Primax - Interim / Quarterly Report 2017

Stock Code:4915

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

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

March 31, 2017 and 2016 (With Independent Auditors’ Review Report Thereon)

Address: No. 669, Ruey Kuang Road, Neihu, Taipei Telephone: (02)2798-9008

The auditors’review report and the accompanying consolidated interim financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ review report and consolidated interim financial statements, the Chinese version shall prevail.

		Contents	Page
1.	Cover Page		1
2.	Table of Contents		2
3.	Independent Auditors’ Review Report		3
4.	Consolidated Balance Sheets		4
5.	Consolidated Statements of Comprehensive Income		5
6.	Consolidated Statements of Changes in Equity		6
7.	Consolidated Statements of Cash Flows		7
8.	Notes to the Consolidated Interim Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the consolidated financial statements	8
	(3)	New standards, amendments and interpretations adopted	8`～`11
	(4)	Summary of significant accounting policies	12`～`15
	(5)	Significant accounting assumptions and judgments, and major sources	15
		of estimation uncertainty
	(6)	Explanation of significant accounts	15`～`44
	(7)	Related-party transactions	44`～`45
	(8)	Pledged assets	46
	(9)	Significant commitments and contingencies	46`～`47
	(10)	Losses due to major disasters	47
	(11)	Subsequent events	47
	(12)	Other	47`～`48
	(13)	Other disclosures
		(a) Information on significant transactions	49`～`53
		(b) Information on investments	53`～`54
		(c) Information on investment in mainland China	54`～`55
	(14)	Segment information	55`～`56

Independent Auditors’ Review Report

To the Board of Directors PRIMAX ELECTRONICS LTD.:

We have reviewed the accompanying consolidated balance sheets of PRIMAX ELECTRONICS LTD. and its subsidiaries (the “Group”) as of March 31, 2017 and 2016, and the related restated consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2017 and 2016. These consolidated interim financial statements are the responsibility of the Group’ s management. Our responsibility is to issue a report on these consolidated interim financial statements based on our review. We have not reviewed the financial statements of Tymphany Worldwide Enterprises Ltd. with total assets of NT$4,975,022 thousand and NT$3,151,814 thousand, constituting 16.5% and 9.0% of the related consolidated total assets, as of March 31, 2017 and 2016, respectively, and with operating revenue of NT$2,829,895 thousand and NT$1,848,459 thousand, constituting 22.0% and 13.2%, of the related consolidated operating revenue for the three months ended March 31, 2017 and 2016, respectively. Those financial statements were reviewed by other auditors, whose reports have been furnished to us, and our review, insofar as it relates to the amounts included for those companies, is based solely on the reports of the other auditors.

Except as described in the following paragraph, we conducted our reviews in accordance with Statement on Auditing Standards No. 36, “Engagements to Review Financial Statements”. A review consists principally of inquiries of the Group’s personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with the generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated interim financial statements taken as a whole. Accordingly, we do not express such an opinion.

Also included in the accompanying consolidated interim financial statements are the financial statements of certain consolidated subsidiaries, which were not reviewed by independent auditors. These consolidated subsidiaries had the total assets of NT$1,558,936 thousand and NT$5,625,596 thousand, constituting 5.2% and 16.0% of the Group’s consolidated total assets as of March 31, 2017 and 2016, respectively. Total liabilities of NT$1,852,664 thousand and NT$2,705,646 thousand, constituting 10.4% and 12.4% of the Group’ s consolidated total liabilities as of March 31, 2017 and 2016, respectively. The comprehensive loss of NT$88,811 thousand and NT$13,707 thousand, constituting 1,134.0% and 4.0% of the Group’s consolidated comprehensive income for the three months ended March 31, 2017 and 2016, respectively.

3-1

Based on our reviews and the reports of the other auditors, except for the effects of the adjustments, if any, that might have emerged had the financial statements of the said consolidated subsidiaries been reviewed by independent auditors, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to in the first paragraph in order for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China.

KPMG

Taipei, Taiwan (Republic of China) May 11, 2017

Notes to Readers

The accompanying consolidated interim financial statements are intended only to present the consolidated statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated interim financial statements are those generally accepted and applied in the Republic of China.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of March 31, 2017 and 2016

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2017, December 31, and March 31, 2016 (Expressed in Thousands of New Taiwan Dollars)

December 31, 2016	December 31, 2016	March 31, 2016
Amount	%	Amount % 2,875,356 8 11,340,015 32 264,151 1 3,234,476 9 514,424 1 284,698 1 808,675 2 19,321,795 54 574,286 2 1,346,173 4 535,473 2 2,455,932 8 21,777,727 62 4,417,938 13 3,684 - 787,085 2 611,322 2 97,300 - 4,352,649 13 492,815 1 2,518,071 7 13,280,864 38 35,058,591 100
- 16,892,918 150,430 3,878,606 1,146,183 350,860 382,222	- 46 - 10 3 1 1 61 1 4 1 6 67 12 - 2 2 - 13 - 4 33 100
22,801,219
218,889 1,408,138 449,345
2,076,372
24,877,591
4,421,343 3,024 791,466 788,634 97,300 4,779,419 118,538 1,244,734
12,244,458
37,122,049

See accompanying notes to consolidated interim financial statements.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)

4000 Operating revenue (notes 6(r) and 7(c)) 5000 Operating costs (notes 6(e), (m), (p), (s), and 12(a)) Gross profit Operating expenses (notes 6(m), (p), (s) and 12(a)): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses Total operating expenses Net operating income Non-operating income and expenses: 7010 Other income (note 6(t)) 7020 Other gains and losses (note 6(u)) 7050 Finance costs Total non-operating income and expenses Profit from continuing operations before tax 7950 Less: income tax expense (note 6(n)) Profit from continuing operations 8100 Profit from discontinued operations, net of tax (note 12(b)) Profit 8300 Other comprehensive income (loss): 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences on translation of foreign operation’s financial statements 8362 Unrealized gains on available-for-sale financial assets (note 6(c)) 8399 Income tax expense related to items that may be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income after tax Comprehensive income Profit attributable to: 8610 Owners of parent 8620 Non-controlling interests Comprehensive income attributable to: 8710 Owners of parent 8720 Non-controlling interests Earnings per share (note 6(q)) 9710 Basic earnings per share (NT dollars) Profit from continuing operations Profit from discontinued operations Profit per share 9810 Diluted earnings per share (NT dollars) Profit from continuing operations Profit from discontinued operations Profit per share	For the three	months ended March 31 2016 (restated) % Amount % 100 13,405,115 100 88 11,996,976 89 12 1,408,139 11 2 327,309 2 2 224,385 2 4 458,937 4 8 1,010,631 8 4 397,508 3 - 39,453 - - 169,610 1 - (11,052) - - 198,011 1 4 595,519 4 1 201,014 1 3 394,505 3 - 45,569 - 3 440,074 3 (3) (148,733) (1) - 51,608 - - - - (3) (97,125) (1) (3) (97,125) (1) - 342,949 2 3 400,715 3 - 39,359 - 3 440,074 3 - 311,342 2 - 31,607 - - 342,949 2 0.95 0.88 0.03 0.95 0.91 0.94 0.88 0.03 0.94 0.91
	2017	% 100 88 12 2 2 4 8 4 - - - - 4 1 3 - 3 (3) - - (3) (3) - 3 - 3 - - - 0.95 0.95 0.94 0.94
	Amount $ 12,881,184 11,265,889 1,615,295 304,233 306,314 471,139 1,081,686 533,609 50,725 16,907 (11,234) 56,398 590,007 137,735 452,272 - 452,272 (446,064) 1,624 - (444,440) (444,440) $ 7,832 $ 418,436 33,836 $ 452,272 $ 2,108 5,724 $ 7,832 $ - $ $ - $

See accompanying notes to consolidated interim financial statements.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Changes in Equity For the three months ended March 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

Share capital	Share capital	Capital surplus	Retained earnings	Retained earnings	Retained earnings	Retained earnings	Exchange differences on translation of operation’s financial statements	Unrealized gains (losses) on available-for- sale financial assets	Unearned employee compensation	Total equity attributable to owners of parent	Non- controlling interests Total equity
Ordinary shares	capital collected in advance		Legal reserve	Special reserve	Unappropriated retained earnings
$ 4,411,877 - - - (1,000) - - - 7,061 $ 4,417,938 $ 4,421,343 - - - - - 24,500 - 1,700 $ 4,447,543	15,174 - -	777,368 - -	611,322 - -	97,300 - -		3,951,934 400,715 -	351,045 - (140,981) (140,981) - - - - - 210,064 (259,911) - (417,952) (417,952) - - - - - (677,863)	294,760 - 51,608	(80,399) - - - - - 16,782 - - (63,617) (27,017) - - - - 12,182 (112,210) - - (127,045)	10,430,381 400,715 (89,373) 311,342 - 604 16,782 3,684 - 10,762,793 10,999,724 418,436 (416,328) 2,108 656 12,182 - 1,890 - 11,016,560	2,486,204 12,916,585 39,359 440,074 (7,752) (97,125) 31,607 342,949 - - 260 864 - 16,782 - 3,684 - - 2,518,071 13,280,864 1,244,734 12,244,458 33,836 452,272 (28,112) (444,440) 5,724 7,832 281 937 - 12,182 - - - 1,890 - - 1,250,739 12,267,299
	-	-	-	-		400,715		51,608
		1,000 604 - - 8,113	- - - - -	- - - - -		- - - - -		- - - - -
		787,085	611,322	97,300		4,352,649		346,368
		791,466 - -	788,634 - -	97,300 - -		4,779,419 418,436 -		405,466 - 1,624
		-	-	-		418,436		1,624
		656 - 87,710 - 2,584	- - - - -	- - - - -		- - - - -		- - - - -
		882,416	788,634	97,300		5,197,855		407,090

See accompanying notes to consolidated interim financial statements.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit from continuing operations before tax
Profit from discontinued operations before tax
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation and amortization
Losses related to inventories
Provision (reversal of provision) for bad debt expense and sales returns and discounts
Interest expense
Interest income
Compensation cost of share-based payments
Other
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Financial assets at fair value through profit or loss－current
Notes and accounts receivable
Accounts receivable from related parties
Other receivable－current and non-current
Inventories
Other current assets
Other operating assets
Changes in operating assets
Financial liabilities at fair value through profit or loss - current
Notes and accounts payable
Salary payable
Other payables
Other current liabilities
Other operating liabilities
Changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash outflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash used in operating activities
Cash flows from (used in) investing activities:
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of unamortized expense
Acquisition of available-for-sale financial assets
Other investing activities
Net cash flows used in investing activities
Cash flows from (used in) financing activities:
Increase in short-term borrowings
Decrease in long-term borrowings
Increase in guarantee deposits
Increase in other payables to related parties
Exercise of employee share options
Net cash flows from (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net 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,
2017
2016
$ 590,007
595,519
-
63,694
590,007
659,213
370,529
422,905
101,685
312,736
(52,919)
12,231
10,808
14,438
(48,459)
(39,051)
13,119
17,646
1,315
1,129
396,078
742,034
22,874
(220,975)
3,535,503
3,313,055
33,618
4,214
234,423
193,951
1,171,576
1,043,244
114,799
4,413
13,261
2,881
5,126,054
4,340,783
(52,133)
204,046
(5,625,846)
(7,383,915)
(677,559)
(712,683)
(440,617)
(723,218)
(14,031)
5,578
(3,062)
3,737
(6,813,248)
(8,606,455)
(1,687,194)
(4,265,672)
(1,291,116)
(3,523,638)
(701,109)
(2,864,425)
48,459
39,051
(10,791)
(14,421)
(35,654)
(186,005)
(699,095)
(3,025,800)
(300,349)
(139,573)
338
13,607
(17,476)
(10,551)
(21,045)
-
1,566
10,312
(336,966)
(126,205)
-
1,524,787
(274,444)
(294,526)
22,799
10,808
-
14
1,890
3,684
(249,755)
1,244,767
(190,321)
(49,985)
(1,476,137)
(1,957,223)
6,359,916
7,623,380
$
4,883,779
5,666,157

See accompanying notes to consolidated interim financial statements.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) AS OF MARCH 31, 2017 AND 2016 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING STANDARDS

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

March 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

PRIMAX ELECTRONICS LTD. (“the Company”), formerly known as Hong Chuan Investments Ltd., was incorporated on March 20, 2006, and registered under the Ministry of Economic Affairs, ROC. The Company changed its name to Hong Chuan Electronics Ltd. and Primax Electronics Ltd. in October 2007 and February 2008, respectively. The address of the Company’s registered office is No. 669, Ruey Kuang Road, Neihu, Taipei.

Primax Electronics Holdings, Ltd. (Primax Holdings, formerly known as Apple Holdings Ltd.) acquired all shares of the Company from YWAN PANG Management Limited on April 2, 2007. The investment was approved by the Investment Commission, Ministry of Economic Affairs. However, all shares of the Company were sold by Primax Holdings to its shareholders in October 2009.

Based on the resolution approved by the Company’ s board of directors on November 5, 2007, the Company resolved to acquire and merge with Primax Electronics Ltd. (“Primax”, a listed company) on December 28, 2007. The Company is the surviving company, and Primax was dissolved upon completion of the merger.

The consolidated interim financial statements of the Company as at and for the years ended March 31, 2017, comprised the Company and subsidiaries (together referred to as “the Group”). The major business activities of the Group were the manufacture and sale of multi-function printers, scanners, digital camera modules, computer mice, keyboards, track pads, mobile phone accessories, consumer electronics products, shredders, amplifiers, speakers, audio systems and industrial automation parts. Please refer to note 14 for further information.

The Company’ s common shares were registered with the Financial Supervisory Commission, ROC (“FSC”) on June 22, 2012, and listed on the Taiwan Stock Exchange (“TWSE”) on October 5, 2012.

(2) Approval date and procedures of the consolidated financial statements:

The consolidated interim financial statements were authorized for issuance by the board of directors on May 11, 2017.

(3) New standards, amendments and interpretations adopted

(a) Impact of the International Financial Reporting Standards (”IFRSs”) endorsed by the FSC which have already taken effect.

The Group conform to the IFRSs which were issued by the International Accounting Standards Board (IASB) before January 1, 2016, and were endorsed by the FSC on January 1, 2017 in preparing their financial statements. The related new standards, interpretations and amendments are as follows:

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: Applying	January 1, 2016
the Consolidation Exception”
Amendments to IFRS 11 “Accounting for Acquisitions of Interests in Joint	January 1, 2016
Operations”
IFRS 14 “Regulatory Deferral Accounts”	January 1, 2016
Amendment to IAS 1 “Disclosure Initiative”	January 1, 2016
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of	January 1, 2016
Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”	January 1, 2016
Amendments to IAS 19 “Defined Benefit Plans: Employee Contributions”	July 1, 2014
Amendment to IAS 27 “Equity Method in Separate Financial Statements”	January 1, 2016
Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial	January 1, 2014
Assets”
Amendments to IAS 39 “Novation of Derivatives and Continuation of Hedge	January 1, 2014
Accounting”
Annual improvements cycles 2010-2012 and 2011-2013	July 1, 2014
Annual improvements cycle 2012-2014	January 1, 2016
IFRIC 21 “Levies”	January 1, 2014

The Group assessed that the initial application of the above IFRSs would not have any material impact on the consolidated interim financial statements.

(b) Newly released or amended standards and interpretations not yet endorsed by the FSC

A summary of the new standards and amendments issued by the IASB but not yet endorsed by the FSC. The FSC announced that the Group should apply IFRS 9 and IFRS 15 starting January 1, 2018. As of the date the Group’s interim financial statements were issued, the FSC has yet to announce the effective dates of the other IFRSs. As of the end of reporting date is as follows:

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 9 “Financial Instruments”	January 1, 2018
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between	Effective date to
an Investor and Its Associate or Joint Venture”	be determined by
	IASB
IFRS 15 “Revenue from Contracts with Customers”	January 1, 2018
IFRS 16 “Leases”	January 1, 2019
Amendment to IFRS 2 “Clarifications of Classification and Measurement of	January 1, 2018
Share-based Payment Transactions”

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Effective date New, Revised or Amended Standards and Interpretations per IASB Amendment to IFRS 15 “Clarifications of IFRS 15” January 1, 2018 Amendment to IAS 7 “Disclosure Initiative” January 1, 2017 Amendment to IAS 12 “Recognition of Deferred Tax Assets for Unrealized January 1, 2017 Losses” Amendments to IFRS 4 “Insurance Contracts” (“Applying IFRS 9 Financial January 1, 2018 Instruments with IFRS 4 Insurance Contracts”) Annual Improvements to IFRSs 2014 - 2016 Cycle : IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2017 IFRS 1 “First-time Adoption of International Financial Reporting Standards” January 1, 2018 and IAS 28 “Investments in Associates and Joint Ventures” IFRIC 22 “Foreign Currency Transactions and Advance Consideration” January 1, 2018 IAS 40 “Transfers of Investment Property” January 1, 2018

The Group is still currently determining the potential impact of the standards listed below:

Issuance / Release

Dates Standards or Interpretations Content of amendment May 28, 2014 IFRS 15 “Revenue from April 12, 2016 Contracts with Customers”

IFRS 15 establishes a five-step model for recognizing revenue that applies to all contracts with customers, and will supersede IAS 18 “ Revenue,” IAS 11 “ Construction Contracts,” and a number of revenue-related interpretations.

Final amendments issued on April 12, 2016, clarify how to (i) identify performance obligations in a contract; (ii) determine whether a company is a principal or an agent; (iii) account for a license for intellectual property (IP); and (iv) apply transition requirements.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Issuance / Release
Dates
November 19, 2013
July 24, 2014
January 13, 2016 Standards or Interpretations
Content of amendment
IFRS 9 “Financial Instruments”
The standard will replace IAS 39 “Financial
Instruments: Recognition and Measurement”,
and the main amendments are as follows:
Classification and measurement: Financial
‧
assets are measured at amortized cost, fair
value through profit or loss, or fair value
through other comprehensive income,
based on both the entity’s business model
for managing the financial assets and the
financial assets’ contractual cash flow
characteristics. Financial liabilities are
measured at amortized cost or fair value
through profit or loss. Furthermore, there is
a requirement that “ own credit risk”
adjustments be measured at fair value
through other comprehensive income.
Impairment: The expected credit loss
‧
model is used to evaluate impairment.
Hedge accounting: Hedge accounting is
‧
more closely aligned with risk management
activities, and hedge effectiveness is
measured based on the hedge ratio.
IFRS 16 “Leases”
The new standard of accounting for lease is
amended as follows:
For a contract that is, or contains, a lease,
‧
the lessee shall recognize a right-of-use
asset and a lease liability in the balance
sheet. In the statement of profit or loss and
other comprehensive income, a lessee shall
present interest expense on the lease
liability separately from the depreciation
charge for the right-of use asset during the
lease term.
A lessor classifies a lease as either a
‧
finance lease or an operating lease, and
therefore, the accounting remains similar
to IAS 17.

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

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(4) Summary of significant accounting policies:

(a) Statement of compliance

These consolidated interim financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“ the Regulations”) and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed by FSC and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (hereinafter referred to IFRS endorsed by the FSC) for full annual consolidated financial statements.

Except the following accounting policies mentioned below, the significant accounting policies adopted in the consolidated interim financial statements are the same as those in the consolidated financial statement for the year ended December 31, 2016. For the related information, please refer to note 4 of the consolidated financial statements for the year ended December 31, 2016.

(b) Basis of consolidation

(i) Except as described in the following paragraph, the principles of preparation of the consolidated interim financial statements are the same as those of the consolidated financial statements for the year ended December 31, 2016. For the related information, please refer to note 4(c) of the consolidated financial statements for the year ended December 31, 2016.
(ii) List of subsidiaries in the consolidated interim financial statements

The consolidated interim financial statements comprise the Company and its subsidiaries. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity.

The details of the subsidiaries included in the consolidated interim financial statements are as follows:

Name of investor	Name of subsidiary	Principal activities Holding company Holding company Holding company Market development and customer service Holding company Market development and customer service	Percentage of shareholding March 31, 2017 December 31, 2016 March 31, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	Percentage of shareholding March 31, 2017 December 31, 2016 March 31, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
			March 31, 2017	December 31, 2016 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
The Company The Company The Company The Company The Company The Company	Primax Industries (Cayman Holding) Ltd. (Primax Cayman) Primax Technology (Cayman Holding) Ltd. (Primax Tech.) Destiny Technology Holding Co., Ltd. (Destiny BVI.) Primax Destiny Co., Ltd. (Destiny Japan) Diamond (Cayman) Holdings Ltd. (Diamond) Gratus Technology Corp. (Gratus Tech.)		% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Name of investor	Name of subsidiary	Principal activities Manufacture and sale of sophisticated machinery components, automotive parts, industrial automation parts, communication parts and aerospace components Holding company and customer service Holding company Manufacture of sophisticated machinery components and automotive parts Holding company Manufacture of multifunctional peripherals, computer mice, mobile phone accessories, consumer electronics products, and shredders Manufacture of computer, peripherals and keyboards Manufacture of computer peripherals and keyboards Sale of multi-function printers and computer peripheral devices Research and development of computer peripheral devices and software Sale of audio accessories, amplifiers and their components Market development and customer service of amplifiers and their components Manufacture, research and development, design, and sale of audio accessories, amplifiers and their components	Percentage of shareholding March 31, 2017 December 31, 2016 March 31, 2016 Description % - % - % 30.00 (note 1) % 100.00 % 100.00 % 100.00 % 70.00 % 70.00 % 70.00 % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	Percentage of shareholding March 31, 2017 December 31, 2016 March 31, 2016 Description % - % - % 30.00 (note 1) % 100.00 % 100.00 % 100.00 % 70.00 % 70.00 % 70.00 % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
			March 31, 2017	December 31, 2016 % - % 100.00 % 70.00 % - % - % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
The Company Primax Cayman Diamond Global TEK Global TEK Primax HK and Primax Tech. Primax HK Primax HK Primax Tech. Destiny BVI. TWEL TWEL TYM HK	Global TEK Fabrication Co., Ltd. (Global TEK) Primax Industries (Hong Kong) Ltd. (Primax HK) Tymphany Worldwide Enterprises Ltd. (TWEL) Global TEK Co., Ltd. (GT) Global TEK Fabrication Co., Ltd. (Samoa) (GTF-S) Dongguan Primax Electronic & Telecommunication Products Ltd. (PCH2) Primax Electronics (KS) Corp., Ltd. (PKS1) Primax Electronics (Chongqing) Corp., Ltd. (PCQ1) Polaris Electronics Inc. (Polaris) Destiny Electronic Corp. (Destiny Beijing) Tymphany HK Ltd. (TYM HK) TYP Enterprises, Inc. (TYP) Premium Loudspeakers (Hui Zhou) Co., Ltd. (Premium Hui Zhou)		% - % 100.00 % 70.00 % - % - % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Name of investor	Name of subsidiary	Principal activities Sale of audio accessories, amplifiers and their components Manufacture, research and development, design, and sale of audio accessories, amplifiers and their components Research and Development , design, and sale of audio accessories, amplifiers and their components Research and Development , design, and sale of audio accessories, amplifiers and their components and holdings Research and Development , design of audio accessories, amplifiers and their components Sale of automotive parts, industrial automation parts, communication parts and aerospace components Holding company Holding company Manufacture of sophisticated machinery components Manufacture of industrial automation parts, communication parts and aerospace components Manufacture of sophisticated machinery components and automotive parts	Percentage of shareholding March 31, 2017 December 31, 2016 March 31, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - TYDC was incorporated in October 2016 % 100.00 % - % - (note 2) % 100.00 % - % - (note 2) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1)	Percentage of shareholding March 31, 2017 December 31, 2016 March 31, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - TYDC was incorporated in October 2016 % 100.00 % - % - (note 2) % 100.00 % - % - (note 2) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1)
			March 31, 2017	December 31, 2016 % 100.00 % 100.00 % 100.00 % - % - % - % - % - % - % - % -
TYM HK TYMPHANY LOGISITCS, INC. (TYML) TYM HK Dongguan Tymphany Acoustic Technology Co., Ltd. (Tymphany Dongguan) Tymphann Dongguan Dong Guan Dong Cheng Tymphany Acoustic Technology Co., Ltd. (TYDC) Premium Hui ZhouTymphany Acoustic Technology HK Ltd. (TYM Acoustic HK ) TYM Acoustic HKTYMPHANY ACOUSTIC TECHNOLOGY (UK) LIMITED (TYM UK ) GT GP Tech, Inc. (GP) GTF-S Global TEK Fabrication Co., Ltd. (HK) (GTF-HK) GTF-S Global TEK Co., Ltd. (Samoa) (GTS) GTF-HK WUXI GLOBAL TEK FABRICATION CO., LTD. (WUXI GLOBAL TEK) GTS GLOBAL TEK (XI’ AN) CO., LTD. (GLOBAL TEK XI’ AN) GTS and WUXI GLOBAL TEK GLOBAL TEK CO. (WUXI), LTD. (GLOBAL TEK WUXI)			% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % - % - % - % - % -

Note 1: The Board resolved to dispose 20% of the shares of Global TEK on June 21 and September 21, 2016. The disposal transaction has been settled on October 3, 2016, and the Company lost control over Global TEK on the same date.

Note 2: The Company was incorporated in January 2017.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(c) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of International Financial Reporting Standards 34 “Interim Financial Reporting”.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period by the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

(d) Employee benefits

The pension cost in the consolidated interim financial statements was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events.

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

The preparation of the consolidated interim financial statements in conformity with the Regulations and IFRSs (in accordance with IAS 34 “ Interim Financial Reporting” and endorsed by the FSC) requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, 2016. For the related information, please refer to note 5 of the consolidated financial statements for the year ended December 31, 2016.

(6) Explanation of significant accounts:

Except for the following disclosures, there is no significant difference as compared with those disclosed in the consolidated financial statements for the year ended December 31, 2016. Please refer to Note 6 of the 2016 annual consolidated financial statements.

(a) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Time deposits	March 31, 2017 $ 3,109 1,991,924 2,888,746 $ 4,883,779	December 31, 2016 March 31, 2016 2,946 3,694 1,761,981 1,979,266 4,594,989 3,683,197 6,359,916 5,666,157 (Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Please refer to note 6(v) for the currency risk and the interest rate risk of the Group’s cash and cash equivalents.

(b) Financial assets and liabilities at fair value through profit or loss
(i) The fair value of financial instruments was as follows:

Financial assets at fair value through profit or loss – current: Non-derivative financial assets: Mutual funds Derivative financial assets: Forward exchange contracts Foreign exchange swap contracts Financial liabilities at fair value through profit or loss – current: Derivative financial liabilities: Forward exchange contracts Foreign exchange swap contracts	March 31, 2017 $ - $ 86,437 32,006 $ 118,443 $ (65,027) (33,270) $ (98,297)	December 31, 2016 March 31, 2016 - 1,000 141,317 308,692 - - 141,317 308,692 (72,909) (107,275) (77,521) (156,876) (150,430) (264,151)

(ii) The Group held the following derivative financial instruments not designated as hedging instruments presented as held-for-trading financial assets as of March 31, 2017, and December 31 and March 2016:

March 31, 2017

	March 31, 2017
Derivative financial instruments	Nominal amount	Maturity date Predetermined rate April 7, 2017~ June 5, 2017 30.028~30.982 April 7, 2017~ June 2, 2017 30.055~32.008 April 12, 2017 31.953 April 10, 2017~ June 5, 2017 30.210~30.944
Forward exchange contracts `－`buy USD / sell TWD Forward exchange contracts `－`buy TWD / sell USD Foreign exchange swap contracts `－`swap in USD / swap out TWD Foreign exchange swap contracts `－`swap in TWD / swap out USD	USD 194,000 thousand USD 153,200 thousand USD 20,000 thousand USD 80,300 thousand

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

December 31, 2016

	December 31, 2016
Derivative financial instruments	Nominal amount	Maturity date Predetermined rate January 5, 2017~ March 27, 2017 31.157~32.015 January 5, 2017~ March 27, 2017 31.765~32.290 January 5, 2017~ January 19, 2017 31.245~31.920
Forward exchange contracts `－`buy USD / sell TWD Forward exchange contracts `－`buy TWD / sell USD Foreign exchange swap contracts `－`swap in TWD / swap out USD	USD 252,000 thousand USD 189,500 thousand USD 81,000 thousand

	March 31, 2016	Maturity date Predetermined rate April 8, 2016~ May 31, 2016 32.510~33.578 April 1, 2016~ June 15, 2016 32.580~33.869 April 13, 2016~ June 15, 2016 32.8975~33.702
Derivative financial instruments	Nominal amount
Forward exchange contracts `－`buy USD / sell TWD Forward exchange contracts `－`buy TWD / sell USD Foreign exchange swap contracts `－`swap in USD / swap out TWD	USD 141,100 thousand USD 298,100 thousand USD 150,000 thousand

(iii) Please refer to note 6(v) for the liquidity risk of the Group’s financial instruments.

(iv) The Group did not provide any of the aforementioned financial assets at fair value through profit or loss – current as collateral.
(c) Available-for-sale financial assets – non-current

Stocks listed in domestic markets Stocks unlisted in domestic markets Stocks unlisted in foreign markets	March 31, 2017 $ 496,404 382,517 31,549 $ 910,470	December 31, 2016 March 31, 2016 586,404 606,600 287,517 13,297 13,880 16,141 887,801 636,038

(i) The unrealized gains and losses were recognized as unrealized gains and losses on availablefor-sale financial assets. Details were as follows:

Unrealized gains	For the three months ended March 31
	2017 2016 $ 1,624 51,608

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) The Group did not provide any of the aforementioned available-for-sale financial assets as collateral.
(d) Notes and accounts receivable, and other receivables (including related parties)

Notes receivable Accounts receivable Accounts receivable – related parties Other receivables Less: allowance for doubtful accounts allowance for sales returns and discounts Total	March 31, 2017 $ 114,869 10,145,830 69,223 260,988 (89,204) (50,206) $ 10,451,500	December 31, 2016 March 31, 2016 3,761 410,556 13,798,350 10,763,700 102,841 50,781 495,392 268,298 (99,936) (37,425) (98,302) (37,495) 14,202,106 11,418,415

(i) The Group did not provide any of the aforementioned notes and accounts receivable, and other receivables (including related parties) as collateral.
(ii) Please refer to note 6(v) for the movements in the allowance for doubtful accounts and the credit risk and currency.
(iii) The Company entered into agreements with banks to sell its accounts receivable without recourse. According to the agreements, within the limit of its credit facilities, the Company does not need to guarantee the capability of its customers to pay for reasons other than commercial disputes when transferring its accounts receivable. The Company receives partial advances upon sales of accounts receivable and pays interest calculated based on the interest rates agreed for the period through the collection of the accounts receivable. The remaining amounts are received upon the collection of the accounts receivable, and are recorded as other receivables. In addition, the Company shall pay handling charges based on a fixed rate. As of March 31, 2017, and December 31 and March 31, 2016, the details of transferred accounts receivable which conformed to the criteria for derecognition were as follows:

			March 31, 2017
Buyer Mega International Commercial Bank HSBC Bank Bank of Taiwan	Amount sold NT$ $ - - - $ -	Credit facilities US$ (expressed in thousand) 20,000 64,400 26,000 110,400	Cash received in advance NT$ Interest rate Guarantee (promissory note) expressed in thousands - US$ 5,000 - US$ 58,000 - NT$ 772,200 -	Amount derecognized NT$ Amount not received NT$ - - - - - - - -

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

			December 31, 2016
Buyer Mega International Commercial Bank HSBC Bank Bank of Taiwan	Amount sold NT$ $ 374,057 592,397 449,051 $ 1,415,505	Credit facilities US$ (expressed in thousand) 20,000 64,400 26,000 110,400	Cash received in advance NT$ Interest rate Guarantee (promissory note) expressed in thousands 336,651 % 1.75 US$ 5,000 533,157 % 1.42 US$ 58,000 404,146 % 2.10 NT$ 772,200 1,273,954 March 31, 2016	Amount derecognized NT$ Amount not received NT$ 336,651 37,406 533,157 59,240 404,146 44,905 1,273,954 141,551
Buyer Mega International Commercial Bank HSBC Bank Bank of Taiwan		Credit facilities US$ (expressed in thousand) 25,000 64,400 26,000 115,400	Cash received in advance NT$ Interest rate Guarantee (promissory note) expressed in thousands - US$ 7,000 - US$ 58,000 - NT$ 725,400 -	Amount derecognized NT$ Amount not received NT$ - - - - - - - -

(iv) Please refer to note 9 for guarantee notes provided by the Company to sell its accounts receivable.

(e) Inventories

Raw materials Semi-finished goods and work in process Finished goods and merchandise	March 31, 2017 $ 1,266,667 1,291,194 2,839,425 $ 5,397,286	December 31, 2016 March 31, 2016 1,618,227 1,393,131 1,485,837 1,207,622 3,566,483 3,393,876 6,670,547 5,994,629

The Group did not provide any of the aforementioned inventories as collateral.

The Group recognized the following items as cost of goods sold from continuing operations:

Losses on inventory valuation Unallocated manufacturing overhead resulting from the actual production being lower than the normal capacity Loss on disposal of inventories Gain on physical inventories	For the three months ended March 31
	2017 2016 $ (48,066) (280,929 (35,906) (32,024 (19,545) (146 1,832 363 $ (101,685) (312,736

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(f) Material non-controlling interests of subsidiaries

The Material non-controlling interests of subsidiaries were as follows:

Name of subsidiaries	Main operation place Business/Registered Country	Proportion of Ownership and Voting Rights Held by Non-controlling Interests March 31, 2017 December 31, 2016 March 31, 2016 % 30 % 30 % 30 % - % - % 70

The following information of the aforementioned subsidiaries have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Included in these information are the fair value adjustment made during the acquisition and relevant difference in accounting principles between the Group as at the acquisition date. Intra-group transactions were not eliminated in this information.

(i) TWEL and its subsidiaries:

March 31, 2017 Current assets $ 4,364,113 Non-current assets 3,299,077 Current liabilities (3,268,643) Non-current liabilities (225,418) Net assets $ 4,169,129 Non-controlling interests $ 1,250,739 Operating revenue $ Profit $ Other comprehensive income Comprehensive income $ Profit attributable to non-controlling interests $ Comprehensive income attributable to non-controlling interests $	March 31, 2017 Current assets $ 4,364,113 Non-current assets 3,299,077 Current liabilities (3,268,643) Non-current liabilities (225,418) Net assets $ 4,169,129 Non-controlling interests $ 1,250,739 Operating revenue $ Profit $ Other comprehensive income Comprehensive income $ Profit attributable to non-controlling interests $ Comprehensive income attributable to non-controlling interests $	December 31, 2016 March 31, 2016 4,510,885 2,803,337 3,377,729 3,109,687 (3,496,113) (1,702,729) (243,387) (241,770) 4,149,114 3,968,525 1,244,734 1,190,558 For the three months ended March 31 2017 2016 2,877,049 1,856,928 112,785 24,866 (93,708) (27,177) 19,077 (2,311) 33,836 7,460 5,724 (694)

	$ $ $ $ $

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

					For the three months	For the three months	For the three months
					ended March		31
					2017		2016
	Cash flows from operating activities			$	400,325		(640,411)
	Cash flows from investing activities				(63,294)		(53,296)
	Cash flows from financing activities					(691)	(197)
	Effect of foreign currency exchange translation				(65,493)		(22,002)
	Net increase (decrease) in cash and cash equivalents			$	270,847		(715,906)
	Dividends paid to non-controlling interests			$	-		-
(ii)	Global TEK and its subsidiaries
			March 31,		December 31,		March 31,
			2017			2016	2016
	Current assets	$	-			-	1,496,334
	Non-current assets		-			-	1,779,783
	Current liabilities		-			-	(1,007,116)
	Non-current liabilities		-			-	(372,553)
	Net assets	$	-			-	1,896,448
	Non-controlling interests	$	-			-	1,327,513
					For the three months
					ended March		31
					2017		2016
	Operating revenue			$	-		607,448
	Profit			$	-		45,569
	Other comprehensive income				-		575
	Comprehensive income			$	-		46,144
	Profit attributable to non-controlling interests			$	-		31,899
	Comprehensive income attributable to non-controlling
	interests			$	-		32,301

					For the three months
					ended March		31
					2017		2016
	Cash flows from operating activities		$		-		12,317
	Cash flows from investing activities				-		(8,563)
	Cash flows from financing activities				-		(29,079)
	Effect of foreign currency exchange translation				-		(9,665)
	Net decrease in cash and cash equivalents		$		-		(34,990)
	Dividends paid to non-controlling interests		$		-		-

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(g) Property, plant and equipment

The cost, depreciation, and impairment loss of the property, plant and equipment of the Group for the three months ended March 31, 2017 and 2016, were as follows:

Cost or deemed cost: Balance on January 1, 2017 Additions Disposals Reclassifications Effect of movements in exchange rates Balance on March 31, 2017 Balance on January 1, 2016 Additions Disposals Reclassifications Effect of movements in exchange rates Balance on March 31, 2016 Depreciation and impairments loss: Balance on January 1, 2017 Depreciation Disposals Reclassifications Effect of movements in exchange rates Balance on March 31, 2017 Balance on January 1, 2016 Depreciation Disposals Reclassifications Effect of movements in exchange rates Balance on March 31, 2016 Carrying amounts: Balance on January 1, 2017 Balance on March 31, 2017 Balance on January 1, 2016 Balance on March 31, 2016	Land	Buildings, leasehold improvement, and additional equipment		Machinery and equipment 5,672,304 140,500 (61,396) 99,245 (318,819) 5,531,834 6,578,407 111,084 (180,809) 89,334 (115,557) 6,482,459 3,632,382 254,841 (59,660) (152) (209,984) 3,617,427 3,718,475 285,545 (168,694) (2,657) (72,393) 3,760,276 2,039,922 1,914,407 2,859,932 2,722,183	Office and other equipment	Construction in progress and testing equipment 347,678 57,028 - (156,014) (16,801) 231,891 503,242 305,335 - (256,524) (8,218) 543,835 - - - - - - - - - - - - 347,678 231,891 503,242 543,835	Government grants Total (16,286) 10,451,612 - 228,929 - (66,862) - (14,989) 897 (556,341) (15,389) 10,042,349 (12,731) 12,179,667 - 434,373 - (198,875) - 188,451 240 (204,978) (12,491) 12,398,638 (13,237) 5,734,190 (1,226) 322,764 - (65,209) - (210) 765 (319,095) (13,698) 5,672,440 (9,579) 5,895,644 (733) 370,196 - (184,290) - 28,468 191 (111,379) (10,121) 5,998,639 (3,049) 4,717,422 (1,691) 4,369,909 (3,152) 6,284,023 (2,370) 6,399,999
	$ 134,701 - - - - $ 134,701 $ 284,973 - - 111,822 - $ 396,795 $ - - - - - $ - $ - - - - - $ - $ 134,701 $ 134,701 $ 284,973 $ 396,795				510,457 9,252 (3,695) 2,179 (27,474) 490,719 680,211 10,763 (8,292) 2,308 (10,773) 674,217 383,934 13,329 (3,778) (58) (21,206) 372,221 449,371 23,303 (6,023) (131) (8,221) 458,299 126,523 118,498 230,840 215,918

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) The unamortized deferred revenue of equipment subsidy amounted to $1,209,931, $1,310,945 and $1,282,334 as of March 31, 2017, and December 31 and March 31, 2016, respectively.
(ii) Please refer to note 8 for further information on property, plant and equipment provided as collateral.
(h) Investment property

Carrying amounts: Balance at January 1, 2017 $ Balance at March 31, 2017 $ Balance at January 31, 2016 $ Balance at March 1, 2016 $	Land 16,249 16,249 128,071 16,249	Buildings and other equipment Total 19,428 35,677 19,312 35,561 130,638 258,709 19,775 36,024

(i) The Group reclassified $220,053 as property, plant and equipment from investment property due to the change of the use of such property in the first quarter of 2016.
(ii) Except for the above paragraph, there was no significant additions, disposals, or recognition and reversal of impairment losses of the investment property for the three months ended March 31, 2017 and 2016. Please refer to note 6(j) of the consolidated financial statements for the year ended December 31, 2016 for further information.
(iii) The fair value of the investment property has no significant change from note 6(j) of the consolidated financial statements for the year ended December 31, 2016.
(iv) The Group did not provide any of the aforementioned investment property as collateral.
(i) Intangible assets

The carrying amounts of the intangible assets of the Group as of March 31, 2017 and 2016, were as follows:

Carrying amounts: Balance at January 1, 2017 Balance at March 31, 2017 Balance at January 1, 2016 Balance at March 31, 2016	Goodwill $ 1,850,383 $ 1,850,383 $ 2,191,382 $ 2,191,382	Customer Relationships 504,899 486,929 676,241 655,547	Technology 294,524 284,042 423,954 409,900	Trademarks, Patents and Copyrights Total 23,864 2,673,670 22,652 2,644,006 30,614 3,322,191 28,428 3,285,257

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) There was no significant change on intangible assets for the three months ended March 31, 2017 and 2016. Please refer to note 6(k) of the consolidated financial statements for the year ended December 31, 2016.
(ii) The Group did not provide any of the aforementioned intangible assets as collateral.

(j) Short-term borrowings

The details were as follows:

Unsecured bank loans Secured bank loans Short-term borrowings Unused credit lines Annual interest rates	March 31, 2017 $ - - $ - $ 14,790,839 1.09%~1.43%	December 31, 2016 March 31, 2016 - 2,724,304 - 151,052 - 2,875,356 13,301,651 8,605,863 0.93%~1.27% 0.96%~5.89%

Please refer to note 8 for further information on assets provided as collateral.

(k) Long-term borrowings

Unsecured bank loans Less: current portion Total Unused credit lines		March 31, 2017 Annual interest rate Maturity year Amount 1.19%~1.48% 2018~2020 $ 326,667 (215,556) $ 111,111 $ -
	Currency	Annual interest rate
	TWD	1.19%~1.48%

Unsecured bank loans Less: current portion Total Unused credit lines		December 31, 2016 Annual interest rate Maturity year Amount 0.95~1.56% 2017~2020 $ 601,111 (382,222) $ 218,889 $ -
	Currency	Annual interest rate
	TWD	0.95~1.56%

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Unsecured bank loans `〃` Secured bank loans `〃` Less: current portion Total Unused credit lines		March 31, 2016 Annual interest rate Maturity year Amount 0.95%~2.31% 2016~2020 $ 1,069,194 2.66% 2018 36,734 1.66%~2.71% 2018~2026 225,457 3.24%~3.3% 2018~2030 51,576 (808,675) $ 574,286 $ 94,749
	Currency	Annual interest rate
	TWD USD TWD USD	0.95%~2.31% 2.66% 1.66%~2.71% 3.24%~3.3%

(i) Pursuant to the loan agreements with The Export-Import Bank of the ROC and CTBC Bank, the Company has to maintain the following financial ratios calculated based on the Company’s semi-annual audited (reviewed) consolidated financial statements. As of March 31, 2017, the Company had not violated the financial covenants. The financial covenants include (1) a current ratio of not less than 100%; (2) a financial debt ratio of not greater than 75%; (3) an interest coverage ratio of not less than 400%; and (4) shareholders’ equity of not less than $4,000,000. If the Company violates the financial covenants, the banks have the right to charge a default penalty or to require the Company to improve its financial ratios.
(ii) Please refer to note 9 for the details of the outstanding guarantee notes.

(iii) Please refer to note 8 for further information on assets provided as collateral.

(l) Operating lease
(i) Lessee

Non-cancellable operating lease rentals are payable as follows:

Less than one year Between one and five years More than five years	March 31, 2017 $ 219,463 317,263 212,913 $ 749,639	December 31, 2016 March 31, 2016 234,469 230,673 327,873 426,460 12,989 1,019 575,331 658,152

The Group leases a number of offices and warehouses and pieces of equipment under operating leases. The lease terms are between 1 and 20 years.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Lessor

The Group leases out its investment property under operating leases. Please refer to note 6(h) for further information. Non-cancellable operating leases are receivable as follows:

Less than one year	March 31, 2017 $ 707	December 31, 2016 March 31, 2016 1,060 707

(m) Employee benefits from continuing operations
(i) Defined benefit plans

There was no material volatility of the market, no material reimbursement and settlement or other material one-time events since prior fiscal year. As a result, the pension cost in the accompanying interim consolidated financial statements was measured and disclosed according to the actuarial report as of December 31, 2016 and 2015.

(ii) Defined contribution plans

The Company contribute the pension cost on the defined contribution plans to the labor pension personal account at the Bureau of Labor Insurance. Subsidiaries other than the Company set up their defined contribution plans in accordance with the regulations of their respective countries.

(iii) The Group recognized its pension costs from continuing operations and recorded them as operating expenses and operating cost in the statement of comprehensive income.

Defined benefit plans Defined contribution plans Total	For the three months ended March 31
	2017 2016 $ 501 619 83,706 92,687 $ 84,207 93,306

(n) Income taxes from continuing operations
(i) Income tax expense for the period is best estimated by multiplying the profit before tax of the reporting period by the effective annual tax rate as forecasted by the management.
(ii) The details of the Group’s income tax expenses from continuing operations were as follows:

Income tax expense	For the three months ended March 31
	2017 2016 $ 137,735 201,014

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(iii) There were no income tax recognized in equity or other comprehensive income.

(iv) The Company’s income tax returns have been examined by the tax authority through the years up to 2013. However, the Company disagreed with the examination of the income tax return for 2008 and requested an administrative remedy. The tax effect of the administrative remedy has been recognized by the Company.
(v) Information related to the unappropriated earnings and tax deduction ratio is summarized below:

		March 31,	December 31,	March 31,
		2017	2016	2016
Unappropriated earnings of 1998 and after	$	5,197,855	4,779,419	4,352,649
Balance of imputation credit account	$	508,028	508,028	420,838
		2016	(estimated)	2015 (actual)
Creditable ratio for earnings distribution to	ROC
residents			19.06 %	13.69 %

The above stated information was prepared in accordance with information letter No. 10204562810 issued by the Ministry of Finance of the ROC, on October 17, 2013.

(o) Capital and other equity

Except for the following disclosure, there was no significant change for capital and other equity for the three months ended March 31, 2017 and 2016. For the related information, please refer to note 6(q) of the consolidated financial statements for the year ended December 31, 2016.

(i) Ordinary shares

As of March 31, 2017 and December 31 and March 31, 2016, the nominal ordinary shares amounted to $5,000,000. Par value of each share is $10 (dollars), which means in total there were 500,000 thousand authorized common shares, of which 444,754, 442,134 and 441,794 thousand shares, respectively, were issued. All issued shares were paid up upon issuance.

Reconciliation of shares outstanding was as follows:

Balance on January 1 Exercise of employee stock options Issuance of restricted stock Retirement of restricted stock Balance on March 31		Ordinary shares (in thousands of shares)
		For the three months ended March 31 2017 2016 442,134 441,188 170 706 2,450 - - (100) 444,754 441,794

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Capital surplus

The balances of capital surplus were as follows:

Additional paid-in capital Employee stock options Restricted employee stock options	March 31, 2017 $ 522,237 228,500 131,679 $ 882,416	December 31, 2016 March 31, 2016 508,583 472,651 229,175 232,345 53,708 82,089 791,466 787,085

(iii) Retained earnings

According to the articles of the Company, when allocating the earnings for each year, the Company shall first offset its losses in previous year and set aside a legal capital reserve at 10% of the earing left over, until the accumulated legal capital reserve has equaled the total capital of the Company; then set aside a special capital reserve in accordance with relevant laws, the balance of the earnings shall combined into an aggregate amount of undistributed earnings, which shall become the aggregate distributable earnings to be distributed by the directors’ distribution proposals according to the resolution adopted at the shareholders’ meeting.

The Company is at the growth stage and considers its future cash demand, long-term financial plans, benefits to shareholders, and balanced dividends. Earnings distribution is made by stock dividend and cash dividend. The cash dividend shall not be less than 10 percent of the total dividends and could be adjusted depending on the Company’s operating condition.

1) Legal reserve

In accordance with the Company Act, 10 percent of the net income after tax should be set aside as legal reserve, until it is equal to share capital. If the Company experiences profit for the year, the distribution of the statutory earnings reserve, either by new shares or by cash, shall be decided at the shareholders’ meeting, and the distribution amount is limited to the portion of legal reserve which exceeds 25 percent of the paid-in capital.

2) Special reserve

By choosing to apply exemptions granted under IFRS 1 “ First-time Adoption of International Financial Reporting Standards” during the Company’s first-time adoption of the International Financial Reporting Standards endorsed by the FSC, retained earnings increased by $97,300 by recognizing the cumulative translation adjustments (gains) on the adoption date as deemed cost. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, the increase in retained earnings due to the first-time adoption of IFRSs shall be reclassified as special reserve, and when the relevant asset is used, disposed of, or reclassified, this special reserve, shall be reversed as distributable earnings proportionately. The carrying amount of special reserve amounted to $97,300 on March 31, 2017.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

In accordance with the guidelines of the above Ruling, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special earnings reserve resulting from the first-time adoption of IFRSs and the carrying amount of other shareholders’ equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

3) Earnings distribution

On March 7, 2017, the board of directors’ meeting resolved to appropriate the 2016 earnings. On June 20, 2016, the shareholders’ meeting resolved to distribute the 2015 earnings. The distributions were NT$2.5 and 2.1 (dollars) per share, which amounted to $1,111,886 and $927,933, respectively.

(p) Share-based payment

Except for the following disclosure, there were no significant changes for share-based payment for the three months ended March 31, 2017 and 2016. Please refer to note 6(r) of the consolidated financial statements for the year ended December 31, 2016 for further information.

After the shareholders’ meeting on June 20, 2016, the Company decided to issue 3,000 thousand shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 2,450 thousand shares on January 23, 2016.

(i) Employee stock options and share-based payment
1) As of March 31, 2017, outstanding employee stock options of the Company for equitysettled share-based payment were as follows:

Modification and grant date Exercise price Granted units (thousand) Service period (from the grant date of the original stock options) Vesting period (from the grant date of the original stock options)	Plan 1 (note) December 30, 2008/ November 12, 2009 11.42 30,828 5 years (May 23, 2005~ November 11, 2014) 2 ~ 3 years	Plan 2 (note) December 30, 2008/ November 12, 2009 11.42 7,224 6~8 years (January 2, 2008~November11, 2017) 3 ~ 5 years	Plan 3 (note)
			Issued in November 2011 Issued in October 2012 November 24, 2011 October 22, 2012 16.20 25.20 1,500 3,500 5 years (November 24, 2011~November 23, 2016) 5 years (October 22, 2012~ October 21, 2017) 2 ~ 3 years 2 ~ 3 years

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Note: Stock options under Plan 1 included those granted by Primax in May 2005, June and December 2006, and February and March 2007; those granted by Primax Holdings in January, May and November 2008; and those granted by the Company in November 2009.

Stock options under Plan 2 included those granted by Primax Holdings in January and May 2008, and those granted by the Company in November 2009.

Stock options under Plan 3 included those granted by the Company in November 2011 and October 2012.

The Company applied the Black-Scholes Option pricing model to measure the fair value of employee stock options.

The related information on compensatory employee stock option plans was as follows:

Outstanding at January 1 Granted during the year Exercised during the year Expired during the year Outstanding at March 31 Exercisable at March 31	For the three months ended March 31 2017 2016 Weighted- average exercise price Stock options (in thousands) Weighted- average exercise price Stock options (in thousands) 22.16 957 24.66 1,728 - - - - 25.20 (75) 26.50 (139) - - - - 21.90 882 24.50 1,589 21.90 882 24.50 1,589
	2017 Weighted- average exercise price Stock options (in thousands) 22.16 957 - - 25.20 (75) - - 21.90 882 21.90 882
	Weighted- average exercise price 22.16 - 25.20 - 21.90 21.90

As of March 31, 2017, and December 31 and March 31, 2016, the information on the employee stock option plans outstanding was as follows:

Employee stock option plan 1 Employee stock option plan 2 Employee stock option plan 3 -Issued in November 2011 Employee stock option plan 3 -Issued in October 2012 Outstanding at end of year		March 31, 2017	December 31, 2016 March 31, 2016 - - 211 211 - - 746 1,378 957 1,589
		- 211 - 671
		882

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

2) As of March 31, 2017, the outstanding employee stock options of TWEL for equitysettled share-based payment were as follows:

Grant date Exercise price Granted units (thousand) Service period Vesting period	November 2014 July 2015 November 18, 2014 July 1, 2015 $15.74 $18.82 700 2,750 5 years 5 years 3 ~4 years 3 ~5 years

TWEL applied the Black-Scholes option pricing model to measure the fair value of employee stock options.

The related information on compensatory employee stock option plans of TWEL was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at March 31 Exercisable at March 31	For the three months ended March 31 2017 2016 Weighted- average exercise price Stock options (in thousands) Weighted- average exercise price Stock options (in thousands) 18.27 3,308 18.20 3,450 - - - - - - - - - - - - - - 18.82 (215) 18.27 3,308 18.15 3,235 - - - -
	2017 Weighted- average exercise price Stock options (in thousands) 18.27 3,308 - - - - - - - - 18.27 3,308 - -
	Weighted- average exercise price 18.27 - - - - 18.27 -

(ii) Restricted stock
1) As of March 31, 2017, the outstanding restricted stock of the Company was as follows:

Grant date Fair value on grant date (per share) Exercise price Granted units (thousand shares) Vesting period	Plan 1 (note 1) October 1, 2013 November 20, 2013 February 10, 2014 July 17, 2014 22.80 25.15 27.30 52.00 Free grants Free grants Free grants Free grants 1,450 186 135 220 1~3 years (notes 2 and 3) 1~2 years (notes 3 and 4) 1~2 years (notes 3 and 4) 1~2 years (note 3)	Plan 2 (note 1) Plan 3 (note 1) February 24, 2015 August 18, 2015 February 13, 2017 43.70 38.40 45.80 Free grants Free grants Free grants 1,225 1,775 2,450 1~3years (note 2 and 3) 1~3 years (note 2) 1~3 years (note 2)

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Note 1: Plan 1 –After the shareholders’ meeting on June 25, 2013, the Company decided to issue shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 1,450 thousand shares, 186 thousand shares, 135 thousand shares, and 220 thousand shares on August 13 and November 12, 2013, and January 22 and June 27, 2014, respectively.
Plan 2 –After the shareholders’ meeting on June 24, 2014, the Company decided to issue shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 1,225 thousand shares and 1,775 thousand shares on January 28 and August 13, 2015, respectively.
Plan 3 –After the shareholders’ meeting on June 20, 2016, the Company decided to issue shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 2,450 thousand shares on January 23 2017.
Note 2: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 30% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 30% and 40% shall be vested in year 2 and year 3, respectively, after the grant date.
Note 3: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 50% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 50% shall be vested in year 2 after the grant date.
Note 4: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, the restricted stock shall be vested in year 1 after the grant date.

The related information on restricted stock of the Company was as follows:

(Thousand shares) Outstanding at January 1 Granted during the year Forfeited during the year Vesting during the year Expired during the year Outstanding at March 31		For the three months ended March 31 2017 2016 1,771 3,270 2,450 - - - (289) (389) - - 3,932 2,881

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(iii) Expenses and liabilities attributable to share-based payment were as follows:

Expenses attributable to employee stock options $ Restricted stock Total $ March 31, 2017 Salary payable: Current $ 1,938	Expenses attributable to employee stock options $ Restricted stock Total $ March 31, 2017 Salary payable: Current $ 1,938		For the three months ended March 31
			2017 2016 937 864 12,182 16,782 13,119 17,646 December 31, 2016 March 31, 2016 1,938 1,938
	$ 1,938

(q) Earnings per share

The calculation of basic earnings and diluted earnings per shares was as follows:

(i) Basic earnings per share

Profit attributable to owners of parent Continuing operations Discontinued operations Total Weighted-average number of ordinary shares (thousand shares) Basic earnings per share (NT dollars) Continuing operations Discontinued operations Total	For the three months ended March 31
	2017 2016
	$ 418,436 387,045 - 13,670 $ 418,436 400,715 440,499 438,198 $ 0.95 0.88 - 0.03 $ 0.95 0.91

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Diluted earnings per share

Profit attributable to owners of parent Continuing operations Discontinued operations Total Weighted-average number of ordinary shares (diluted) (thousand shares) Diluted earnings per share Continuing operations Discontinued operations Total Weighted-average number of ordinary shares at March 31 (basic) Effect of employee stock options Effect of employee stock bonuses Effect of restricted stock Weighted-average number of ordinary shares at March 31 (diluted)	For the three months ended March 31	For the three months ended March 31
	2017 2016
	$ 418,436 387,045 - 13,670 $ 418,436 400,715 444,049 442,753 $ 0.94 0.88 - 0.03 $ 0.94 0.91 For the three months ended March 31
		2017 2016 440,499 438,198 508 836 1,869 2,483 1,173 1,236 444,049 442,753

(r) Operating revenue

The operating revenue was as follows:

Goods sold Services rendered Continuing operations Discontinued operations Total	For the three months ended March 31
	2017 2016 $ 12,589,535 12,930,370 291,649 474,745 12,881,184 13,405,115 - 607,448 $ 12,881,184 14,012,563

Please refer to note 12(b) for profit and loss, and cash flows from discontinued operations.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(s) Employee and directors’ and supervisors’ remuneration

In accordance with the Articles of incorporation, the Company should contribute 2 to 10 percent of the profit as employee remuneration and less than 2 percent as directors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

Details of remuneration to employees and directors were as follows:

Employee remuneration Directors’ remuneration	For the three months ended March 31
	2017 2016 $ 17,215 18,889 8,611 7,556 $ 25,826 26,445

The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company’s articles. These remunerations were expensed under operating costs or operating expenses during each period. The differences between the amounts approved in the directors’ meeting and those recognized in the financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in the distribution year.

The differences between the amounts approved in the directors’ meeting and those recognized in the financial statements for the distributions of earnings for 2016 were as follows:

Employee remuneration Stock Cash Directors’ remuneration Employee remuneration Stock Cash Directors’ remuneration	2016 Actual earnings Distributed Accrued in the financial statement Difference $ - - - 74,000 74,000 - 36,800 36,803 3 2015 Actual earnings Distributed Accrued in the financial statement Difference $ - - - 78,500 78,269 (231) 32,000 31,907 (93) (Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

The differences were accounted for as changes in accounting estimates and recognized as profit or loss in the year 2017 and 2016. Information about the remuneration to employee and directors approved in the board of directors’ meetings can be accessed in the Market Observation Post System website.

(t) Other income

The other income from continuing operations was as follows:

Interest revenue of cash in banks Rent revenue Other	For the three months ended March 31
	2017 2016 $ 48,459 38,977 1,750 - 516 476 $ 50,725 39,453

(u) Other gains and losses

The other gains and losses from continuing operations were as follows:

		For the three months	For the three months
		ended March 31
		2017	2016
Net gains on disposal of financial assets measured at fair value
through profit or loss	$	4,888	286
Net losses on disposal of property, plant and equipment		(1,315)	(1,459)
Net gains on financial assets/liabilities measured at fair value
through profit or loss		20,148	44,540
Foreign currency exchange gains (losses), net		(25,800)	114,384
Other		18,986	11,859
	$	16,907	169,610

(v) Financial instruments

Except for the following paragraph, there was no significant change in the fair value of the Group’s financial instruments and degree of exposure to credit risk, liquidity risk and market risk arising from financial instruments. Please refer to note 6(y) of the consolidated financial statements for the year ended December 31, 2016 for further information.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) Credit risk

The aging analysis of notes, accounts, and other receivables (including related parties) that were past due but not impaired was as follows:

Past due 0-30 days Past due 31-90 days Past due 91-180 days Past due 181-360 days Past due over a year	March 31, 2017 $ 702,674 14,771 196,806 989 - $ 915,240	December 31, 2016 March 31, 2016 763,565 595,183 213,509 251,229 17,593 15,159 13,247 18,620 - - 1,007,914 880,191

The Group assesses the uncollectible amount of notes, accounts, and other receivables (including related parties) based on the aging analysis, the collection history, and the customers’ current financial status, and recognizes an allowance for doubtful debts accordingly. After the Group’s assessment, there is no significant change in the customers’ credit quality and the collectability of related receivables.

The movements in the allowance for the three months ended March 31, 2017 and 2016 were as follows:

Balance on January 1, 2017 Reversal gains recognized Amounts written off Exchange differences on translation of foreign currency Balance on March 31, 2017 Balance on January 1, 2016 Impairment loss recognized Amounts written off Exchange differences on translation of foreign currency Balance on March 31, 2016	Individually assessed impairment $ - - - - $ - Individually assessed impairment $ - - - - $ -	Collectively assessed impairment Total 99,936 99,936 (4,823) (4,823) - - (5,909) (5,909) 89,204 89,204 Collectively assessed impairment Total 29,247 29,247 9,663 9,663 (865) (865) (620) (620) 37,425 37,425 (Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities:

March 31, 2017 Non-derivative financial liabilities: Notes and accounts payable Other payables Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow December 31,2016 Non-derivative financial liabilities: Notes and accounts payable Other payables Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow March 31, 2016 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow	Carrying amount $ 11,267,072 2,341,027 326,667 166,036 98,297 - - $ 14,199,099 $ 16,892,918 2,713,494 601,111 143,237 150,430 - - $ 20,501,190 $ 2,875,356 11,340,015 2,053,454 1,382,961 129,449 264,151 - - $ 18,045,386	Contractual cash flows 11,267,072 2,341,027 332,371 166,036 - 2,545,108 (2,444,943) 14,206,671 16,892,918 2,713,494 609,653 143,237 - 2,766,941 (2,615,359) 20,510,884 2,875,356 11,340,015 2,053,454 1,430,227 129,449 - 7,562,011 (7,298,960) 18,091,552	Within 6 months 11,267,072 2,341,027 110,089 - - 2,545,108 (2,444,943) 13,818,353 16,892,918 2,713,494 277,546 - - 2,766,941 (2,615,359) 20,035,540 2,875,356 11,340,015 2,053,454 333,440 - - 7,562,011 (7,298,960) 16,865,316	6~12 months - - 109,024 - - - - 109,024 - - 110,096 - - - - 110,096 - - - 493,153 - - - - 493,153	1~2 years - - 57,051 - - - - 57,051 - - 137,431 - - - - 137,431 - - - 309,247 - - - - 309,247	2~5 years Over 5 years - - - - 56,207 - - 166,036 - - - - - - 56,207 166,036 - - - - 84,580 - - 143,237 - - - - - - 84,580 143,237 - - - - - - 201,581 92,806 - 129,449 - - - - - - 201,581 222,255

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

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(iii) Currency risk

1) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

F	M	arch 31, 201	De	cember 31, 201	M	arch 31, 2016
	Foreign currency $ 285,900 94,684 314,644 280,351 80,803 266,401	Exchange rate 6.8993 7.7721 30.3360 6.8993 7.7721 30.3360	Foreign currency 385,629 101,376 428,216 366,735 94,552 377,974	Exchange rat 6.937 7.755 32.279 6.937 7.755 32.279	Foreign currency 261,227 148,148 311,579 268,684 144,572 246,614	Exchange rat TWD 6.4612 8,432,930 7.7542 4,782,502 32.282 10,058,408 6.4612 8,673,671 7.7542 4,667,063 32.282 7,961,205
F

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, notes and accounts receivable, other receivables, loans and borrowings, notes and accounts payable, and other payables that are denominated in foreign currency. A weakening (strengthening) of 5% of the TWD, CNY and HKD against the USD as of March 31, 2017 and 2016, would have increased or decreased the net profit before tax by $102,646 and $98,595, respectively. The analysis is performed on the same basis for both periods.

As the Group deals in diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the three months ended March 31, 2017 and 2016, the foreign exchange gains (losses), including both realized and unrealized, amounted to $(25,800) and $114,384, respectively.

2)

Interest rate analysis

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

The following sensitivity analysis is based on the exposure to the interest rate risk of non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents the Group management’s assessment of the reasonably possible interest rate change.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

If the interest rate had increased or decreased by 0.25%, the net profit before tax would have increased or decreased by $1,601 and decreased or increased by $360 for the three months ended March 31, 2017 and 2016, respectively, mainly as a result of bank savings and borrowings with variable interest rates.

3)

Other price risk:

For the three months ended March 31, 2017 and 2016, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the other comprehensive income before tax as illustrated below:

Prices of securities at the reporting date	For the three months ended March 31 2017 2016 Other comprehensive income before tax Other comprehensive income before tax $ 49,640 60,660 $ (49,640) (60,660)
Increasing 10% Decreasing 10%

(iv) Fair value
1) Kinds of financial instruments and fair value

The carrying amount and fair value of the Group’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required :

Financial assets at fair value through profit or loss – current Available-for-sale financial assets – non-current Loans and receivables Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total		March 31, 2017	March 31, 2017	March 31, 2017
	Carrying amounts $ 118,443 $ 910,470 $ 4,883,779 10,190,512 260,988 42,829 $ 15,378,108		Fair Value
		Level 1 - 496,404	Level 2 - -	Level 3 Total 118,443 118,443 414,066 910,470

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

March 31, 2017

Financial liabilities at fair value through profit or loss – current Financial liabilities carried at amortized cost Borrowings Notes and accounts payable Other payables Salary payable Guarantee deposits Total	Carrying amounts $ 98,297 $ 326,667 11,267,072 3,578,300 468,624 166,036 $ 15,806,699		Fair Value	Fair Value
		Level 1 -	Level 2 -	Level 3 Total 98,297 98,297

Financial assets at fair value through profit or loss – current Available-for-sale financial assets – non-current Loans and receivables Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at fair value through profit or loss – current Financial liabilities carried at amortized cost: Borrowings Notes and accounts payable Other payables Salary payable Guarantee deposits Total		December 31, 2016	December 31, 2016	December 31, 2016
	Carrying amounts $ 141,317 $ 887,801 $ 6,359,916 13,706,714 495,392 44,429 $ 20,606,451 $ 150,430 $ 601,111 16,892,918 1,146,183 3,878,606 143,237 $ 22,662,055		Fair Value
		Level 1 - 586,404 -	Level 2 - - -	Level 3 Total 141,317 141,317 301,397 887,801 150,430 150,430

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Financial assets at fair value through profit or loss – current Available-for-sale financial assets – non-current Loans and receivables Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at fair value through profit or loss – current Financial liabilities carried at amortized cost Borrowings Notes and accounts payable Other payables Salary payable Guarantee deposits Total		March 31, 2016	March 31, 2016	March 31, 2016
	Carrying amounts $ 309,692 $ 636,038 $ 5,666,157 11,150,117 268,298 53,131 $ 17,137,703 $ 264,151 $ 4,258,317 11,340,015 514,424 3,234,476 129,449 $ 19,476,681		Fair Value
		Level 1 1,000 606,600 -	Level 2 - - -	Level 3 Total 308,692 309,692 29,438 636,038 264,151 264,151

2) Valuation techniques for financial instruments measured at fair value

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. The quoted price of a financial instrument obtained from major exchanges and over-the counter markets are the basis used to determine the fair value of a listed company’s stock and the quoted prices in an active market.

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s-length basis. If these conditions can not be reached, then the market is non-active. In general, a market with low trading volume or high bid-ask spreads is an indication of a non-active market.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

The Group uses the following methods in determining the fair value of its financial instruments without a quoted price in an active market:

a) The fair value of derivative instruments is based on quoted prices. When quoted prices are unavailable, the fair value is estimated on the basis of the contract’s spot exchange rate and swap point.
b) Available-for-sale financial assets – non-current are investments in domestic or foreign non-listed stock. If the price of capital increase by cash is reliable, the fair value will be estimated on the issuance price of ordinary shares, while others will be based on market approach of comparable business. For stocks in the emerging market, the estimated fair value is adjusted for the lack of liquidity. When prices listed in the emerging market are unavailable, the fair value is estimated on the basis of unadjusted prior trade prices.
3) There is no transferring of fair value hierarchy for the three months ended March 31, 2017 and 2016.
4) Changes in Level 3

For the three months ended March 31

Fair value through profit or loss Balance on January 1 $ (9,113) Recognized in profit or loss 20,146 Recognized in other comprehensive income - Acquisition / disposal 9,113 Balance on March 31 $ 20,146			2017	Total 292,284 20,146 91,624 30,158 434,212		2016 Available for sale Total 32,830 60,473 - 44,521 (3,392) (3,392) - (27,643) 29,438 73,959
	Fair value through profit or loss		Available for sale 301,397 - 91,624 21,045 414,066		Fair value through profit or loss 27,643 44,521 - (27,643) 44,521

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

The Group’s financial instruments that use Level 3 inputs to measure fair value include “financial assets and liabilities at fair value through profit or loss”, “derivative financial instruments” and “available-for-sale financial assets – equity investments”. Quantified information of significant unobservable inputs was as follows:

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Item Available-for-sale financial assets – equity securities not listed on emerging stock market Financial assets and liabilities at fair value through profit or loss	Valuation technique (note 1) (note 2)	Significant unobservable inputs Inter-relationships between significant unobservable inputs and fair value measurement (note 1) (note 1) (note 2) (note 2)

note 1: The fair value is based on unadjusted prior trade prices, therefore there is no need to show the sensitivity analysis of unobservable inputs.
note 2: The fair value is based on the quotation of a third party, therefore there is no need to show the sensitivity analysis of unobservable inputs.

(w) Financial risk management

The Group’s objectives and policies on financial risk management are consistent with note 6(z) of the consolidated financial statements for the year ended December 31. 2016.

(x) Capital management

Management believes that the objectives, policies and processes of capital management of the Group has been applied consistently with those described in the consolidated financial statements for the year ended December 31, 2016. Also, management believes that there were no significant changes in the Group’s capital management information as disclosed for the year ended December 31, 2016. Please refer to Note 6(aa) of the consolidated financial statements for the year ended December 31, 2016 for further details.

(7) Related-party transactions:

(a) Parent company and ultimate controlling company

The Company is the ultimate controlling party of the Group.

(b) Names and relationship of the related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated interim financial statements.

Name	Relationship
Specialty Technologies, LLC (Specialty)	Real related party
HUANG, YA- HSING	The general manager of GT
LIU, TSU- YING	The chairman of the board of GT
Key management personnel	Key management personnel of the Group

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(c) Other related-party transactions

(i) Sales

The amounts of sales by the Group to related parties and the outstanding balances were as follows:

Other related parties: Specially	Sales For the three months ended March 31 2017 2016 $ 53,211 42,605	Accounts receivable - relatedparty March 31, December 31, March 31, 2017 2016 2016 69,223 102,841 50,781
	For the three month
	2017
	$ 53,211

There were no significant differences in the selling prices and trading terms between the related parties and other customers.

(ii) Loans from related parties

The outstanding balance of loans to the Group from its related parties was as follows:

Other related parties: HUANG, YA-HSING & LIU, TSU-YING	For the three ended March 31, 2017 Highest balance Ending balance $ - -	For the three ended March 31, 2016
	Highest balance $ -	Highest balance Ending balance 64,008 64,008

(d) Key management personnel transactions

Key management personnel compensation from continuing operations:

Short-term employee benefits Post-employment benefits Termination benefits Other long-term benefits Share-based payments	For the three months ended March 31
	2017 2016 $ 49,061 38,670 - 286 - - - - 11,034 4,546 $ 60,095 43,502

Please refer to note (6)(p) for information related to share-based payments.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets Other current assets – restricted assets Other non-current assets – restricted assets Property, plant and equipment Long-term prepaid rent	Pledged to secure	March 31, 2017 $ - $ 1,099 $ - $ -	December 31, 2016 March 31, 2016 - 6,116 1,163 6,477 - 651,699 - 90,866
	Guarantee letters issued by bank Loan collateral and guarantee letters issued by bank Loan collateral Loan collateral

(9) Significant commitments and contingencies:

(a) The Group’s guarantee of purchasing materials and borrowings, please refer to note 13.
(b) The following are savings accounts provided by the Group to the bank in order for the bank to issue a guarantee letter to customs as guarantee deposits. Please refer to note 8.

Guarantee letters $	March 31, 2017 182,267	December 31, 2016 March 31, 2016 198,121 64,392

(c) Guarantee notes provided as part of agreements with banks to sell accounts receivables, to acquire long-term borrowings, and to purchase materials were as follows:

Sales of accounts receivable Long-term borrowings Purchase of material	March 31, 2017 $ 2,683,368 $ 880,000 $ -	December 31, 2016 March 31, 2016 2,805,777 2,823,730 2,160,000 2,595,488 - 21,988

(d) The aggregate unpaid amounts of contracts pertaining to the purchase of equipment were as follows:

March 31, 2017 Property, plant and equipment $ 33,164	December 31, 2016 March 31, 2016 42,286 62,445

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(e) TWEL Group entered into patent license agreements with several companies in July 2015. According to the agreements, TWEL Group shall pay amounts was as follows:

	March 31,	December 31,	March 31,
	2017	2016	2016
$	-	-	68,018

(f) The Group entered into lease agreements for its offices and warehouses. Please refer to note (6)(l) for future rent payables.

(10) Losses due to major disasters:None

(11) Subsequent events:None

(12) Other:

(a) Employee benefit, depreciation, and amortization expenses are summarized by function from continuing operations are below:

By function By item	For the three months ended March 31, 2017	For the three months ended March 31, 2017	For the three months ended March 31, 2017	For the three months ended March 31, 2016	For the three months ended March 31, 2016	For the three months ended March 31, 2016
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Others Depreciation Amortization	680,444 23,888 55,926 14,411 296,711 4,499	557,786 35,033 28,281 35,811 26,053 43,150	1,238,230 58,921 84,207 50,222 322,764 47,649	801,511 28,908 68,243 13,985 316,171 5,286	517,956 32,421 25,063 31,756 30,566 46,459	1,319,467 61,329 93,306 45,741 346,737 51,745

(b) Discontinued operations

The Group sold parts of the shares of Global TEK on October 3, 2016. Since the segment of Global TEK and its subsidiaries was not a discontinued operation or classified as held for sale on March 31, 2016, the comparative statement of comprehensive income has been restated to show the discontinued operation separately from continuing operations.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Profit and loss, and cash flows from discontinued operations are summarized as follows:

Operating revenue
Operating cost
Gross profit
Operating expenses
Net operating income
Non-operating income and expenses
Profit before income taxes
Income tax expense
Profit from discontinued operations
Profit attributable to:
Owners of Parent
Non-controlling interests
Cash flows from discontinued operations:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Effect of foreign currency exchange translation
Net increase (decrease) in cash and cash in equivalents

Forthe three
months ended
March 31, 2016
$ 607,448
(448,421)
159,027
(93,992)
65,035
(1,341)
63,694
(18,125)
$
45,569
$ 13,670
31,899
$
45,569
$ 12,317
(8,563)
(29,079)
(9,665)
$
(34,990)

－ (c) The Board of the Company’ s subsidiary TWEL resolved to acquire 100% shares of Bang & Olufsen s.r.o. with the approximate amount of €18,000 on March 13, 2017. Through the acquisition, TWEL will extend its business scale in acoustic products throughout Europe, strengthen cooperation with its clients, and further expand the depth of its design, techniques, and manufacturing process.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the Regulations for the Group:

(i) Loans to other parties:

No.	Name of lender	Name of borrowe	r Account name	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Coll	ateral	Individual funding loan limits	Maximum limit of fund financing
												Item	Value
1 2	PKSI Tymphany Dongguan	The Company TYDC	Other accounts receivable Other accounts receivable	781,263 38,341	734,235 37,814	734,235 37,814	- 2%	Necessary to loan to other parties `〃`	- -	Operating capital `〃`	- -		- -	855,712 25,850	855,712 25,850

Note 1: After approval by the Board of directors, PKS1 and Tymphany Dongguan can lend the individual and total amount shall not exceed its net worth in the latest financial statements to parent company and subsidiaries whose voting shares are 100% owned, directly or indirectly.

Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statement.

(ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsemen ts to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0 1 `〃`	The Company PCH2 `〃`	PCH2 T s P P PCQ1 T p c PKS1	he ubsidiary of HK1 and TH2 he same arent ompany `〃`	3,304,968 1,261,399 1,261,399	338,930 193,674 166,848	318,528 133,478 166,848	1,573 16,304 53,555	- - -	% 2.89 % 3.17 % 3.97	8,813,249 3,363,730 3,363,730	Y - -	- - -	Y Y Y

Note 1: The amount of the guarantee to a company shall not exceed 30% of the Company’s net worth in the latest financial statements. The total amount of the guarantee to total company shall not exceed 80% of the Company’s net worth in the latest financial statements.

Note 2: The amount of the guarantee to a company shall not exceed 30% of the PCH2’s net worth in the latest financial statements. The total amount of the guarantee to total company shall not exceed 80% of the PCH2’s net worth in the latest financial statements.

Note 3: The above counter-parties of guarantee and endorsement are subsidiaries included in the consolidated interim financial statements.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(iii) Information regarding securities held at the reporting date (subsidiaries, associates and joint ventures not included):

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company Primax Tech.	Shares: Green Rich Technology Co., Ltd. WK Technology Fund IV LTD. Changing Information Technology Inc. Formosoft International Inc. Syntronix Corp. Ricavision International Inc. Nien Made Enterprise Co., Ltd. Global TEK Grove Ventures, L.P. Shares: Echo. Bahn. WK Global Investment III Ltd.	- - - - - - - - - - -	Available-for-sale financial asset-non- current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Available-for-sale financial asset-non- current `〃`	359 512 179 53 6 917 1,764 5,510 - 400 630	4,000 3,820 2,802 646 749 - 496,404 370,500 20,932 899,853 - 10,617 10,617	3.59 0.38 1.66 0.76 0.02 2.04 0.60 10.00 5.74 11.90 1.32	4,000 3,820 2,802 646 749 - 496,404 370,500 20,932 - 10,617

(iv) Information regarding purchase or sale of securities for the period exceeding 300 million or 20% of the Company’s paid-in capital:

Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	S	S	ales		Ending Balance	Ending Balance
					Shares (thousands)	Amount	Shares (thousands)	Amount	Shares (thousands)	Price	Cost	Gain (loss) on disposal	Shares (thousands)	Amount
PCH2 PCH2	Financial instruments of floating income and capital guaranteed Money market fund of RMB	Held-for- trading financial assets `〃`	Initial offerings `〃`	None `〃`	- -	- -	- -	1,450,402 3,326,502	- -	1,455,108 3,312,008	1,450,402 3,307,738	4,706 (note 1) (14,494) (note 1)	- -	- -

Note 1: Gains of disposal include valuation and exchange differences on translation.

(v) Information on acquisition of real estate with purchase amount exceeding 300 million or 20% of the Company’s paid-in capital: None
(vi) Information regarding receivables from disposal of real estate exceeding 300 million or 20% of the Company’s paid-in capital: None

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(vii) Information regarding related-parties purchases and/or sales exceeding 100 million or 20% of the Company’s paid-in capital:

Name of company	Related party	Nature of relationship		Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company `〃` `〃` `〃` `〃` `〃` Primax HK PCH2 `〃` PKS1 PCQ1 Polaris TYM HK `〃` `〃` `〃` Premium Hui Zhou Tymphany Dongguan `〃` TYDC	PCH2 PKS1 PCQ1 Polaris TYM HK Tymphany Dongguan PCH2 Primax HK The Company The Company Primax HK The Company Premium Hui Zhou The Company Tymphany Dongguan TYDC TYM HK The Company TYM HK TYM HK	The subsidiary of Primax HK The subsidiary of Primax HK The subsidiary of Primax HK The subsidiary of Primax Tech The subsidiary of TWEL The subsidiary of TYM HK Subsidiary Parent The parent of Primax Cayman The parent of Primax Cayman The parent of Primax Cayman The parent of Primax Tech Subsidiary The parent of Diamond Subsidiary Subsidiary Parent The parent of Diamond Parent Parent	Purchase Purchase Purchase (Sale) (Sale) (Sale) Purchase (Sale) (Sale) (Sales) (Sale) Purchase Purchase Purchase Purchase Purchase (Sale) Purchase (Sale) (Sale)	6,041,274 204,008 1,222,896 (784,847) (118,507) (192,245) - - (6,041,274) (204,008) (1,222,896) 784,847 781,185 118,507 1,266,814 100,863 (781,185) 192,245 (1,266,814) (100,863)	% 81 % 3 % 16 % (9) % (1) % (2) % - % - % (80) % (100) % (91) % 100 % 31 % 5 % 50 % 4 % (94) % 15 % (94) % (100)	60 days `〃` `〃` 90 days 60 days `〃` 30 days `〃` 60 days `〃` `〃` 90 days 60 days `〃` `〃` `〃` `〃` `〃` `〃` `〃`	Price agreed by both side `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	The same as general purchasing `〃` `〃` The same as general selling `〃` `〃` The same as general purchasing The same as general selling `〃` `〃` `〃` The same as general purchasing `〃` `〃` `〃` `〃` The same as general selling The same as general purchasing The same as general selling `〃`	(4,575,937) (265,598) (1,201,926) 170,096 133,014 184,177 (300,191) 300,191 4,575,937 265,598 1,201,926 (170,096) (651,878) (133,014) (975,685) (44,409) 651,878 (184,177) 975,685 44,409	(74)% (4)% (19)% 3% 2% 3% (100)% 4% 68% 27% 89% (100)% (34)% (7)% (51)% (2)% 98% (10)% 91% 100%

Note 1: Accounts receivables over payment terms has been classified as other payables-non-current.

Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statement.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(viii) Information regarding receivables from related-parties exceeding 100 million or 20% of the Company’s paid-in capital:

Name of company	Counter-party	Nature of relationship	Ending balance (note 2)	Turnover rate		Overdue	Amounts received in subsequent period (note 1)	Allowance for bad debts
					Amount	Action taken
The Company `〃` `〃` PCH2 `〃` PKS1 PCQ1 Premium Hui Zhou Tymphany Dongguan	Polaris TYM HK Tymphany Dongguan Primax HK The Company The Company The Company TYM HK TYM HK	The Subsidiary of Primax Tech The subsidiary of TWEL The Subsidiary of TYM HK Parent The Parent of Primax Cayman The Parent of Primax Cayman The Parent of Primax Cayman Parent Parent	170,096 133,014 184,177 300,191 4,575,937 999,833 1,201,926 651,878 975,685	15.85 3.18 8.35 - 4.19 2.42 3.13 3.82 4.68	- - - - - 734,235 - - -	Reclassify to Long-term payable, and enhance the control of receivables	170,096 57,278 131,935 - 2,294,421 7,743 153,443 326,771 548,212	- - - - - - - - -

Note 1: The above information ended May 11, 2017. Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statement.

(ix) Information regarding trading in derivative financial instruments: Please refer to note 6(b).
(x) Significant transactions and business relationship between the parent company and its subsidiaries:

No. (Note 1)	Name of company	Name of counter-party	Nature of relationship (Note 2)	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	The Company `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	PCH2 `〃` PKS1 `〃` PCQ1 `〃` Polaris `〃` TYM HK `〃`	The subsidiary of Primax HK `〃` The subsidiary of Primax HK `〃` `〃` `〃` The subsidiary of Primax Tech `〃` The subsidiary of TWEL `〃`	Purchase Accounts payable Purchase Accounts payable purchase Accounts payable Sale Accounts receivable Sale Accounts receivable	6,041,274 4,575,937 204,008 265,598 1,222,896 1,201,926 784,847 170,096 118,507 133,014	Price agreed by both side 60 days Price agreed by both side 60 days Price agreed by both side 60 days Price agreed by both side 90 days Price agreed by both side 60 days	46.90% 15.20% 1.58% 0.88% 9.49% 3.99% 6.09% 0.56% 0.92% 0.44%

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

No. (Note 1)	Name of company	Name of counter-party	Nature of relationship (Note 2)	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
`〃` `〃` 1 2 `〃` `〃` `〃` `〃`	`〃` `〃` Primax HK TYM HK `〃` `〃` `〃` `〃`	Tymphany Dongguan `〃` PCH2 Premium Hui Zhou `〃` Tymphany Dongguan `〃` TYDC	The subsidiary of TYM HK `〃` Subsidiary Subsidiary `〃` Subsidiary `〃` Subsidiary	Sale Accounts receivable Accounts payable Purchase Accounts payable Purchase Accounts payable Purchase	192,245 184,177 300,191 781,185 651,878 1,266,814 975,685 100,863	Price agreed by both side 60 days 30 days Price agreed by both side 60 days Price agreed by both side 60 days Price agreed by both side	1.49% 0.61% 1.00% 6.06% 2.16% 9.83% 3.24% 0.78%

Note 1: Disclosure of the amounts exceeding the lower of NT$100 million.

Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statement.

(b) Information on investments:

The following are the information on investees for the three months ended March 31, 2017 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of March 31, 2017	Balance as of March 31, 2017		Net income (losses) of investee	Share of profits/losses of investee
				March 31, 2017	December 31, 2016	Shares (thousands)	Percentage of ownership	Carrying value
The Company `〃` `〃` `〃` `〃` `〃`	Primax Cayman Primax Tech. Destiny BVI. Destiny Japan Diamond Gratus Tech. Total	Cayman Islands Cayman Islands Virgin Island Japan Cayman Islands USA	Holding company Holding company Holding company Market development and customer service Holding company Market development and customer service	2,540,588 897,421 30,939 7,032 2,517,298 9,330 6,002,608	2,540,588 897,421 30,939 7,032 2,517,298 9,330 6,002,608	8,147,636 285,067 1,050 0.50 84,050 300 -	100.00 100.00 100.00 100.00 100.00 100.00	4,277,535 1,820,905 25,013 15,898 3,016,546 9,376 9,165,273	24,306 (5,115) 366 7 74,227 98 93,889	63,339 5,332 366 7 74,227 98 143,369
Primax Cayman	Primax HK	Hong Kong	Holding company and customer service	2,375,164	2,375,164	602,817	100.00	4,339,955	27,866	27,866
Primax Tech.	Polaris	USA	Sale of multi-function printers and computer peripheral devices	52,680	52,680	1,600	100.00	373,444	2,874	2,874
Diamond	TWEL	Cayman Islands	Holding company	2,515,800	2,515,800	38,501	70.00	2,918,390	139,924	78,950
TWEL `〃`	TYM HK TYP	Hong Kong USA	Holding company and sale of audio accessories, amplifiers and their components Market development and customer service of amplifiers and their components	76,280 (note 1) 15 (note 1)	76,280 (note 1) 15 (note 1)	144,395 0.50	100.00 100.00	1,576,045 5,148	129,312 583	129,312 583
TYM HK	TYML	USA	Sales of audio accessories, amplifiers and their components	6,628	6,628	200	100.00	(5,846)	664	4,539

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of March 31, 2017	Balance as of March 31, 2017	Balance as of March 31, 2017	Net income (losses) of investee	Share of profits/losses of investee	Note
				March 31, 2017	December 31, 2016	Shares (thousands)	Percentage of ownership	Carrying value
Premium Hui Zhou TYM Acoustic HK	TYM Acoustic HK TYM UK	Hong Kong United Kingdom	Research and development, design, and sale of audio accessories, amplifiers and their components Research and development design of audio accessories, amplifiers and their components	- -	- -	- -	100.00 100.00	- -	- -	- -

Note 1: The amount is the initial investment costs from the original shareholders prior to the acquisition of the Company through Diamond. Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statement.

(c) Information on investment in Mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2017	Investm	ent flows	Accumulated outflow of investment from Taiwan as of March 31, 2017	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
PCH2 Destiny Beijing PKS1 PCQ1 Premium Hui Zhou Tymphany Dongguan TYDC	Manufacture of multifunctional peripherals, computer mice, mobile phone accessories, consumer electronics products, and shredders Research and development of computer peripheral devices and software Manufacture of computer, peripherals and keyboards Manufacture of computer, peripherals and keyboards Research and development, design, and sale of audio accessories, amplifiers and their components `〃` `〃`	1,960,794 38,842 858,567 551,042 138,248 (note 3) 15,168 87,940	Indirect investment through Primax Cayman and Primax Tech. Indirect investment through Destiny BVI. Indirect investment through Primax Cayman Indirect investment through Primax Cayman Indirect investment through Diamond `〃` `〃`	1,773,902 (note 2) 33,893 (note 2) 710,138 (note 2) 645,580 (note 2) 2,711,436 16,140 -	- - - - - - -	- - - - - - -	1,666,084 (note 2) 31,853 (note 2) 667,392 (note 2) 606,720 (note 2) 2,548,224 15,168 - (Note 2)	(8,972) 366 (14,843) 55,912 5,438 (20,030) (32,531)	100% 100% 100% 100% 70% 70% 70%	(8,972) 366 (14,843) 55,912 3,807 (14,021) (22,772)	4,204,663 25,009 855,712 919,193 391,667 18,095 39,160	- - - - - - -

Note 1: The above information on the exchange rate is as follows: HKD:TWD $3.9032; USD:TWD 30.336; RMB:TWD 4.3970.

Note 2: The difference between accumulated out flow of investments and paid-in capital derived was from the currency exchange on translation, capital increase from retained earnings and working capital.

Note 3: The amount is the initial investment costs from the original shareholders prior to the acquisition of the Company through Diamond.

Note 4: Related transactions have been eliminated during preparing the consolidated interim financial statement.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Upper limit on investment in Mainland China:

Name of Company	Accumulated Investment in Mainland China as of March 31, 2017	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
The Company	5,619,633	6,387,689	None(Note)

Note: The Company has received the Certificate issued by the Industrial Development Bureau, Ministry of Economic Affairs, allowing it to start the operating of its headquarters.

The above investment income (losses) in Mainland China, except for PCH2, was reviewed by the Company’s auditors, Premium Hui Zhou, Tymphany Dongguan and TYDC were reviewed by other auditors, and other information related to subsidiaries came from financial reports prepared by the investees, not reviewed by auditors.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated interim financial statements for the three months ended March 31, 2017, are disclosed in “ Information on significant transactions” and “ Significant transactions and business relationship between the parent company and its subsidiaries.”

(14) Segment information:

For the three months ended March 31, 2017 and 2016, the Group’ s segment information has no significant change. Please refer to note 14 of the consolidated financial statements for the year ended December 31, 2016 for further information.

Revenue External revenue Intra-group revenue Elimination from discontinued operations Total segment revenue Profit from segments reported Elimination from discontinued operations Total profit	For the three months ended March 31, 2017	For the three months ended March 31, 2017	For the three months ended March 31, 2017
	Computer Peripherals		Non-computer Peripherals Total 8,123,383 12,881,184 - - - - 8,123,383 12,881,184 358,295 590,007 - - 358,295 590,007
	$ 4,757,801 - - $ 4,757,801 $ 231,712 - $ 231,712

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Revenue External revenue Intra-group revenue Elimination from discontinued operations Total segment revenue Profit from segments reported Elimination from discontinued operations Total profit	For the three months ended March 31, 2016 (restated) Computer Peripherals Non-computer Peripherals Total $ 6,750,050 7,262,513 14,012,563 - - - - (607,448) (607,448) $ 6,750,050 6,655,065 13,405,115 $ 341,174 318,039 659,213 - (63,694) (63,694) $ 341,174 254,345 595,519	For the three months ended March 31, 2016 (restated) Computer Peripherals Non-computer Peripherals Total $ 6,750,050 7,262,513 14,012,563 - - - - (607,448) (607,448) $ 6,750,050 6,655,065 13,405,115 $ 341,174 318,039 659,213 - (63,694) (63,694) $ 341,174 254,345 595,519
	Computer Peripherals
	$ 6,750,050 - - $ 6,750,050 $ 341,174 - $ 341,174

AI assistant

Primax — Interim / Quarterly Report 2017

52436_rns_2017-11-14_945c2be8-469f-4c52-b7e7-1f0d6870919d.pdf

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Table of contents

Independent Auditors’ Review Report

KPMG

Notes to Readers

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of March 31, 2017 and 2016

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2017 and 2016

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Changes in Equity For the three months ended March 31, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) AS OF MARCH 31, 2017 AND 2016 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING STANDARDS

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

March 31, 2017 and 2016

(1) Company history

(2) Approval date and procedures of the consolidated financial statements:

(3) New standards, amendments and interpretations adopted

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Issuance / Release

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(4) Summary of significant accounting policies:

(a) Statement of compliance

(b) Basis of consolidation

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(c) Income taxes

(d) Employee benefits

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

(6) Explanation of significant accounts:

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) TWEL and its subsidiaries:

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(g) Property, plant and equipment

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(j) Short-term borrowings

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Lessor

(ii) Defined contribution plans

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(o) Capital and other equity

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Capital surplus

(iii) Retained earnings

1) Legal reserve

2) Special reserve

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

3) Earnings distribution

(p) Share-based payment

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Diluted earnings per share

(r) Operating revenue

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Primax Interim / Quarterly Report 2017