evaluators with recognized professional qualifications and recent experience in the area and type of investment properties evaluated.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(3) Fair value hierarchy
The following table analyzes the fair value hierarchy of financial instruments and
investment property by valuation. Each fair value hierarchy is defined as follows:
A. Level 1: Publicly quoted prices (unadjusted) in an active market for identical assets or liabilities.
B. Level 2: Input parameters for an asset or liability are observable either directly (i.e., prices) or indirectly (i.e., derived from prices), except for publicly quoted prices included in Level 1.
C. Level 3: Input parameters for an asset or liability are not based on observable market information (non-observable parameters).

Jun. 30, 2020 The parts measured at fair value: Financial assets measured at FVTPL Financial assets measured at FVTOCI Not measured at fair value: Investment property	Level 1 $ 16,458 -		Level 2 - -		Level 3 - 1,669		Total 16,458 1,669 18,127 418,217
	$ 16,458		-		1,669
	$ -		-		418,217

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Level 1 $ 20,931 -	Level 2 - -	Level 3 219,103 6,438	Total 240,034 6,438
$ 20,931	-	225,541	246,472
$ -	-	322,604	322,604
Level 1 $ 23,971 -	Level 2 - 10,000	Level 3 13,558 14,717	Total 37,529 24,717
$ 23,971	10,000	28,275	62,246
$ -	-	282,694	282,694

(4) Table of details of the changes in financial assets (liabilities) measured at fair value and classified into level 3

Unit: 1,000 TWD

Name							Ja	n-Jun 2020
	$	Opening balance 219,103 6,438	Profit an		d	Losses Recognized in other comprehensi ve income - 91		Incr	eas	e Transferred to level 3 - -	Decrease Sales, disposal or clearing (217,728) (4,860)	Closing balance - 1,669
			Recognized in profit or loss (1,375) -					Purchase - -
Financial assets measured at FVTPL Financial assets measured at FVTOCI Name
	$	225,541		(1,375)		91		-		-	(222,588)	1,669
							Ja	n-Jun 2019
	$	Opening balance 71,603 12,541		Profit a	nd	Losses		Incr	eas	e Transferred to level 3 - -	Decrease Sales, disposal or clearing (127,922) -	Closing balance 13,558 14,717
			Recognized in profit or loss 1,347 -			Recognized in other comprehensi ve income - 2,176		Purchase 68,530 -
Financial assets measured at FVTPL Financial assets measured at FVTOCI
	$	84,144		1,347		2,176		68,530		-	(127,922)	28,275

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

For June 30, 2020, December 31, 2019, and June 30, 2019, unrealized gains or losses on assets held at the end of the reporting period amounted to $0, $411, and $10, respectively.

(5) Quantitative information on the fair value measurement of significant non-observable input values (level 3)

The Consolidated Company through the profit and loss of fair value as the third level measured at the fair value of financial assets on June 30, 2020, December 31, 2019, and June 30, 2019, are respectively $0, $219,103, and $13,558, because there was no active market public offer reference and counterparties, and because in practice, it can’t fully grasp the major unobservable input value and the fair value of the relationship, so it did not reveal the quantitative information. The quantitative information list of the other significant unobservable input values measured at fair value at third level is as follows:

Item Financial assets measured at FVTOCI`－` investment in equity instruments with no active market "	Valuation technique Comparable Company Analysis Net asset value method	Significant unobservable inputs ‧The multiple of book-to-Market ratio: 0.74-0.80 as of Dec. 31, 2019 and 1.30-1.33 as of Jun. 30, 2019 ‧Discount for lack of marketability: 14.8%~16.8% as of Dec. 31, 2019 and Jun. 30, 2019 ‧Net asset value	Relationship between significant unobservable inputs and fair value
			‧The higher the multiple, the higher the fair value ‧The higher the discount for lack of marketability, the lower the fair value ‧Positive correlation with fair value

(6) The fair value is classified in the third level of the evaluation process

The fair value of the Consolidated Company is measured using the unobservable input value, which is classified as the third level. The input value of this level is based on the price provided by the counterparty quotation or the price-to-market ratio multiplier of the market comparable company, etc., and relevant quotation and evaluation data are properly kept. The evaluation results are then checked to ensure consistency with the evaluation sources and to ensure that the evaluation results are reasonable.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(7) The fair value measurement of the third level and the sensitivity analysis of the fair value to the reasonable alternative hypothesis

The fair value measurement of financial instruments by the Consolidated Company is reasonable, but different evaluation models or evaluation parameters may result in different evaluation results. For financial instruments classified as level 3, if the evaluation parameters change, the impact on current profits and losses or other comprehensive income is as follows:

Dec. 31, 2019 Financial assets measured at FVTOCI Investment in equity instruments with no active market	Input	Rise or Drop	The change of fair value reflected in the profit or loss in the period	The change of fair value reflected in the profit or loss in the period	The change of fair value reflected in other comprehensive income	The change of fair value reflected in other comprehensive income
			Favorable change	Adverse change	Favorable change	Adverse change
	The multiple of book-to-Mark et ratio Discount for lack of marketability	5% 1%	- -	- -	171 51	(178) (58)

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Jun. 30, 2019 Financial assets measured at FVTOCI Investment in equity instruments with no active market	Input	Rise or Drop	The change of fair value reflected in the profit or loss in the period	The change of fair value reflected in the profit or loss in the period	The change of fair value reflected in other comprehensive income	The change of fair value reflected in other comprehensive income
			Favorable change	Adverse change	Favorable change	Adverse change
	The multiple of book-to-Mark et ratio Discount for lack of marketability	1% 1%	- -	- -	114 172	(172) (172)

Favorable and unfavorable changes in the Consolidated Company’s fair value represent fluctuations in fair value, which is calculated by using a valuation technique based on unobservable input parameters of varying degrees. Where the fair value of a financial instrument is affected by more than one input, the above table only reflects the effect of changes in a single input and does not take into account correlation and variability between inputs.

(27) Financial risk management

The Consolidated Company’s financial risk management objectives and policies are consistent with those disclosed in the 2019 consolidated financial statement; see Note 6 (26) to the 2019 consolidated financial statement for related information.

(28) Capital management

The Consolidated Company’s capital management objectives, policies and procedures have not changed materially from those disclosed in the 2019 consolidated financial statements; see Note 6 (27) of the 2019 consolidated financial statements for related information.

(29) Investment and fund raising activities for non-cash transactions

Please refer to Notes 6 (8) and 6 (14) for information on the Consolidated Company’s non-cash trading investments and fundraising activities for Right-of-use assets acquired under leases during the years ended June 30, 2020 and 2019.

The reconciliation of the Consolidated Company’s liabilities from fundraising activities for the years ended June 30, 2020 and 2019 was as follows:

Short-term loan Long-term loan	109.1.1 Cash flow $ 29,980 (21,145) - (28,776)	Non-cash change Other Change in exchange rate Change in fair value Jun. 30, 2020 36,680 485 - 46,000 129,544 - - 100,768

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

The change of fair value reflected in the profit or loss in the period Input Rise or Drop Favorable change Adverse change 155,411 (58,603) 72,191 (3,791)	Rise or Drop	The change of fair value reflected in the profit or loss in the period	The change of fair value reflected in the profit or loss in the period	The change of fair value reflected in other comprehensive income Favorable change Adverse change - 165,208	The change of fair value reflected in other comprehensive income Favorable change Adverse change - 165,208
		Favorable change	Adverse change	Favorable change
			(3,791)	-
$ 185,391 (108,524)	238,415		(3,306)	-	311,976
108.1.1 Cash flow $ 919,643 (689,015) 241,482 (56,236)	Non-cash change				Jun. 30, 2019 232,988 190,992
$ 1,161,125 (745,251)	3,376 4,730 -				423,980

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

VII. Related Party Transactions

(1) Parent company and ultimate controller: The Company is the ultimate controller of the Company and the Company’s subsidiaries.
(2) Names and relationships of related parties

The related parties with whom the Company had transactions during the period covered

by these consolidated financial statements are as follows:

Name of Related Party Relationship with the Company Key management personnel Including the directors, supervisors, managers and their families and spouses

(3) Material transactions with the related parties

1. Lease

The Consolidated Company leases warehouses from a related party and enters into one-year lease contracts with a total value of $60. Interest expense recognized was $0, $0, $1, and $1 for the period from April 1 to June 30, 2020 and 2019 and from January, and the balance of lease liabilities was $30, $59, and $89 for the years ended June 30, 2020, December 31, 2019, and June 30, 2019, respectively.

(4) Major management personnel transaction

Related compensation includes:

Short-term employee benefits Post-employment benefits	Apr. to Jun. 2020	Apr. to Jun. 2019	Jan. to Jun. 2020	Jan. to Jun. 2019 22,712 429
	$ 13,675 326	13,357 242	28,419 615
	$ 14,001	13,599	29,034	23,141

VIII. Pledged Assets

The carrying value of the assets pledged as security by the Consolidated Company was as follows:

Name of Asset Other financial assets - current Property, plant, and equipment	Jun. 30, 2020 $ 2 129,006		Dec 31, 2019 - 44,618		Jun. 30, 2019 - 45,027 45,027
	$ 129,008		44,618

IX. Significant Contingent Liabilities and Unrecognized Contractual Commitments

(1) Significant unrecognized contractual commitments:

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As of June 30, 2020, the Consolidated Company, had signed and unpaid major plant construction contracts, with the value of approximately $33,041.

The Consolidated Company had entered into outstanding information system related contracts as of June 30, 2020 for an amount of approximately $33,999.

(2) The issuance of guarantee notes for bank loans, financing lines and derivative financial commodity transactions:

Dec 31, 2019 Jun. 30, 2020 Jun. 30, 2019 Guaranteed notes $ 1,185,190 2,358,960 2,438,300

X. Significant Disaster Loss: None.

XI. Significant post-period events:

On July 8, 2020, the board of directors of GENIE PRECISION MACHINING CO., LTD., the sub-subsidiary, resolved to increase capital by 15,000 thousand shares at $10 per share, and reserved 1,500 thousand shares for subscription by employees. On July 8, 2020, the board of directors of Lintes Technology Co., Ltd., a subsidiary, resolved to acquire 8,630 thousand shares at $10 per share, and completed the capital stock subscription on July 8, 2020; after the capital increase, Lintes Technology Co., Ltd. holds 60% of the shares.

On August 11, 2020, the Company proposed to invest in the establishment of a Vietnam subsidiary to enhance the flexibility of the Group's production capacity adjustment, with an estimated investment amount of $1,400,000.

XII. Others

(1) Employee benefits, depreciation, depletion, and amortization functions are summarized below:

below:
Function Item	Apr-Jun 2020			Apr-Jun 2019
	Operation cost	Operation expense	Total	Operation cost	Operation expense	Total
Employee benefit expense Salaries expense Labor insurance and health insurance expenses Pension expense Compensation of directors Other employee benefit	539,848 16,781 739 - 43,384	290,502 17,745 2,788 1,375 32,115	830,350 34,526 3,527 1,375 75,499	433,549 79,151 77 - 35,519	222,206 24,716 2,393 1,476 34,263	655,755 103,867 2,470 1,476 69,782

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

expenses Depreciation expense Amortization expense	201,869 323	93,629 3,632	295,498 3,955	188,425 338	101,477 3,250	289,902 3,588

Function Item	Jan-Jun 2020			Jan-Jun 2019
	Operation cost	Operation expense	Total	Operation cost	Operation expense	Total
Employee benefit expense Salaries expense Labor insurance and health insurance expenses Pension expense Compensation of directors Other employee benefit expenses Depreciation expense Amortization expense	882,236 92,590 828 - 69,302 404,290 629	532,070 39,286 5,339 2,730 55,265 183,933 6,900	1,414,306 131,876 6,167 2,730 124,567 588,223 7,529	800,760 153,122 157 - 63,147 447,619 468	435,526 49,922 4,791 2,951 61,541 145,965 5,794	1,236,286 203,044 4,948 2,951 124,688 593,584 6,262

(2) Seasonality of operations:

The Company’s operations are subject to seasonal fluctuations due to the downstream computer industry.

XXIII. Disclosing Information

(1) Major transaction details

In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions for the year ended June 30 in 2020:

Capital lending to others:

Unit: NT$1000 ／ $1000 in foreign currency

No.	Lender	Borrower	Item	Related Party	Max Amount for the term	Balance at the end	Actual Lending Amount	Interest rate	Nature of the lending (Note 1)	Business Amount	Purpose f or the lending	Allowance for bad debt	Collateral	Collateral	Individual Limit (Note 2)	Overall limit (Note 2)
													Name	Value
0 0	The Company `〞`	Lotes Guanghou Co., Ltd `〞`	Intracom pany transacti on `〞`	Y Y	131,496 (RMB30,000) 213,300 (RMB50,000)	125,559 (RMB30,000) 209,265 (RMB50,000)	83,706 -	5% 5%	2 2	- -	Working Capital `〞`	- -	None None	- -	2,368,747 2,368,747	4,737,493 4,737,493

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Note 1: The description of loaning funds to others are as follow:

(1) Where a business transaction is necessary.
(2) Where a short-term financing facility is necessary.
Note 2: The amount of the Company’s financing to a single party shall not exceed 20% of the Company’s

net worth.

The total amount of funds lent by the Company to others shall not exceed 40% of the Company’s net

worth.

2. Endorsement:

Unit: NT$1000 ／ $1000 in foreign currency

==> picture [460 x 184] intentionally omitted <==

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

Endorsee
[No.] [Name of the ] Relations Ceiling on Balance of the Ending balance Amount Amount of Percentage of the Ceiling on Endorsement Endorsement Endorsement
Company that Company Name hip amount of ceiling of the actually used endorsement accumulated amount amount of made by parent made by made to any
provides the (Note 1) endorsement endorsement fee endorsement fee backed by of endorsement in the endorsement company to subsidiary to party in
endorsement for an in the period assets net value of current (Note 2) subsidiary parent company Mainland
enterprise (Note financial statement China
2) (%)
[0 ] The REKA 2 2,368,747 35,000 35,000 - - 0.30% 5,921,867 Y N N
Company Technology
Co., Ltd.
[0 ] “ Lotes Suzhou 2 2,368,747 151,250 - - - - % 5,921,867 " " Y
Co., LTD (USD5,000)
[0 ] " Lotes 2 2,368,747 453,750 - - - - % 5,921,867 " " “
Guanghou Co., (USD15,000)
Ltd 及 Lotes
Suzhou Co.,
LTD
[0 ] " Lotes 2 2,368,747 907,500 237,040 - - 2.00% 5,921,867 " " “
Guanghou Co., (USD30,000) (USD8,000)
Ltd
[1 ] Lotes GuREKA 1 948,826 90,750 88,890 - - 1.87% 2,372,065 N " N
Technology (USD3,000) (USD3,000)
Co., Ltd.
[2 ] LintesLintes 2 774,083 181,500 118,520 - - 7.66% 1,548,167 " " Y
Technology Technology (USD6,000) (USD4,000)
Co., Ltd (Suzhou) Co.,
Ltd.
----- End of picture text -----

Note 1: There are seven types of relationship between the Endorser and Endorsee, which can be marked:
(1) Companies with business dealings.
(2) Companies in which the Company directly and indirectly holds more than 50% of the voting rights.
(3) Companies that hold more than 50% of the voting rights in the Company, both directly and indirectly.
(4) The Company owns, directly and indirectly, more than 90 percent of the voting shares.
(5) Company that is mutually insured under a contract between its peers or co-manufacturers based on the need to perform the work.
(6) Company in which all of the contributory shareholders have given their endorsement in proportion to their shareholding in the joint venture.
(7) Intercompany performance guarantees and guarantees for pre-sale contracts in accordance with the Consumer Protection Act.
Note 2: (1) The amount of the Company’s guarantee for a single corporate endorsement shall not exceed
20% of the net worth of the Company.

The aggregate amount of the Company’s guarantees under external endorsement shall not exceed

50% of the net worth of the Company.
(2) The amount of Lotes Guanghou Co., Ltd.’s guarantee for a single corporate endorsement is

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

limited to not more than 20% of the net worth of the company.

The aggregate amount of Lotes Guanghou Co., Ltd.’s external endorsement guarantees is limited to an amount not exceeding 50% of the Company’s net worth.

(3) The amount of Lintes Technology Co., Ltd.’s guarantee for a single corporate endorsement is limited to not more than 50% of the net worth of the company.
The aggregate amount of Lintes Technology Co., Ltd.’s external endorsement guarantees is limited to an amount not exceeding 100% of the Company’s net worth.
Securities held at the end of fiscal period (excluding the equity of controlled by subsidiaries, affiliated companies, or joint company):

Unit: NT$1000

Company which holds securities	Category and name of security	Category and name of security	Relationship with the issuer of the security	Relationship with the issuer of the security	Listed as	Listed as	Listed as	End of the fiscal period	End of the fiscal period	End of the fiscal period	End of the fiscal period	End of the fiscal period	End of the fiscal period	End of the fiscal period	End of the fiscal period	End of the fiscal period	Note	Note
								Shares			Book Value		Shareholding proportion		Fair value
Jiayu Investment Co., Ltd. " " " " "	Grand-Tek Technology Co., Ltd. APAQ Technology Co., Ltd. OtO Photonics Inc. Lucemitek Co., Ltd Radinet Communications Inc. AICP Technology Corporation		`無` " " " " "		Financial assets measured at FVTPL - current " " " " Financial assets measured at FVTOCI current			163,980 345,000 1,368,800 1,169,977 600,000 400,000			6,108 10,350 - - - 1,669		0.67 % 0.41 % 5.35 % 17.33 % 18.37 % 5.33 %		6,108 10,350 - - - 1,669		Note Note Note
Note: All of them were recognized in losses. The cumulative purchase or sale of the same securities amounted to at least $300,000 or 20% of the paid-in capital: None. Acquisition of real property amounting to $300,000 or 20% or more of the paid-in capital: Unit: NT$1000 If the counterparty is a related party, the information of its previous transfer shall be provided The company which acquired the property Name of Asset Date of occurrence Amount of Transaction (Note 2) Payment condition (Note 2) Counterpart y of transaction Relations hip Owner Relationship with the Issuer Date of transfer Amount Reference for pricing Purpose of the acquisition and the condition of use Other agreed matters Lotes Zhongshan Co., Ltd Plant (Note 1) 106.10 ~ 109.6 833,804 695,515Chongqing Chuangyou Construction Group, etc. None - - - - Bidding For the constructio n of a plant None
The company which acquired the property	Name of Asset	Date of occurrence	Amount of Transaction (Note 2)	Payment condition (Note 2)		Counterpart y of transaction	Relations hip		If the counterparty is a related party, the information of its previous transfer shall be provided						Reference for pricing	Purpose of the acquisition and the condition of use		Other agreed matters
									Owner	Relationship with the Issuer		Date of transfer		Amount
Lotes Zhongshan Co., Ltd	Plant (Note 1)	106.10 ~ 109.6	833,804	695,515		Chongqing Chuangyou Construction Group, etc.	None		-	-		-		-	Bidding	For the constructio n of a plant		None

The cumulative purchase or sale of the same securities amounted to at least $300,000 or 20% of the paid-in capital: None.
Acquisition of real property amounting to $300,000 or 20% or more of the paid-in capital:

Note 1: Build the factory by own contracting committee.

Note 2: The conversions to NTD were made at the exchange rates prevailing on the balance sheet date.

Disposal of real property amounting to $300,000 or 20% or more of paid-in capital: None.

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The amount of sales to or from related parties is at least $100,000 or 20% of the paid-in capital:

Unit: NT$1000

The company which purchases (sells) products	Name of Transaction Counterparty	Relationship	Condition of Transaction	Condition of Transaction	Condition of Transaction	Condition of Transaction	Situation and reason for the conditions of transaction to be different from the ordinary ones	Situation and reason for the conditions of transaction to be different from the ordinary ones	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Remarks
			Purchase (sales)	Amount	Percentage in total goods purchased (sold)	Credit period	Unit Price	Credit period	Balance	Percentage in the notes and accounts receivable (payable)
Xincheng Development Co., Ltd. " REKA Technology Co., Ltd. " " " " " Lotes Guanghou Co., Ltd " Lintes Technology (Suzhou) Co., Ltd.	The Company Lotes Suzhou Co., LTD The Company Lotes Guanghou Co., Ltd Lotes Shenzhen Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. LOTES HengNan CO.,LTD. " Lotes Zhongshan Co., Ltd " REKA Technology Co., Ltd. LOTES HengNan CO.,LTD. Lintes Technology Co.,Ltd	Subsidiary The surrogate parent company are the same parent company Subsidiary The surrogate parent company are the same parent company " " " " " " " " Subsidiary	Net revenue from the goods sold Net expense from the goods purchased Net revenue from the goods sold Net expense from the goods purchased Net revenue from the goods sold Net revenue from the goods sold Net expense from the goods purchased Net revenue from the goods sold Net revenue from the goods sold Net expense from the goods purchased Net expense from the goods purchased Net expense from the goods purchased Net revenue from the goods sold	595,233 622,734 3,359,171 4,019,881 115,120 326,791 282,441 128,177 196,153 138,686 965,531 146,429 812,262	95.58 % 100.00 % 75.09 % 91.10 % 2.57 % 7.30 % 6.40 % 2.87 % 4.38 % 3.14 % 30.67 % 4.65 % 95.77 %	Settled by month at intervals of 90 days " " " " " " " " " " " "	- - - - - - - - - - - - -	No significant difference " " " " " " " " " " " "	110,140 (131,963) 1,391,550 690,589 99,271 259,846 (103,409) 95,848 156,358 (100,842) (291,847) (44,777) 393,658	82.73% 100.00% 50.42% 26.86% 3.60% 9.42% 4.02% 3.47% 5.67% 3.92% 23.27% 3.57% 96.66%

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Amounts due from related parties amounting to at least $100,000 or 20% of paid-in capital:

Unit: NT$1000

Related party with accounts receivable by the Company	Name of transaction counterparty	Relationship	Balance of receivables from the related party	Turnover Ratio	Past due receivables from the relatedparty	Past due receivables from the relatedparty	Receivables from the related party Amount received after the period ended	Appropriated Allowance Amount of loss
					Amount	Solution
Xincheng Development Co., Ltd. REKA Technology Co., Ltd. " " " Lotes Suzhou Co., LTD Good Hope Investments Limited Lotes Guanghou Co., Ltd Lotes Zhongshan Co., Ltd Lotes Hengnan Co., Ltd. Lintes Technology (Suzhou) Co., Ltd.	The Company The Company Lotes Guanghou Co., Ltd Zongka Technology (Shenzhen) Co., Ltd. Lotes Zhongshan Co., Ltd Xincheng Development Co., Ltd. REKA Technology Co., Ltd. " " REKA Technology Co., Ltd. Lintes Technology Co.,Ltd	Subsidiary Subsidiary The surrogate parent company are the same parent company " " The surrogate parent company are the same parent company Parent company The surrogate parent company are the same parent company " " Subsidiary	110,140 1,391,550 291,847 259,846 156,358 131,963 916,191 690,589 100,842 103,409 393,658	7.40 3.91 5.72 2.42 5.02 6.77 - 7.24 5.50 6.54 4.70	- - - - - - - - - - -		110,140 103,705 708 - - 109,203 - - 59,260 42,366 131,548	- - - - - - - - - - -

9. Engagement in derivative transactions:

Unit: NT$1000 `／` $1000 in foreign currency

Company conducting transaction	Investment target	Transaction date	Maturity date	Contract period	Contract Price	Profit or loss from investment
The Company " " " " " "	Swap contract of metal products Swap contract of metal products Swap contract of metal products Swap contract of metal products Swap contract of metal products Swap contract of metal products Swap contract of metal products	Feb. 4, 2020 Feb. 4, 2020 Feb. 4, 2020 Feb. 4, 2020 Feb. 4, 2020 Apr. 6, 2020 Apr. 6, 2020	Mar. 4, 2020 Mar. 4, 2020 Mar. 4, 2020 Mar. 9, 2020 Mar. 9, 2020 Apr. 29, 2020 Apr. 29, 2020	29 29 29 34 34 23 23	USD 570 USD 570 USD 286 USD 286 USD 572 USD 983 USD 985	(48) (64) (42) 18 36 1,718 1,671

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Business relationships and material transactions between parent and subsidiaries: Business relationships and significant intercompany transactions for the year ended June 30, 2020:

Unit: NT$1000

				Unit: NT$1000	Unit: NT$1000	Unit: NT$1000	Unit: NT$1000
No.	Name	Transaction with	Relation ship	Transactions in 2020
				Subject	Amount	Term	Operating revenue Accounting for total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0	The Company " " " " " " " " " " " " " " " " " " " " " " " " " " "	Ememe Robot Co., Ltd " Lintes Technology Co., Ltd " " " " Jiayu Investment Co., Ltd. LOTES USA, INC. " LOTES EU GmbH Xincheng Development Co., Ltd. " " " REKA Technology Co., Ltd. " " " " " GOOD NEWS MEDICAL CO., LTD. Lotes Guanghou Co., Ltd " Compertum Microsystems Inc. Lerain Technology Co., Ltd. Lotes Suzhou Co., LTD "	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Accounts receivable Other accounts receivable Other income Accounts receivable Net revenue from the goods sold Net expense from the goods purchased Accounts payable Other income Administration fee Other payables Administration fee Accounts payable Net expense from the goods purchased Other payables Selling expenses Accounts receivable Accounts payable Net expense from the goods purchased Sales Revenue Other accounts receivable Other payables Other income Other accounts receivable Accounts receivable Other income Other income Sales Revenue Other accounts receivable	2,982 2,272 155 22 62 14,149 12,239 17 42,203 5,130 1,200 110,140 595,233 62 237 12,235 1,391,550 3,359,171 13,056 59 11,473 9 83,973 2,025 3 76 26 26	Same as other transactions " " " " " " " " " " " " " " " " " " " " " " " " " " "	0.02% 0.01% -% -% -% 0.18% 0.07% -% 0.54% 0.03% 0.02% 0.60% 7.56% -% -% 0.07% 7.53% 42.67% 0.17% -% 0.06% -% 0.45% 0.03% -% -% -% -%

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No.	Name	Transaction with	Relation ship		Transa	ctions in 2020
				Subject	Amount	Term	Operating revenue Accounting for total assets
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 . 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Lotes Guanghou Co., Ltd " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " "	REKA Technology Co., Ltd. " " " " Lotes Suzhou Co., LTD " " " " " Lotes Hengnan Co., Ltd. " " " " " Zongka Technology (Shenzhen) Co., Ltd. " " " " " " Shenzhen Deyi Automation Technology Co., Ltd. " " " " " Lintes Technology (Suzhou) Co., Ltd. " " " Lotes Zhongshan Co., Ltd " " " " " Guangzhou Leside Technology Co., Ltd. " " "	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Accounts receivable Accounts payable Purchasing for the term Sales Revenue Other accounts receivable Sales revenue Purchasing for the term Mold purchasing Accounts receivable Other accounts receivable Accounts payable Mold purchasing Accounts receivable Accounts payable Sale of fixed assets Other accounts receivable Sales revenue Administration expenses Accounts receivable Accounts payable Other accounts receivable Purchasing for the term Sales Revenue Other income Accounts receivable Accounts payable Other accounts receivable Sales revenue Current purchase Other income Sales Revenue Accounts receivable Purchasing for the term Accounts payable Other payables Accounts receivable Sales revenue Purchasing for the term Sale of fixed assets Accounts payable Accounts receivable Other accounts receivable Sales revenue Other income	690,589 291,847 965,531 4,019,881 37,126 3,046 1,546 1,583 2,650 135 967 146,429 2,196 44,777 1,990 2,204 1,983 340 227 179 17 161 228 97 431 255 13 585 230 73 27,297 27,636 15 17 7,319 13,519 12,207 7,260 240,368 8,040 2,829 31 2,685 59	Same as other transactions " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " ' " " " " " " "	3.74% 1.58% 12.27% 51.07% 0.20% 0.04% 0.02% 0.01% 0.01% -% 0.01% 1.86% 0.01% 0.24% -% 0.01% 0.03% -% -% -% -% -% -% -% -% -% -% -% -% -% 0.35% 0.15% -% -% 0.04% 0.07% 0.16% 0.09% 0.11% 0.04% 0.02% -% 0.03% -%

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 5 5 5 6 7 7 8 8	Lotes Suzhou Co., LTD " " " " " Lotes Suzhou Co., LTD " " " " " " " " REKA Technology Co., Ltd. " " " " " " " " " " " " " " " " " Lotes Hengnan Co., Ltd. " " " " " Lintes Technology (Suzhou) Co., Ltd. " " Lintes Technology Co., Ltd Zongka Technology (Shenzhen) Co., Ltd. " Lotes Zhongshan Co., Ltd "	Xincheng Development Co., Ltd. " " " Zongka Technology (Shenzhen) Co., Ltd. " Lintes Technology (Suzhou) Co., Ltd. " " " " Shenzhen Deyi Automation Technology Co., Ltd. " Lotes Zhongshan Co., Ltd " Xincheng Development Co., Ltd. " Zongka Technology (Shenzhen) Co., Ltd. " Good Hope Investments Limited Ememe Robot Co., Ltd Lotes Hengnan Co., Ltd. " " " " Shenzhen Deyi Automation Technology Co., Ltd. " Lotes Zhongshan Co., Ltd " " " LOTES USA, INC. Shenzhen Deyi Automation Technology Co., Ltd. " Zongka Technology (Shenzhen) Co., Ltd. " Lotes Suzhou Co., LTD " Lintes Technology Co., Ltd " " Jiayu Investment Co., Ltd. Shenzhen Deyi Automation Technology Co., Ltd. " Guangzhou Leside Technology Co., Ltd. "	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 2 3 3 3 3	Sales revenue Accounts receivable Accounts payable Purchasing for the term Sales revenue Accounts receivable Sales Revenue Other accounts receivable Accounts receivable Other income Sale of fixed assets Sales Revenue Accounts receivable Purchasing for the term Accounts payable Purchasing for the term Accounts payable Sales Revenue Accounts receivable Accounts payable Accounts receivable Sales Revenue Accounts receivable Purchasing for the term Accounts payable Sale of fixed assets Sales Revenue Accounts receivable Sales Revenue Accounts receivable Purchasing for the term Accounts payable Other payables Sales Revenue Accounts receivable Sales Revenue Accounts receivable Sales Revenue Accounts receivable Sales Revenue Accounts payable Accounts receivable Other payables Sales Revenue Accounts receivable Sales Revenue Accounts receivable	622,734 131,963 495 646 21,740 16,746 6,582 6,394 20,785 5,717 21,051 34,670 32,531 116 128 26,637 22,434 326,791 259,846 916,191 8,115 128,177 95,848 282,441 103,409 506 115,120 99,271 196,153 156,358 138,686 100,842 19 48,731 51,059 54,433 49,676 2,030 1,439 812,262 3,732 393,658 53,483 18 19 926 1,025	" " " " " " Same as other transactions " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " "	7.91% 0.71% -% 0.01% 0.28% 0.09% 0.08% 0.03% 0.11% 0.07% -% 0.44% 0.18% -% -% 0.34% 0.12% 4.15% 1.41% 4.96% 0.04% 1.63% 0.52% 3.59% 0.56% -% 1.46% 0.54% 2.49% 0.85% 1.76% 0.55% -% 0.62% 0.28% 0.69% 0.27% 0.03% 0.01% 10.32% 0.02% 2.13% 0.29% -% -% 0.01% 0.01%

Note 1: The number should be filled in as follows:

0 refer to parent company

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Subsidiaries are numbered by company, starting with the Arabic numeral 1.
Note 2: The type of relationship with the counterparty is indicated below:
Parent company to subsidiaries
Subsidiaries to parent company
Subsidiaries to subsidiaries

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(2) Information on reinvestment business:

Information on the Company’s investees for the year ended June 30, 2020 was as follows (excluding investees in China):

Unit: NT$1000

Name of the company investing	Name of investee company	Location	Main business	Initial investment amount (Note 1)	Initial investment amount (Note 1)	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Gain/loss of investee company in the fiscal period	Gain/loss in the investment recognized in the fiscal period	Remarks
				End of this period	End of the previous year	Shares	Percentage	Book Value
The Company " " " " " " " Lotes Investment Ltd. Good Hope Investments Limited " Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. " " " Lintes Technology Co., Ltd " "	Lotes Investment Ltd. Good Hope Investments Limited Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. Lotes USA, Inc. LOTES EU GmbH Lerain Technology Co., Ltd. Loteson International Investments Limited Xincheng Development Co., Ltd. REKA Technology Co., Ltd. Jae You Co., Ltd. Wangden Investments Limited Ememe Robot Co., Ltd Compertum Microsystems Inc. GOOD NEWS MEDICAL CO., LTD. Lintes Technology Co., Ltd Jiajyun Investment Co., Ltd. GENIE PRECISION MACHINING CO., LTD. Compertum Microsystems Inc.	Samoa " " Anguilla Taiwan America Germany Taiwan Hong Kong Samoa Hong Kong " " Taiwan " " " " " "	Holding and investment businesses " " " General investment Market development Market development Chip design, testing and sales Holding and investment businesses Telecommunicati on services and sales of connectors for consumer electronics industry Telecommunicati on services and sales of connectors for consumer electronics industry Holding and investment businesses Holding and investment businesses Electric appliance and audiovisual electric products manufacturing Electronic parts and components manufacturing Mechanical equipment, electronic components, and optical instruments manufacturing and trading Electronic parts, components, electrical machinery, supplies manufacturing General investment Optical mold manufacturing and trading Electronic parts and components manufacturing	771,862 11,890 593,087 14,815 690,000 74,075 3,327 9,385 771,862 2,963 3,001 593,096 14,815 69,600 13,164 250 486,926 15,000 78,533 4,386	780,979 12,030 600,092 14,990 690,000 74,950 3,359 - 780,979 2,998 3,036 600,102 14,990 69,600 13,164 - 486,926 - - -	26,050,000 401,281 20,016,426 500,000 69,000,000 2,500,000 100,000 938,525 26,050,000 100,000 101,281 20,016,756 500,000 6,960,000 1,316,400 25,000 29,712,788 1,500,000 6,041,000 438,600	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 33.92% 100.00% 100.00% 100.00% 100.00% 100.00% 94.37% 31.38% 5.00% 52.13% 100.00% 63.93% 10.46%	4,620,153 1,514,774 1,980,895 116,144 948,837 78,202 3,012 7,626 4,744,147 1,707 596,852 1,997,583 116,144 (4,971) 7,138 245 807,024 15,000 95,846 4,115	340,822 (5,300) 129,768 7,490 71,115 30,706 (660) (1,759) 340,822 (10) (5,290) 129,768 7,490 120 (18,715) (94) 167,097 - 23,676 (18,715)	353,068 (5,300) 129,771 7,490 71,123 30,706 (660) (1,759) 340,822 (10) (5,290) 129,768 7,490 113 (8,064) (5) 83,554 - 8,940 (271)	Note 2 Note 2 Note 2

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

" Jilong Co., Ltd.	Jilong Co., Ltd. Rihui Co., Ltd.	Taiwan "	Holding and investment businesses Holding and investment businesses	146,669 146,669	148,401 148,401	4,950,000 4,950,000	100.00% 100.00%	233,275 233,275	56,060 56,060	70,791 70,791	Note 2 Note 2

Note 1: The original investment amount was converted into New Taiwan dollars using the exchange rate at the balance sheet date.
Note 2: Investment income recognized in the current period includes adjustments for unrealized gains or losses on intercompany transactions.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(3) Investment in Chinese Company:
Names of investee companies in Mainland China, major business activities, and other related information:

Unit: NT$1000

Name of investee company in Mainland China	Main business	Paid-in capital (Note 3)	Method of investme nt (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of the fiscal period (Note 3)	Amount remitted or retrieved	Amount remitted or retrieved	Accumulated investment amount remitted from Taiwan at the end of the fiscal period (Note 3)	Gain/loss of investee company in the fiscal period	Shareholdin g Rati	Gain/loss in investment recognized in the fiscal period (Note 2)	Carrying amount of investment at the end of the fiscal period	Investment income remitted back to Taiwan by the end of the fiscal period
					Remittance	Retrieved
Lotes Guanghou Co., Ltd Lotes Suzhou Co., LTD Zongka Technology (Shenzhen) Co., Ltd. Lotes Hengnan Co., Ltd. Lintes Technology (Suzhou) Co., Ltd. Shenzhen Deyi Automation Technology Co., Ltd. Lotes Zhongshan Co., Ltd Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Hengnan Deyi Property Development Co., Ltd. Guangzhou Leside Technology Co., Ltd. Chongqing Fuxinrui Electronic Technology Co., Ltd.	Manufacturing connectors for telecommunication industry and for consumer electronics industry Manufacturing connectors for telecommunication industry and for consumer electronics industry R&D of electronics, import and export of raw materials of plastic products and plastic products Manufacturing connectors for telecommunication industry and for consumer electronics industry Development and production of the measurement instruments for optical communication, optical transceivers of 10GB/s or above and relevant technical support Manufacturing of robotic arms, automation equipment and relevant components Manufacturing connectors for telecommunication industry and for consumer electronics industry, and Manufacturing of robotic arms, automation equipment and relevant components Surface treatment of metal products and plastic products Development of real estate, lease of premises, landscape design and interior decorating Research, testing and development R&D and sales of electronic components, automobile components and accessories, computers and accessories, development of molds and the import and export of goods and technologies	791,121 592,281 14,815 362,028 146,669 104,633 1,213,737 41,853 96,262 2,930 2,511	(`二`) (`二`) (`二`) (`三`) (`二`) (`三`) (`三`) (`三`) (`三`) (`三`) (`三`)	755,565 592,281 14,815 - 146,669 - - - - - -	- - - - - - - - - - -	- - - - - - - - - - -	755,565 592,281 14,815 - 146,669 - - - - - -	340,822 129,768 7,490 56,002 56,387 12,332 (23,869) (5,794) (61) (1,174) (776)	100.00% 100.00% 100.00% 100.00% 52.13% 100.00% 100.00% 100.00% 100.00% 100.00% 51.00%	353,058 129,771 7,490 56,751 37,072 12,332 (23,869) (5,794) (410) (1,174) (396)	4,620,123 1,980,839 116,144 545,965 147,029 86,659 1,166,480 36,174 95,855 152 379	- - - - - - - - - - -

Note 1: There are six types of investments:

(1) Investment in Chinese Corporation via Third Region Remittance.
(2) Establishment of a company to reinvest in a continental company through a third regional investment.
(3) Reinvest in Chinese companies by re-investing in existing companies in third regions.
(4) Direct Investment
(5) Others.
(6) N/A.

Note 2: The investment gain or loss recognized in the current period has been reconciled with the unrealized gain or loss from intercompany transactions.

Note 3: The balance sheet date exchange rates are used to translate the paid-in capital and remittance of cumulative investment amounts into New Taiwan dollars.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

2. Investment ceiling in Mainland China:

Name	Accumulated amount remitted from Taiwan at the end of the fiscal period for investment in Mainland China (Note 1)	Investment amount approved by Investment Commission, MoEA (Note 1)	Investment ceiling in Mainland China according to the regulations made by Investment Commission, MoEA
Lotes Co.,Ltd.	1,362,661,000	1,505,337,000	7,106,240,000
Lintes Technology Co.,Ltd	146,669,000	146,669,000	928,900 ,000

Note 1: The conversions to NTD were made at the exchange rates prevailing on the balance sheet date.

Significant transactions with the investee companies in China:

Please refer to the “Significant Transactions” and “Business relationship and significant transactions between the Company and its subsidiaries” for details of the significant transactions between the Company and its investee companies in Mainland China, directly or indirectly, as of June 30, 2020.

(4) Principal shareholder information:

ina, directly or indirectly, as of June 30, 2020. ipal shareholder information:
Shares Major Shareholders	Shareholding
	Shares	Percentage
Jinling Investment Co., Ltd.	10,956,237	10.58%
Jiaming Investment Co., Ltd.	9,797,037	9.46%

Note: (1) This table summarizes the principal shareholders’ information for the Company, based on the last business day of each calendar quarter, for the common and preferred shares of the Company for which the stockholders hold at least 5% of the Company’s outstanding common shares and treasury shares. The difference between the number of shares recorded in the financial statements and the number of shares for which the Company has completed the dematerialized shares may be due to differences in the basis of calculation.
(2) If the above information is related to a shareholder’s share held in a trust, it is disclosed in the client’s separate account of the trustee’s trust account. For shareholders who apply for declaration of internal shareholdings of more than 10% according to the Securities and Exchange Act, their shareholdings include their own shares plus shares held by them in the trust and have the right to decide on the use of trust property; please refer to Market Observation Post System for more information on the declaration of internal shareholdings.

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

XIV. Segmental Information

(1) General Information

The company’s main business is the trading of various hardware and tool parts, the manufacturing, processing and trading of various terminals and their finished connectors, the import and export trade of the preceding items, and the agency of the preceding items related to domestic and foreign manufacturers’ products in the tender quotation and distribution business.

(2) Information on reportable segment profit or loss, assets, liabilities and their measurement basis and reconciliation

The Consolidated Company’s major decisions are based on the performance appraisal and resource allocation by the production regions. After analysis, the two regions meet the conditions of consolidation into a single operating segment, therefore the Consolidated Company as a whole is a single operating segment, and the information of segment profit or loss, segment assets and segment liabilities are consistent with the financial statements.

(3) Product and labor provision information

The Consolidated Company’s revenue information from external customers is as follows:

follows:
Product and Labor Provision	Apr-Jun 2020 $ 1,551,523 1,110,583 683,240 569,281 18,301 802,303	Apr-Jun 2019 1,261,980 602,966 625,333 440,050 30,719 647,888	Jan-Jun 2020 2,570,734 1,935,028 1,067,257 984,958 44,579 1,269,515	Jan-Jun 2019 2,394,562 1,273,264 1,172,636 840,392 62,364 1,118,597
DT Server LINTES(High Speed Cable) NB Automotive Others Total
	$ 4,735,231	3,608,936	7,872,071	6,861,815

(4) Geographical information

The Consolidated Company’s geographical information is shown below, which is classified based on the geographic location of customers and non-current assets are classified based on the geographic location of assets.

Area Apr-Jun 2020 Apr-Jun 2019 Jan-Jun 2020 Jan-Jun 2019 External client revenue: Taiwan $ 350,761 128,873 589,370 237,911

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LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

Mainland China Other countries Total	3,533,373 2,824,687 5,808,488 5,526,144 851,097 655,376 1,474,213 1,097,760
	$ 4,735,231 3,608,936 7,872,071 6,861,815

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AI assistant

LOTES — Interim / Quarterly Report 2020

52339_rns_2020-11-13_840bce68-a166-48cd-821f-74e13fa55e69.pdf

LOTES CO., LTD. and Subsidiaries

Consolidated Financial Statements and Independent Auditor's Report

Notice to Readers

Table of Content

Independent Auditor’s Report

Foreword

Scope

Conclusion

June 30, 2020 and 2019, reviewed only and not audited in accordance with generally accepted auditing standards (GAAS)

LOTES CO., LTD., and Its Subsidiaries

Consolidated Balance Sheet

June 30, 2020, December 31, 2019, and June 30, 2019

Unit: NT$1000

Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS) LOTES CO., LTD., and Its Subsidiaries Consolidated Statement of Comprehensive Income

April 1 to June 30, 2020 and 2019 and January 1 to June 30, 2020 and 2019

Unit: NT$1000

Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS) LOTES CO., LTD., and Its Subsidiaries

Consolidated Statement of Changes in Equity

January 1 to June 30, 2020 and 2019

Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS) LOTES CO., LTD., and Its Subsidiaries Consolidated Statement of Cash Flows January 1 to June 30, 2020 and 2019

(Please refer to the Consolidated Financial Notes for details)

Reviewed only and not audited in accordance with generally accepted auditing standards (GAAS)

LOTES CO., LTD., and Its Subsidiaries Consolidated Financial Statement Notes

Second Quarter 2020 and 2019

(Except as otherwise indicated, the unit for all amounts in this document is NT$1,000)

I. Company History

II. Date and Procedures of Approval of Financial Statement

III. Application of New and Revised Standards and Interpretations

New release/revision/amendment of guidelines and interpretations

Release

Major Amendments

IV. Summary of Major Accounting Policies

(1) Compliance Statement

1. Subsidiary listed in the Consolidated Financial Statements

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

2. Subsidiary not listed in the Consolidated Financial Statements: none.

(3) Business Combination

(4) Employee benefits

(5) Income Tax

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

V. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

VI. Descriptions for Important Accounting Items

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(2) Identifiable assets acquired and liabilities assumed

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(3) Bargain purchase gains

(6) Subsidiaries with significant non-controlling interests

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

1. Comprehensive financial information of Lintes Technology Co., Ltd.:

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(7) Property, plant, and equipment

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(8) Right-of-use assets

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(13) Long-term loans

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

1. Lease of land, premises, and buildings

2. Other leases

(17) Operating lease

1. Lessor lease

(18) Employee benefits

1. Defined benefit plans

2. Defined contribution plan

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(19) Income tax

3. Income Tax Approval

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(20) Capital and other equity

1. Capital reserve

2. Retained earnings

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

(3) Earnings distribution

3. Other Equity

LOTES CO., LTD. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Cont’d)

LOTES Interim / Quarterly Report 2020

`Notice to Readers`

Unit: NT$1000 `／` $1000 in foreign currency