MSI — Interim / Quarterly Report 2020

Nov 12, 2020

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

MARCH 31, 2020 AND 2019

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of MICRO-STAR INTERNATIONAL CO., LTD.

Introduction

We have reviewed the accompanying consolidated balance sheets of MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES (the “Group”) as at March 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical 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.

Basis for Qualified Conclusion

As explained in Note 4(3), the financial statements of certain insignificant consolidated subsidiaries were not reviewed by independent accountants. Those statements reflect total assets of NT$13,862,081 thousand and NT$14,876,287 thousand, constituting 24% and 27% of the consolidated total assets, and total liabilities of NT$2,442,446 thousand and NT$2,500,784 thousand,

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constituting 10% and 10% of the consolidated total liabilities as at March 31, 2020 and 2019, and total comprehensive income of NT$(42,815) thousand and NT$133,957 thousand, constituting -4% and 9% of the consolidated total comprehensive income for the three months then ended.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries been reviewed by independent accountants, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2020 and 2019, and of its consolidated financial performance and its consolidated cash flows for the three months then ended in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Liang, Hua-Ling Lai, Chung-Hsi

For and on behalf of PricewaterhouseCoopers, Taiwan April 30, 2020

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

MARCH 31, 2020, DECEMBER 31, 2019 AND MARCH 31, 2019

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of March 31, 2020 and 2019 are reviewed, not audited)

Assets	Notes	March 31, 2020 AMOUNT % $ 10,957,593 19 111,770 - 1,200,000 2 68,909 - 16,163,743 28 143,755 1 16,337 - 20,571,632 36 1,575,003 3 50,808,742 89 151,975 - 100,830 - 4,853,175 9 610,695 1 271,225 - 407,232 1 86,950 - 6,482,082 11 $ 57,290,824 100 (Continued)	December 31, 2019 AMOUNT % $ 10,834,884 18 152,805 - 1,200,000 2 47,114 - 17,205,783 29 227,116 - 16,417 - 22,527,840 37 1,675,701 3 53,887,660 89 151,975 - 102,009 - 4,893,433 8 474,897 1 300,559 1 471,523 1 66,652 - 6,461,048 11 $ 60,348,708 100	March 31, 2019	March 31, 2019
		AMOUNT $ 10,957,593 111,770 1,200,000 68,909 16,163,743 143,755 16,337 20,571,632 1,575,003 50,808,742 151,975 100,830 4,853,175 610,695 271,225 407,232 86,950 6,482,082 $ 57,290,824 (Continued)	AMOUNT $ 10,834,884 152,805 1,200,000 47,114 17,205,783 227,116 16,417 22,527,840 1,675,701 53,887,660 151,975 102,009 4,893,433 474,897 300,559 471,523 66,652 6,461,048 $ 60,348,708	AMOUNT $ 8,487,235 118,030 242,740 23,871 17,371,532 167,766 35,943 21,361,499 1,639,895 49,448,511 - 76,348 4,743,551 391,301 321,269 487,155 105,960 6,125,584 $ 55,574,095	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Current financial assets at amortised cost 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 1410 Prepayments 11XX Total current assets Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property - net 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets	6(1) 6(2) 6(4) 6(5) 6(5) 6(6) 6(7) 6(3) 6(4) and 8 6(8) and 8 6(9) 6(11) 6(25)				15 - 1 - 31 - - 39 3
					89
					- - 8 1 1 1 -
					11
					100

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

MARCH 31, 2020, DECEMBER 31, 2019 AND MARCH 31, 2019

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of March 31, 2020 and 2019 are reviewed, not audited)

					March 31, 2020				December 31, 2019	December 31, 2019			March 31, 2019
	Liabilities andEquity	Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(12)		$	1,600,000		3	$	1,500,000		3	$	-	-
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current				36,603		-		24,943		-		6,273	-
2150	Notes payable				79		-		-		-		-	-
2170	Accounts payable				16,111,469	28			20,391,520	34			16,974,026	31
2200	Other payables	6(13)			3,504,469		6		3,844,835		6		3,253,094	6
2230	Current income tax liabilities				600,661		1		402,714		1		1,249,016	2
2250	Provision for liabilities -	6(16)
	current				587,506		1		556,720		1		510,501	1
2280	Current lease liabilities				222,355		1		159,081		-		108,330	-
2365	Refund liabilities- current				1,526,217		3		1,636,499		3		1,360,987	3
2399	Other current liabilities, others				164,667		-		108,961		-		85,671	-
21XX	Total current liabilities				24,354,026	43			28,625,273	48			23,547,898	43
	Non-current liabilities
2540	Long-term borrowings	6(14) and 8			14,944		-		15,095		-		16,344	-
2570	Deferred income tax liabilities	6(25)			13,197		-		27,214		-		3,670	-
2580	Non-current lease liabilities				324,191		1		247,767		1		201,964	-
2640	Net defined benefit liability,	6(15)
	non-current				220,294		-		221,974		-		216,198	1
2670	Other non-current liabilities,
	others				198,669		-		198,920		-		207,146	-
25XX	Total non-current
	liabilities				771,295		1		710,970		1		645,322	1
2XXX	Total liabilities				25,125,321	44			29,336,243	49			24,193,220	44
	Equity attributable to owners of
	parent
	Share capital	6(17)
3110	Share capital - common stock				8,448,562	15			8,448,562	14			8,448,562	15
	Capital surplus	6(18)
3200	Capital surplus				804,214		1		803,918		1		1,226,049	2
	Retained earnings	6(19)
3310	Legal reserve				4,982,577		9		4,982,577		8		4,378,464	8
3320	Special reserve				505,966		1		505,966		1		421,815	1
3350	Unappropriated retained
	earnings				18,316,476	32			17,065,967	28			17,283,347	31
	Other equity interest
3400	Other equity interest		(		892,292 ) (		2) (		794,525) (		1) (		377,362) (	1 )
31XX	Equity attributable to
	owners of the parent				32,165,503	56			31,012,465	51			31,380,875	56
3XXX	Total equity				32,165,503	56			31,012,465	51			31,380,875	56
	Significant events after the	11
	balance sheet date
3X2X	Total liabilities and equity			$	57,290,824	100		$	60,348,708	100		$	55,574,095	100

The accompanying notes are an integral part of these consolidated financial statements.

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as earnings per share) (UNAUDITED)

Items

Three months ended March 31 2020 2019 Notes AMOUNT % AMOUNT % 6(20) $ 28,503,542 100 $ 29,487,921 100 6(6)(23) ( 24,670,553 ) ( 87) ( 25,711,921) ( 87 ) 3,832,989 13 3,776,000 13 6(23) ( 1,210,844 ) ( 4) ( 1,369,446) ( 4 ) ( 279,288 ) ( 1) ( 224,453) ( 1 ) ( 789,524 ) ( 3) ( 781,550) ( 3 ) 724 - ( 7,557) - ( 2,278,932 ) ( 8) ( 2,383,006) ( 8 ) 1,554,057 5 1,392,994 5 6(21) 110,074 - 168,476 - 6(22) ( 139,454 ) - ( 5,870) - ( 6,382 ) - ( 8,167) - ( 35,762 ) - 154,439 - 1,518,295 5 1,547,433 5 6(25) ( 267,786 ) ( 1) ( 241,023) ( 1 ) $ 1,250,509 4 $ 1,306,410 4 ($ 97,767 ) - $ 128,604 1 ( 97,767 ) - 128,604 1 ($ 97,767 ) - $ 128,604 1 $ 1,152,742 4 $ 1,435,014 5 $ 1,250,509 4 $ 1,306,410 4 $ 1,152,742 4 $ 1,435,014 5 6(26) $ 1.48 $ 1.55 $ 1.47 $ 1.53

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit loss 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8360 Components of other comprehensive (loss) income that will be reclassified to profit or loss 8300 Total other comprehensive (loss) income for the period 8500 Total comprehensive income for the period Profit attributable to: 8610 Owners of the parent Comprehensive income attributable to: 8710 Owners of the parent Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

The accompanying notes are an integral part of these consolidated financial statements.

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

2019 Balance at January 1, 2019 Profit for the three months ended March 31, 2019 Other comprehensive income for the three months ended March 31, 2019 Total comprehensive income Balance at March 31, 2019 2020 Balance at January 1, 2020 Profit for the three months ended March 31, 2020 Other comprehensive loss for the three months ended March 31, 2020 Total comprehensive income Due to donated assets received Balance at March 31, 2020	Notes						Equity	Equity	Equity	attributableto own	attributableto own	er	s of the parent							Totalequity
			Share capital - commonstock				CapitalSurplus								RetainedEarnings			Financial statements translation differences of foreignoperations
					Additional paid-in capital		Treasury stock transactions		Donated assets received	Employee stock warrants			Legal reserve		Special reserve		Unappropriated retained earnings
			$ 8,448,562 - - - $ 8,448,562 $ 8,448,562 - - - - $ 8,448,562		$ 1,050,563 - - - $ 1,050,563 $ 628,134 - - - - $ 628,134		$ 130,592 - - - $ 130,592 $ 130,592 - - - - $ 130,592		$ 434 - - - $ 434 $ 732 - - - 296 $ 1,028		$ 44,460 - - - $ 44,460 $ 44,460 - - - - $ 44,460		$ 4,378,464 - - - $ 4,378,464 $ 4,982,577 - - - - $ 4,982,577		$ 421,815 - - - $ 421,815 $ 505,966 - - - - $ 505,966		$ 15,976,937 1,306,410 - 1,306,410 $ 17,283,347 $ 17,065,967 1,250,509 - 1,250,509 - $ 18,316,476	($ 505,966 ) - 128,604 128,604 ($ 377,362 ) ($ 794,525 ) - ( 97,767 ) ( 97,767 ) - ($ 892,292 )	$ 29,945,861 1,306,410 128,604 1,435,014 $ 31,380,875 $ 31,012,465 1,250,509 ( 97,767 ) 1,152,742 296 $ 32,165,503

The accompanying notes are an integral part of these consolidated financial statements.

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation (including right-of-use assets and investment properties) Amortization Expected credit (gains) loss Net loss (gains) on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Loss on disposal of property, plant and equipment Gain on lease modification Loss (gains) on unrealized foreign currency exchange Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Notes receivable, net Accounts receivable Other receivables Inventories, net Prepayments Other non-current assets Changes in operating liabilities Notes payable Accounts payable Other payables Provision for liabilities - current Refund liabilities- current Other current liabilities, others Net defined benefit liability Cash inflow generated from operations Interest received Interest paid Income tax paid Net cash flows from operating activities

For the three months ended March 31 Notes 2020 2019 $ 1,518,295 $ 1,547,433 6(23) 263,487 208,628 6(23) 55 55 ( 724 ) 7,557 85,388 ( 20,526 ) 6,382 8,167 6(21) ( 19,657 ) ( 22,658 ) 6(22) 36 106 6(9) ( 13 ) - 66,176 ( 27,599 ) ( 33,711 ) - ( 21,795 ) 11,312 1,042,624 ( 1,339,254 ) 84,014 ( 10,329 ) 1,956,208 691,363 100,698 ( 258,873 ) ( 4,155 ) 30,581 79 ( 200 ) ( 4,280,051 ) 2,040,402 ( 341,458 ) ( 164,765 ) 30,786 9,406 ( 110,282 ) ( 435,918 ) 55,667 ( 6,419 ) ( 1,680 ) ( 1,411 ) 396,369 2,267,058 18,952 24,940 ( 5,274 ) ( 8,555 ) ( 18,737 ) ( 48,752 ) 391,310 2,234,691

(Continued)

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial assets at amortised cost Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Acquisition of investment properties Net cash flows (used in) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Repayment of the principal portion of lease liabilities Payment of long-term borrowings Decrease in guarantee deposits received Due to donated assets received Net cash flows from (used in) financing activities Effect of exchange rate Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

For the three months ended March 31 Notes 2020 2019 $ 1,179 $ 492,736 6(8) ( 163,388 ) ( 110,766 ) - 682 ( 13,135 ) ( 1,519 ) 6(11) ( 307 ) ( 298 ) ( 175,651 ) 380,835 100,000 ( 3,000,000 ) ( 57,251 ) ( 28,144 ) ( 242 ) ( 209 ) ( 251 ) ( 19,757 ) 296 - 42,552 ( 3,048,110 ) ( 135,502 ) 104,139 122,709 ( 328,445 ) 6(1) 10,834,884 8,815,680 6(1) $ 10,957,593 $ 8,487,235

The accompanying notes are an integral part of these consolidated financial statements.

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (Reviewed, not audited)

1. HISTORY AND ORGANISATION

MICRO-STAR INTERNATIONAL CO., LTD. (the “Company”) was incorporated as a company limited by shares under the laws of the Republic of China (R.O.C.) in August 1986 and started its operations in the same year. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the manufacture and sale of motherboards and computer hardware. The shares of the Company have been listed on the Taiwan Stock Exchange since October 1998. The Company is the Group’s ultimate parent company.

1. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were reported to the Board of Directors on April 30, 2020.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new standards and amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendment to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’	January 1, 2020 January 1, 2020 January 1, 2020

The above standards and interpretations have no significant impact to the Group’s financial condition and operating result based on the Group’s assessment.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

None.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

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Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets To be determined by between an investor and its associate or joint venture’ International Accounting Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2021 Amendments to IAS 1, ‘Classification of liabilities as current or nonJanuary 1, 2022 current’

The above standards and interpretations have no significant impact to the Group’s financial condition and operating result based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, “Interim financial reporting” as endorsed by the FSC.

• (2) Basis of preparation

• A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

  • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • (b) Financial assets at fair value through other comprehensive income.

  • (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “ IFRSs ” ) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

• (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity

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when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

• (b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• (c) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

• (d) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

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B. Subsidiaries included in the consolidated financial statements:

Name of investor	Name of subsidiaries	Main business activities	Ownership(%)	Ownership(%)	Ownership(%)	Note
			2020/3/31	2019/12/31	2019/3/31
MICRO-STAR INTERNATIONAL CO., LTD. 〃 〃 〃 〃 〃 MSI (HOLDING) 〃 〃 〃 〃	MICRO-STAR NETHERLANDS HOLDING B.V. [MSI (HOLDING)] MSI COMPUTER CORP. [MSI (LA)] MSI PACIFIC INTERNATIONAL HOLDING CO., LTD. [MSI (PACIFIC)] MSI COMPUTER JAPAN CO., LTD. [MSI (JAPAN)] MSI COMPUTER (AUSTRALIA) PTY. LTD. [MSI (AUSTRALIA)] MSI COMPUTER (CAYMAN) CO., LTD. [MSI COMPUTER (CAYMAN)] MYSTAR COMPUTER B.V. [MYSTAR] MSI COMPUTER SARL [MSI (SARL)] MSI COMPUTER (UK) LTD. [MSI (UK)] MSI POLSKA SP. Z O. O. [MSI (POLSKA)] MSI COMPUTER EUROPE B.V. [MSI (EUROPE)]	Investment holding company Sales and maintenance of computers and electronic components Investment holding company Sales support and maintenance of computers and electronic components Maintenance and after-sales services of computers and electronic components Investment holding company Sales support of computers and electronic components 〃 〃 Sales support and maintenance and after-sales services of computers and electronic components Logistics services of computers and electronic components	100 100 100 100 100 100 100 100 100 99 100	100 100 100 100 100 100 100 100 100 99 100	100 100 100 100 100 100 100 100 100 99 100	A and D 〃 A and C 〃 〃 A and D 〃 〃 〃 〃 〃

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Main business Ownership(%)
Name of investor Name of subsidiaries activities 2020/3/31 2019/12/31 2019/3/31 Note
----- End of picture text -----

Name of investor	Name of subsidiaries	activities	2020/3/31	2019/12/31	2019/3/3	1 Note
MSI (HOLDING)	LLC MSI COMPUTER	Sales support and	99	99	99	A and D
	[MSI (RUSSIA)]	maintenance of
		computers and
		electronic
		components
〃	MSI COMPUTER	Sales support of	99	99	99	A, D
	TECHNOLOGIES	computers and				and F
	LIMITED COMPANY	electronic
	[MSI (TURKEY)]	components
〃	MSI ITALY S.R.L.	〃	100	100	100	A and D
	[MSI (ITALY)]
〃	MSI IBERIA S.L.	〃	100	100	-	B, D
	[MSI (IBERIA)]					and H
MSI (EUROPE)	MSI POLSKA SP. Z O. O.	Sales support and	1	1	1	A and D
	[MSI (POLSKA)]	maintenance and
		after-sales services
		of computers and
		electronic
		components
〃	LLC MSI COMPUTER	Sales support and	1	1	1	〃
	[MSI (RUSSIA)]	maintenance of
		computers and
		electronic
		components
〃	MSI COMPUTER	Sales support of	1	1	1	A, D
	TECHNOLOGIES	computers and				and F
	LIMITED COMPANY	electronic
	[MSI (TURKEY)]	components
MSI (PACIFIC)	MSI KOREA CO.,	Sales and	100	100	100	A and D
	LTD. [MSI (KOREA)]	maintenance of
		computers and
		electronic
		components
〃	STAR INFORMATION	Investment holding	100	100	100	A and C
	HOLDING CO., LTD.	company
	[STAR INFORMATION]
〃	MEGA INFORMATION	〃	-	-	100	E and G
	HOLDING CO., LTD.
	[MEGA INFORMATION]
〃	MICRO-STAR	〃	100	100	100	A and C
	INTERNATIONAL
	(B.V.I) HOLDING
	CO., LTD. [MSI (B.V.I.)]

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Main business Ownership(%)
Name of investor Name of subsidiaries activities 2020/3/31 2019/12/31 2019/3/31 Note
----- End of picture text -----

Name of investor	Name of subsidiaries	activities	2020/3/31	2019/12/31	2019/3/3	1 Note
MSI (PACIFIC)	MICRO ELECTRONICS	Investment holding	100	100	100	A and C
	HOLDING CO., LTD.	company
	[MICRO ELECTRONICS]
〃	MEGA TECHNOLOGY	〃	100	100	100	〃
	HOLDING CO., LTD.
	[MEGA TECHNOLOGY]
〃	MEGA COMPUTER CO.,	Sales support of	100	100	100	A and D
	LTD.	computers and
	[MEGA COMPUTER]	electronic
		components
〃	MHK INTERNATIONAL	〃	100	100	100	〃
	CO., LTD. [MSI (MHK)]
〃	MSI (SHANGHAI)	Sales and	100	100	100	A and C
		maintenance of
		computers and
		electronic
		components
〃	SHENZHEN MEGA	Examination and	100	100	100	〃
	INFORMATION CO.,	maintenance of
	LTD. [SHENZHEN	computers, and
	MEGA INFORMATION]	electronic
		components
〃	LINKING FUTURE CO.,	General trade	-	-	-	I and J
	LTD. [LINKING]
MICRO	MSI ELECTRONICS	Manufacture and	100	100	100	A and C
ELECTRONICS	(KUNGSHAN) CO., LTD.	maintenance of
	[MSI ELECTRONICS	computers, and
	(KUNSHAN)]	electronic
		components
STAR	MSI (SHENZHEN) CO.,	Sales and	100	100	100	〃
INFORMATION	LTD. [MSI SHENZHEN]	maintenance
		of computers and
		electronic
		components
MSI (B.V.I.)	MSI COMPUTER	Manufacture and	100	100	100	〃
	(SHENZHEN) CO., LTD.	maintenance of
	[MSI COMPUTER	computers, and
	(SHENZHEN)]	electronic
		components
MEGA	MSI COMPUTER	Sales and	100	100	100	〃
TECHNOLOGY	TRADING (SHENZHEN)	maintenance
	CO., LTD. [MSI	of computers and
	TRADING (SHENZHEN)]	electronic
		components
〃	RAIDEALS INC.	Sales computers	100	100	100	〃
	[RAIDEALS]	and electronic
		components

~15~

  - Note A: The financial statements of the entity as of and for the three months ended March 31, 2020 and 2019 were not reviewed by the independent accountants as the entity did not meet the definition of significant subsidiary.

  - Note B: The financial statements of the entity as of and for the three months ended March 31, 2020 were not reviewed by the independent accountants as the entity did not meet the definition of significant subsidiary.

  - Note C: As of December 31, 2019, these investee companies are included in the consolidated financial statements based on their financial statements which were audited by the Group’s independent accountants for the correponding period.

  - Note D: As of December 31, 2019, these investee companies are included in the consolidated financial statements based on their financial statements which were audited by other independent accountants for the correponding period.

  - Note E: The financial statements of the entity as of and for the three months ended March 31, 2019 were not reviewed by the independent accountants as the entity did not meet the definition of significant subsidiary.

  - Note F: The subsidiary is in the process of liquidation.

  - Note G: On May 1, 2019, this subsidiary has cancelled the registration.

  - Note H: Registration of MSI IBERIA was completed on May 6, 2019. Thus, it has been included in the consolidated financial statements from that date.

  - Note I: The company only sets up registration without any capital injection nor has any actual operation.

  - Note J: On June 14, 2019, this subsidiary has cancelled the registration.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

• (4) Foreign currency translation

• Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.

• A. Foreign currency transactions and balances

  • (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

~16~

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

• B. Translation of foreign operations

• (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • iii. All resulting exchange differences are recognised in other comprehensive income.

• (b) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

(5) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realized within twelve months from the balance sheet date;

• (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

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• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (a) Liabilities that are expected to be settle within the normal operating cycle;

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be settled within twelve months from the balance sheet date;

• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

Cash equivalents refer to short-term highly liquid investments that readily convert to known amount of cash and subject to an insignificant effect of value of changes in rate. Time deposits and money market fund that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

• (7) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

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

• A. Financial assets at fair value through over comprehensive in come comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

• (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

• (b) The assets’ contractual cash flows represents solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

• The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the

~18~

Group and the amount of the dividend can be measured reliably.

• (9) Financial assets at amortised cost

• A. Financial assets at amortised cost are those that meet all of the following criteria:

• (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

• (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

• C. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

• (10) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (11) Impairment of financial assets

• For financial assets measured at amortised cost including accounts receivable that have a significant financing component, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

• －

• (12) Leasing arrangements (lesser) Operating leases

• Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

• (13) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work-in-process comprises raw materials, other direct costs and related production overheads. The item-by-item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

• (14) Property, plant and equipment

• A Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item

~19~

will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings Machinery and equipment Other properties (include transportation equipment, office equipment, and leasehold improvements)

5~55 years 2~10 years 2~10 years

(15) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are mainly fixed payments, less any fixed payments that can be received.

• The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost mainly comprising the amount of the initial measurement of lease liability.

• The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

~20~

• D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.

(16) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 20 years.

(17) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

• (18) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(19) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

(21) Provisions

• Provisions of warranties are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle

~21~

the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

• (22) Employee benefits

• A. Short-term employee benefits

Sort-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees, and should be recognized as expense in that period when the employees render service.

• B. Pensions

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

• (b) Defined benefit plans

  • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past service costs. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date).

  • ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

  • iii. Past service costs are recognised immediately in profit or loss.

  • iv. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. The related information is disclosed accordingly.

• C. Termination benefits

• Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognizes expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs,

~22~

whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

• D. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ remuneration and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

• (23) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

~23~

Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

• F. The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period. The related information is disclosed accordingly.

(24) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

(25) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities.

(26) Revenue recognition

• A. Sales of goods

• (a) The Group manufactures and sells motherboards, graphic cards, a variety of computer hardware, and electronic components. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

• (b) Revenue from the products is recognised based on the price specified in the contract, net of the estimated value added tax, returns and volume discounts and rebates. The volume discounts to the customers are estimated based on the anticipated annual sales quantities and the right of return for defective products is estimated on the basis of historical experience. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. The period between the transfer of the promised goods or services to the customer and payment by the customer does not exceed one year. As a result, the Group does not adjust any of the transaction prices for the time value of money.

• (c) The Group’s obligation to provide a refund for faulty products under the standard warranty terms is recognised as a provision.

• (d) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the

~24~

payment is due.

• B. Incremental costs of obtaining a contract

Given that the contractual period lasts less than one year, the Group recognises the incremental costs of obtaining a contract as an expense when incurred although the Group expects to recover those costs.

(27) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies

None.

(2) Critical accounting estimates and assumptions

• Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation. As of March 31, 2020, the carrying amount of inventories was $20,571,632.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Time deposits Total	March31,2020 5,320 $ 9,264,923 1,687,350 10,957,593 $	December31,2019 4,210 $ 9,651,879 1,178,795 10,834,884 $	March31,2019
			3,418 $ 7,685,255 798,562
			8,487,235 $

• A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

~25~

• B. The Group’s time deposits with maturity periods over three months or pledged to others are reclassified as “financial assets at amortised cost.” Details of financial assets at amortised cost are provided in Notes 6(4) and 8.

(2) Financial assets and liabilities at fair value through profit or loss - current

==> picture [489 x 320] intentionally omitted <==

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

Asset items March 31, 2020 December 31, 2019 March 31, 2019
Financial assets mandatorily
measured at fair value through
profit or loss
Stock of publicly traded or listed
companies $ 152,037 $ 119,571 $ 123,203
Derivatives – Forward exchange
contract 21,870 3,660 21,904
Derivatives – Foreign exchange
swap - 52,981 -
173,907 176,212 145,107
Evaluation adjustment ( 62,137) ( 23,407) ( 27,077)
Total $ 111,770 $ 152,805 $ 118,030
Liability items March 31, 2020 December 31, 2019 March 31, 2019
Financial liabilities held for trading
Derivatives – Forward exchange
contract $ 9,366 $ 24,943 $ 1,912
Derivatives – Foreign exchange
27,237 - 4,361
swap
Total $ 36,603 $ 24,943 $ 6,273
----- End of picture text -----

• A. Amounts recognised in profit or loss in relation to financial assets and liabilities at fair value through profit or loss are listed below:

through profit or loss are listed below:
		For the three months ended		March 31,
		2020		2019
Financial assets and liabilities mandatorily
measured at fair value through profit or loss
Equity instruments	($	38,956)	$	13,671
Derivatives		48,493	(	1,606)
	$	9,537	$	12,065

• B. The Group entered into contracts related to derivative financial assets and liabilities which were not accounted for under hedge accounting. The contract information are as follows:

~26~

Derivative Financial Assets		March 31,2020	March 31,2020
		Contract Amount Notional Principal (In thousands) Contractperiod GBP 2,200 2020.03.06~2020.05.11 AUD 2,500 2020.03.16~2020.05.26 JPY 321,038 2020.03.03~2020.04.30 SEK 5,668 2020.03.04~2020.04.24 EUR 24,500 2019.11.28~2020.05.26 March 31,2020	Contractperiod
Forward exchange contracts 〃 〃 〃 〃 Derivative Financial Liabilities
		Contract Amount Notional Principal (In thousands) GBP 3,000 AUD 2,300 JPY 164,480 EUR 7,000 USD 20,000 CNY 480,758	Contractperiod
Forward exchange contracts 〃 〃 〃 Foreign exchange swap 〃			2020.03.20~2020.05.18 2020.03.24~2020.05.08 2020.02.27~2020.04.01 2020.03.24~2020.05.26 2020.03.30~2020.04.10 2019.11.14~2020.08.17

Derivative Financial Assets		December	31,2019
		Contract Amount Notional Principal (In thousands) EUR 2,000 GBP 500 KRW 1,156,000 SEK 4,650 JPY 216,310 USD 94,000 CNY 473,584	Contractperiod
Forward exchange contracts 〃 〃 〃 〃 Foreign exchange swap 〃			2019.10.21~2020.02.10 2019.12.09~2020.02.18 2019.12.30~2020.01.15 2019.12.30~2020.02.10 2019.12.04~2020.02.03 2019.11.07~2020.02.24 2019.08.14~2020.05.18

~27~

Contract Amount Derivative Financial Liabilities Notional Principal (In thousands) Forward exchange contracts CAD 8,000 〃 RUB 224,291 〃 EUR 44,000 〃 SEK 2,852 〃 GBP 5,500 〃 AUD 6,500 December	Contractperiod 31,2019
	2019.10.21~2020.03.24 2019.12.05~2020.01.16 2019.10.15~2020.04.08 2019.12.03~2020.01.08 2019.10.17~2020.02.18 2019.10.31~2020.02.24

Derivative Financial Assets	Contract Amount Notional Principal (In thousands) Contractperiod KRW 2,252,000 2019.03.21~2019.04.15 JPY 484,365 2019.02.15~2019.05.08 RUB 32,513 2019.03.18~2019.04.30 EUR 32,000 2019.01.29~2019.05.24 AUD 6,900 2019.01.30~2019.05.16 CAD 4,700 2019.02.11~2019.06.24 GBP 2,700 2019.02.22~2019.04.24 Contract Amount Notional Principal (In thousands) Contractperiod JPY 255,586 2019.03.08~2019.05.08 RUB 230,039 2019.03.13~2019.04.16 USD 60,000 2019.02.27~2019.04.24 CNY 229,737 2019.02.21~2019.07.16 March 31, 2019 March 31,2019	Contract Amount Notional Principal (In thousands) Contractperiod KRW 2,252,000 2019.03.21~2019.04.15 JPY 484,365 2019.02.15~2019.05.08 RUB 32,513 2019.03.18~2019.04.30 EUR 32,000 2019.01.29~2019.05.24 AUD 6,900 2019.01.30~2019.05.16 CAD 4,700 2019.02.11~2019.06.24 GBP 2,700 2019.02.22~2019.04.24 Contract Amount Notional Principal (In thousands) Contractperiod JPY 255,586 2019.03.08~2019.05.08 RUB 230,039 2019.03.13~2019.04.16 USD 60,000 2019.02.27~2019.04.24 CNY 229,737 2019.02.21~2019.07.16 March 31, 2019 March 31,2019
Forward exchange contracts 〃 〃 〃 〃 〃 〃 Derivative Financial Liabilities
		Contractperiod
Forward exchange contracts 〃 Foreign exchange swap 〃		2019.03.08~2019.05.08 2019.03.13~2019.04.16 2019.02.27~2019.04.24 2019.02.21~2019.07.16

The Group entered into forward foreign exchange contracts to hedge exchange risk. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

• C. The Group has no financial assets at fair value through profit or loss pledged to others.

• D. Information relating to financial assets at fair value through other comprehensive income is provided in Note 12(2)(3).

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

Items Non-current items: Equity instruments Unlisted stocks Valuation adjustment Total	March31,2020 151,975 $ - 151,975 $	December31,2019 151,975 $ - 151,975 $

• A. The Group has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments both amounted to $151,975 as at March 31, 2020 and December 31, 2019.

• B. As at March 31, 2020 and December 31, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group were both $151,975.

• C. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.

• D. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(3).

(4) Financial assets at amortised cost

income is provided in Note 12(3). Financial assets at amortised cost
Items Current items: Time deposits over three months Non-current items: Pledge bank deposits Others	March 31,2020 1,200,000 $ 99,084 $ 1,746 100,830 $	December 31, 2019 1,200,000 $ 100,244 $ 1,765 102,009 $	March 31,2019
			242,740 $
			74,474 $ 1,874
			76,348 $

• A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

Interest income

For the three months ended March 31,	For the three months ended March 31,
2020 1,965 $	2019
	5,322 $

• B. As at March 31, 2020, December 31, 2019 and March 31, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group were $1,300,830, $1,302,009 and $319,088, respectively.

• C. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.

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D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

(5) Accounts receivable

Accounts receivable
			March 31, 2020	December 31, 2019					March 31, 2019
Notes receivable		$	68,909		$	47,114		$	23,871
Accounts receivable		$	16,191,023		$	17,237,493		$	17,398,848
Less: Allowance for doubtful
accounts	(		27,280)	(		31,710)	(		27,316)
		$	16,163,743		$	17,205,783		$	17,371,532

• A. The ageing analysis of accounts receivable and notes receivable:

Not past due 1 to 75 days 76 to 365 days Over 365 days	Accounts Notes receivable receivable 14,023,481 $ 68,909 $ 1,981,137 - 184,522 - 1,883 - 16,191,023 $ 68,909 $ March31,2020	Accounts Notes receivable receivable 14,068,801 $ 47,114 $ 3,044,781 - 120,008 - 3,903 - 17,237,493 $ 47,114 $ December31,2019	March31,2019	March31,2019
	Accounts receivable 14,023,481 $ 1,981,137 184,522 1,883 16,191,023 $	Accounts receivable 14,068,801 $ 3,044,781 120,008 3,903 17,237,493 $	Accounts receivable 15,312,921 $ 2,004,378 80,787 762 17,398,848 $	Notes receivable
				23,871 $ - - -
				23,871 $

The above ageing analysis was based on past due date.

• B. As of March 31, 2020, December 31, 2019 and March 31, 2019, accounts receivable and notes receivable were all from contracts with customers. And as of January 1, 2019, the balance of receivables from contracts with customers amounted to $16,075,372.

• C. Most of the Group’s accounts receivable have been insured or have collateral as security, and the Group will be able to obtain insurance claims or enforce a collateral in case these accounts default.

• D. As of March 31, 2020, December 31, 2019 and March 31, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes and accounts receivable were $68,909, $47,114 and $23,871; $16,163,743, $17,205,783 and $17,371,532, respectively.

• E. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

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(6) Inventories

Inventories
Raw material Work-in-process Finished goods Raw material Work-in-process Finished goods Raw material Work-in-process Finished goods	Cost 9,249,407 $ 1,335,862 10,481,237 21,066,506 $ Cost 6,579,127 $ 1,378,828 15,104,505 23,062,460 $ Cost 6,572,362 $ 1,967,747 13,574,450 22,114,559 $	Allowance for valuation loss 131,011) ($ 1,271) ( 362,592) ( 494,874) ($ Allowance for valuation loss 130,049) ($ 1,311) ( 403,260) ( 534,620) ($ Allowance for valuation loss 280,572) ($ 1,989) ( 470,499) ( 753,060) ($ March31,2019 December31,2019 March31,2020	Bookvalue
			9,118,396 $ 1,334,591 10,118,645
			20,571,632 $ Bookvalue
			6,449,078 $ 1,377,517 14,701,245
			22,527,840 $
			Bookvalue
			6,291,790 $ 1,965,758 13,103,951
			21,361,499 $

The cost of inventories recognised as expense for the period:

		For	the threemonths ended	the threemonths ended	March31,
			2020		2019
Cost of inventories recognised as expense		$	24,670,553	$	25,711,921
(Gains on reversal of decline) losses on decline
in market value	(		40,109)		20,826

The Group reversed from a previous inventory write-down and accounted for as reduction of cost of goods sold because some inventories which were recognized as expense have been sold for the three months ended March 31, 2020.

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(7) Prepayments

Prepayments
Overpaid tax for offsetting the future tax payable Office supplies Prepayment for goods Others	March31,2020 December31,2019 829,341 $ 922,464 $ 518,330 490,408 17,124 30,266 210,208 232,563 1,575,003 $ 1,675,701 $	March31,2019 900,112 $ 415,804 35,784 288,195
		1,639,895 $

(8) Property, plant and equipment

								2020
			Land		Buildings		Machineries			Others		Total
At January 1
Cost		$	1,462,282	$	5,251,609		$	2,550,199	$	1,776,223	$	11,040,313
Accumulated depreciation			-	(	3,387,842)	(		1,443,341)	(	1,315,697)	(	6,146,880)
		$	1,462,282	$	1,863,767		$	1,106,858	$	460,526	$	4,893,433
Balance at January 1		$	1,462,282	$	1,863,767		$	1,106,858	$	460,526	$	4,893,433
Additions			-		6,701			66,918		89,769		163,388
Reclassifications			-		23,562			32,185	(	46,442)		9,305
Disposals			-		-	(		1)	(	35)	(	36)
Depreciation charge			-	(	66,828)	(		86,447)	(	35,857)	(	189,132)
Net exchange differences	(		963)	(	9,781)	(		9,720)	(	3,319)	(	23,783)
Balance at March 31		$	1,461,319	$	1,817,421		$	1,109,793	$	464,642	$	4,853,175
At March 31
Cost		$	1,461,319	$	5,263,723		$	2,623,905	$	1,799,231	$	11,148,178
Accumulated depreciation			-	(	3,446,302)	(		1,514,112)	(	1,334,589)	(	6,295,003)
		$	1,461,319	$	1,817,421		$	1,109,793	$	464,642	$	4,853,175

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							2019
			Land		Buildings	Machineries			Others		Total
At January 1
Cost		$	1,467,630	$	5,368,187	$	3,713,051	$	1,715,434	$	12,264,302
Accumulated depreciation			-	(	3,298,694)	(	2,889,051)	(	1,338,013)	(	7,525,758)
		$	1,467,630	$	2,069,493	$	824,000	$	377,421	$	4,738,544
Balance at January 1		$	1,467,630	$	2,069,493	$	824,000	$	377,421	$	4,738,544
Additions			-		6,493		71,071		33,202		110,766
Reclassifications			-		9,110		-		5,678		14,788
Disposals			-		-		-	(	788)	(	788)
Depreciation charge			-	(	65,088)	(	67,851)	(	31,580)	(	164,519)
Net exchange differences	(		1,279)		23,413		16,564		6,062		44,760
Balance at March 31		$	1,466,351	$	2,043,421	$	843,784	$	389,995	$	4,743,551
At March 31
Cost		$	1,466,351	$	5,524,390	$	3,815,627	$	1,778,950	$	12,585,318
Accumulated depreciation			-	(	3,480,969)	(	2,971,843)	(	1,388,955)	(	7,841,767)
		$	1,466,351	$	2,043,421	$	843,784	$	389,995	$	4,743,551

Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

－ (9) Leasing arrangements lessee

A. The Group leases various assets including land, buildings, machinery and equipment, and other equipment. Rental contracts are typically made for periods of 2 months to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Machinery and equipment Other equipment	March31,2020 Carrying amount 67,441 $ 490,567 9,039 43,648 610,695 $	December31,2019 Carrying amount 70,355 $ 361,312 6,717 36,513 474,897 $	March31,2019
			Carrying amount
			81,619 $ 274,493 5,170 30,019
			391,301 $

~33~

	For	the threemonths ended	the threemonths ended	March31,
		2020		2019
	Depreciation charge		Depreciation charge
Land	$	2,119	$	2,258
Buildings		52,812		23,567
Machinery and equipment		596		636
Other equipment		4,865		4,553
	$	60,392	$	31,014

• C. For the three months ended March 31, 2020 and 2019, the additions to right-of-use assets were $204,719 and $20,404, respectively.

• D. The information on profit and loss accounts relating to lease contracts is as follows:

	For the three months ended March 31,	For the three months ended March 31,	For the three months ended March 31,	For the three months ended March 31,
	2020		2019
Items affecting profit or loss
Interest expense on lease liabilities	$	2,843 $		1,327
Expense on leases of low-value and short-term assets		10,059		10,302
Expense on variable lease payments		8,427		8,165
Gain on lease modification		13		-

• E. For the three months ended March 31, 2020 and 2019, the Group’s total cash outflow for leases were $78,574 and $29,471, respectively.

(10) Leasing arrangements – lessor

• A. The Group leases buildings. Rental contracts are typically made for periods of 1 to 4 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

• B. The Group recognised rental income of $29,189 and $27,708 based on operating lease contracts for the three months ended March 31, 2020 and 2019, respectively. None of these included variable lease payments.

• C. The maturity analysis of the undiscounted lease payments in the operating lease is as follows:

Less than 1 year Between 1 and 5 years Total	March 31,2020 50,353 $ 48,345 98,698 $	March 31,2019
		80,003 $ 69,744
		149,747 $

~34~

(11) Investment property

Investment property
		2020		2019
		Buildings		Buildings
At January 1
Cost	$	1,167,190	$	1,129,777
Accumulated depreciation	(	866,631)	(	788,536)
	$	300,559	$	341,241
Balance at January 1	$	300,559	$	341,241
Additions		307		298
Reclassifications	(	12,368)	(	15,365)
Depreciation charge	(	13,963)	(	13,095)
Net exchange differences	(	3,310)		8,190
Balance at March 31	$	271,225	$	321,269
At March 31
Cost	$	1,117,499	$	1,083,505
Accumulated depreciation	(	846,274)	(	762,236)
	$	271,225	$	321,269

• A. Rental income from the lease of the investment and direct operating expenses arising from the investment property:

investment property:
Rental income from the lease of the investment property Direct operating expenses arising from the investment property	For the three months ended March31,
	2020 29,189 $ 18,635 $	2019
		27,708 $
		18,302 $

B. As of March 31, 2020, December 31, 2019 and March 31, 2019, the fair value of the Group’s investments in property amounting to $2,878,734, $3,403,426 and $2,669,932, respectively, as derived from market prices in the nearby area, are included in Level 2.

(12) Short-term borrowings

Short-term borrowings
Type of borrowings Bank borrowings Unsecured borrowings Type of borrowings Bank borrowings Unsecured borrowings	March 31,2020 1,600,000 $ December 31,2019 1,500,000 $	Interest rate range 0.88%～0.94% Interest rate range 0.88%～0.90%	Collateral
			None Collateral
			None

~35~

As of March 31, 2019, the Group did not have any short-term borrowings.

(13) Other payables

Accrued salary and bonus Directors’ remuneration and employees’ bonus Accrued freight Advertising expenses payable Accrued molding expense Other accrued expenses	March 31,2020 1,077,803 $ 679,930 588,487 354,057 246,455 557,737 3,504,469 $	December 31,2019 March 31,2019 1,303,131 $ 986,552 $ 554,500 691,070 617,251 454,139 355,107 230,104 217,077 208,336 797,769 682,893 3,844,835 $ 3,253,094 $

- (14) Long term borrowings

Long-term borrowings
Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral March 31,2020 Land and Building 15,914 $ 970) ( 14,944 $ Collateral December 31,2019 Land and Building 16,026 $ 931) ( 15,095 $
Long-term bank borrowings Secured borrowings Less: current portion Type of borrowings	Starting from March 24, 2016 to March 24, 2021, repayment of principal and interest of USD 4,307.77 monthly and remaining principal on the due date. Borrowing period and repayment term	Three month LIBOR plus 1.75% Interest rate range
Long-term bank borrowings Secured borrowings Less: current portion	Starting from March 24, 2016 to March 24, 2021, repayment of principal and interest of USD 4,307.77 monthly and remaining principal on the due date.	Three month LIBOR plus 1.75%

~36~

Borrowing period and Type of borrowings repayment term Long-term bank borrowings Secured borrowings Starting from March 24, 2016 to March 24, 2021, repayment of principal and interest of USD 4,307.77 monthly and remaining principal on the due date. Less: current portion	Interest rate range Collateral March 31,2019 Three month LIBOR plus 1.75% Land and Building 17,131 $ 787) ( 16,344 $

(15) Pensions

• A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

• (b) The pension costs under defined contribution pension plans of the Group for the three months ended March 31, 2020 and 2019 were $1,228 and $1,472, respectively.

• (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $11,628.

• B. (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The Company’s mainland China subsidiaries have a defined contribution plan. Monthly

~37~

contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

• (c) The pension costs under defined contribution pension plans of the Group for the three months ended March 31, 2020 and 2019, were $54,786 and $67,519, respectively.

(16) Provisions for liabilities

==> picture [482 x 152] intentionally omitted <==

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

Warranty 2020 2019
At January 1 $ 556,720 $ 501,095
Additional provisions 167,795 187,067
Used during the period ( 136,958) ( 177,643)
Exchange differences ( 51) ( 18)
At March 31 $ 587,506 $ 510,501
Analysis of total provisions:
March 31, 2020 December 31, 2019 March 31, 2019
Current $ 587,506 $ 556,720 $ 510,501
----- End of picture text -----

The Group gives warranties on computer components and personal computers sold. Provision for warranty is estimated based on historical warranty data.

(17) Share capital

As of March 31, 2020, the Company’s authorized capital was $15,000,000 (including 80,000 thousand shares reserved for employee stock options and 150,000 thousand shares reserved for convertible bonds issued by the Company), and the paid-in capital was $8,448,562 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

(18) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(19) Retained earnings

• A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior year's operating losses, then 10% of the remaining amount shall be set aside or reversed as legal reserve. The balance plus unappropriated retained earnings at the beginning of the period shall be appropriated 10%~90% as proposed by the Board of Directors and resolved by the stockholders during their meeting.

• B. The Company’s dividend policy is summarized below: as the Company operates in a volatile

~38~

business environment and is in the stable growth stage, except for the Company’s future expansion plans, stockholders’ interest is taken into consideration. The Group appropriated dividends in proportion to total number of shares, dividends could be distributed in stock or cash, and cash dividends shall account for at least 30% of the total dividends distributed.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

• E. The appropriations of 2018 earnings have been resolved at the stockholders’ meeting on June 14, 2019 as follows:

2019 as follows:
Legal reserve Special reserve Cash dividend	Amount Dividends per share (dollar) 604,113 $ 84,151 3,801,853 4.50 $ 2018
	Amount 604,113 $ 84,151 3,801,853
		4.50 $

The cash dividends of the Company from capital surplus that has been approved by the stockholders on June 14, 2019 amounted to $422,429.

The appropriation of 2018 earnings as approved by the stockholders is the same as with the appropriation resolved by the Board of Directors during its meeting on April 30, 2019. Information about earnings appropriation of the Company as resolved by Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

F. The appropriations of 2019 earnings is provided in Note 11.

(20) Operating revenue

The Group derives revenue from the transfer of goods at a point in time in the following major segment:

~39~

==> picture [474 x 177] intentionally omitted <==

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

For the three months Computer and
ended March 31, 2020 peripherals segment Other Total
Total segment revenue $ 28,503,403 $ 139 $ 28,503,542
Timing of revenue recognition
At a point in time $ 28,503,403 $ 139 $ 28,503,542
For the three months Computer and
ended March 31, 2019 peripherals segment Other Total
Total segment revenue $ 29,485,663 $ 2,258 $ 29,487,921
Timing of revenue recognition
At a point in time $ 29,485,663 $ 2,258 $ 29,487,921
----- End of picture text -----

(21) Other income

Other income
Interest income Interest income from bank deposits Interest income from financial assets measured at amortised cost Total interest income Rental revenue Others Total	2020 2019 17,692 $ 17,336 $ 1,965 5,322 19,657 22,658 29,189 27,708 61,228 118,110 110,074 $ 168,476 $ For the three months ended March 31,
		17,336 $ 5,322
		22,658
		27,708 118,110
		168,476 $

(22) Other gains and losses

Other gains and losses
		For the three months ended		March 31,
		2020		2019
Gains on financial assets and liabilities
at fair value through profit or loss	$	9,537	$	12,065
Net losses on disposal of property, plant and
equipment	(	36)	(	106)
Net currency exchange losses	(	131,311)	(	1,445)
Other losses	(	17,644)	(	16,384)
Total	($	139,454)	($	5,870)

~40~

(23) Expenses by nature

For the three months ended March 31,

For the three month	s ended March 31,
2020 Employee benefit expense 1,742,770 $ Depreciation charges 263,487 Amortisation charges 55 2,006,312 $	2019 1,710,863 $ 208,628 55
	1,919,546 $

(24) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses Total	Forthe threemonths endedMarch31,
	2020 1,509,796 $ 99,610 56,014 77,350 1,742,770 $	2019
		1,475,465 $ 90,480 68,991 75,927
		1,710,863 $

• A. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall be 6%~10% for employees’ compensation and shall not be higher than 1% for directors’ remuneration.

• B. For the three months ended March 31, 2020 and 2019, employees’ remuneration was accrued at

• $114,000 and $115,000, respectively; while directors’ remuneration was accrued at $11,430 and

• $11,570, respectively. The aforementioned amounts were recognized in salary expenses respectively.

The employees’ compensation and directors’ remuneration were estimated and accrued based on the historical distribution ratio and the profit of the current year for the three months ended March 31, 2020.

Employees’ compensation and directors’ remuneration of 2019 as resolved at the meeting of Board of Directors were in agreement with those amounts recognized in the 2019 financial statements.

Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors and shareholders will be posted in the “Market Observation Post System” website of the Taiwan Stock Exchange.

(25) Income tax

• A. Income tax expense

• (a) Components of income tax expense:

~41~

		For	the threemonths ended	the threemonths ended	the threemonths ended	March31,
			2020			2019
Current tax:
Current tax on profits for the period		$	227,512		$	197,645
Prior year income tax overestimation	(		10,000)	(		4,200)
Total current tax			217,512			193,445
Deferred tax:
Origination and reversal of temporary
differences			50,274			47,578
Total deferred tax			50,274			47,578
Income tax expense		$	267,786		$	241,023

(b) The income tax (charge)/credit relating to components of other comprehensive income: None.

(c) The income tax charged/(credited) to equity during the period: None.

B. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.

(26) Earnings per share

Authority. Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	For the three months ended March		31,2020
	Amount after tax 1,250,509 $ 1,250,509 $ - 1,250,509 $	Retroactively adjusted weighted-average outstanding ordinary shares(in thousands) 844,856 844,856 8,299 853,155	Earnings per share (in NT dollars)
			1.48 $
			1.47 $

~42~

		For the three months ended March	For the three months ended March	31,2019	31,2019
			Retroactively adjusted
			weighted-average
			outstanding ordinary	Earnings per share
	Amount after tax		shares(in thousands)		(in NT dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent	$	1,306,410	844,856	$	1.55
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent	$	1,306,410	844,856
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation		-	7,542
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares	$	1,306,410	852,398	$	1.53

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

None.

(2) Significant related party transactions

None.

(3) Key management compensation

Names of related parties and relationship None. Significant related party transactions None. Key management compensation
Salaries and other employee benefits	For the three months ended March31,
	2020 2019 96,563 $ 91,546 $

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Asset items Non-current financial assets at amortised cost Property, plant and equipment		Book value	March 31, 2019 74,474 $ 132,999 207,473 $	Purpose
	March 31, 2020 99,084 $ 126,700 225,784 $	December 31, 2019 100,244 $ 126,733 226,977 $
				Performance security guarantee For guarantee of long-term loans

~43~

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies ： None.

(2) Commitments ： None.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

The appropriations of 2019 earnings have been resolved at the Board of Directors’ meeting on April 30, 2020 as follows:

Legal reserve Special reserve Cash dividend	Amount Dividends per share (dollar) 558,721 $ 288,559 3,548,396 4.20 $ 2019

The appropriations of 2019 earnings have not been approved by the stockholders as of April 30, 2020.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or repurchase outstanding shares.

~44~

(2) Financial instruments

A. Financial instruments by category

ancial instruments Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Notes receivable Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Financial liabilities at amortised cost Short-term borrowings Notes payable Accounts payable Other accounts payable Long-term borrowings (including current portion) Guarantee deposits received Lease liabilities	March 31,2020 111,770 $ 151,975 10,957,593 1,300,830 68,909 16,163,743 143,755 55,377 28,953,952 $ March 31,2020 36,603 $ 1,600,000 79 16,111,469 3,504,469 15,914 198,669 21,467,203 $ 546,546 $	December 31,2019 152,805 $ 151,975 10,834,884 1,302,009 47,114 17,205,783 227,116 42,242 29,963,928 $ December 31,2019 24,943 $ 1,500,000 - 20,391,520 3,844,835 16,026 198,920 25,976,244 $ 406,848 $	March 31,2019
			118,030 $ - 8,487,235 319,088 23,871 17,371,532 167,766 27,867
			26,515,389 $
			March 31,2019
			6,273 $ - - 16,974,026 3,253,094 17,131 207,146
			20,457,670 $
			310,294 $

~45~

• B. Risk management policies

The Group’s activities expose it to a variety of financial risks: including market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

• ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency.

• iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

• iv. The Group hedges foreign exchange rate by using forward exchange contracts. However, the Group does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(2).

• v. The Group’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

March 31, 2020

		March31,2020
(Foreign currency: functionalcurrency) Financial assets Monetary items USD: NTD EUR: NTD KRW: NTD GBP: NTD Financial liabilities Monetary items USD: NTD EUR: NTD USD: RMB	Foreign Currency Amount (In Thousands) 307,040 $ 54,910 16,238,651 9,073 645,231 10,426 10,726	Exchangerate 30.2250 33.2400 0.0248 37.2500 30.2250 33.2400 7.1034	Book Value (NTD)
			9,280,277 $ 1,825,218 402,719 337,958 19,502,120 346,554 324,201

~46~

(Foreign currency: functionalcurrency) Financial assets Monetary items USD: NTD EUR: NTD RMB: NTD GBP: NTD CAD: NTD Financial liabilities Monetary items USD: NTD USD: RMB EUR: NTD (Foreign currency: functionalcurrency) Financial assets Monetary items USD: NTD EUR: NTD RMB:NTD RUB: NTD JPY: NTD Financial liabilities Monetary items USD: NTD USD: RMB EUR: NTD		December31,2019
	Foreign Currency Amount (In Thousands) 396,064 $ 51,697 162,475 7,794 10,468 673,526 16,433 11,924	Exchangerate 29.9800 33.5900 4.3050 39.3600 22.9900 29.9800 6.9640 33.5900 March31,2019	Book Value (NTD)
			11,873,988 $ 1,736,500 699,454 306,785 240,670 20,192,315 492,673 400,520
	Foreign Currency Amount (In Thousands) 316,467 $ 47,941 152,143 602,469 945,672 533,905 14,125 10,600	Exchangerate 30.8200 34.6100 4.5800 0.4761 0.2783 30.8200 6.7293 34.6100	Book Value (NTD)
			9,753,514 $ 1,659,236 696,813 286,836 263,181 16,454,947 435,327 366,871

vi. The exchange loss arising from significant foreign exchange variation on the monetary items held by the Group for the three months ended March 31, 2020 and 2019 amounted to $131,311 and $1,445, respectively.

vii. Analysis of foreign currency market risk arising from significant foreign exchange variation:

~47~

For the three months ended March 31, 2020

		For the three months ended March 31,2020	For the three months ended March 31,2020	For the three months ended March 31,2020
(Foreign currency: functional currency) Financial assets Monetary items USD: NTD EUR: NTD KRW: NTD GBP: NTD Financial liabilities Monetary items USD: NTD EUR: NTD USD: RMB (Foreign currency: functional currency)		Degree of variation Effect on profit or loss (before tax) Effect on other comprehensive income 1% 92,803 $ - $ 1% 18,252 - 1% 4,027 - 1% 3,380 - 1% 195,021 - 1% 3,466 - 1% 3,242 - Sensitivityanalysis Degree of variation Effect on profit or loss (before tax) Effect on other comprehensive income 1% 97,535 $ - $ 1% 16,592 - 1% 6,968 - 1% 2,868 - 1% 2,632 - 1% 164,549 - 1% 4,353 - 1% 3,669 - For the three months ended March 31,2019 Sensitivityanalysis
			Sensitivityanalysis
		Degree of variation	Effect on profit or loss (before tax)
Financial assets Monetary items USD: NTD EUR:NTD RMB: NTD RUB: NTD JPY: NTD Financial liabilities Monetary items USD: NTD USD: RMB EUR: NTD		1% 1% 1% 1% 1% 1% 1% 1%	97,535 $ 16,592 6,968 2,868 2,632 164,549 4,353 3,669	- $ - - - - - - -

Price risk

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

• ii. The Group has investments in equity securities. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-

~48~

tax profit for the three months ended March 31, 2020 and 2019 would have increased/decreased by $719 and $769, as a result of gain or loss of equity instruments at fair value through profit or loss. Also, other components of equity would have increased/decreased by $1,520 and $0, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

• i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. For the three months ended March 31, 2020 and 2019, the Group borrowings are issued at variable rate denominated in US dollars.

• ii. The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.

• iii. As at March 31, 2020, December 31, 2019 and March 31, 2019, if interest rates on USD and NTD denominated borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the three months ended March 31, 2020 and 2019 would have been $32 and $34 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable, notes receivable and financial assets at amortised cost cash flow based on the agreed terms.

• ii. The Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions, only parties with a rating of investment grade are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the management. The utilisation of credit limits is regularly monitored. Credit risk arises from credit exposures to wholesale and retail customers, including outstanding receivables.

• iii. The Group adopts assumptions, if the contract payments were past due over 90 days based

~49~

on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• iv. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 150 days.

• v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

• (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

• (ii) The disappearance of an active market for that financial asset because of financial difficulties;

• (iii) Default or delinquency in interest or principal repayments;

• (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

• vi. The Group applies the modified approach using provision matrix, loss rate methodology to estimate expected credit loss under the provision matrix basis.

• vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

• viii. The Group used the forecastability to adjust historical and timely information to assess the default possibility of debt instrument as at March 31, 2020, December 31, 2019 and March 31, 2019. The expected credit loss rate of the Group’s overdue accounts receivable was not material as of March 31, 2020, December 31, 2019 and March 31, 2019.

• ix. The Group applies the simplified approach to provide loss allowance for accounts receivable that have no significant impact. The Company had not recognized related impact as at March 31, 2020, December 31, 2019 and March 31, 2019.

(c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Group’s internal balance sheet ratio targets and external regulatory or legal requirements.

• ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

~50~

Non-derivative financial liabilities:

Non-derivative financial liabilities:	lities:
March 31, 2020 Less than 1 year Short-term borrowings 1,600,000 $ Accounts payable 16,111,469 Other payables 3,504,469 Lease liabilities 233,178 Long-term borrowings (including current portion) 1,562 Other financial liabilities 1,418 Non-derivative financial liabilities: December 31, 2019 Less than 1 year Short-term borrowings 1,500,000 $ Accounts payable 20,391,520 Other payables 3,844,835 Lease liabilities 194,646 Long-term borrowings (including current portion) 1,550 Other financial liabilities 605 Non-derivative financial liabilities: March 31, 2019 Less than 1 year Accounts payable 16,974,026 $ Other payables 3,253,094 Lease liabilities 11,873 Long-term borrowings (including current portion) 1,593 Other financial liabilities -	Less than 1 year	Between 1 to 2years - $ - - 191,688 13,992 104,858 Between 1 to 2years	Between 2 to 3years	Over 3years
			- $ - - 103,222 - - Between 2 to 3years	- $ - - 31,929 - 92,393 Over 3 years
		- $ - - 144,775 14,266 106,506 Between 1 to 2years	- $ - - 80,921 - - Between 2 to 3years	- $ - - 38,352 - 91,809 Over 3years - $ - 60,894 - 94,365
March 31, 2019 Accounts payable Other payables Lease liabilities Long-term borrowings (including current portion) Other financial liabilities
	16,974,026 $ 3,253,094 11,873 1,593 -	- $ - 90,848 1,593 112,781	- $ - 54,074 14,267 -

Derivative financial liabilities

As of March 31, 2020, December 31, 2019 and March 31, 2019, the derivative financial liabilities mature within 1 year.

iii. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date. A market is regarded as active where a

~51~

market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an on going basis.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: Unobservable inputs for the asset or liability.

• B. The fair value information of the Group’s investments in property is provided in Note 6(11).

• C. Financial instruments not measured at fair value

• The Group’s cash and cash equivalents, financial assets at amortised cost, notes receivable, accounts receivable, other receivables, guarantee deposits paid, short-term borrowings, notes payable, accounts payable, other payables, long-term borrowings and guarantee deposits received are approximate to their fair values. The transaction value information is provided in Note 12(2)A.

• D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

March 31, 2020 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss -Equity security -Forward exchange contract Financial assets at fair value through other comprehensive income -Equity securities Total Liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contract -Foreign exchange swap Total	Level 1 89,900 $ - - 89,900 $ - $ - - $	Level 2 - $ 21,870 - 21,870 $ 9,366 $ 27,237 36,603 $	Level 3 - $ - 151,975 151,975 $ - $ - - $	Total
				89,900 $ 21,870 151,975
				263,745 $
				9,366 $ 27,237
				36,603 $

~52~

December 31, 2019 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss -Equity security -Forward exchange contract -Foreign exchange swap Financial assets at fair value through other comprehensive income -Equity securities Total Liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contract March 31, 2019 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss -Equity security -Forward exchange contract Total Liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contract -Forward exchange swap Total	Level 1 96,164 $ - - - 96,164 $ - $ Level 1 96,126 $ - 96,126 $ - $ - - $	Level 2 - $ 3,660 52,981 - 56,641 $ 24,943 $ Level 2 - $ 21,904 21,904 $ 1,912 $ 4,361 6,273 $	Level 3 - $ - - 151,975 151,975 $ - $ Level 3 - $ - - $ - $ - - $	Total
				96,164 $ 3,660 52,981 151,975
				304,780 $
				24,943 $
				Total
				96,126 $ 21,904
				118,030 $
				1,912 $ 4,361
				6,273 $

• E. The methods and assumptions the Group used to measure fair value are as follows:

• (a) The level 1 financial instruments-equity security held by the Group are listed shares, and the market quoted price is determined by the closing price of the security.

• (b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes.

• (c) When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap

~53~

contracts and options, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• (d) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.

• F. For the three months ended March 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

• G. For the three months ended March 31, 2020 and 2019, there was no transfer in or out from Level 3.

• H. The Group entrusts an external evaluation agency to evaluate the fair value classified as the third level.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: None.

• B. Provision of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 1.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: Please refer to table 2.

• H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.

• I. Derivative financial instruments transactions: Please refer to Note 6(2).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

• (2) Information on investees

• Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 6.

• B. Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas: Please refer to table 7.

(4) Major shareholders information

Major shareholders information: Please refer to table 8.

~54~

14. SEGMENT INFORMATION

(1) General information and measurement of segment information

The Group’s operating segment profit (loss) is measured by the operating income (loss), which is used as a basis in assessing the performance of operating segments. “Operating Segments,” the Group’s reportable operating segments are as follows:

Computer and peripherals business group: Mainly engages in development and sale of mother

boards, graphic cards, notebooks, and computer peripherals.

Other segments: Mainly engages in development and sale of other products and in charge of general administration department expenses.

There is no material change in the basis for grouping of entities and division of segments in the Group or in the measurement basis for segment information during this period.

(2) Information about segment profit or loss, assets and liabilities:

The revenue and segment information provided to the chief operating decision-maker for the reportable segments is as follows:

For the three months ended March 31, 2020

Total segment revenue Operating income (loss) Other non-operating expense Profit before tax	Computer and peripherals segment Other Total 28,503,403 $ 139 $ 28,503,542 $ 1,794,015 $ 239,958) ($ 1,554,057 $ 35,762) ( 1,518,295 $

For the three months ended March 31, 2019

Total segment revenue Operating income (loss) Other non-operating revenue Profit before tax	Computer and peripherals segment Other 29,485,663 $ 2,258 $ 1,398,171 $ 5,177) ($	Total
		29,487,921 $
		1,392,994 $
		154,439
		1,547,433 $

The above revenue was derived from the transactions with external customers. The above amounts are provided to the chief operating decision-maker for allocating resources and assessing performance of operating segments.

(3) Reconciliation for segment income

Sales between segments are carried out at arm’s length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.

~55~

A reconciliation of reportable segment income to the income before tax from continuing operations for the three months ended March 31, 2020 and 2019 is provided as follows:

		For the three months ended	For the three months ended	March 31,
		2020		2019
Reportable segments income	$	1,554,057	$	1,392,994
Unappropriated amount:
Other non-operating (expense) income	(	35,762)		154,439
Income before tax from
continuing operations	$	1,518,295	$	1,547,433

~56~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

For the three months ended March 31, 2020

Expressed in thousands of NTD

Table 1

(Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account	As of March 31, 2020	As of March 31, 2020	As of March 31, 2020	As of March 31, 2020	Footnote
				Number of shares	Book value	Ownership (%)	Fair value
MSI (HOLDING)	CVA ING GROEP	-	Financial assets at fair value through profit or loss - current	180,000	28,609 $	-	28,609 $	-
MSI (HOLDING)	DAIMLER	-	Financial assets at fair value through profit or loss - current	40,000	36,591	-	36,591	-
MSI (HOLDING)	DEUTSCHE POST	-	Financial assets at fair value through profit or loss-current	30,000	24,700	-	24,700	-
MICRO-STAR INTERNATIONAL CO., LTD.	BLUESTACK SYSTEM, INC.	-	Financial assets at fair value through other comprehensive income - non current	516,052	151,975	-	151,975	-

Table 1 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

For the three months ended March 31, 2020

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction company (Note 4)	Name of the counter party (Note 4)	Relationship with the counterparty	Description of the transaction	Description of the transaction	Description of the transaction	Description of the transaction	Description and reasons of difference in transaction terms compared to third party transactions	Description and reasons of difference in transaction terms compared to third party transactions	Accounts or notes receivable (payable)	Accounts or notes receivable (payable)	Footnote
			Purchases/(Sales)	Amount (Note 3)	% of total purchase (sale)	Credit terms	Unit price	Credit terms	Balance (Note 3)	% of total accounts or notes receivable/(payable)
MICRO-STAR INTERNATIONAL CO., LTD.	MSI (LA)	Subsidiary	Sales	(3,936,178) $	(14)	80~100 days	Insignificant difference	Note 1	4,373,686 $	27	-
MICRO-STAR INTERNATIONAL CO., LTD.	MEGA COMPUTER	Second-tier Subsidiary	Sales	(1,586,620)	(6)	40-70 days	Insignificant difference	Note 1	1,342,508	8	-
MICRO-STAR INTERNATIONAL CO., LTD.	MYSTAR	Second-tier Subsidiary	Sales	(482,956)	(2)	30-90 days	Insignificant difference	Note 1	217,751	1	-
MICRO-STAR INTERNATIONAL CO., LTD.	MSI (KOREA)	Second-tier Subsidiary	Sales	(1,245,114)	(4)	50-70 days	Insignificant difference	Note 1	54,666	-	-
MICRO-STAR INTERNATIONAL CO., LTD.	MSI COMPUTER (SHENZHEN)	Second-tier Subsidiary	Processing overhead	622,191	3	Note 2	Insignificant difference	Note 2	2,602,330) (	17) (	-
MICRO-STAR INTERNATIONAL CO., LTD.	MSI ELECTRONICS (KUNSHAN)	Second-tier Subsidiary	Processing overhead	201,307	1	Note 2	Insignificant difference	Note 2	1,032,848) (	7) (	-
MEGA COMPUTER	MSI (SHANGHAI)	Affiliated company	Sales	(1,078,919)	(100)	40-70 days	Insignificant difference	Note 1	1,717,249	100	-

Note 1: The credit terms to third parties are approximately 30 to 120 days. Note 2: Credit terms depend on the financial condition of the paying firm. Note 3: Balances after elimination in conformity with regulations. Note 4: Corresponding transactions are not disclosed.

Table 2 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

March 31, 2020

Expressed in thousands of NTD

Table 3

(Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as of March 31, 2020	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
MICRO-STAR INTERNATIONAL CO., LTD.	MSI (LA)	Subsidiary	$ 4,373,686	3.27	$ -	-	1,008,634 $	$ -
MICRO-STAR INTERNATIONAL CO., LTD.	MEGA COMPUTER	Second-tier Subsidiary	1,342,508	5.21	-	-	225,568	-
MICRO-STAR INTERNATIONAL CO., LTD.	MYSTAR	Second-tier Subsidiary	217,751	7.95	-	-	74,670	-
MSI (PACIFIC) (Note)	MICRO-STAR INTERNATIONAL CO., LTD.	Ultimate parent company	3,870,494	-	-	-	239,520	-
MSI COMPUTER (SHENZHEN) (Note)	MSI (PACIFIC)	Parent Company	2,602,330	-	-	-	170,200	-
MSI ELECTRONICS (KUNSHAN) (Note)	MSI (PACIFIC)	Parent Company	1,032,848	-	-	-	69,320	-
MSI (B.V.I.)	MSI (PACIFIC)	Parent Company	141,249	-	-	-	-	-
MEGA COMPUTER	MSI (SHANGHAI)	Affiliated company	1,717,249	2.37	-	-	493,633	-

Note: MSI (PACIFIC) processing overhead receivable between MICRO-STAR INTERNATIONAL CO., LTD. and both of MSI COMPUTER (SHENZHEN) and MSI ELECTRONICS (KUNSHAN).

Table 3 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Significant inter-company transactions during the three months ended March 31, 2020

Expressed in thousands of NTD

Table 4

(Except as otherwise indicated)

Table 4				合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)	合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)	合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)	合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)
Number	Company name (Note 4)	Counterparty (Note 4)	Relationship	Transaction
				General ledger account	Amount (Note 1)	Transaction terms	Percentage of consolidated total operating revenues or total assets
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (KOREA)	Parent company to second-tier subsidiary	Sales	1,245,114 $	Note 2	4.37%
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (LA)	Parent company to subsidiary	Sales	3,936,178	Note 2	13.81%
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MEGA COMPUTER	Parent company to second-tier subsidiary	Sales	1,586,620	Note 2	5.57%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MYSTAR	Parent company to second-tier subsidiary	Sales	482,956	Note 2	1.69%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (KOREA)	Parent company to second-tier subsidiary	Accounts receivable	54,666	Note 2	0.10%
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (LA)	Parent company to subsidiary	Accounts receivable	4,373,686	Note 2	7.63%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MEGA COMPUTER	Parent company to second-tier subsidiary	Accounts receivable	1,342,508	Note 2	2.34%
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MYSTAR	Parent company to second-tier subsidiary	Accounts receivable	217,751	Note 2	0.38%
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MSI ELECTRONICS (KUNSHAN)	Parent company to second-tier subsidiary	Processing overhead	201,307	Note 3	0.71%
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MSI COMPUTER (SHENZHEN)	Parent company to second-tier subsidiary	Processing overhead	622,191	Note 3	2.18%
0	MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (EUROPE)	Parent company to second-tier subsidiary	Manufacturing and operatingexpense	66,266	Note 2	0.23%
1	MSI (PACIFIC)	MICRO ELECTRONICS	Subsidiary to second-tier subsidiary	Accrued expenses payable	94,067	Note 3	0.16%
1	MSI (PACIFIC)	MSI (B.V.I.)	Subsidiary to second-tier subsidiary	Accrued expenses payable	141,249	Note 3	0.25%
1	MSI (PACIFIC)	MSI ELECTRONICS (KUNSHAN)	Subsidiary to second-tier subsidiary	Accrued expenses payable	1,032,848	Note 3	1.80%
1	MSI (PACIFIC)	MSI COMPUTER (SHENZHEN)	Subsidiary to second-tier subsidiary	Accrued expenses payable	2,602,330	Note 3	4.54%
1	MSI (PACIFIC)	MICRO-STAR INTERNATIONAL CO., LTD.	Subsidiary to parent	Accounts receivable	3,870,494	Note 3	6.76%

Table 4 Page 1

Number	Company name (Note 4)	Counterparty (Note 4)	Relationship	Transaction	Transaction	Transaction	Transaction
				General ledger account	Amount (Note 1)	Transaction terms	Percentage of consolidated total operating revenues or total assets
2	MEGA COMPUTER	MSI (SHANGHAI)	Second-tier subsidiary to second-tier subsidiary	Sales	1,078,919	Note 2	3.79%
2	MEGA COMPUTER	MSI (SHANGHAI)	Second-tier subsidiary to second-tier subsidiary	Accounts receivable	1,717,249	Note 2	3.00%
3	MSI (LA)	RAIDEALS	Subsidiary to second-tier subsidiary	Sales	65,149	Note 2	0.23%

Note 1: Balances after elimination in conformity with regulations.

Note 2: Transaction terms were approximately the same as those to third parties.

Note 3: Processing overhead was determined based on the quantities, contract amount and delivery time.

Note 4: Individual transactions not exceeding $50,000 and their corresponding transactions are not disclosed.

Table 4 Page 2

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Information on investees (not including investees in Mainland China)

For the three months ended March 31, 2020

Expressed in thousands of NTD

Table 5

(Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at March 31, 2020	Shares held as at March 31, 2020	Shares held as at March 31, 2020	Net profit (loss) of the investee for the three months ended March 31, 2020	Investment income (loss) recognised by the Company for the three months ended March 31, 2020	Footnote
				Balance as at March 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (LA)	U.S.A	Sales and maintenance of computers,and electronic components	258,468 $	258,468 $	575,458	100.00	35,394 $	(921) $	(921) $	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (AUSTRALIA)	Australia	Maintenance and after-sales service of computers and electronic components	57,420	57,420	221,836	100.00	6,392	325	325	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (JAPAN)	Japan	Sales support and maintenance of computers and electronic components	20,411	20,411	1,400	100.00	15,465	539	539	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (PACIFIC)	Cayman Islands	Holding company	1,511,382	1,511,382	30,204,118	100.00	6,581,437	(22,702)	22,702) (	Direct subsidiary
MICRO-STAR INTERNATIONAL CO., LTD.	MSI (HOLDING)	Netherlands	Holding company	45,724	45,724	424,000	100.00	592,623	(20,078)	20,078) (	Direct subsidiary
MICRO-STAR INTERNATIONAL CO., LTD.	MSI COMPUTER (CAYMAN)	Cayman Islands	Holding company	99,093	99,093	50,000	100.00	124,597	22	22	Direct subsidiary
MSI (PACIFIC)	MSI (KOREA)	South Korea	Sales and maintenance of computers and electronic components	24,374	24,374	80,000	100.00	280,141	10,935	-	Indirect subsidiary
MSI (PACIFIC)	MSI (B.V.I.)	British Virgin Island	Holding company	1,784,681	1,784,681	47,465,071	100.00	3,894,144	(30,201)	-	Indirect subsidiary
MSI (PACIFIC)	MICRO ELECTRONICS	British Virgin Island	Holding company	1,168,593	1,168,593	33,315,472	100.00	2,388,522	(8,002)	-	Indirect subsidiary
MSI (PACIFIC)	STAR INFORMATION	British Virgin Island	Holding company	144,721	144,721	4,502,601	100.00	24,464	(2,982)	-	Indirect subsidiary
MSI (PACIFIC)	MEGA TECHNOLOGY	British Virgin Island	Holding company	92,819	92,819	3,050,000	100.00	(6,485)	42	-	Indirect subsidiary
MSI (PACIFIC)	MEGA COMPUTER	Hong Kong	Sales support of computers and electronic components	-	-	1	100.00	5,880	(93)	-	Indirect subsidiary
MSI (PACIFIC)	MSI (MHK)	Hong Kong	Sales support of computers and electronic components	-	-	1	100.00	21,977	1,513	-	Indirect subsidiary

Table 5 Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at March 31, 2020	Shares held as at March 31, 2020	Shares held as at March 31, 2020	Net profit (loss) of the investee for the three months ended March 31, 2020	Investment income (loss) recognised by the Company for the three months ended March 31, 2020	Footnote
				Balance as at March 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
MSI (HOLDING)	MYSTAR	Netherlands	Sales support of computers and electronic components	71,353 $	71,353 $	-	100.00	150,164 $	5,324 $	- $	Indirect subsidiary
MSI (HOLDING)	MSI (RUSSIA)	Russia	Sales support and maintenance of computers and electronic components	68,258	68,258	-	99.00	31,047	(994)	-	Indirect subsidiary
MSI (HOLDING)	MSI (POLSKA)	Poland	Maintenance and after-sales service of computers and electronic components	46,077	46,077	-	99.00	31,343	794	-	Indirect subsidiary
MSI (HOLDING)	MSI (SARL)	France	Sales support of computers and electronic components	26,646	26,646	-	100.00	52,979	1,071	-	Indirect subsidiary
MSI (HOLDING)	MSI (UK)	Britan	Sales support of computers and electronic components	37,226	37,226	-	100.00	15,574	845	-	Indirect subsidiary
MSI (HOLDING)	MSI (TURKEY)	Turkey	Sales support of computers and electronic components	3,229	3,229	-	99.00	(75)	-	-	Indirect subsidiary (Note 2)
MSI (HOLDING)	MSI (ITALY)	Italy	Sales support of computers and electronic components	2,153	2,153	-	100.00	2,823	295	-	Indirect subsidiary
MSI (HOLDING)	MSI (EUROPE)	Netherlands	Logistics services of computers and electronic components	37,620	37,620	-	100.00	46,060	1,368	-	Indirect subsidiary
MSI (HOLDING)	MSI (IBERIA)	Spain	Sales support of computers and electronic components	5,177	5,177	-	100.00	6,210	466	-	Indirect subsidiary
MSI (EUROPE)	MSI (RUSSIA)	Russia	Sales support and maintenance of computers and electronic components	689	689	-	1.00	531	(994)	-	Indirect subsidiary
MSI (EUROPE)	MSI (POLSKA)	Poland	Maintenance and after-sales service of computers and electronic components	467	467	-	1.00	170	794	-	Indirect subsidiary
MSI (EUROPE)	MSI (TURKEY)	Turkey	Sales support of computers and electronic components	33	33	-	1.00	25	-	-	Indirect subsidiary (Note 2)
MEGA TECHNOLOGY	RAIDEALS	U.S.A	Sales of computers and electronic components	1,523	1,523	-	100.00	1,760	56	-	Indirect subsidiary

Note 1: The table is presented in New Taiwan dollars. Except for the initial investment amount is valued at historical exchange rate, the others are valued with exchange rate 1USD=30.225 NTD; 1EUR=33.24 NTD on March 31, 2020 and average rate with 1USD=30.1078 NTD; 1EUR=33.2107 NTD for the three months ended March 31, 2020.

Note 2: As of March 31, 2020, the liquidation process has not been completed.

Table 5 Page 2

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China - Basic information

For the three months ended March 31, 2020

Expressed in thousands of NTD

Table 6

(Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three months ended March 31, 2020	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three months ended March 31, 2020	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2020	Net income of investee as of March 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the three months ended March 31, 2020 (Note 2)	Book value of investments in Mainland China as of March 31, 2020	Accumulated amount of investment income remitted back to Taiwan as of March 31, 2020	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
MSI COMPUTER (SHENZHEN)	Sales and manufacture of computers, and electronic components	1,726,857 $	Note 1	1,726,857 $	$ -	$ -	1,726,857 $	(30,242) $	100.00	(30,242) $	3,734,676 $	$ -	-
MSI ELECTRONICS (KUNSHAN)	Sales and manufacture of computers, and electronic components	1,772,675	Note 1	1,772,675	-	-	1,772,675	(8,154)	100.00	(8,154)	2,282,074	-	-
SHENZHEN MEGA INFORMATION	Examination and maintenance of computers, and electronic components	23,940	Note 1	23,940	-	-	23,940	713	100.00	713	21,951	-	-
MSI COMPUTER TRADING (SHENZHEN)	Sales and maintenance of computers and electronic components	91,296	Note 1	-	-	-	-	(14)	100.00	(14)	(8,246)	-	Note 3
MSI (SHENZHEN)	Sales and maintenance of computers and electronic components	30,092	Note 1	-	-	-	-	(3,045)	100.00	(3,045)	10,662	-	Note 4
MSI (SHANGHAI)	Sales and maintenance of computers and electronic components	29,275	Note 1	-	-	-	-	3,270	100.00	3,270	(22,770)	-	Note 5

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of March 31,2020	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
MICRO-STAR INTERNATIONAL CO., LTD.	3,602,547 $	3,850,987 $	19,299,302 $

Note 1: The investments were made indirectly through 100% owned subsidiary of the Company.

Note 2: Evaluated based on financial statement not reviewed by other auditors of the investee companies. Note 3: The amount of US $3,000 thousand was remitted by the Company's subsidiary, MSI (Pacific), to MSI COMPUTER TRADING (SHENZHEN). Note 4: The amount of US $1,000 thousand was remitted by the Company's subsidiary, MSI (Pacific), to MSI (SHENZHEN).

Note 5: The amount of US $1,000 thousand was remitted by the Company's subsidiary, MSI (Pacific), to MSI (SHANGHAI).

Note 6: In pursuance of Shen-Zi Letter No.09704604680 from the Ministry of Economic Affairs dated August 29, 2008. The amended "Regulations for examination of investments and technical cooperation in Mainland Area" sets the limitation for investments in Mainland China to be higher of net book value or 60% of consolidated net book value.

Note 7: The table is presented in New Taiwan dollars. Except for the initial investment amount is valued at historical exchange rate, the others are valued with exchange rate 1USD=30.225 NTD on March 31, 2020 and average rate with 1USD=30.1078 NTD for the three months ended March 31, 2020.

Table 6 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China - Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in third areas

For the three months ended March 31, 2020

Expressed in thousands of NTD

Table 7

(Except as otherwise indicated)

Investee in Mainland China	Sales/(Purchase)	Sales/(Purchase)	Propertytransaction	Propertytransaction	Accounts receivable/(payable)	Accounts receivable/(payable)	Amount of endorsements/guarantees secured with collaterals	Amount of endorsements/guarantees secured with collaterals		Accommodation of funds	Accommodation of funds		Others(Note)
	Amount	%	Amount	%	Balance as of March 31,2020	%	Balance as of March 31,2020	Purpose	Ceiling amount	Balance as of March 31,2020	Interest rate range	Interest expense
MSI COMPUTER (SHENZHEN) MSI ELECTRONICS (KUNSHAN) MSI (SHANGHAI)	$ - - 1,078,919	- - 100	$ - - -	- - -	(2,602,330) $ (1,032,848) 1,717,249	17) ( 7) ( 100	$ - - -	- - -	$ - - -	$ - - -	- - -	$ - - -	622,191 $ 201,307 -

Note: Processing overhead.

Table 7 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Major shareholders information

For the three months ended March 31, 2020

Table 8

Name of major shareholders	Shares held as a	t March 31,2020
	Number of shares	Ownership(%)
Hsu Hsiang	51,983,151	6.15%

Table 8 Page 1