SPC — Audit Report / Information 2019

Nov 13, 2019

Stock Symbol�2496

Success Prime Corporation

Parent Company Only Financial Statements For the Years Ended December 31, 2019 and 2018 with Independent Auditors’ Report

Address: 2F No. 11, Kezhong Road, Zhunan Town, Miaoli County, Science Park, Hsinchu, Taiwan

Phone: (037) 586999

INDEPENDENT AUDITORS’ REPORT

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The Board of Directors and Shareholders Success Prime Corporation

Opinion

We have audited the accompanying consolidated financial statements of Success Prime Corporation and its subsidiaries (SPC), which comprise the balance sheets as of December 31, 2019 and 2018, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of 2019 Success Prime Corporation consolidated financial statements are described as follow:

Revenue Recognition of Education Services

Success Prime Corporation’s main source of business revenue is from education service, note on its revenue recognition policy please refer to the Consolidated Financial Report Note 4(15). The revenue recognition of the Success Prime Corp. Education Service, collect student prepaid full tuition payment, then calculated and recognized as revenue according to the actual teaching timeline of the course. Due to the wide range of education service revenue from various courses offered, and the large volume of transactions, the auditors believe that the correctness of the revenue calculation from education services may possess potential risks and therefore list it as a key audit matter.

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The audit procedure by the Auditors is as follows:

1. Understand and test the effectiveness of the design and implementation of the main internal control system for the calculation process of education service revenue.

2. Verify the authenticity of the information related to the Education Service Revenue statement used by the Success Prime Corp., including random spot check on the collection of student tuition matches the prepaid account amount, and check on the consistency between the teaching time periods used for revenue amortization and actual class syllabus schedule.

3. Test the validity of the calculation formulas of the tuition distribution calculation and reverify the correctness of the calculation spreadsheet.

Assessment of Goodwill and Trademark Impairment

The Goodwill and Trademark rights of the Success Prime Corp. are considered as significant assets, displaying high value amount in the consolidated balance sheet. In accordance with the IFRS Article 36 regulation on "impairment of assets", Success Prime Corp. shall conduct annual impairment testing of Goodwill and Trademark rights, as well as measure the recoverable amount of Goodwill and Trademark rights. When the Management is deciding future operating cash flows, the consideration will base on future business outlook of the projected sales growth rate and profit margin, and calculate the weighted average capital cost rate as the discount rate. As these estimations and judgments of assumptions and management subjective views might be affected by high uncertainty of future markets or economic conditions, they are classified as key audit matters. The disclosure of relevant accounting policies and information of Goodwill and Trademark rights, please refer to the Consolidated Financial Statements Note 4(10), 5(2) and 14.

The main verification procedures by the accountant for Management impairment assessment of Goodwill and Trademark rights as follows:

1. Assess the professional qualifications, suitability and independence of external independent evaluation experts entrusted by Management to assist the impairment tests implementation, identifying items that imposes no effect on their objectivity and no limit on the scope of their work, and that the methods used by the evaluators use are in compliance with regulations.

2. Understand the process and basis of revenue growth rate and profit margin projected by Management to estimate future operational outlook, and whether it takes into account the recent operation results, historical trends and industry profile.

3. Evaluate the recoverable amount calculated by the management base on the value of use model, the weighted average cost rate used, including the assumptions of risk-free compensation interest rate, volatility and overpayment risk, and whether it is consistent with Company’s current status and its industry conditions, then re-execute and verify the calculations.

Other Matters

Success Prime Corp. has prepared 2019 and 2018 parent company only financial statements and an Audit Report has been issued by the Auditors, for reference.

Responsibility of Management and Governance Units over the Consolidated Financial Statements

The responsibility of the Management is to formulate the Consolidated Financial Statements in accordance to the financial reports preparation guidelines by securities issuer and be approved by the Financial Supervisory Commission; to release Consolidated Financial Statements that is prepared through effective international Financial Reporting Standards, International accounting standards, and permissible interpretation notices; to maintain the necessary internal controls relating to the preparation of Consolidated Financial Statements, ensuring that the Consolidated Financial Statements do not contain significant false representations of fraud or error.

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In preparing the Consolidated Financial Statements, the responsibilities of the management also include assessing the ability of the Success Prime Corp. to sustain its operations, the disclosure of related matters, and the adoption of the accounting basis for sustainable operations, unless the Management intends to liquidate Success Prime Corp. or terminate business, or other options that are not practical besides than liquidation or closure.

The governance unit of the Success Prime Corp. (the Audit Committee included) has the responsibility to supervise financial reporting procedures.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Chin-Chuan Shih and Shu-Lin Liu.

Deloitte & Touche Taipei, Taiwan Republic of China March 24, 2020

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

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Success Prime Corporation

PARENT COMPANY ONLY BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ASSETS Current assets Cash and cash equivalents (note 4 and 6) Financial assets measured at amortized cost(note 4, 8 and 30) Accounts receivables (note 4 and 9) Accounts receivables-related parties (note 4 and 29) Current income tax assets Inventories (note 4 and 10) Other current assets (note 15) Total current assets Non-current assets Financial assets measured at fair value through other comprehensive income (note 4 and 7) Investments accounted for using equity method(note 4, 5 and 11) Property, plant and equipment (note 4 and 12) Right-of-use assets(note 3, 4 and 13) Net investment property(note 4, 14 and 30) Computer software Deferred income tax assets (note 4 and 23) Defined benefit assets (note 4 and 19) Other non-current assets (note 15) Total non-current assets Total assets LIABILITIES AND EQUITY Current liabilities Short-term borrowings(note 4 and 16) Notes payable Accounts payable (note 17 and 29) Other payables(note 18) Other payables-related parties (note 29) Current income tax liabilities Lease liabilities-current(note 3, 4 and 13) Current portion of long-term loans payable(note 4, 16 and 30) Other current liabilities (note 18) Total current liabilities Non-current liabilities Long-term debt payable(note 4, 16 and 30) Deferred income tax liabilities(note 4 and 23) Lease liabilities-non current(note 3, 4 and 13) Guarantee deposits received(note 29) Total non-current liabilities Total liabilities Equity(note 20) Ordinary Shares Capital surplus Retained earnings Legal Reserve Special Reserve Unappropriated retained earnings Total retained earnings Other equity interest Treasury shares Total equity Total liabilities and equity	December 31, 2019 Amount � $70,098 7 5,655 42,492 1 4 19,747 2 10 - 20,871 2 3,179 - 162,052 16 4,500 - 6,051 - 32,631 3 694 - 36,364 4 7,561 1 9,464 1 753,185 75 $998,658 100 $80,000 - 8 - 19,732 2 40,543 56 4 - 2,104 10,372 2,430 - 1 - 1,696 - 156,933 15 21,870 1,478 2 - 74,945 200 8 - 98,493 10 255,426 25 174,594 17 367,081 26,354 35 3 1,611 - 240,544 23 268,509 26 (2,600) (1) (21,956) (2) 785,628 75 $1,041,054 100	December 31, 2019 Amount � $70,098 7 5,655 42,492 1 4 19,747 2 10 - 20,871 2 3,179 - 162,052 16 4,500 - 6,051 - 32,631 3 694 - 36,364 4 7,561 1 9,464 1 753,185 75 $998,658 100 $80,000 - 8 - 19,732 2 40,543 56 4 - 2,104 10,372 2,430 - 1 - 1,696 - 156,933 15 21,870 1,478 2 - 74,945 200 8 - 98,493 10 255,426 25 174,594 17 367,081 26,354 35 3 1,611 - 240,544 23 268,509 26 (2,600) (1) (21,956) (2) 785,628 75 $1,041,054 100	December 31, 2019 Amount � $70,098 7 5,655 42,492 1 4 19,747 2 10 - 20,871 2 3,179 - 162,052 16 4,500 - 6,051 - 32,631 3 694 - 36,364 4 7,561 1 9,464 1 753,185 75 $998,658 100 $80,000 - 8 - 19,732 2 40,543 56 4 - 2,104 10,372 2,430 - 1 - 1,696 - 156,933 15 21,870 1,478 2 - 74,945 200 8 - 98,493 10 255,426 25 174,594 17 367,081 26,354 35 3 1,611 - 240,544 23 268,509 26 (2,600) (1) (21,956) (2) 785,628 75 $1,041,054 100	December 31, 2018	December 31, 2018
					Amount � $60,324 6 - 61,808 - 6 61,437 6 12 - 58,039 6 3,853 1 245,473 25 717,634 79 3,546 - - - 30 - 16,916 2 7,492 1 1,257 - 746,875 82 $914,120 100 $135,000 22 14 - 26,541 3 37,787 - 4 - 12,277 - - 1 - - 4,695 - 216,322 22 - 1,812 - - - 200 - - 2,012 - 218,334 22 174,594 17 367,081 13,868 37 1 772 - 247,576 25 262,216 26 (1,611) - (21,956) (2) 780,324 78 $998,658 100

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

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Success Prime Corporation

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2019 Amount % $235,066 52 219,205 48 454,271 100 153,713 34 173,490 38 327,203 72 127,068 28 17,143 4 34,188 8 27,695 6 79,026 18 48,042 10 7,243 2 (48) - Operating revenue(note 4, 21 and 29) Sales revenue Service revenue Total operating revenue Operating costs(note 10, 22 and 29) Cost of sales Cost of services Total operating costs Gross profit Operating expenses(note 19, 22 and 29) Marketing General and administrative Research and development Total operating expenses Net income from operations Non-operating income and expenses Other income (note 22 and 29) Other gains and losses (note 22) Finance costs(note 22) Share of profit or loss of subsidiaries(note 4 and 11) (3,474) 26,796 (1) 6 Total non-operating income and expenses 30,517 7		2019	2018
		Amount %	Amount %
			$218,361 47 246,079 53 464,440 100 142,653 31 139,433 30 282,086 61 182,354 39 17,441 4 35,265 8 14,867 3 67,573 15 114,781 24 6,143 1 2,167 1 (1,610) ( 3,357) - (1) 3,343 1

(Continued)

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2019 2018 Amount % Amount % 78,559 17 118,124 25 (2,441) - 6,742 2 76,118 17 124,866 27 Income before income tax Tax (expense) income (note 23) Net income Total other comprehensive income(note 19 and 23) Items that will not be reclassified to profit or loss: Remeasurements of the defined benefit pension-plans (985) - (25) - Income tax relating to items that will (202) - (128) - (783) - (153) - (989) - (989) (1) - (1) (650) (189) (839) - - - (1,772) (1) (992) - $ 74,346 16 $123,874 27 $4.41 $7.18 not be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements Income tax related to components of other comprehensive income that will be reclassified to profit or loss �ther comprehensive income (loss), net of income tax Total comprehensive income for the year Earnings per share (Note24) Basic earnings per share Diluted earnings per share $4.40 $7.16	2019	2018
	Amount %	Amount %

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

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Success Prime Corporation and Subsidiaries

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Balance at January 1, 2018 Appropriation of 2017 earnings Legal Reserve Special Reserve Capital surplus transferred to common stock Cash dividends distributed by the Company- NT$ 6.50 per share Issuance of ordinary shares under employee stock options Net income (loss) of 2018 Other comprehensive income (loss) after tax of 2018 Total comprehensive income (loss) of 2018 Buy-back of treasury stock Balance at December 31, 2018 Appropriation of 2018 earnings Legal Reserve Special Reserve Cash dividends distributed by the Company - $4.00 per share Net income (loss) of 2019 Other comprehensive income (loss) after tax of 2019 Total comprehensive income (loss) of 2019 Balance at December 31, 2019		Share	Capital	unt $165,480 - - 8,314 - 800 - - - - 174,594 - - - - - $174,594	Capital Surplus $479,549 - - 8,314 (108,082) 3,928 - - - - 367,081 - - - - - $367,081			Retained	Earnings
		Shares (Thousands) 16,548 - - 831 - 80 - - - - 17,459 - - - - - $17,459	Amo				Legal Reserve $130 13,738 - - - - - - - - 13,868 12,486 - - - - $26,354	Special Reserve $- - 772 - - - - - - - 772 - 839 - - - $1,611	Unappropriated Earnings $137,373 (13,738) (772� - - - 124,866 (153) 124,713 - 247,576 (12,486) (839) (69,042) 76,118 (783) 75,335 $240,544	Total

The accompanying notes are an integral part of the consolidated financial statement

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PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Success Prime Corporation

Cash flows from operating activities Income before income tax Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Finance costs Interest income Share of (profit) loss of subsidiaries accounted for using equity method Loss (gain) on disposal of property, plan and equipment Net loss (gain) on foreign exchange Inventory valuation losses gains Gains from bargain purchases Changes in operating assets and liabilities: Notes receivables Accounts receivables Accounts receivable-related parties Inventories Other current assets Net defined benefit assets Notes payable Accounts payable Other payables Other payables-related parties Other current liabilities Cash generated from operations Interest received Interest paid Income taxes paid (refund) Net cash flows generated by operating activities Cash flows from investing activities Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost Investments accounted for using Equity Method	2019 $78,559 14,291 194 3,474 (168) (26,796) 4 3,178 17,027 (727) - 40,744 19,747 20,141 (154) (86) (22) (6,873) 1,619 56 (3,027) 161,181 168 (3,474) (12,283) 145,592 (4,500) (5,655) (9,900)	2018 $118,124 2,122 336 1,610 (147) 3,357 - (723) 2,934 - 434 (32,818) (61,437) (32,367) 26,296 (94) (37) 18,501 3,575 - (18,465) 31,201 147 (1,610) 4 29,742 - - (5,100)

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Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Purchases of intangible assets Acquisition of investment property Dividends received from subsidiaries Net cash flows generated by investing activities Cash flows from financing activities Increase in short-term loans Decrease in short-term loans Long-term debt Increase in deposits received Payments of lease liabilities Issuance of cash dividends Employee execution on stock options Payments for buy-back of treasury shares Net cash flows generated by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year

2019 2018 (4,682) 3 (4,800) 4,563 - (10,690) - (5,469) 1,708 (1,000) - (32,710) 1,488 58,118 (23,483) 4,857 304,300 629,500 (359,300) 24,300 (559,500) - - (10,194) 200 - (69,042) (108,082) - 4,728 - (21,956) (109,936) (55,110) ( 2,399) 826 9,774 (19,685) 60,324 80,009 $ 70,098 $ 60,324

(

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NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Success Prime Corporation

1. GENERAL

Success Prime Corporation (hereinafter referred to as the Company) was established in June 15, 1991, the main business operations are production of optical fiber cables, communication components, system, sensors, digital informatics consulting services, and the management of tutorial academy teachers and curriculum education services.

On March 2002, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE).

The Consolidated Financial Report is expressed in the functional New Taiwan Dollar currency (NT$).

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 24, 2020.

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

• (1) Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the IFRSs) endorsed and issued into effect by the FSC

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the accounting policies of the Company:

IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. For relevant accounting policies, please see Note 4.

Definition of a lease

Upon initial application of IFRS 16, the Company will apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified previously as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Company as lessee

Except for payments for low-value asset and short-term leases which will be recognized as expenses on a straight-line basis, the Company will recognize right-ofuse assets and lease liabilities for all leases on the consolidated balance sheets. On the

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Parent Company Only Financial Statements, the Company will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities and computed using the effective interest method. On the Parent Company Only statements of cash flows, cash payments for both the principal portion and the interest portion of lease liabilities are classified within financing activities, the interest payment portion will be listed as a operating activity.

Upon initial application of IFRS 16, the Company will apply IFRS 16 retrospectively with the cumulative effect of the retaining surplus at the date January 1, 2019 but will not restate comparative information.

Leases agreements classified previously as operating leases under IAS 17, will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. Right-of-use assets are subject to impairment testing under IAS 36.

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.74%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 and Undiscounted amounts on January 1, 2019 $ 102,900 Discounted amounts using the incremental borrowing rate on January 1, 2019 $ 95,511

The impact on assets, liabilities, and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

Right-of-use assets Total effect on assets Lease liabilities - current Lease liabilities - non-current Total effect on liabilities	As Originally Stated on January 1, 2019 $ - $ - $ - - $ -	Initial Application Reclassification		Adjustments Arising from Initial Application $ 95,511 $ 95,511 $ 10,193 85,318 $ 95,511 $ 95,511	Restated on January 1, 2019	Restated on January 1, 2019
		$ - $ - $ - - $ -				$ 95,511 $ 95,511 $ 10,193 85,318 $ 95,511 $ 95,511

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For the leases classified as finance leases under IAS 17, the carrying amount of the leased assets and lease liabilities on December 31, 2019 will be used as the carrying amount of the right-of-use assets and lease liabilities on January 1, 2019.

The Company as lessor

The Company does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

• (2) The IFRSs endorsed by the FSC for application starting from 2020

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2) January 1, 2020 (Note 3)

• Note 1: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

• Note 2: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

• Note 3: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

Except for the above impact, as of the date the Parent Company Only Financial Statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

• (3) New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note 1) To be determined by IASB January 1, 2021 January 1, 2022

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

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Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• (1) Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and defined benefit liabilities.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing its parent company only financial statements, the Company used equity method to account for its investment in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and consolidated basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries, share of other comprehensive income of subsidiaries and related equity items, as appropriate, in the parent company only financial statements.

• (3) Classification of current and non-current assets and

liabilities Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• (1) Liabilities held primarily for the purpose of trading;

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• (2) Liabilities due to be settled within 12 months after the reporting period, and

• (3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least

• 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

• (4) Merger of Enterprises

The merger of enterprises adopts the acquisition law. The acquisition related cost is listed at the current period as an expense occurred and labor acquisition.

Goodwill is measured by the fair value of the transfer price, the amount of the fair value of the acquirer's non-controlling interest and previously held interest is measured by the net value of the identifiable assets and liabilities after the acquisition date. A merger that is achieved in stages is measured at the fair value of the acquisition date and is re-measured by the Company's previously held interest from the acquiree, if any profits or losses are incurred shall be recognized.

• (5) Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting parent company only financial statements, the functional currencies of the Company and the Group (including subsidiaries and associates that use currency different from the currency of the Company) are translated into the presentation currency - the New Taiwan dollar as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

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(6) Inventories

Inventories includes raw materials, manufactured goods, in-process products and commodities. Inventory is measured by the cost and the value of net realization, comparing costs with net realizable value is based on individual items except for those in same inventory category. Net realizable value means under normal circumstances the balance after the estimated cost required to complete the investment and sale is deducted. The weighted average method is adopted to calculate inventory cost.

(7) Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries. Subsidiaries are the entities controlled by the Company.

• Under the equity method, the investment in a subsidiary is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary after the date of acquisition. Besides, the Company also recognizes the Company’s share of the change in other equity of the subsidiary.

• Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

• When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

• Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

• The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent’s company only financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent’s company financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

(8) Property, plant and equipment

Property, plant and equipment are recognized at cost and subsequently valued by costs minus the amount of accumulated depreciation. Property, plant and equipment’s amortization is measured based on straight-line basis, and each significant depreciation is

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separately accounted. At each year end, the Company examines the estimated durability, residual value and depreciation methods, and delays the impact of using altered accounting estimates.

In addition to the listing of property, plant and equipment, the difference between the net disposition price and the carrying amount of the asset is recognized as profit and loss.

(9) Investment Property

Investment Property is properties held for the purpose of earning rent or capital appreciation or both. Investment property also includes land that has not yet been determined for future use. Investment property is initially measured at cost (including transaction costs) and subsequently measured at cost minus accumulated depreciation and accumulated impairment losses. Investment property is depreciated on a straight-line basis.

When derecognition of investment property, the difference between the net disposal price and the carrying amount of the asset is recognized in profit or loss.

• (10) Intangible assets

• Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

2. Derecognition

When derecognizing the intangible assets, the difference between the net disposition price and the asset’s carrying amount is recognized as the profit and loss of the current period.

• (11) Impairment of tangible and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

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(12) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1. Financial Assets

All regular way purchases or sales of financial assets are recognized and derecognized on a settlement date basis.

• 1) Measurement Category

Financial assets are classified into the following categories: Financial assets measured at amortized cost and investments in equity instruments at FVTOCI.

• A. Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on the disposal of the equity investments; instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

B. Financial assets measured at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

1. The financial assets are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

2. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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Subsequent to initial recognition, financial assets measured at amortized cost, including cash and trade receivables measured at amortized cost, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

• A. Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such a financial asset; and

• B. Financial assets that have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such a financial asset.

• 2) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost (including trade receivables).

The Company always recognizes lifetime expected credit losses (i.e. ECLs) for trade receivables and lease receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on such a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Company recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.

3) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

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On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

1. Financial liabilities

2. 1) Subsequent measurement

   • All the Company’s financial liabilities are measured at amortized cost using the effective interest method.

3. 2) Derecognition of financial liabilities

   • The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(13) Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

1. Revenue from the sale of goods

Goods sales revenue comes from the sale of various types of fiber optic cables, optical fiber communication components, optical communication systems and optical sensor component systems. As the above products arrive at the customer's designated location or at the time of departure, the customer has the right to set the price and use of the goods and has the primary responsibility for re-sales, and bear the risk of obsolescence of the goods, the Company should recognize revenue and accounts receivables at the time.

When the material processing is performed, the control of the ownership of the processed product is not transferred, and the income is not recognized when the material is removed.

2. Revenue from the rendering of services

Service revenue comes from digital information consulting services and management of teacher and academic curriculum services.

The service income is recognized as income in proportion to the performance of service.

(14) Leases

2019

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

1. The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

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Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

Rentals that are not dependent on the index or rate in the lease agreement are recognized as revenue in the period in which they occur.

1. The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, or variable lease payments which depend on an index or a rate, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Rentals that are not dependent on the index or the rate in the lease agreement are recognized as expenses in the period in which they occur.

2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

1. The Company as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

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2. The Company as lessee

• Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

(15) Borrowing Costs

Borrowing costs are recognized when incurred as a profit or loss at the current period.

(16) Government Grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received. Government grants are recognized as profits and losses on a systematic basis during the period in which the costs associated with compensation intentions are recognized as expenses by the Company.

(17) Employee Benefits

1. Short term Employee Benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for service rendered by employees.

2. Retirement benefits

For defined contribution retirement benefit plans, payments to the benefit plan are recognized as an expense when the employees have rendered service entitling them to the contribution. For defined benefit retirement benefit plans, the cost of providing benefit is recognized based on actuarial calculations.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (assets) represents the actual deficit (remaining) in the Company’s defined benefit plan.

• (18) Share-based Payment Agreement Employee Stock Option

1. Employee Stock Option

Employee stock options are based on the fair value of the equity instruments granted to the day and the best estimate of the expected value. The expenses are recognized on a straight-line basis over the vested period, and the capital reserve-employee stock options are adjusted at the same time. If it is available immediately on the date of the grant, it will be recognized on the grant date.

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The Company corrects the estimated number of expected employee stock options on each balance sheet date. If the original estimated quantity is corrected, the impact quantity is recognized as profit or loss, so that the accumulated expenses reflect the revised estimate, and the capital reserve-employee stock option is relatively adjusted.

1. Employee Rights Restricted Stocks

Employee Rights Restricted Stock is based on the fair value of the equity instruments granted to the date and the best estimate of the expected value. The expenses are recognized on a straight-line basis over the vested period, and other benefits are adjusted at the same time (employees have not earned compensation). If it is available immediately on the date of the grant, it will be recognized on the grant date.

When the company issues stocks that restrict employees' rights, it recognizes other interests (the employee’s compensations not earned) on the date of issue, and also adjusts the capital reserve - the stocks that limit employee rights. In the case of a paid issuance, the employee is required to refund the price when leaving the company, the relevant payables shall be recognized. If an employee leaves the company within the vested period without returning the dividends received, the fee is recognized when the dividend is declared, and the retained earnings and capital reserve are also adjusted - the employee rights restricted stocks.

The Company corrects the expected vested limit on the number of employees' rights restricted stocks on each reporting date. If the original estimated quantity is corrected, the impacted number is recognized as profit or loss, so that the accumulated expenses reflect – the revised estimate, and the capital reserve is adjusted relatively Employee stock options.

(19) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1. Current tax

According to the Income Tax Law, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

1. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carry forward and unused tax credits for purchases of machinery, equipment and technology, research and development expenditures and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with

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investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

1. Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that period or in the period of the revision and future years if the revision affects both current and future years.

Impairment of Investment Subsidiary

When there are signs of impairment indicating that the investment in the subsidiary may have been impaired and the carrying amount may not be recovered, the Company immediately evaluated the asset impairment associated with the subsidiary from the perspective of the financial statements as a whole. The Company’s management is based on the future cash flow projections of the cash-generating units of the relevant assets, including assumptions such as the estimated sales growth rate and profit margin of the management, and determines the appropriate discount rate used to calculate the present value to assess the impairment.

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6. CASH

	December 31, 2019	December 31, 2019	December 31, 2019	December 31,	December 31,	December 31,
						2018
Cash on hand		$	211		$	197
Checking accounts and demand deposits			69,887
						60,127
		$	70,098		$	60,324

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

INCOME
Investments in equity instruments Domestic investments Unlisted shares Accuagile Co., Ltd Ordinary shares	December 31, 2019 $ 4,500	December 31, 2018 $ -

In order to enhance its competitive advantage, the Company seeks a strategic alliance of educational digital training system providers and establishes a long-term cooperative relationship. On September 26, 2019, it participated in the cash increase of Accuagile Co., Ltd., and the Company subscribed 1,500 thousand shares. The investment amount is NT$4,500 thousand in total, and 15% of its equity is acquired.

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8. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

Current Performance Security Deposits	December 31, 2019 $ 5,655	December 31, 2018	December 31, 2018
			$ -

• (1) The Company assesses that the expected credit risk of the financial assets measured by amortization cost is not high, and its credit risk has not increased after the original recognition.

• (2) For information on the pledge of financial assets measured at amortization costs, please refer to Note 30.

9. ACCOUNTS RECEIVABLES

ACCOUNTS RECEIVABLES
Measured at amortized costs Total carrying amount Less: Allowance loss	December 31,2019 $ 42,492 - $ 42,492		December 31, 2018
				$	61,808 - 61,808
				$

The average credit period for sales of goods was 30~60 days. To mitigate credit risk, the company's management assigns a dedicated team responsible for the decision of the credit line, credit approval and other monitoring procedures to ensure that the recovery of overdue receivables has taken appropriate action. In addition, the Company reviews the recoverable amounts of receivables on the reporting date to ensure that receivables that cannot be recovered include appropriate impairment losses. As result, the Company’s management believes that the credit risk has been significantly reduced.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs (excluding special individual payments that listed are as 100% loss). The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of conditions at the reporting date. The Company estimates expected credit losses based on the number of days for which receivables are past due. As the Company’s historical credit loss experience shows significantly different loss patterns for different customer segments, the provision for losses based on past due status of receivables is not further distinguished according to different segments of the Company’s customer base.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The Company measures the allowance loss of accounts receivables in accordance with the preparation matrix as follows:

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December 31, 2019

Gross carrying amount Loss allowance (lifetime ECL) Amortized cost	N	o t O v e r d u e $ 30,904 - $ 30,904		Overdue 0 - 3 0 D a y s $ 6,812 - $ 6,812	Overdue 3 1-9 0 D a y s T $ 4,776 - $ 4,776	o t a l
						$ 42,492 - $ 42,492

December 31, 2018

Gross carrying amount Loss allowance (lifetime ECL) Amortized cost	N	o t O v e r d u e $ 18,766 - $ 18,766	0	Overdue - 3 0 D a y s $ 41,803 - $ 41,803	3	Overdue 1 - 9 0 D a y s	T	o t a l
						$ 1,239 - $ 1,239		$ 61,808 - $ 61,808

The Company assesses that there is no need to list impairment losses in 2019 and 2018.

10. INVENTORIES

Finished goods Raw materials Work in progress Merchandise	December 31,

The cost of inventories sold in 2019 and 2018 were NT$153,713,000 and NT$142,653,000 respectively. The cost of goods sold in 2019 and 2018 respectively included a net loss of value of inventory of NT$17,027,000 and NT$2,934,000.

11. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investment in subsidiaries

Investment in subsidiaries
Unlisted Company Chen Li Education Group Co., Ltd. (Chen Li Education) Prime Optical Fiber Co., Ltd. (Prime Optical Fiber) Prime Education Consulting Co., Ltd. (Prime Education) Chen Li ELM Co., Ltd. (Chen Li ELM ) Chen Li ELM Co., Ltd.�Chen Li ELM�	December 31, 2019 $ 676,308 2,152 6,159 10,747 $ 695,366	December 31, 2018
			$ 651,207 2,460 6,753 - $ 660,420

Percentage of equity rights and voting rights

Name of Subsidiary	December 31, 2019	December 31, 2018
Chen Li Education	100%	100%
Prime Optical Fiber	100%	100%
Prime Education	51%	51%
Chen Li ELM	100%	-

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In order to expand the tutoring business in Kaohsiung city, the Company’s Board of Directors’ passed the resolution on December 15, 2017, and established Prime Education in January 1, 2018, holding 51% of total equity.

In order to further bring out the benefits of educational products, the company adopted a resolution - of the board of directors on October 24, 2019 to purchase 100% equity of Chuang Si Digital Technology Co., Ltd. from related parties. The transaction base date is October 31, 2019. The purchase price It is NT$9,900,000. After the company completed the acquisition of Chuang-Si Digital Technology Co., Ltd., it changed its company name to Chen Li ELM Co., Ltd., and took primary education products and services as the direction of future operation and development, please refer to Note 26.

The company's profit and loss and other comprehensive profit and loss shares of the subsidiary using the equity method in 2019 and 2018, except that Chen Li Education is recognized according to the financial report verified by the accountant, the rest have not been verified by the accountant, but the management of the company believes that the above If the financial report of the verified subsidiary is verified by accountant, no major adjustments will be made.

For details of the investment subsidiaries held by the Company, please refer to Table 5.

12. PROPERTY, PLANT, EQUIPMENT

Cost January 1, 2018 Balance Addition Disposition December 31, 2018 Balance Accumulated depreciation January 1, 2018 Balance Depreciation Fee Disposition December 31, 2018 Balance December 31, 2018 Net amount Cost January 1, 2019 Balance Addition Disposition December 31, 2019 Balance Accumulated depreciation January 1, 2019 Balance Depreciation Fee Disposition December 31, 2019 Balance December 31, 2019 Net amount	Leasing of modified i t e m s $ 29,223 - - $ 29,223 $ 26,496 1,342 - $ 27,838 $ 1,385 $ 29,223 - - $ 29,223 $ 27,838 1,342 - $ 29,180 $ 43	M a c h i n e r y E q u i p m e n t $ 2,301 4,198 ( 1,162) $ 5,337 $ 1,625 624 ( 1,162) $ 1,087 $ 4,250 $ 5,337 1,814 ( 85) $ 7,066 $ 1,087 1,743 ( 78) $ 2,752 $ 4,314	Other Equipment T $ 517 350 - ( $ 867 $ 374 77 - ( $ 451 $ 416 $ 867 - - ( $ 867 $ 451 134 - ( $ 585 $ 282	o t a l
	i	E
		( ( ( (		$ 32,041 4,548 1,162) $ 35,427 $ 28,495 2,043 1,162) $ 29,376 $ 6,051 $ 35,427 1,814 85) $ 37,156 $ 29,376 3,219 78) $ 32,517 $ 4,639

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For the year 2019 and 2018, there was no indication of an impairment loss; therefore, the Company did not perform impairment assessment.

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Leasing of Modified Items 3~8 years Machinery Equipment 3~5 years Other Equipment 3 years

13. LEASE ARRANGEMENTS

(1) Rights-of-use assets - 2019

13. LEASE ARRANGEMENTS (1) Rights-of-use assets - 2019
Carrying amounts Buildings Depreciation charge for right-of-use assets Buildings	December 31, 2019
		$ 84,596 2019
		$ 10,915

The Company’s evaluation did not find any sign of impairment on 2019 right-of-use assets.

(2) Lease liabilities - 2019

ase liabilities - 2019
Carrying amounts Current Non-current The discount rate for lease liabilities was as follows: Buildings	December 31, 2019
	$ 10,372 74,945 $ 85,317 December 31, 2019
	1.74%

The discount rate for lease liabilities was as follows:

• (1) Material lease-in activities and terms

The Company leased buildings for the use as office space, for a period of 10 years.

The company's building lease agreement annual rent is based on the previous year's monthly rent plus 3.9% adjustment in the lease payment. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years	December 31, 2018	December 31, 2018
		$ 11,760 47,040 44,100

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$ 102,900

(2) Other lease information

Total cash outflow for leases

2019 $ 11,761

14. INVESTMENT PROPERTY

Cost January 1, 2018 Balance Addition December 31, 2018 Balance Accumulated depreciation January 1, 2018 Balance Depreciation Fee December 31, 2018 Balance December 31, 2018 Net amount Cost January 1, 2019 and December 31, 2019 Balance Accumulated depreciation January 1, 2019 Balance Depreciation Fee December 31, 2019 Balance December 31, 2019 Net amount	L	a n d $ - 27,394 $ 27,394 $ - - $ - $ 27,394 $ 27,394 $ - - $ - $ 27,394	B	u i l d i n g s $ - 5,316 $ 5,316 $ - 79 $ 79 $ 5,237 $ 5,316 $ 79 157 $ 236 $ 5,080	T	o t a l
						$ - 32,710 $ 32,710 $ - 79 $ 79 $ 32,631 $ 32,710 $ 79 157 $ 236 $ 32,474

Investment property is the properties held by the Company to earn rental income. It is leased to the subsidiary Chen Li Education as a tutorial school.

The depreciation fee is based on the straight-line basis for the following number of years of durability:

Buildings 32 years

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The fair value of investment property has not been evaluated by independent evaluators and is only measured by the Company’s management level using the evaluation model commonly used by market participants in the third level input value. The evaluation is based on market evidence similar to the transaction price of the property, and the fair value obtained is evaluated.

Fair value	December 31, 2019	December 31, 2019
		$ 36,550

The lease period of investment real estate is 3 years, which is a fixed lease payment.

In 2019, leased investment real estate under operating leases will receive the total lease payments in the future as follows:

payments in the future as follows:
1styear 2ndyear	December 31, 2019
		$ 1,143 571 $ 1,714

The total future minimum lease payments for non-cancellable business leases in 2018 are as follows:

follows:
Less than 1 year 1�5 years	December 31, 2018
		$ 1,143 1,714 $ 2,857

Please refer to Note 30 for the amount of investment real estate set as loan guarantee.

15. OTHER ASSETS

Current Other account receivables Prepaid Payment Refundable Deposit Other Non-current Prepaid Equipment Payment Refundable Deposit		December 31, 2019 $ 1,001 769 739 670 $ 3,179 $ 10,374 3,988 $ 14,362	December 31, 2019 $ 1,001 769 739 670 $ 3,179 $ 10,374 3,988 $ 14,362		December 31, 2018	December 31, 2018	December 31, 2018
			$			$	8 1,728 1,401 716 3,853 6,507 2,957 9,464
			$			$
			$			$
			$			$

16. BORROWINGS

(1) Short-term borrowings

1) Short-term borrowings
Secured borrowings(Note 30) Bank borrowings Unsecured borrowings Bank borrowings	December 31, 2019 $ 80,000 - $ 80,000	December 31, 2018 $ 35,000 100,000 $ 135,000
			$ 35,000 100,000 $ 135,000

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The interest rates of bank revolving borrowings were 1.55% and 1.72% respectively at December 31, 2019 and 2018.

The above-mentioned borrowings from financial institutions are jointly endorsed by the subsidiary Chen Li Education.

17. ACCOUNTS PAYABLE

Hourly fee payables to Teachers Trade Payables	December 31, 2019 $ 14,649 5,083 $ 19,732	December 31, 2018	December 31, 2018
			$ 18,588 7,953 $ 26,541

18. OTHER LIABILITIES

. OTHER LIABILITIES
Other Payables Salary payable Compensation payable to Employees Compensation payable to Directors Service payable Other Other Current Liabilities Advance Payment Other	December 31, 2019 $ 8,999 2,468 1,234 1,643 26,199 $ 40,543 $ 552 1,144 $ 1,696	December 31, 2018
			$ 9,335 3,750 3,125 2,477 19,100 $ 37,787 $ 679 4,016 $ 4,695

19. RETIREMENT BENEFIT PLANS

(1) Defined Contribution Plans

The pension system of the "Labor Pensions Ordinance" applicable to the Company is a government-mandated retirement plan, which is based 6% of monthly salary contribution to the personal account of the Labor Insurance Bureau.

(2) Defined benefit plan

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds,

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Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy. The Company agreed to suspend the transfer on December 31, 2019, and 2018 in accordance with the letter of the No. 1080007178 and No. 1070010673 of the Hsinchu Science and Technology Parks Authority of the Ministry of Science and Technology.

The amounts in the consolidated balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets	December 31, 2019 $ 8,676 ( 15,338) ($ 6,662)	December 31, 2018	December 31, 2018
	( (	( (	$ 7,110 14,671) $ 7,561)

Movements in net defined benefit assets were as follows:

Balance at January 1, 2018 Net interest expense (revenue) Recognized in profit or loss Remeasurement Return on plan assets (excluding the amount included in net interest) Actuarial loss- demographic assumptions change Actuarial loss - change in financial assumptions Actuarial loss - experience adjustments Recognized in other comprehensive income Balance at December 31, 2018 Net interest expense (revenue) Recognized in profit or loss Remeasurement Return on plan assets (excluding the amount included in net interest) Actuarial loss- demographic assumptions change Actuarial loss - change in financial assumptions Actuarial loss - experience adjustments Recognized in other comprehensive income Balance at December 31, 2019	Present Value o f D e f i n e d B e n e f i t O b l ig a t io n $ 6,609 82 82 - 16 81 322 419 7,110 80 80 - 46 227 1,213 1,486 $ 8,676	Fair Value of the Plan Assets ($ 14,101) ( 176) ( 176) ( 394 ) - - - ( 394) ( 14,671) ( 166) ( 166) ( 501 ) - - - ( 501) ($ 15,338)	Net Defined Benefit Assets
			($ 7,492) ( 94) ( 94) ( 394 ) 16 81 322 25 ( 7,561) ( 86) ( 86) ( 501 ) 46 227 1,213 985 ($ 6,662)

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An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

enefit plans is as follows:
General and administration expenses (retirement fund profit)		2019 $ 86)		2018
	(		(	$ 94)

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government/corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

aluations were as follows:
Discount rate Expected rate of salary increase	December 31, 2019 0.800% 1.125%	December 31, 2018
		1.125% 1.125%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

would increase (decrease) as follows:
Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease	December 31, 2019 ($ 178) $ 184 $ 177 ($ 172)	December 31, 2018
	( (	( (	$ 166) $ 171 $ 166 $ 161)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The average duration of the defined benefit obligation	December 31, 2019 10 years	December 31, 2018
		12 years

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20. EQUITY

(1)Capital Stock

apital Stock
Authorized shares (in thousands) Authorized capital Issued and paid shares (in thousands) Issued capital	December 31, 2019 200,000 $ 2,000,000 17,459 $ 174,594	December 31, 2018
			200,000 $ 2,000,000 17,459 $ 174,594

On June 14, 2018 the Company passed the capital reserve to increase capital of NT$8,314,000. In addition, in February 2018, the Company issued new shares of NT$ 800,000 due to employee exercising employee shares.

The Company has increase cash capital through private financing as follows:

Shareholders ' meeting resolution Date Private funding Base Date Number of shares (thousand shares) Denomination (NT$) Subscription Price (NT$) Total private financing amount (thousands NT$)	First time 97.10.31 97.11.21 14,103 10.00 1.17 16,500	Second time 97.10.31 98.12.31 16,575 10.00 1.81 30,000	Third time 102.05.03 102.07.25 3,000 10.00 10.00 30,000	Forth time 104.05.12 104.06.23 7,000 10.00 6.30 44,100	Fifth time
					105.05.09 105.08.31 8,200 10.00 73.25 600,650

In 2008, 2009, 2013, 2015 and 2016, private financing capital stocks successively processed capital reductions to make losses in 2010 and 2016, and then transferred capital reserves to capital increase in 2017 and 2018, resulting in the increase or decrease of capital of the Company. The number of private financing common shares in each of the years were 381,000 shares, 448,000 shares, 533,000 shares, 1,243,000 shares and 9,040,000 shares respectively.

The above rights and obligations of private financing of new shares are the same as those of ordinary shares issued by the Company. However, according to the Securities Exchange Law, after 3 years of delivery of private financing ordinary shares and reapply public issuance, can apply for listing transaction on the market. The first to fourth and fifth private equity common shares mentioned above were completed on November 23, 2018 and October 30, 2019, respectively.

(2) Capital surplus

To make up for losses, issue cash, or stock dividends Stock Issue Premium Only to make up for losses Employees stock options exercised Employees stock options expired	December 31, 2019 $360,198 2,591 4,292 $367,081	December 31, 2018	December 31, 2018
			$360,198 2,591 4,292 $367,081

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The changes in the balance of various capital reserves of the Company in 2018 is as follows:

January 1, 2018 Balance Distribution of cash Transfer of increased capital Employees exercise stock options December 31, 2018 Balance	Stock Issuance Premium $ 472,666 ( 108,082 ) ( 8,314 ) 3,928 $ 360,198	Employees stock options exercised Employees stock options expired Employees stock options Total $ 2,238 $ 4,292 $ 353 $ 479,549 - - - ( 108,082 ) - - - ( 8,314 ) 353 - ( 353) 3,928 $ 2,591 $ 4,292 $ - $ 367,081	Employees stock options exercised Employees stock options expired Employees stock options Total $ 2,238 $ 4,292 $ 353 $ 479,549 - - - ( 108,082 ) - - - ( 8,314 ) 353 - ( 353) 3,928 $ 2,591 $ 4,292 $ - $ 367,081
			$ 2,238 - - 353 $ 2,591

The excess of the capital reserve in excess of the premium amount (including the issuance of common shares with excess in denomination) to cover the losses, when the Company has no loss can be used to issue cash dividends or stock dividends, provided that the amount of share capital is limited to a certain percentage of the collected share capital each year.

(3)Retained Earnings and Dividend Policy

The Company’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years and then set aside the following items accordingly: Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals Company’s paid-in capital; special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge; any balance left over shall be allocated according to the resolution of the shareholders’ meeting. The Company’s Articles of Incorporation provide the policy about the profit-sharing bonus to employees, please refer to Note 22 (6).

The dividend policy of the Company shall take into account the environment and surplus status of the industry, the demand for future capital expenditure and the long-term financial planning, and if there is a surplus to distribute dividends, the proportion of cash dividend payment shall not be lower than 10% of the total dividend allocated in the current year, and the rest is distributed in the form of stock dividends.

The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a deficit or be distributed as dividends in cash for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.

The Company according to the Financial Commission’s issued letter No. 1010012865, No.1010047490, No.1030006415 and “Adoption of international Financial Reporting Standards (IFRSs), a question and answer on the application of the special surplus reserve” and other provisions to mention and rotate the special surplus reserve.

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The appropriation of earnings for 2018 and 2017, which had been proposed by the Company’s general meeting of shareholders on May 2, 2019 and June 14, 2018, respectively. The appropriation and dividends per share were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2018 $ 12,486 $ 839 $ 69,042 $ 4.00		2017
				$ 13,738 $ 772 $ - $ -

On June 14, 2018, the Company transferred capital to the capital reserve of NT$8,314,000 according to the resolution of the shareholders' meeting and distributed the capital reserve of NT$108,082,000, cash dividend per share is NT$6.50.

The proposed appropriation of earnings for 2019 by the Board of Directors on March 24, 2020 is as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2019
		$ 7,612 $ 989 $ 17,260 $ 1.00

On March 24, 2019, the Company transferred capital to the capital reserve of NT$17,260,000 according to the resolution of the shareholders' meeting and distributed cash of NT$8,631,000, cash dividend per share is NT$0.5.

The appropriation of earnings for 2019 is to be discussed at the shareholders' meeting scheduled on June 18, 2020.

(4)Treasury Stocks

The company transferred the shares to the employees. On August 16, 2018, the board of directors decided to buy back the treasury shares. As of December 31, 2019, it had bought back 199 shares.

The Treasury shares held by the company shall not be pledged under the Securities Exchange law, nor shall they enjoy the rights of dividend distribution and voting right.

21. REVENUE

. REVENUE
Client contracts revenue Sales of good revenue Service revenue		2019 $ 235,066 219,205 $ 454,271		2018
				$ 218,361 246,079 $ 464,440

(1) Explanation on client contracts revenue, please refer to Note 4 (13).

(2) Remaining contracts balance

Accounts receivable balance, please refer to Note 9.

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22. NET PROFIT OF THE YEAR

(1) Other Revenue

(1) Other Revenue
Government subsidy revenue Acceptance and technical service revenue Interest revenue on bank deposits Other		2019 $ 3,984 1,630 168 1,461 $ 7,243		2018
				$ 1,899 3,058 147 1,039 $ 6,143

The government subsidy income is mainly the funds subsidized by the company to implement the A + enterprise innovation R & D quenching chain plan of the Ministry of Economic Affairs.

(2) Other Profit and Loss

2) Other Profit and Loss
Cheap purchase benefits (Note 1) Net foreign currency exchange benefits (losses) (Note 2) Disposition of property, equipment and plant losses		2019 $ 727 771) 4) $ 48)		2018
	( ( (			$ - 2,167 - $ 2,167

Note 1: The company's 2019 consolidated financial report for the cheap purchase benefits arising from the acquisition of 100% equity of Chen Li ELM on October 31, 2019, please refer to Note 28.

Note 2: The Company’s 2019 and 2018 foreign exchange profits and losses are as follows:

follows:
Total foreign currency exchange profits Total foreign currency exchange losses Net profit (loss)		2019 $ 1,842 2,613) $ 771)		2018
	( (		(	$ 4,519 2,352) $ 2,167

(3) Financial Costs

) Financial Costs
Interest on bank loans Interest on rental liabilities Total		2019 $ 1,907 1,567 $ 3,474		2018
				$ 1,610 - $ 1,610

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(4) Depreciation and Amortization

(4) Depreciation and Amortization
Depreciation- property, plant and equipment Depreciation-Right-of-use assets Depreciation-Investment property Amortization- Computer software Total An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses		2019 $ 3,219 10,915 157 194 $ 14,485 $ 13,511 780 $ 14,291 $ 194		2018
				$ 2,043 - 79 336 $ 2,458 $ 1,743 379 $ 2,122 $ 336

(5) Employee Benefit Expenses

5) Employee Benefit Expenses
Short term Employee Benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) Resignation benefits Total employee benefits expense Operating costs Operating expenses		2019 $ 54,775 1,430 86) 56,119 1,484 $ 57,603 $ 15,894 41,709 $ 57,603		2018
	(		(	$ 62,899 1,623 94) 64,428 - $ 64,428 $ 23,842 40,586 $ 64,428

(6) Employees’ compensation and remuneration of directors

In accordance with the provisions of the Articles of Incorporation, the employees' compensations are provided at not less than 3% and remuneration of directors are not more than 5% before deducting the pre-tax benefits of the employees and directors. The estimated 2019 and 2018 employees’ compensation and remuneration of directors were decided by the Board on March 24, 2020 and March 20, 2019 respectively as follows:

Employees’ compensation -Estimated ratio -Amount Remuneration of directors -Estimated ratio -Amount		2019 3% $ 2,468 1.5% $ 1,234		2018
				3% $ 3,750 2.5% $ 3,125

If there is a change in the amounts after the annual Parent Company Only Financial Statements

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are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amount of employees’ compensation and remuneration of directors paid and the amount recognized in the Parent Company Only Financial Statements for the years ended December 31, 2018 and 2017.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

23. INCOME TAXES

(1) Major components of income tax expense recognized in profit or loss:

Current tax Income tax on unappropriated earnings Adjustments for prior period Deferred tax In respect of the current year Changes in tax rates Income tax expense recognized in profit or loss		2019 $ 2,117 5) 2,112 329 - 329 $ 2,441		2018
	(		( ( ( (	$ 12,286 10 12,296 16,150 ) 2,888) 19,038) $ 6,742)

A reconciliation of accounting loss and income tax expenses were as follows:

Income before tax Income tax expense calculated at the statutory rate Tax-free income and non- deductible costs Income tax unappropriated earnings Impact number of non- recognitions of deferred income tax assets Adjustments for prior year Changes in tax rates Income tax expense recognized in profit or loss		2019 $ 78,559 $ 15,712 5,359 ) 2,117 10,024 ) 5 ) - $ 2,441		2018
	( ( (		( ( (	$ 118,124 $ 23,625 671 12,286 40,446 ) 10 2,888) $ 6,742)

The Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%. The effect of the change in tax rate on deferred tax income to be recognized in profit or loss is recognized in full in the period in which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%.

(2) Income tax recognized in other consolidated profits and losses

2019

2018

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Deferred income tax In respect of the current year -Remeasured number of defined benefit plan $ 202 ( $ 128 )

(3) Deferred tax assets and liabilities

The changes in deferred tax assets and liabilities are as follows: 2019

2018

	Opening Balance $ 5,239 604 5,843 30,521 $ 36,364 Opening Balance $ 1,513 - 299 $ 1,812 Opening Balance $ 3,954 460 4,414 12,502 $ 16,916 $ 1,274 - $ 1,274	Recognized in Profit or Loss $ 3,405 40 3,445 ( 3,906) ($ 461) Recognized in Profit or Loss $ 22 145 ( 299) ($ 132) Recognized in Profit or Loss $ 1,285 144 1,429 18,019 $ 19,448 $ 111 299 $ 410	Recognized in other comprehensive income $ - - - - $ - Recognized in other comprehensive income ( $ 202 ) - - ($ 202) Recognized in other comprehensive income $ - - - - $ - $ 128 - $ 128		Closing Balance
					$ 8,644 644 9,288 26,615 $ 35,903 Closing Balance
					$ 1,333 145 - $ 1,478 Closing Balance
					$ 5,239 604 5,843 30,521 $ 36,364 $ 1,513 299 $ 1,812

(4) Losses deduction of deferred income tax assets not recognized in the balance sheet

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Loss carryforwards Expire in 2023 Expire in 2024 Expire in 2025	December 31, 2019 $ - 12,191 24,784 $ 36,975	December 31, 2018	December 31, 2018
			$ 8,604 53,678 24,784 $ 87,066

(5) Related information of unused loss Expire in 2019 Expire in 2020 Expire in 2021 Expire in 2023 Expire in 2024 Expire in 2025	carry-forwards December 31, 2019 $ - 15,284 62,622 13,679 53,678 24,784 $ 170,047	December 31, 2018	December 31, 2018
			$ 33,979 50,925 62,622 13,679 53,678 24,784 $ 239,667

(6) Income Tax Assessments

The Company’s tax returns through 2017 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

Unit: NT$ per share

Basic earnings per share Diluted earnings per share		2019 $ 4.41 $ 4.40		2018
				$ 7.18 $ 7.16

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The income and weighted average number of ordinary shares outstanding in the computation of earnings per share from continuing operations were as follows:

Net Income for the Year Income for the year attributable to owners of the Company Number of shares Weighted average common shares used to calculate basic earnings per share Impact of potential common shares with dilution effect: Employee compensation Weighted average common shares used to calculate diluted earnings per share		2019 $ 76,118 2019 17,260 48 17,308

Since the Company offered to settle compensation or bonuses paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonus will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

25. SHARE-BASED PAYMENT AGREEMENTS

Employees Stock Options

In June and July 2012, the Company granted employees stock options with 1,799,000 units and 1,801,000 units, and each unit can subscribe for 1 unit of common stock. The granted subject are employees who meet certain conditions in the Company. The duration of the options is 6 years, and the holders of the certificates can exercise 50%, 30% and 20% of the stock options respectively after 2, 3 and 4 years after the issuance expiration. The exercise price of the stock options is the closing price of the ordinary shares on day of issuance. After the stock options are issued, when the ordinary shares of the Company change, the exercise price of the stock options is adjusted according to the prescribed formula.

(1) Information on the issuance of 2012 employees stock options is as follows:

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2018

Employees stock options Circulating year-start Abstained-current year Executed- current year Circulating year-end Can be executed by year- end		Unit (Thousands) 80 - 80) - -	Weighted average Execution Price (NT$)
	(		$ 59.1 - 59.1

On November 6, 2017, the company also issued 1,600,000 units of employee stock options according to the board of directors’ resolution. Each unit can subscribe for 1 share of common stock, and the price of the common stock is the share price of the share option on issuance date.

(2) Employee restricting new shares proposal

In order to retain and attract talents, the company issued a limited number of new shares of 400,000 shares based on the resolution of the shareholders' meeting on June 14, 2018, with a total amount of NT$ 4,000,000 and the issue price is NT$ 0 per share. It is expected within one year from the shareholders' meeting, the board of directors is authorized to issue once or in part within the quota.

26. ACQUIRED SUBSIDIARY

Chuang-Si Digital Technology Co. Ltd.	Main operating activities Education Service	Acquisition Date Oct 31, 2019	Ownership rights with voting rights /Acquisition ratio(%) 100%	Transfer Price	Transfer Price
					$ 9,900

The Company acquired Chuang-Si Technology, later renamed Chen Li ELM Co. Ltd (hereinafter as Chen Li ELM ), for the deployment of primary school education business and expansion of the operation of the company. For the explanation on the acquisition of Chen Li ELM School, please refer to Note 28 of the Company's 2019 consolidated financial report.

27. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to operate under the premises of going concerns and growth while maximizing the return to shareholders through the optimization of the debt and equity balance.

The capital structure of the Company is composed of the Company’s net debt (ie borrowings less cash) and equity (ie share capital, capital reserve and retained earnings). The Company does not need to comply with other external capital requirements.

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28. FINANCIAL INSTRUMENTS

(1) Fair value of financial instruments not measured at fair value The management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

• (2) Fair value of financial instruments measured at fair value on a recurring basis

• Fair value hierarchy

December 31, 2019

Financial assets at FVTOCI Equity securities Stocks unlisted in the ROC		Level 1 $ -		Level 2 $ -		Level 3 $ 4,500		Total
								$ 4,500

1. Valuation technic and input value used in Level 3 fair value measurement

Category of financial instruments Unlisted equity investments

Evaluationoftechnology andinput values

Net Assets Method: Reference to the value of net assets measured by an external independent institution at fair value to assess the fair value of the subject matter of the investment. Market Method: Assess the fair value of the investment by reference to the recent operating activity of the subject or the market transaction price and market conditions of the investment subject or other similar subjects.

1. Fair value assessment for Level 3 can reasonably replace assumptions of sensitivity analysis

The company's fair value measurement of financial instruments is reasonable, and no selfbuilt evaluation model is used for level 3 fair value measurement, so there is no need to perform a sensitivity analysis that may replace hypotheses.

• (3) Categories of financial instruments

) Categories of financial instruments
Financial assets Measured at amortized costs (Note 1) Measured at FVTOCI- equity investment instrument Financial liabilities Measured at amortized cost (Note 2)		December 31, 2019 $ 143,720 4,500 164,831		December 31, 2018
				$ 187,935 - 199,550

Note 1: The balance consists of cash, accounts receivables (include related parties),

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other receivables (other current assets) and refundable deposits (other noncurrent assets), which are measured at amortized cost.

• Note 2: The balances included financial liabilities measured at amortized cost, which comprise, notes payable and trade payables (including payables to related parties), other payables (including other payables to related parties), payable for purchases of equipment and long-term loans (including current portion).

(4) Financial risk management objectives and policies

The main financial instruments of the company include cash, financial assets measured at amortized cost, accounts receivable, equity investment instruments, bills payable, accounts payable, borrowings and lease liabilities. The financial management department of the company provides services for each business unit, coordinates the operation of entering the domestic and international financial markets, and monitors and manages the financial risks related to the operation of the company by analyzing the risk internal risk report according to the degree of risk and breadth. These risks include market risk (including exchange rate risk and interest rate risk), credit risk and liquidity risk.

1) Market Risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (1) below), and in interest rates (see (2) below).

• (1) Foreign currency risk

For the carrying amount of monetary assets and liabilities denominated in the non-functional currency at the balance sheet date, refer to Note 31.

Sensitivity analysis

The Company is mainly affected by fluctuations in the US dollar (USD) exchange rates.

The sensitivity analysis only includes foreign currency monetary items that are in circulation and the conversion at the end of the period is adjusted by 1% of the exchange rate change. When the New Taiwan dollar appreciates by 1% against each relevant currency, it increased the net profit before tax of the Company in 2019 and 2018 by NT$ 385,000 and NT$ 118,000 respectively. When the New Taiwan dollar depreciates by 1% against each foreign currency, its impact on net profit before tax will be a positive amount of the same amount.

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(2) Interest Rate Risk

The Company is exposed to fixed and fluctuating interest rate risk from outstanding bank loans. Changes in interest rates would affect the future cash flows but not the fair value.

The financial assets and liabilities balance for which the Company is subject to interest rate risk on the balance sheet date is as follows:

Interest rate risk with fair value -Financial assets Cash flow interest rate risk -Financial assets -Financial liabilities	December 31, 2019 $5,655 69,887 104,300	December 31, 2018
		$ - 60,127 135,000

Assume that the floating borrowing rate at the end of the reporting period is held during the entire reporting period. When the interest rate increases/decreases by 0.1%, the net profit before tax for the Company's 2019 and 2018 will decrease or increase by NT$34,000 and NT$75,000 respectively, while all other variables remain fixed.

2) Credit Risk

Credit risk refers to the risk that the counterparty defaults on the contractual obligations resulting in financial losses to the Company. As the major trading counterparty are all creditworthy financial institutions and corporate organizations, no significant credit risk is expected.

3) Liquidity Risk

The Company reduces the impact of cash flow fluctuations by managing and maintaining sufficient cash. The Management supervises the available quotas of bank financing and ensures compliance with the terms of the loan contract.

Bank borrowing is an important source of liquidity for the Company. As of December 31 of 2019 and 2018, the unused financing capital (note) was NT$190,245,000 and NT$91,000,000 respectively.

Note: As of December 31, 2019 and 2018, the amount used jointly by the Company and its subsidiary Chen Li Education was NT$170,900,000 and NT$91,000,000 respectively.

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Liquidity and interest rate risk statement for non-derivative financial liabilities

The analysis of the remaining contractual maturity of non-derivative financial liabilities is based on the undiscounted cash flows of financial liabilities (including principal and estimated interest) based on the date which the Company is required to repay. Therefore, regardless whether the bank immediately executes its rights, the Company may be required to immediately repay the bank loan by the earliest period in the following table; other non-derivative financial liability maturity analysis is prepared according to the agreed repayment date.

Interest cash flow paid at floating interest rate, its outstanding interest amount is derived from the balance sheet daily interest rate curve.

December 31, 2019

Non-derivative financial liabilities Non-interest- bearing liabilities Fluctuating interest rates instruments	1~6 Months	1~6 Months	6 months~1 year $ 3,702 1,215 $ 4,917	1 year above	1 year above
		$ 56,629 81,215 $ 137,844			$ 200 21,870 $ 22,070

December 31, 2018

Non-derivative financial liabilities Non-interest- bearing liabilities Fluctuating interest rates instruments	1~6 Months $ 57,514 135,000 $ 192,514	6 months~1 year $ 6,836 - $ 6,836	1 year above	1 year above
				$ 200 - $ 200

Additional information about the maturity analysis for lease liabilities:

Lease liabilities		Less than 1 year $ 11,760		1-5 Years $ 47,040	5-10 Years $ 32,340		Total
							$ 91,140

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29. TRANSACTION WITH RELATED PARTIES

In addition to those disclosed in other notes, detail of transactions between the Company and related parties are disclosed below.

(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176	(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176	(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176	(1) Related parties and their relationships associated with the Company: Related parties Relationship with the Company Chen Li Education Subsidiary of the Company Success Prime Optical Fiber Subsidiary of the Company Chen Li ELM Subsidiary of the Company 2) Business Revenue Account Related parties 2019 2018 Service revenue Subsidiary Chen Li Education $ 219,091 $ 224,176
	of the Company of the Company of the Company 2019 $ 219,091		2018
			$ 224,176

(2) Business Revenue

(3) Service cost

3) Service cost
Related parties Subsidiary Chen Li ELM		2019 $ 761		2018
				$ -

(4) Accounts Receivable

4) Accounts Receivable
Related parties Subsidiary Chen Li Education		December 31, 201 $ 19,747		December 31, 2018
					$	61,437

There is no guarantee for payment due from related parties outstanding. The amounts due from related parties in 2019 and 2018 were not provided as allowances for losses.

(5) Accounts payable to related parties

Accounts Accounts payable Other accounts payable	Related parties Subsidiary Chen Li ELM Subsidiary Prime Optical Fiber		2019 $ 407 $ 56		2018
					$ - $ -

The balance of payments due to related parties outstanding is not guaranteed.

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(6) Acquisition of financial assets

Related Parties Related party Shu-Ling Tseng Min-Chun Chen	Account	Number of shares transaction 1,000,000 shares 500,000 shares	Transaction subject	Price obtained	Price obtained
	Investment using equity method Investment using equity method		Chuang-Si Technology Chuang-Si Technology		$ 6,600 $ 3,300

The Company acquired 100% equity of Chuang-Si Technology on October 31, 2019, making it a subsidiary of the company, please refer to Note 28 of the consolidated financial statements.

(7) Obtain Endorsement Guarantee

(7) Obtain Endorsement Guarantee
Related parties Subsidiary Chen Li Education Guaranteed Amount (8) Rental Revenue Type/Name of the related parties Subsidiary Chen Li Education	December 31, 2019 December 31, 2018 $ 250,900 $ 226,000 2019 2018 $ 1,145 $ 572
		$ 572

As stated in Note 14, the investment property of the Company is leased to the subsidiary Chen Li Education, whose rent is based on the market rent and receives a deposit of NT$200,000.

(9) Leasing Agreement

Account Lease expense	Related parties Prime Optical Fiber		2019 $ 160		2018
					$ 3,364

(10) Remuneration of Key Management Levels

Short term Employee Benefits Post-employment benefits		2019 $ 11,127 188 $ 11,315		2018
				$ 14,528 102 $ 14,630

The remuneration of directors and other key management levels are determined by the Compensation Committee based on individual performance and market trends.

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30. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets have been provided as collateral for financial loans:

Performance bond (accounting for financial assets measured at amortized cost-current) Investment property- land (note) Investment property- buildings (note)		December 31, 2019 $ 5,655 27,394 5,080 $ 38,129		December 31, 2018	December 31, 2018
					$ - - - $ -

Note: The investment property land and buildings held by the company are used as collateral for long-term bank loans.

31. INFORMATION ON FOREIGN CURRENCY ASSETS AND LIABILITIES WITH

SIGNIFICANT IMPACT

The following information is aggregated in foreign currencies other than the functional currency of the Company. The exchange rate disclosed is the exchange rate of the foreign currency into the functional currency. The foreign currency assets and liabilities that have significant impact are as follows:

December 31, 2019

Foreign currency assets Monetary accounts US Dollars RMB Foreign currency liabilities Monetary item US Dollars	Foreign Currency $ 2,503 57 1,209	Exchange rate 29.580 4.208 29.580	Balance
			$ 74,039 240 35,762

December 31, 2018 Foreign currency assets Monetary accounts US Dollars Foreign currency liabilities Monetary item US Dollars	Foreign Currency $ 1,172 787	Exchange rate 30.665 30.665	Balance
			$ 35,939 24,133

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The Company has realized and unrealized the foreign currency exchange gains and losses in the 2019 and 2018. Please combine the consolidated income statement. Due to the large number of foreign currency transactions, it is impossible to disclose the exchange gains and losses according to each significant foreign currency.

32. NOTES DISCLOSURE ITEMS

(1) Main transaction items and

• (2) Information related to the transfer of investment business:

• Loans to others: Table 1.

• Endorsement for others: Table 2.

• Holding securities at the end of the period (excluding investment in subsidiaries): Table 3.

• Accumulatively buy or sell the same marketable securities amounting to NT$300 million or paid-up capital of more than 20%: None.

• The amount of property acquired is NT$300 million or over 20% of paid-up capital: none.

• The disposition of property amounts to NT$300 million or over 20% of paid-up capital: none.

• The amount of import and sales with related parties amounts to NT$100 million or over 20% of paid-up capital: Table 4.

• The receivables from the related party amounted to NT$100 million or more than 20% of the paid-up capital: none.

• Engage in derivatives transactions: None.

• Information on the investee company: Table 5.

• (3) China Investment Information:

  1. Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gain or loss, carrying amount of the investment at the end of the period, repatriation of investment gains, and limit on the amount of investment in the mainland China area: Table 6.

  2. Any of the significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses: None.

  3. i. The amount and percentage of the purchase and the closing balance and percentage of the relevant payables.

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• ii. The amount and percentage of goods sold and the closing balance and percentage of related receivables.

• iii. The amount of the property transaction and the amount of profit and loss it generates.

• iv. The closing balance of the bill endorsement or the provision of the collateral and its purpose.

• v. The maximum balance, closing balance, interest rate range and total interest in the current period of the facility.

• vi. Other transactions that have a significant impact on the profits and losses or financial position of the current period, such as the provision or receipt of services.

33. DEPARTMENTAL INFORMATION

The company has disclosed relevant operating department information in the consolidated financial statements in accordance with regulations.

34. CASH FLOW INFORMATION

Simultaneously affect investment and fundraising activities for cash and non-cash items

Acquisition of property, plant and equipment Increase in property, plant and equipment Net increase in prepaid equipment Decrease (increase) in equipment payable Net cash payments		2019 $ 1,814 3,867 999) $ 4,682		2018
	(			$ 4,548 5,507 635 $ 10,690

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2019

Table 1

Success Prime Corporation

LOANS TO OTHERS

Unit: New Taiwan Dollar

Number (Note1�	The company that lends the funds	Receive of loans	Transaction Items	Related Party	Maximum balance for the current period	Closing balance	Actual amount of used	Interest rate range	Loan Properties (Note 2�	Business-related Transaction Amount	Reasons for short-term financing capital	Allowance for bad debt listed	Guarante	e Products	Limited loan amount to Individual subject	Total limit amount on loans to others	Note
													Name	Value
1	Chen Li Education	The Company	Other receivables - related party	Yes	$ 27,748	$ -	$ -	1.9%	(2)	$ -	Business Turnover	$ -	�	$ -	$ 27,748 (Note 3�	$ 27,748 (Note 3�	�

Note 1�The numbering column is described as follows:

• (1) Issuer fill in 0.

(2) Companies as investee are numbered sequentially starting from 1.

Note 2�The subject receiving the loans, shall be limited to the following circumstances:

• (1) Subject companies with business relations with the SPC.

(2) Necessary party with short-term financing capital.

• Note 3�According to the board of directors meeting (September 17, 2018), the maximum amount of business transactions in the most recent year between the two parties and 10% of the net value of the latest financial statements of Chen Li Education is calculated to be NT$ 27,748,000 (the business volume of the most recent year is NT$50,800,000 x 10% and the net value of the financial statements on December 31, 2018 is NT$226,689,000 x 10% of the total).

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2019

Table 2

Success Prime Corporation

ENDORSEMENT GUARANTEE FOR OTHERS

Unit: In thousands of New Taiwan Dollars, unless otherwise noted

Number (Note1�	Name of endorsement guarantor Company	The object of endorsement isguaranteed	The object of endorsement isguaranteed	Limit Endorsement Guarantee for a single enterprise (Note 3�	Highest Endorsement Guaranteed balance of current period	Final Endorsement Guaranteed balance	Actual amount of used	Property Endorsement Guarantee Amount	Cumulative endorsement margin as a percentage of net value from most recent financial statements(%)	Endorsement Guarantee Maximum limit (Note 3�	Parent company endorsement to Subsidiary	Subsidiary endorsement to parent company	Endorsement guarantee for China	Note
		Company Name	Relationship (Note 2�
1	Chen Li Education	The Company	(4)	$ 288,668	$ 250,900	$ 250,900	$ 80,000	$ -	130.37%	$ 288,668	N	Y	N	�

Note 1� The numbering column is described as follows:

• (1) Issuer fill in 0.

• (2) Companies as investee are numbered sequentially starting from 1.

Note 2�There are 6 kinds of relationship between the endorsement guarantor and the endorsed subject, can be indicated by the following types:

• (1) Companies with business relationship.

• (2) Directly hold more than 50% of the common stock of Subsidiaries.

• (3) The combined calculation of shares held by the parent company and the subsidiary is 50% more than the investee company.

• (4) For parent companies that indirectly hold more than 50% of the common stock directly or through subsidiaries.

• (5) Companies that are mutually protected under contractual requirements based on the needs of the contracted project.

• (6) A company that is endorsed by each of the contributing shareholders in accordance with their shareholding ratio due to the joint investment relationship.

Note 3�The limit amount of the foreign endorsement guarantee of Chen Li Education Co., Ltd. are as follows:

(1) For companies that directly and indirectly hold more than 50% of the voting rights of Chen Li Education, the total amount of endorsement guarantees and endorsement guarantees of Chen Li Education for a single object is based on Chen Li Education ’s most recent audit or review by an accountant The net value of the financial statements is 150%.

(2) The net value is based on the most recent financial statements (2019) reviewed by Chen Li Education by accountants.

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Success Prime Corporation

MARKETABLE SECURITIES HELD

December 31, 2019

Table 3

Unit: In thousands of New Taiwan Dollars

Holding Company Name	Type and Name of Marketable S e c u r i t i e s	Relationship with the Holding C o m p a n y	Financial Statement Account	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	D e c e m b e r 3 1 , 2 0 1 9	N o t e
				Shares/Units (In T h o u s a n d s )	Carrying Amount		Percentage of O w n e r s h i p ( % )	F a i r V a l u e
The Company	��Taiwan unlisted shares Accuagile Co., Ltd	None	Financial assets at FVTOCI	1,500,000		$ 4,500	15	$ 4,500	Note

Note�Fair value is based on the most recent evaluation results.

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Table 4

Success Prime Corporation

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2019

									Unit:In thousands ofN	Unit:In thousands ofN	ew Taiwan Dollar Note - -
Import (sale) goods Company	Trading Subject	Relationship		Trading Scenarios			Trading conditions are different from general transaction The situation and reason		Notes and accounts receivables (payable)		Note
			Import (sold) goods	Amount	Ratio of total import (sales) goods	Credit Period	Price	During the letter of credit	Balance	Ratio of total notes and accounts receivables (payable)
The Company Chen Li Education	Chen Li Education The Company	Subsidiary Parent company	Service revenue Service costs	( $ 219,091 ) 219,091	( 48% ) 65%	30 days 30 days	Note Note	- -	$ 19,747 ( 19,747 )	32% ( 85% )	- -

Note: There are no other transactions of the same type available for comparison, and the terms of collection are agreed by both parties.

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Success Prime Corporation

RELATED INFORMATION ON THE INVESTEE COMPANY, OPERATING REGIONS AND MORE

FOR THE YEARS ENDED DECEMBER 31, 2019

Table 5

Unit: In thousands of New Taiwan Dollars, unless otherwise noted

I n v e s t o r C o m p a n y	I n v e s t e e C o m p a n y	L o c a t i o n	M a i n b u s i n e s s O p e r a t i o n	O r i g i n a l I n v	e s t e d A m o u n t	**B a l a n c e a s o f D e c e m **	**B a l a n c e a s o f D e c e m **	b e r 3 1 , 2 0 1 9	Net Income (Loss) of t h e I n v e s t e e	Share of Profit (Loss)	N o t e
				December 31, 2 0 1 9	December 31, 2 0 1 8	Number of shares �Thousand shares�	%	C a r r y i n g A m o u n t
The Company Chen Li Education CHEN LI Education Company Limited	Chen Li Education Prime Optical Fiber Prime Education Chen Li ELM CHEN LI Education Company Limited CHEN LI Education Company (HK) Limited	Taiwan Taiwan Taiwan Taiwan British Virgin Islands Hong Kong	Education Services Wire & Cable Manufacturing Education Consulting Service Education Services Holding Company Holding Company	$ 711,369 10,000 5,100 9,900 40,543 ( USD 1,292,000 ) 30,059 ( USD 952,000 )	$ 711,369 10,000 5,100 - 40,543 ( USD 1,292,000 ) 30,059 ( USD 952,000 )	11,200 1,000 510 1,500 - -	100% 100% 51% 100% 100% 100%	$ 676,308 2,152 6,159 10,747 27,700 26,867	$ 26,110 ( 308 ) 1,753 ( 963 ) ( 5,094 ) ( 5,034 )	$ 26,090 ( 308 ) 894 120 Note Note	Subsidiary Subsidiary Subsidiary Subsidiary Sub-subsidiary Sub-subsidiary

Note: The profit and loss of the invested company is included in its investment company. To avoid confusion, it will not be expressed here.

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Success Prime Corporation

CHINA INVESTMENT INFORMATION

FOR THE YEARS ENDED DECEMBER 31, 2019

Table 6

Unit: In thousands of New Taiwan Dollars, unless otherwise noted

Mainland Investee Company Name	Main Business Operations	Actual Amount of capital received	Investment method	Beginning of the current period Remitted from Taiwan investment amount	Remittance or reco amountinc	very of investment urrent period	End of current period Remitted from Taiwan investment amount	Invested companies Profit and loss of current period	Merger Company Proportion of shares in direct or indirect investment	Investments Recognition in current period Profit and Loss (Note 1�	End of investment Carrying amount	For the period ended Repatriated Investment Income	Note
					Remitted	Recovered
Chen Li (Xiamen) Education Consulting Co., Ltd.	Engaged in educational consulting services and other business	RMB 6,000,000	Through the third regional company CHEN LI Education Company (HK) Limited Investment	$ 28,516	$ -	$ -	$ 28,516	($ 4,969 )	100%	($ 4,969 )	$ 25,493	$ -

Remittance Accumulated from Taiwan at the end of this period Amount invested in mainland China	Investment amount approved by the Ministry of Economy	According to the regulations of the Ministry of Economic Affairs Investment quota for mainland China
$ 28,516�RMB 60,000,000)	$ 28,516�RMB 60,000,000�	$ 115,467 (Note 2�

Note 1: Investment gains and losses are recognized in the financial statements audit checked by the Taiwanese parent company's accountant.

Note 2: Based on 60% of the net value of the latest financial statements of Chen Li Education Co., Ltd.

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