TMC — Interim / Quarterly Report 2019

Dec 6, 2019

TAIWAN MASK CORPORATION AND SUBSIDIARIES Consolidated Financial Statements

With Independent Auditors’ Review Report Thereon

March 31, 2019 and 2018

(Stock code: 2338)

Address ： No. 11, Innovation Rd. I, Science-Based Industrial Park, Hsinchu, Taiwan, R.O.C

Telephone ： (03)563-4370

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Independent Auditors’ Review Report

To the Board of Directors and Shareholders of ：

TAIWAN MASK CORPORATION

Introduction

We have reviewed the accompanying consolidated balance sheets of TAIWAN MASK CORPORATION and subsidiaries (the “Group”) as of March 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three-month periods ended March 31, 2019 and 2018, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

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

Basis for Qualified Conclusion

As explained in Note 4(3) and 6(6), the accompanying consolidated financial statements included certain non-significant consolidated subsidiaries and investments accounted for under equity method, which statements reflect total assets

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amounting to $749,883 thousand and $571,163 thousand, constituting 17.02% and 17.60% of consolidated total assets as of March 31, 2019 and 2018, respectively, total liabilities amounting to $173,455 thousand and $30,544 thousand, constituting 9.78% and 4.45% of consolidated total liabilities as of March 31, 2019 and 2018, respectively, and total comprehensive income (loss) amounting to ($74,893) thousand and ($1,069) thousand, constituting (140.39%) and (1.35%) of consolidated total comprehensive income for the three-month periods ended March 31, 2019 and 2018, respectively. These amounts and the related information disclosed in the accompanying consolidated financial statements were based on the un-reviewed financial statements of consolidated subsidiaries and investments accounted for under equity method.

Qualified Conclusion

Based on our reviews and the reports of other independent auditors, except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain non-significant consolidated subsidiaries and investments accounted for under equity method been reviewed by independent auditors, that we might have become aware of had it not been for the situation described above, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of March 31, 2019 and 2018, and of its consolidated financial performance and its consolidated cash flows for the three-month periods ended March 31, 2019 and 2018, in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

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For and on behalf of PricewaterhouseCoopers, Taiwan

Daniel Lee

Certified Public Accountants

Tina Cheng

May 8, 2019

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Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets Mar., 31[st] 2019 and 2018; Dec., 31[st] 2018

(Mar., 31[st] 2019 and 2018 Consolidated Balance Sheets were only reviewed, not audited.)

in thousand NTD

Assets		Mar.,31st2019	%		Dec.,31st2018	%		Mar.,31st2018	%
		Amount $ 591,382 56,282 738 548,321 969 7,823 - - 425,613 70,568 7,976 1,709,672 801,586 29,727 195,966 935,307 351,773 39,196 111,123 5,232 225,032 2,694,942 $ 4,404,614			Amount $ 563,408 54,335 1,277 597,152 4,178 13,607 4,636 710 408,575 77,026 9,479 1,734,383 731,826 29,727 126,760 966,563 - - 112,544 5,238 157,277 2,129,935 $ 3,864,318			Amount $ 433,699 104,160 728 485,223 8,053 20,031 - 7,548 333,499 89,556 11,731 1,494,228 526,015 29,723 83,891 962,738 - - 37,002 39,194 72,026 1,750,589 $ 3,244,817
Current Assets 1100 Cash and Cash Equivalents 1136 Financial Assets at Amortized Cost- Cur. 1150 Notes Receivables(Net) 1170 Accounts Receivables(Net) 1180 Accounts Receivables－Related Parties(Net) 1200 Other Receivables 1210 Other Receivables－Related Parties 1220 Tax Assets 130X Inventories 1410 Prepayments 1470 Other Current Assets 11XX Total Current Assets Non-Current Assets 1510 Financial Asset at Fair Value Through Profit or Loss-Non Cur. 1535 Financial Assets at Amortized Cost-Non Cur. 1550 Investment under Equity Method 1600 Properties, Plants and Equipment 1755 Right-of-use asset 1760 Investment property (Net) 1780 Intangible Assets 1840 Deferred Income Tax Assets 1900 Other Non-Current Assets 15XX Total Non-Current Assets 1XXX Total Assets			13 1 - 13 - - - - 10 2 -			15 1 - 16 - - - - 11 2 -			14 3 - 15 - 1 - - 10 3 -
			39			45			46
			18 1 4 21 8 1 3 - 5			19 1 3 25 - - 3 - 4			16 1 3 30 - - 1 1 2
			61			55			54
			100			100			100

(Continued)

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Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets

Mar., 31[st] 2019 and 2018; Dec., 31[st] 2018

(Mar., 31[st] 2019 and 2018 Consolidated Balance Sheets were only reviewed, not audited.)

in thousand NTD

Liabilities and Equities		Mar.,31st2019	%		Dec.,31st2018	%		Mar.,31st2018	%
		Amount $ 853,495 47,932 54 218,358 - 226,721 848 15,302 19,154 26,792 1,408,656 - 17,070 323,424 21,871 3,302 - 365,667 1,774,323 2,527,136 172,566 524,792 14,287 260,540 11,431 ( 884,741) 2,626,011 4,280 2,630,291 $ 4,404,614			Amount $ 591,000 58,701 54 236,387 - 287,675 1,003 17,744 - 45,733 1,238,297 - 17,189 - 21,917 3,223 9,881 52,210 1,290,507 2,527,136 169,431 524,792 14,287 199,736 7,853 ( 884,741) 2,558,494 15,317 2,573,811 $ 3,864,318			Amount $ 99,315 75,328 40 188,657 8,135 172,678 - 19,254 - 46,672 610,079 24,219 15,517 - 21,936 100 14,673 76,445 686,524 2,527,136 212,948 599,009 14,287 12,115 7,274 ( 884,741) 2,488,028 70,265 2,558,293 $ 3,244,817
Current Liabilities 2100 Short Term Loans 2130 Contract Liabilities- Current 2150 Notes Payables 2170 Accounts Payables 2180 Accounts Payables－Related Parties 2200 Other Payables 2220 Other Payables－Related Parties 2230 Current Income Tax Liabilities 2280 Lease liability -Current 2300 Other Current Liabilities 21XX Total Current Liabilities Non-Current Liabilities 2540 Long-term Loans 2570 Deferred Income Tax 2580 Lease liability –Non Current 2640 Defined Benefit Liabilities- Non Current 2645 Guarantee deposits received 2670 Other Non-Current Liabilities 25XX Total Non-Current Liabilities 2XXX Total Liabilities Equities Attributable to Parent Company Stock 3110 Common Stock Additional Paid-in Capital 3200 Additional Paid-in Capital Retained Earnings 3310 Legal Reserve 3320 Special Reserve 3350 Uncompensated Deficit Other Equities 3400 Other Equities 3500 Treasury Stock 31XX Total Equities Attributable to Parent Company 36XX Non-Controlling Interests 3XXX Total Equities Major Commitments and Contingencies Major Events after Financial Statement Date 3X2X Total Liabilities and Equities			19 1 - 5 - 5 - - 1 1			15 2 - 6 - 7 - 1 - 1			3 2 - 6 - 5 - 1 - 2
			32			32			19
			- - 7 1 - -			- - - 1 - -			1 - - 1 - -
			8			1			2
			40			33			21
			58 4 12 - 6 - ( 20)			65 5 14 - 5 - ( 23)			78 7 19 - - - ( 27)
			60			66			77
			-			1			2
			60			67			79
			100			100			100

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

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Taiwan Mask Corporation and Subsidiaries Consolidated Comprehensive Income Statements For the first 1 quarter ended Mar., 31st, 2019 and 2018

(Consolidated Comprehensive Income Statements in the period mentioned above were only reviewed, not audited.)

in thousand NTD (Except gain (loss) per share is in NTD)

				2019/1/1-				2018/1/1-
				2019/3/31				2018/3/31
	Items			Amount	%			Amount	%
4000	Operating Incomes		$	711,254	100		$	631,624	100
5000	Operating Costs	(		556,473 )(	78)	(		507,064)(	80)
5900	Gross Income from Operations			154,781	22			124,560	20
	Operating Expenses
6100	Selling Expenses	(		33,419 ) (	5)	(		11,712) (	2)
6200	Administrative Expenses	(		36,258 ) (	5)	(		30,647) (	5)
6300	R & D Expenses	(		45,753 ) (	6)	(		13,126) (	2)
6450	Expected Credit Impairment (Loss) Benefit	(		17,513 )(	3)			723	-
6000	Total Operating Expenses	(		132,943 )(	19)	(		54,762)(	9)
6900	Operating Gain			21,838	3			69,798	11
	Non-Operating Incomes and Losses
7010	Other Incomes			3,843	1			1,124	-
7020	Other Gains and Losses			38,587	5			10,328	2
7050	Financial Costs	(		3,091 )	-	(		307)	-
7060	The share of affiliates and joint venture
	profits and losses recognized by the equity
	method	(		5,857 )(	1)	(		12,305)(	2)
7000	Total Non-Operating Incomes and
	Losses			33,482	5	(		1,160)	-
7900	Earnings Before Tax			55,320	8			68,638	11
7950	Income Tax Expense (Benefit)	(		5,478 )(	1)			11,122	2
8200	Net Income (Loss)		$	49,842	7		$	79,760	13
	Other Comprehensive Incomes (Net)
	Subsequent items that may be reclassified to
	profit or loss
8361	Financial statement translation differences
	of foreign operations		$	3,503	1	($		835)	-
8360	Total Components of other
	comprehensive income that will be
	reclassified to profit or loss			3,503	1	(		835)	-
8500	Total Comprehensive Incomes		$	53,345	8		$	78,925	13
	Net Incomes (Losses) Attributable to：
8610	Parent Company		$	60,804	9		$	82,575	13
8620	Non-Controlling Interest	(		10,962 )(	2)	(		2,815)	-
	Total		$	49,842	7		$	79,760	13
	Total Comprehensive Incomes (Losses)
	Attributable to：
8710	Parent Company		$	64,382	10		$	82,398	14
8720	Non-Controlling Interest	(		11,037 )(	2)	(		3,473)(	1)
	Total		$	53,345	8		$	78,925	13
	Basic Gain per Share
9750	Net Gain (Loss)		$		0.31		$		0.42
	Diluted Gain or Loss per Share
9850	Net Gain		$		0.28		$		0.42

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

in thousand NTD

Taiwan Mask Corporation and Subsidiaries Consolidated Changes of Equities Statements For the First 1 Quarter Ended Mar., 31[st] , 2019 and 2018

(Consolidated Changes of Equities Statements in the period mentioned above were only reviewed, not audited.)

																					in thousand
2018/1/1-2018/3/31 Beginning Balance as of 2018/1/1 Impact of Retroactive Applications Adjusted Balance as of January 1, 2018 Net Income Other Comprehensive Profit or Loss Total Comprehensive Profit or Loss Increase of Non-Controlling Interest Ending Balance as of 2018/3/31 2019/1/1-2019/3/31 Beginning Balance as of 2019/1/1 Net Income Other Comprehensive Profit or Loss Total Comprehensive Profit or Loss Adjustment of the shareholding ratio of the invested company Share-based payment transaction Ending Balance as of 2019/3/31						Equities Attributable to Parent Company													Non-Control lingInterest		Total Equities
		Common Stock		Additional Paid-in Capital		Retained Earnings						Other Equities			TreasuryStock			Total
						Legal Reserves		Special Reserves	Uncompensated Deficit			Conversion balance of financial statement translation of foreign operating agencies	Unrealized Evaluation Profit and Loss of Available-for-Sal es Financial Assets
		$ 2,527,136 - 2,527,136 - - - - $ 2,527,136 $ 2,527,136 - - - - - $ 2,527,136		$ 212,948 - 212,948 - - - - $ 212,948 $ 169,431 - - - 135 3,000 $ 172,566		$ 599,009 - 599,009 - - - - $ 599,009 $ 524,792 - - - - - $ 524,792		$ 14,287 - 14,287 - - - - $ 14,287 $ 14,287 - - - - - $ 14,287		($ 74,216 ) 3,756 ( 70,460 ) 82,575 - 82,575 - $ 12,115 $ 199,736 60,804 - 60,804 - - $ 260,540		$ 7,451 - 7,451 - ( 177 ) ( 177 ) - $ 7,274 $ 7,853 - 3,578 3,578 - - $ 11,431		$ 3,756 ( 3,756 ) - - - - - $ - $ - - - - - - $ -		($ 884,741 ) - ( 884,741 ) - - - - ($ 884,741 ) ($ 884,741 ) - - - - - ($ 884,741 )		$ 2,405,630 - 2,405,630 82,575 ( 177 ) 82,398 - $ 2,488,028 $ 2,558,494 60,804 3,578 64,382 135 3,000 $ 2,626,011		$ 73,510 - 73,510 ( 2,815 ) ( 658 ) ( 3,473 ) 228 $ 70,265 $ 15,317 ( 10,962 ) ( 75 ) ( 11,037 ) - - $ 4,280	$ 2,479,140 - 2,479,140 79,760 ( 835 ) 78,925 228 $ 2,558,293 $ 2,573,811 49,842 3,503 53,345 135 3,000 $ 2,630,291

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

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Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow

For the First 1 Quarter Ended Mar., 31[st] , 2019 and 2018 ( Consolidated Statements of Cash Flow in the period mentioned above were only reviewed, not audited. ) in thousand NTD

			2019/1/1-	2018/1/1-
			2019/3/31	2018/3/31
Cash Flow from Operating Activities
Net Income(Loss) Before Tax		$	55,320 $	68,638
Adjustments to Reconcile Net Income to Net Cash Flow from Operating
Activities
Revenues and Expenses
Depreciation			42,222	37,409
Amortization			1,773	252
Expected Credit Impairment Benefit			17,513	723
Interest Incomes	(		771 ) (	699 )
Interest Expenses			3,091	307
Net Profit of Financial Asset at Fair Value Through Profit or Loss	(		57,092 ) (	17,171 )
Dividends Income	(		1,866 )	-
Share-based payment transaction			3,000	-
The Share of Affiliates Profits and Losses Recognized by the
Equity Method			5,857	12,305
Disposal of Property, Plants and Equipment	(		1,336 )	-
loss on disposal of investments			20,856	-
The Changes of Assets/ Liabilities related to Operating Activities
The Changes of Assets related to Operating Activities
Force of Financial Asset at Fair Value Through Profit or Loss	(		43,383 ) (	254,967 )
Notes Receivable			539	1,905
Accounts Receivable			31,284 (	16,276 )
Accounts Receivable-related Parties			3,209 (	6,963 )
Other Receivables			5,871 (	2,490 )
Other Receivables-related Parties			4,636	7,589
Inventories	(		17,037 )	12,058
Prepayments			7,168 (	1,453 )
Other Current Assets			1,502	6,425
Other Non-Current Assets	(		21 )	-
The Changes of Liabilities related to Operating Activities
Contract Liabilities	(		10,769 ) (	8,261 )
Notes Payable			- (	194 )
Accounts Payable	(		18,029 )	15,462
Accounts Payable- related Parties			-	8,135
Other Payables			4,894	4,962
Other Payables- related Parties	(		155 )	-
Other Current Liabilities	(		10,701 ) (	6,304 )
Accrued Pension Liability	(		46 ) (	6,977 )
Other Non-Current Liabilities			-	220
Net Cash In-Flow (Out-Flow) from Operating Activities			47,529 (	145,365 )
Interest Received			685	579
Dividends Received			1,866	-
Interest Paid	(		1,856 ) (	367 )
Income Tax Paid			- (	411 )
Net Cash In-Flow(Out-Flow) from Operating Activities			48,224 (	145,564 )

(Continued)

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Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow

For the First 1 Quarter Ended Mar., 31[st] , 2019 and 2018

( Consolidated Statements of Cash Flow in the period mentioned above were only reviewed, not audited. )

in thousand NTD

		2019/1/1-	2018/1/1-
		2019/3/31	2018/3/31
Cash Flow from Investment Activities
Acquisition of Amortized Cost Financial Assets	( $	1,947 ) ( $	66,461 )
Acquisition of investment property by the Equity Method	(	65,000 )	-
Cash Out-Flow from Merge		-	6,403
Acquisition of Property, Plants and Equipment	(	216,805 ) (	40,193 )
Disposal of Property, Plants and Equipment		3,816	28,279
Acquisition of Intangible Assets	(	352 )	-
Increase of Refundable Deposits	(	102 ) (	2,537 )
Net Cash In-Flow(Out-Flow) from Investment Activities	(	280,390 ) (	74,509 )
Cash Flow from Funding Activities
Increase of Short Term Loan		372,495	18,062
Redemption of Short Term Loan	(	110,000 )	-
Redemption of Long Term Loan		- (	416 )
Lease account payable	(	5,895 )	-
Increase of Guarantee Deposits		79	6
Net Cash In-Flow (Out-Flow) from Funding Activities		256,679	17,652
Adjustments of Exchange Rate		3,461 (	835 )
Increase (Decrease) of Cash and Cash Equivalents		27,974 (	203,256 )
Beginning Balance of Cash and Cash Equivalents		563,408	636,955
Ending Balance of Cash and Cash Equivalents	$	591,382 $	433,699

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

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TAIWAN MASK CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE -MONTH PERIODS ENDED MARCH 31, 2019 AND 2018 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) (UNAUDITED)

1、 HISTORY AND ORGANISATION

TAIWAN MASK CORPORATION (TMC or the Company) was established in the Republic of China (R.O.C.) on 1988/10/21 and first operated in March, 1989. Based on the resolution made on 2000/6/12 shareholders ‟ meeting, TMC merged Shin -Tai Corporation on 2000/12/1. The Company and the subsidiaries (the Group) is primarily engaged in the research, development, manufacturing and selling of Mask and Circuit, and also provide technology assistance, consultation, inspection and maintenance services for Mask and Circuit. The Group is also manufacturing and selling medical wares.

2 、 THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were reported to the Board of Directors and issued on May 8, 2019.

3 、 APPLICATION OF NEW STANDARDS, AMENDMENTS AND

INTERPRETATIONS

• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“ IFRSs” ) as endorsed by the Financial Supervisory Commission (FSC)

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, “ Prepayment features with negative compensation” IFRS 16, “Leases” Amendments to IAS 19, “ Plan amendment, curtailment or settlement” Amendments to IAS 28, “Long-term interests in associates and joint ventures” IFRIC 23, “Uncertainty over income tax treatments” Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. IFRS 16, “Leases”

• A. IFRS 16, “Leases”, replaces IAS 17, “Leases” and related interpretations and Standing Interpretations Committee (SICs). The standard requires lessees to recognize a “right-of-use asset” and a lease liability (except for those leases with terms of 12 months or less and leases of low value assets). Lessor accounting still uses the dual classification approach: operating lease and finance lease, and only increases the related disclosures.

• B. When applying the version of the International Financial Reporting Standards, International Accounting Standards, Interpretation and Interpretation (hereinafter referred to as IFRSs), which is recognized by Financial Supervisory Commission, the Group expects to recognize the lease contract of lessees in line with IFRS 16. Accordingly, on January 1, 2018, the Group will have to increase ‘right-of-use asset’ by $358,566 and increase lease liability by$348,133, respectively.

• C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:

• (A) Reassessment as to whether a contract is, or contains, a lease is not required, and instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.

• (B) The use of single discount rate to a portfolio of leases with reasonably similar characteristics.

• (C) The accounting for operating leases whose period will end before December 31, 2019 as short term lease and accordingly, rent expense of $300 was recognized in the first quarter of 2019.

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• (D) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

• (E) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

• D. The Group calculated the present value of lease liabilities by using the incremental borrowing interest rate which ranging from 1.136% to 7.223%.

• E. The Group recognized lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the leasee’s incremental borrowing rate and lease liabilities recognized as of January 1, 2019 is as follows:

Operating lease commitments disclosed under IAS 17 as of	$	130,929
December 31, 2018
Add: Lease payable recognised under finance lease by
applying IAS 17 as at December 31, 2018		18,119
Less: Low-value assets	(	1,102)
Add/Less: Adjustments as a result of a different treatment of
extension and termination options		318,759
Total lease contracts amount recognised as lease liabilities by
applying IFRS 16 on January 1, 2019	$	466,705
Incremental borrowing interest rate at the date of initial
application		1.136%~7.223%
Lease liabilities recognised as at January 1, 2019 by applying
IFRS 16	$	348,133

• (2) Effect of new issuances of or amendments to International Financial Reporting Standards as endorsed by the FSC but not yet adopted by the Group

None.

• (3) International Financial Reporting Standards issued by IASB but not yet endorsed by the FSC

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

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, “ Disclosure Initiative - Definition of Material” Amendments to IFRS 3, “Definition of a business” Amendments to IFRS 10 and IAS 28, “ Sale or contribution of assets between an investor and its associate or joint venture” IFRS 17, “Insurance contracts”	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

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

4 、 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2018, except for the compliance statement, basis of preparations, basis of consolidation and additional policies as set out below. These policies ha ve been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

• A. These consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and IAS 34, “Interim Financial Reporting” as endorsed by the FSC.

• B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2018.

• (2) Basis of preparation

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

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

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

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• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

• (3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements

The principles applied in the preparation of these financial statements are the same as the ones applied in 2018.

• B. Subsidiaries included in the consolidated financial statements:

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Investor	Subsidiary	Main business activities Investing in communication business Selling of masks Investing in communication business Investing in communication business Medical device manufacturing, wholesale and trading Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Research, design, development, manufacturing and sales of display panel control chips and modules Medical device manufacturing, wholesale and trading Investing in communication business Medical device manufacturing, wholesale and tradin		Ownership (%)	March 31,2018 100 100 100 100 30.26 100 - 21.48 100 10.58	Remark
			March 31,2019 100 - - 100 30.26 100 100 - - 32.06	December 31,2018 100 - - 100 30.26 100 100 - - 32.06
Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Youe Win Capital Corporation Youe Win Capital Corporation Youe Chung Capital Corporation	SunnyLake Park International Holding, Inc. Taiwan Mask Corp.-USA Youe Win Capital Corporation Youe Chung Capital Corporation Innova Vision INC. Miracle Technology CO., LTD. Weida Hi-Tech Innova Vision INC. Suichang Investment Co., Ltd. Innova Vision INC.					Note 1 Note 2、 Note 8 Note 2、 Note 6 Note 2 Note 3 Note 3、 Note 7 Note 2、 Note 6 Note 2、 Note 6 Note 3、 Note 6

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Investor	Subsidiary	Main business activities Investing in communication business Investing in communication business Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Investing in communication business Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. IC product design, production and sales IC product design, production and sales Medical device manufacturing, wholesale and trading Investing in communication business Medical device manufacturing, wholesale and trading Investing in communication business Medical device manufacturing, wholesale and trading		Ownership (%)	March 31,2018 100 100 100 100 100 100 35.71 35.71 100 100 - 100 100	Remark
			March 31,2019 100 100 100 100 100 100 64.29 35.71 100 100 9.23 100 90.77	December 31,2018 100 100 100 100 100 100 64.29 35.71 100 100 9.23 100 90.77
Miracle Technology CO., LTD. Miracle Technology CO., LTD. Jingjing Investment Co., Ltd. Jingjing Investment Co., Ltd. Miracle Technology (Samoa)Co., Ltd. Misun Technology Co., Ltd. Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(Sha nHai) Co., Ltd. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision (B.V.I.) Inc.	Jingjing Investment Co., Ltd. Miracle Technology (Samoa)Co., Ltd. Miko-China Enterprise (Shanghai) Co., Ltd. MIKO Technology Co., Ltd. Misun Technology Co., Ltd. Miracle International Enterprise(Sha nHai) Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Innova Technology Company Innova Vision (B.V.I.) Inc. Innova Vision Kabushiki Kaisha Calaview International Holding Company Limited Innova Vision Kabushiki Kaisha					Note 1、 Note 5 Note 1、 Note 5 Note 1 Note 1 Note 3 Note 1、 Note 4 Note 1

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Investor	Subsidiary	Main business activities Medical device manufacturing, wholesale and trading Touch screen system hardware design and software development and production Investing in communication business Investing in communication business Investing in communication business Touch screen system hardware design and software development and production		Ownership (%)	March 31,2018 100 - 100 35.71 64.29 100	Remark
			March 31,2019 100 100 100 22.30 77.70 -	December 31,2018 100 100 100 22.30 77.70 -
Calaview International Holding Company Limited Weida Hi- Tech Weida Hi- Tech Weida Hi- Tech Smart Touch Co., Ltd. Central star Ltd.	Innova Vision Shenzen Touch Hi-Tech Smart Touch Co., Ltd. Central Star Ltd. Central Star Ltd. Touch Hi-Tech					Note 1、 Note 4 Note 3、 Note 7 Note 3、 Note 7 Note 3、 Note 7 Note 3、 Note 7 Note 7

• Note 1 ： The financial statements of the entity as of and for the ended March 31, 2019 and 2018 were not reviewed by the independent accountants as the entity did not meet the definition of a significant subsidiary.

• Note2 ： The financial statements of the entity as of and for the ended March 31, 2018 were not reviewed by the independent accountants as the entity did not meet the definition of a significant subsidiary .

• Note3 ： The financial statements of the entity as of and for the ended March 31, 2019 were not reviewed by the independent accountants as the entity did not meet the definition of a significant subsidiary.

• Note4 ： The Group acquired Calaview International Holding Company Limited 100% shares, also acquired its subsidiary Innova Vision Shenzen 100% shares indirectly. Starting from that time, the income and loss from Calaview and its subsidiary were combined into the consolidated financial statements of the company.

• Note5 ： In March 2007, the Group jointly invested and established Sichuan Miracle Electronic Technology Co., Ltd., and held 71.42% of the shares. The company's income and loss were included in the consolidated statement since the acquisition of control, and it was obtained in December of the Republic of China 100% equity.

• Note6 ： The group organized reorganization, and the company ‟s related assets and liabilities were merged into Yu Chuan

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Investment Co., Ltd., in May 2018.

• Note7 ： In August 2018, the company obtained control through the acquisition of the equity of Wei Dao Hi-Tech Co., Ltd., and incorporated the income and loss of the company and its subsidiaries into the consolidated statement since the acquisition of control 100% equity in November 2018.

• Note8 ： The Company was dissolved in 2018.

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

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

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group:

Innova Vision INC. and subsidiaries have not disclosed the following information because they did not meet the definition of important subsidiaries on March 31, 2018 and are not significant.

As of December 31, 2018 and March 31, 2018 the non-controlling interest amounted to $15,317 and $70,265, respectively. The information of non-controlling interest and respective subsidiaries is as follows:

Name of subsidiary	Principal place of business Taiwan	Amount Ownership (%) Amount Ownership (%) $ 15,317 37.68% $ 61,639 37.68% Non-controllinginterest December 31,2018 March 31,2018	Amount Ownership (%) Amount Ownership (%) $ 15,317 37.68% $ 61,639 37.68% Non-controllinginterest December 31,2018 March 31,2018	Description
		Amount Ownership (%) $ 15,317 37.68% December 31,2018
		Amount $ 15,317	Amount $ 61,639
Innova Vision INC. and Subsidiaries

Summarized financial information of the subsidiaries:

Balance sheets

Balance sheets
			Innova Vision INC.	and Subsidiaries
		December 31,2018			March 31,2018
Current assets	$		230,150	$	269,334
Non-current assets			74,607		119,517
Current liabilities	(		259,250)	(	215,868)
Non-current liabilities	(		4,854)	(	9,389)
Total net assets	$		40,653	$	163,594

Statements of comprehensive income

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Statements of cash flows Revenue Loss before income tax Income tax expense Loss for the period from continuing operations Loss for the period Other comprehensive income, net of tax Total comprehensive income for the period Comprehensive income attributable to non-controlling interest Dividends paid to noncontronlling interest Net cash provided by operating activities Net cash provided by investing activities Net cash provided by financing activities Effect of exchange rates on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period		Innova Vision INC. and Subsidiaries
		For the three-month period ended March 31,2018
	48,880 $ 6,890) ($ 266) ( 7,156) ( 7,156) ( 1,725) ( 8,881) ($ 2,866) ($ - $ Innova Vision INC. and Subsidiaries
		For the three-month period ended March 31,2018
	3,983) ($ 4,160) ( 11,337 1,725) ( 1,469 17,612 19,081 $

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

Effective 2019

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

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are fixed payment, less any lease incentives receivable. The Group subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is re-measured and the amount of re-measurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

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• C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

• (A) The amount of the initial measurement of lease liability;

• (B) Any lease payments made at or before the commencement date; and

• (C) Any initial direct costs incurred by the lessee.

• (D) Estimated cost of requisitioning, removing the underlying asset and restoring its location, or restoring the underlying asset to the state required by the terms and conditions of the lease.

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

(5) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment prop erty is depreciated on a straight-line basis over its estimated useful life of 45 years.

(6) Employee benefits

Pensions

Defined benefit plans

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

- (7) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non -market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at the end of the financial reporting period. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

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(8) Income tax

• A. The interim period income tax expense is calculated according to pretax income times effective income tax rate, and the related information is disclosed accordingly.

• B. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognizes the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognized outside profit or loss is recognized in other comprehensive income or equity while the effect of the change on items recognized in profit or loss is recognized in profit or loss.

5 、 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

No major changes in this period, please see Note 5 in the consolidated financial statements of 2018.

6 、 DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Total	March 31,2019 December 31,2018 1,976 $ 3,182 $ 552,606 535,426 36,800 24,800 591,382 $ 563,408 $	March 31,2018
		2,598 $ 418,687 12,414
		433,699 $

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

• B. The Group has no cash and cash equivalents pledged to others.

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(2) Financial assets at fair value through profit or loss

Items Non-current items: Financial assets mandatorily measured at fair value through profit or loss Listed stocks Unlisted stocks Private Offered Fund Valuation adjustment Total	March 31,2019 December 31,2018 736,723 $ 613,771 $ 38,391 63,926 32,982 110,247 808,096 787,944 6,510) ( 56,118) ( 801,586 $ 731,826 $	March 31,2018 355,313 $ 103,953 91,371 550,637 24,622) ( 526,015 $

• A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss is listed below:

Financial assets mandatorily measured at fair value through profit or loss Listed stocks Unlisted stocks Beneficiary certificates Private Offered Fund Total		For the three-month periods ended March 31, 2019		For the three-month periods ended March 31, 2018
		55,106 $ 345 - 19,215) ( 36,236 $		17,082 $ - 89 - 17,171 $

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

• C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

• (3) Financial assets at amortized cost

Items Current items: Time deposits Non-current items: Time deposits	March 31,2019 December 31,2018 56,282 $ 54,335 $ 29,727 $ 29,727 $	March 31,2018
		104,160 $
		29,723 $

• A. Amounts recognized in profit or loss in relation to financial assets at amortized cost is listed below:

~25~

For the three-month For the three-month periods ended March 31, periods ended March 31, 2019 2018 Interest income $ 53 $ 112

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

• C. Information relating to credit risk of financial assets at amortized cost is provided in Note 12(2).

• (4) Notes and accounts receivable

Notes receivable Accounts receivable Accounts receivable-related parties Less: Allowance for uncollectible accounts	March 31,2019 December 31,2018 738 $ 1,277 $ 568,646 $ 599,932 $ 969 4,178 569,615 604,110 20,325) ( 2,780) ( 549,290 $ 601,330 $	March 31,2018 728 $ 492,350 $ 8,053 500,403 7,127) ( 493,276 $

• A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

were past due but not impaired is as follows:	were past due but not impaired is as follows:	were past due but not impaired is as follows:	ows:	ows:
Accounts receivable Notes receivable Accounts receivable Notes receivable Not past due 507,582 $ 738 $ 483,098 $ 1,277 $ Up to 30 days 26,331 - 76,987 - 31 to 90 days 24,233 - 32,436 - 91 to 180 days 1,849 - 2,288 - Over 180 days 9,620 - 9,301 - 569,615 $ 738 $ 604,110 $ 1,277 $ March 31,2019 December 31,2018 Accounts receivable Notes receivable Not past due 422,182 $ 728 $ Up to 30 days 35,494 - 31 to 90 days 24,674 - 91 to 180 days 6,382 - Over 180 days 11,671 - 500,403 $ 728 $ March 31,2018			Accounts receivable Notes receivable 483,098 $ 1,277 $ 76,987 - 32,436 - 2,288 - 9,301 - 604,110 $ 1,277 $ December 31,2018 March 31,2018
		Accounts receivable 422,182 $ 35,494 24,674 6,382 11,671 500,403 $		Notes receivable
				728 $ - - - -
				728 $

The above ageing analysis was based on past due date.

• B. The Group has no notes and accounts receivable pledged to others as collateral.

• C. As at March 31, 2018, December 31, 2018 and 2019 without taking into

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account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best 、 represents the Group’s accounts receivable were $ 549,290 $601,330 及 $493,276 respectively.

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

(5) Inventories

Inventories
Raw materials Work in progress Finished goods Merchandise inventories Total Raw materials Work in progress Finished goods Merchandise inventories Total Raw materials Work in progress Finished goods Merchandise inventories Total		March 31,2019
	Cost 141,490 $ 162,060 226,778 83,521 613,849 $	Allowance for valuation loss 32,518) ($ 39,249) ( 103,638) ( 12,831) ( 188,236) ($ December 31,2018	Book value
			108,972 $ 122,811 123,140 70,690
			425,613 $
	Cost 140,121 $ 151,214 216,131 62,081 569,547 $		Book value
			106,581 $ 111,529 130,667 59,798
			408,575 $
	Cost 120,371 $ 124,648 192,738 40,297 478,054 $		Book value
			78,431 $ 84,294 130,633 40,141
			333,499 $

The cost of inventories recognized as expense for the year:

~27~

Cost of goods sold Allowance(reversal) for valuation and obsolescence loss Revenue from sale of scraps Others	For the three-month periods ended March 31, 2019	For the three-month periods ended March 31, 2018
	528,337 $ 27,264 141) ( 1,013 556,473 $	511,153 $ 4,006) ( 104) ( 21 507,064 $

The Group's inventory portion prepared for the depreciation loss in the previous period from January 1 to March 31, 2018 has been sold, resulting in a rebound in the net realizable value of the inventory and a reduction in the cost of goods sold.

(6) Investments accounted for using equity method

Associates: Advagene Biopharma Co., Ltd. APTOS Technology INC.	March 31,2019 December 31,2018 121,038 $ 126,760 $ 74,928 - 195,966 $ 126,760 $	March 31,2018
		83,891 $ -
		83,891 $

The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

below:
Loss for the period from Other comprehensive income, net of tax Total comprehensive income	For the three-month periods ended March 31, 2019	For the three-month periods ended March 31, 2018
	27,530) ($ - 27,530) ($	29,617) ($ - 29,617) ($

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(7) Property, plant and equipment

At January 1, 2019 Cost Accumulated depreciation and impairment 2019 January 1 Acquisitions Disposals-Cost Disposals- Accumulated depreciation Depreciation Reclassification- Cost Reclassification- Accumulated depreciation Net exchange differences-Cost Net exchange differences- Accumulated depreciation March 31 March 31, 2019 Cost Accumulated depreciation and impairment	Buildings (Land) Machinery and equipment Office Equipment 1,543,908 $ 2,217,354 $ 28,424 $ 1,003,788) ( 1,840,719) ( 14,694) ( 540,120 $ 376,635 $ 13,730 $ 540,120 $ 376,635 $ 13,730 $ 4,813 66,715 35 509,460) ( 796,857) ( 5,788) ( 506,980 796,857 5,788 9,874) ( 22,301) ( 1,181) ( 41,110) ( 28,279) ( - 4,641 6,060 - - - 10 - 1) ( 7) ( 496,110 $ 398,829 $ 12,587 $ 998,151 $ 1,458,933 $ 22,681 $ 502,041) ( 1,060,104) ( 10,094) ( 496,110 $ 398,829 $ 12,587 $	Transportation 4,292 $ 3,029) ( 1,263 $ 1,263 $ - - - 91) ( - - 23 22) ( 1,173 $ 4,315 $ 3,142) ( 1,173 $	Leasehold Improvements Molding Equipment Other Equipment Leasing assets Construction in progress and equipment under installation Total 28,161 $ 5,087 $ 24,578 $ 9,537 $ 15,345 $ 3,876,686 $ 23,515) ( 3,148) ( 18,026) ( 3,204) ( - 2,910,123) ( 4,646 $ 1,939 $ 6,552 $ 6,333 $ 15,345 $ 966,563 $ 4,646 $ 1,939 $ 6,552 $ 6,333 $ 15,345 $ 966,563 $ - - 1,759 - 1,902 75,224 - - - - - 1,312,105) ( - - - - - 1,309,625 458) ( 341) ( 1,839) ( - - 36,085) ( - - - 9,537) ( 2,897) ( 81,823) ( - - - 3,204 - 13,905 - - - - - 33 - - - - - 30) ( 4,188 $ 1,598 $ 6,472 $ - $ 14,350 $ 935,307 $ 28,161 $ 5,087 $ 26,337 $ - $ 14,350 $ 2,558,015 $ 23,973) ( 3,489) ( 19,865) ( - - 1,622,708) ( 4,188 $ 1,598 $ 6,472 $ - $ 14,350 $ 935,307 $

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At January 1, 2018 Cost Accumulated depreciation and impairment 2018 January 1 Combined transfer number Acquisitions Disposals Depreciation Net exchange differences March 31 March 31, 2018 Cost Accumulated depreciation and impairment	Buildings (Land) Machinery and equipment Office Equipment 1,490,342 $ 2,201,484 $ 18,474 $ 965,516) ( 1,812,298) ( 10,905) ( 524,826 $ 389,186 $ 7,569 $ 524,826 $ 389,186 $ 7,569 $ - - 16 - - 36 - 28,279) ( - 9,560) ( 22,607) ( 880) ( - - 2 515,266 $ 338,300 $ 6,743 $ 1,490,352 $ 2,088,367 $ 18,604 $ 975,086) ( 1,750,067) ( 11,861) ( 515,266 $ 338,300 $ 6,743 $	Transportation 4,848 $ 3,199) ( 1,649 $ 1,649 $ - - - 111) ( 1 1,539 $ 4,865 $ 3,326) ( 1,539 $	Leasehold Improvements Molding Equipment Other Equipment Leasing assets Construction in progress and equipment under installation Total 112,728 $ 16,837 $ 12,137 $ 5,903 $ 10,666 $ 3,873,419 $ 68,800) ( 12,479) ( 11,002) ( - - 2,884,199) ( 43,928 $ 4,358 $ 1,135 $ 5,903 $ 10,666 $ 989,220 $ 43,928 $ 4,358 $ 1,135 $ 5,903 $ 10,666 $ 989,220 $ - - - - - 16 - 387 - 28,398 10,366 39,187 - - - - - 28,279) ( 2,304) ( 875) ( 133) ( 939) ( - 37,409) ( - - - - - 3 41,624 $ 3,870 $ 1,002 $ 33,362 $ 21,032 $ 962,738 $ 112,728 $ 17,225 $ 12,137 $ 34,301 $ 21,032 $ 3,799,611 $ 71,104) ( 13,355) ( 11,135) ( 939) ( - 2,836,873) ( 41,624 $ 3,870 $ 1,002 $ 33,362 $ 21,032 $ 962,738 $

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A. The significant components of buildings include main land, building and factory, which is/are depreciated over 3 and 56 years, respectively.

• B. Amount of borrowing costs for the three-month periods ended March 31, 2019 and 2018 capitalized as part of property, plant and equipment were $0.

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

• D. The property, plant and equipment of the Group are used for their own use.

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(8) Leasing arrangements - lessee Effective 2019

• A. The Group leases various assets including lands, buildings, machinery equipment, transportation equipment, and so on. Rental contracts are typically made for periods of 3 to 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

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

follows:
Land Buildings Machinery and equipment Transportation	March 31,2019 Carryingamount 322,584 $ 3,451 20,199 5,539 351,773 $		For the three-month periods ended March 31, 2019
			Depreciation 2,891 $ 262 2,020 794 5,967 $

• C. For the three-month period ended March 31, 2019, the reduces to

• right-of-use assets was $826.

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

For the three-month periods ended March 31, 2019 Items affecting profit or loss Interest expense of lease liabilities $ 1,166 Expenses of leases of low-value assets 300

• E. For the three-month period ended March 31, 2019, the Group’s total cash outflow of leases was $6,195.

• F. Lease extension option and lease termination option

When the Group determines the lease term, it considers all the facts and circumstances in which the exercise of the option is extended or the termination of the option does not result in an economic incentive. The lease period will be re-estimated when a significant event occurs that affects the exercise of the extension option or the non -exercise termination option.

~32~

－ (9) Leasing arrangements lessor

Effective 2019

• A. The underlying assets leased by the Group are construction. The duration of the lease contract is usually between 1 and 2 years. The lease contract is negotiated separately and contains various terms and conditions. In order to preserve the use of leased assets, the lessee is usually required not to use the leased assets as a loan guarantee.

• B. The maturity date of the Group's undiscounted lease payments leased under operating leases is as follows:

The maturity date of the Group's undiscounted lease under operating leases is as follows:	payments leased
2019 2018 Total	March 31,2019
	2,228 $ 1,486
	3,714 $

(10) Investment Property

Investment Property
		Buildings
At January 1, 2019
Cost	$	-
Accumulated depreciation and impairment		-
	$	-
2019
January 1	$	-
Reclassifications-Cost		44,007
Reclassifications-Accumulated Depreciation	(	4,641)
Depreciation	(	170)
March 31	$	39,196
At March 31, 2019
Cost	$	44,007
Accumulated depreciation and impairment	(	4,811)
	$	39,196

As of December 31, 2018 and March 31, 2018: None.

• A. Rental income from investment property and direct operating expenses arising from investment property are shown below:

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Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period		Year ended December 31,2019
		557 $ 190 $

• B. The fair value of the investment property held by the Group as at March 31, 2019 was $3,941, respectively. Valuations were made using the income approach which is categorized within Level 3 in the fair value hierarchy. Key assumptions are as follows:

	March 31,2019
Discount rate	9.11%
Rental income Yearly (net)	2,244
Years	2
C. There was no amount of borrowing costs capitalized as part of
investment property for the three-month periods ended March 31,
2019.

• D. There was no investment property that was pledged to others as collaterals for the three-month periods ended March 31, 2019.

(11) Short-term borrowings

ort-term borrowings
Type of borrowings Bank borrowings Credit borrowings Type of borrowings Bank borrowings Credit borrowings Type of borrowings Bank borrowings Credit borrowings	March 31,2019			Interest rate range	Collateral
	853,495 $			1.14%~1.25% Interest rate range	- Collateral - Collateral
				1.138%~1.35% Interest rate range
				1.25%~3.087%	-

Interest expense recognized in profit or loss amounted to $1,925 and $188 for the three-month periods ended March 31, 2019 and 2018, respectively.

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(12) Other Payables

ther Payables
Salary and Wages Payable Employee Bonus Payable and Commensation Due to Directors Balance Payable- Machinery and Equipment Machine Maintenance Payable Others	March 31,2019 30,464 $ 45,596 1,828 62,397 86,436 226,721 $	December 31,2018 39,112 $ 31,091 75,777 33,765 107,930 287,675 $	March 31,2018
			24,208 $ 12,794 20,615 52,781 62,280
			172,678 $

- (13) Long term borrowings

As the three-month periods ended March 31, 2019 and the years ended December 31, 2018: None.

For the long-term loan contract of the Group from November 11, 2012 to January 11, 2032, the Group had settled the loan in advance in July 2018 due to financial planning considerations.

Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral Land and buildings	March 31,2018
				25,887 $ 1,668) (
				24,219 $

(14) Finance lease liabilities

Effective 2018

The Group leases in transportation and machine equipment under finance lease. Future minimum lease payments and their present values as at December 31, 2018 and March 31, 2018 are as follows:

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December 31, 2018

				December 31,2018
Current Not later than one year Non-current Later than one year but not later than five years Over five years Total Current Not later than one year Non-current Later than one year but not later than five years Over five years Total		Total finance lease liabilities		Future finance charges		Present value of finance lease liabilities
		8,987 $ 10,132 - 10,132 19,119 $	749) ($ 251) ( - 251) ( 1,000) ($ March 31,2018			8,238 $ 9,881 - 9,881 18,119 $ Present value of finance lease liabilities
		Total finance lease liabilities		Future finance charges
		8,050 $ 13,988 - 13,988 22,038 $	1,022) ($ 665) ( - 665) ( 1,687) ($			7,028 $ 13,323 - 13,323 20,351 $

(15) Pensions

A.(A) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the

~36~

employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions for the deficit by next March.

• (B) The pension costs under the defined benefit pension plans of the Group were $116 and $236 for the three-month periods ended March 31, 2019 and 2018, respectively.

• (C) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2020 amount to $635.

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

• (B) The pension costs under defined contribution pension plans of the Group for the three-month periods ended March 31, 2019 and 2018 were $3,838 and $2,624, respectively.

(16) Share capital

• A. As of March 31, 2019, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock (including 20,000 thousand shares reserved for employee stock options issued by the Company), and the paid-in capital was $2,527,136 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

Unit: share in thousands

January 1, March 31	2019 195,632	2018
		195,632

• B. Treasury shares

• (A) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

~37~

Shares held by	Reason for reacquisition		March 31,2019	March 31,2019
			Number of shares Book value 37,081 527,678 $ 20,000 357,063 57,081 884,741 $ December 31,2018	Book value
Subsidiary- Youe Chung Capital Corporation Taiwan Mask Corporation Shares held by	Subsidiary holds shares of the company To be reissued to employees Total Reason for reacquisition			527,678 $ 357,063
				884,741 $
			Number of shares Book value 37,081 527,678 $ 20,000 357,063 57,081 884,741 $ March 31,2018	Book value
Subsidiary- Youe Chung Capital Corporation Taiwan Mask Corporation Shares held by	Subsidiary holds shares of the company To be reissued to employees Total Reason for reacquisition			527,678 $ 357,063
				884,741 $
			Number of shares 37,081 20,000 57,081	Book value
Subsidiary- Suichang Investment Co., Ltd. Corporation	Subsidiary holds shares of the company employees Total			527,678 $ 357,063
				884,741 $

• (B)The book value of the company's treasury shares is NT$17.85 per share. As of March 31, 2019, the company has transferred 20,000 shares of the treasury shares bought back to the employees and immediately acquired them on the date of the grant.

• (C) The Company's remuneration costs incurred for the transfer of treasury shares from January 1 to March 31, 2019 were $NT3, 000.

• (D) Pursuant to the R.O.C. Securities and Exchange Act, th e number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus.

~38~

• (E) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.

• (F) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retir ed within six months of acquisition.

• (G) The Group organized and reorganized in May 2018, and merged Suichang Investment Co., Ltd. and Youe Win Capital Corporation into Youe Chung Capital Corporation (hereinafter referred to as “Suichang Campany”, “Youe Win Campany” and “Youe Chung Company”). Suichang Campany and Youe Win Campany were closed and transferred the relevant assets and liabilities to Youe Chung Company. Before the reorganization, Suichang Company held the shares, and after reorganization, Youe Chung Company held the shares of the company. As of March 31, 2018, Suichang Company held 37,081 shares, with an average book value of $14.23 per share and a fair value of $17.60 per share. As of March 31, 2019 and December 31, 2018, Youe Chung Company held 37,081 shares and 37,081 shares, the average book value per share was $14.23, too, and the fair value per share were $27 and $18.35. The transfer of treasury stock costs is based on the book value of the shares held by Suichang Company in each period, based on the indirect .

• shareholding ratio of the Company

(17) Capital surplus

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

~39~

Treasury shares Recognition of changes in ownership interest in subsidiaries Employee stock options Changes in equity of affiliated companies January 1, 2019 145,471 $ 16,904 $ 7,056 $ - $ Adjustment of the shareholding ratio of the invested company - 30 - 105 Share-based payment transaction - - 3,000 - March 31, 2019 145,471 $ 16,934 $ 10,056 $ 105 $ Treasury shares Recognition of changes in ownership interest in subsidiaries Employee stock options For the three-month periods ended March 31, 2018 145,471 $ 62,959 $ 4,518 $

Total 169,431 $ 135 3,000 172,566 $ Total

212,948 $

~40~

(18) Retained earnings (deficit to be compensated)

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. When such legal reserve amounts to the total authorized capital, the Company shall not be subject to this requirement. The Company may then appropriate or reverse a certain amount as special reserve according to the demand for the business or relevant regulations. After the distribution of earnings, the remaining earnings and prior years’ undistributed earnings may be appropriated according to a resolution of the Board of Directors adopted in the shareholders’ meeting.

• B. To well design a long term financial plan and stabilize the operation, the company chose a residual dividend policy to plan the future capital fund needs based on capital investment budget. First to appropriate the retained earnings to get capital funds fulfilled and residual earnings will be paid off as dividends. The steps are:

• (A) Define an optimized capital budget.

• (B) Define the fund needs to fulfill one capital budget.

• (C) Define how much fund shall be fulfilled by retained earnings. (Unfulfilled part shall be fulfilled by fund raising o r bond issuing.)

• (D) To reserve a certain amount of residual earnings, then dividends shall be paid off to shareholders. According to the dividend policy of the company, cash dividend ratio shall not be lower than 20% of total dividends.

• C. Except for covering accumulated deficit, increasing capital or payment of cash in proportion to ownership percentage, the legal reserve shall not be used for any other purpose. The amount capitalized or the cash payment shall be limited to the portion of legal reserve which exceeds 25% of the paid-in capital.

• D. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the end of the financial reporting period before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• E. As resolved by the shareholders on June 13, 2018, the deficit in 2017 shall be compensated by legal reserve for $74,217.

• F. On March 20, 2019, the Board of Directors proposed that total dividends for the distribution of earnings for the year of 2018 were $194,083 at $0.834 (in dollars) per share. However, the proposition has not been resolved by the shareholders.

~41~

• G. For the information relating to employees’ compensation (bonuses) and directors’ and supervisors’ remuneration, please refer to Note 6(25).

• (19) Other equity items

6(25). ther equity items
perating revenue Unrealized evaluation of profit and loss Foreign currency translation Total January 1 - $ 7,853 $ 7,853 $ Foreign currency conversion difference: –Group - 3,578 3,578 March 31 - $ 11,431 $ 11,431 $ 2019 Unrealized evaluation of profit and loss Foreign currency translation Total January 1 3,756 $ 7,451 $ 11,207 $ Effect on retrospective application 3,756) ( - 3,756) ( Foreign currency conversion difference: –Group - 177) ( 177) ( March 31 - $ 7,274 $ 7,274 $ 2018 For the three-month periods ended March 31, 2019 For the three-month periods ended March 31, 2018 Revenue from contracts with customers 711,254 $ 631,624 $	Unrealized evaluation of profit and loss					2019
						Foreign currency translation 7,853 $ 3,578 11,431 $ 2018
	- $ - - $ Unrealized evaluation of profit and loss	- $ - - $
						$ (
		$				$
				711,254 $				631,624 $

(20) Operating revenue

• A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines:

~42~

For the three-month periods ended March 31,2019 Mask and Semiconductor division Medical division Revenue from dept. 692,133 $ 32,749 $ Revenue from internal dept. contracts 13,628) ( - Revenue from external customer contracts 678,505 $ 32,749 $ Timing of revenue recognition At a point in time 678,505 $ 32,749 $ For the three-month periods ended March 31,2018 k and Semiconductor div Medical division Revenue from dept. 603,297 $ 48,879 $ Revenue from internal dept. contracts 19,842) ( 710) ( Revenue from external customer contracts 583,455 $ 48,169 $ Timing of revenue recognition At a point in time 583,455 $ 48,169 $	Total
	724,882 $ 13,628 (
	711,254 $
	711,254 $
	Total
	652,176 $ 20,552 (
	631,624 $
	631,624 $

• B. Contract liabilities

• (A) The Group has recognized the following revenue-related contract liabilities:

liabilities:
Contract liability	March 31,2019 47,932 $	December 31,2018 58,701 $	March 31,2018
			75,328 $

(B) Initial contract liabilities recognized income in the current period

period
The revenue recognized from the beginning balance of contract liability		For the three-month periods ended March 31,2019		For the three-month periods ended March 31,2018
		31,724 $		48,995 $

~43~

(21) Other income

r income
Interest income： Bank deposits Financial assets at amortised cost Interest income Other interest income Total interest income Rent income Dividend income Others		For the three-month periods ended March 31, 2019 711 $ 53 7 771 641 1,866 565 3,843 $	For the three-month periods ended March 31, 2018
			587 $ 112 - 699 83 - 342 1,124 $

(22) Other gains and losses

r gains and losses
nce costs Gains(Losses) on disposals of property, plant and equipment Gains(Loss) on disposal of investments Currency exchange gains(loss) Gains(Loss) on financial assets at fair value through profit or loss Other Non-operating loss- Investment Property Depreciation Other expenses Interest expense Other finance expense	For the three-month periods ended March 31, 2019 1,336 $ 20,856) ( 1,909 57,092 170) ( 724) ( 38,587 $ For the three-month periods ended March 31, 2019 3,091 $ - 3,091 $			For the three-month periods ended March 31, 2018
				- $ - 3,786) ( 17,171 - 3,057) ( 10,328 $ For the three-month periods ended March 31, 2018
			3,091 $ - 3,091 $	270 $ 37 307 $

(23) Finance costs

~44~

(24) Expenses by nature

nses by nature
Employee benefit expenses Depreciation charges on property, plant and equipment Amortisation charges on intangible assets	For the three-month periods ended March 31, 2019	For the three-month periods ended March 31, 2018
	120,031 $ 42,222 1,773	85,878 $ 37,409 252

(25) Employee benefit expense

loyee benefit expense
Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses		For the three-month periods ended March 31, 2019		For the three-month periods ended March 31, 2018
		103,670 $ 8,119 3,954 4,288 120,031 $		74,489 $ 5,338 2,860 3,191 85,878 $

• A. According to the Articles of Incorporation of the Company, the current year’s profit shall be used first to cover accumulated deficit, if any, and then the remaining balance shall be distributed as follows: no less than 10% as employees’ compensation, and no more than 2% as directors’ remuneration.

• B. For the three-month periods ended March 31, 2019 and 2018, employees’ compensation were accrued at $6,770 and $7,373, respectively; directors’ and supervisors’ remuneration were accrued at $1,346 and $0, respectively. The aforementioned amounts were recognized in salary expenses.

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

• (26) Income tax

• A. Income tax expense

Components of income tax expense:

~45~

Current tax: Current tax on profits for the year Tax on undistributed surplus earnings Previous income tax low (high) estimate Total current tax Deferred tax: Origination and reversal of temporary differences Impact of change in tax rate Total deferred tax Income tax expense		For the three-month periods ended March 31, 2019	For the three-month periods ended March 31, 2018
		5,366 $ - - 5,366 112 - 112 5,478 $	1,307 $ - - 1,307 10,772) ( 1,657) ( 12,429) ( 11,122) ($

• B. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

• C. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has accessed the impact of the change in income tax rate.

~46~

(27) Earnings per share

ings per share
Basic earnings per share Profit attributable to the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Share-Based Payment Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares		Amount after tax		Weighted average number of ordinary shares outstanding (share in thousands)	Earnings per share (in dollars)
		60,804 $ 60,804 $ - - 60,804 $		195,632 195,632 1,139 19,289 216,060		0.31 $ 0.28 $

~47~

For the three-month periods ended March 31,

					2018
					Weighted	average
					number of
					ordinary	shares	Earnings
					outstanding			per
		Amount			(share in			share
	after tax				thousands)		(in	dollars)
Basic earnings per share
Profit attributable to the parent	$		82,575			195,632	$	0.42
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent	$		82,575			195,632
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation				-		419
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares	$		82,575			196,051	$	0.42
The weighted average number		of	shares outstanding				for the
three-month periods ended March 31,			2019,		which has been		deducted
from the number of shares held by the			subsidiary company,				Yu	Chuan
Investment company, which are regarded					as treasury shares			of the
company (the number of shares		is	calculated according					to the
shareholding ratio of the company).

The weighted average number of shares outstanding for the three-month periods ended March 31, 2018, which has been deducted from the number of shares held by the subsidiary company, Suichang Investment Co., Ltd., which are regarded as treasury shares of the company (the number of shares is calculated according to the shareholding ratio of the company).

~48~

(28) Business combinations

• A. In August, 2018, the Group acquired 65.35% equity of Wei Da Hi-Tech Co., Ltd. in cash of $ 191,710 and obtained control of the company. The main business items of the company are research, design and development of display panel control chips and their modules, manufacturing and sales. The Group expects to combine semiconductor industry resources and expand its business scale after the acquisition

• (A) The following table summarizes the consideration paid for Wei Da Hi-Tech Co., Ltd. and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the non-controlling interest at the acquisition date:

		Merger date
Purchase consideration
Purchase consideration-Cash	$	191,710
Non-controlling interests account for the identifiable
net assets share of the acquiree		66,179
		257,889
Obtaining the fair value of identifiable assets and
liabilities
Cash		107,824
Trade receivables		32,147
Other receivables		1,704
Inventories		50,274
Other Current Assets		5,620
Property, plant and equipment		4,357
Intangible assets		20,701
Other Non-Current Assets		938
Accounts payable	(	19,705)
Other accounts payable	(	10,995)
Other current liabilities	(	1,788)
Other non-current liabilities	(	100)
Identifiable net assets		190,977
Goodwill	$	66,912

• (B) The fair value of the acquired identifiable intangible assets is provisional pending receipt of the final valuations for those assets.

• (C) The operating revenue included in the consolidated statement of comprehensive income since August, 2018 contributed by Weida Hi-Tech Company was $43,582. Weida Hi-Tech Company also contributed loss before income tax of $24,536 over the same period. Had Weida Hi-Tech Company been consolidated from January 1, 2018, the consolidated statement of comprehensive

~49~

income would show operating revenue of $3,047,757 and profit before income tax of $187,218.

(29) Operating leases

Effective 2018

The Group leases in land and building assets under non -cancellable operating lease agreements. The lease terms to 2034. The Group recognized rental expenses of $8,792 in profit or loss for the three-month periods ended March 31, 2018, respectively.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

operating leases are as follows:
Not later than one year Later than one year but not later than five years Later than five years	December 31, 2018 15,891 $ 54,954 60,084 130,929 $	March 31,2018
		26,561 $ 61,765 70,225
		158,551 $

(30) Supplemental cash flow information

Investing activities with partial cash payments:

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Ending balance of advanced on equipment Less: Opening balance of advanced on equipment Ending balance of payable on i Cash paid during the period	For the three-month periods ended March 31, 2019	For the three-month periods ended March 31, 2018	For the three-month periods ended March 31, 2018
	75,224 $ 75,777 201,267 133,635) ( 1,828) ( 216,805 $	39,187 $ 11,606 58,659 48,644) ( 20,615) ( 40,193 $
			40,193 $

~50~

(31) Changes in liabilities from financing activities

January 1,2019 Changes in cash flow from financing Other non-cash change March 31, 2019 January 1,2018 Changes in cash flow from financing March 31, 2018		Short-term borrowings	Lease obligations	Lease obligations		Deposits received		Total liabilities from financing activities
		591,000 $ 262,495 - 853,495 $ Short-term borrowings	348,133 $ 5,895) ( 340 342,578 $ Long-term borrowings			3,223 $ 79 - 3,302 $ Deposits received		942,356 $ 256,679 340 1,199,375 $ Total liabilities from financing activities
		81,253 $ 18,062 99,315 $		26,303 $ 416) ( 25,887 $		94 $ 6 100 $		107,650 $ 17,652 125,302 $

7 、 RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related arties p

Innova Vision Shenzen Weida Hi-Tech

WishRich Technology Co., Ltd.

Maxchip Electronics Corporation

Advanced Silicon SA

Relationshi with the Grou p p

Subsidiary The general manager of the company is the chairman of the company (note1) The director of the subsidiary of the company is the chairman of the company (note2) The director of the company is the chairman of the company The chairman of the subsidiary of the company is the director of the company

Note1: merged into the Group in September, 2018.

Note2: The chairman of the company resigned as a director of the company's subsidiary in December 2018.

(2) Significant related party transactions

• A. Operating revenue:

~51~

	For the three-month	For the three-month		For the three-month
	periods ended	March 31,	periods ended March 31,
	2019			2018
Sales of goods:
Other Related Parties	$	2,011	$	3,222
Goods are sold based on the price lists in		force and terms that would be
available to third parties.
B.Purchases:
	For the three-month			For the three-month
	periods ended	March 31,	periods ended March 31,
	2019			2018
Purchases of goods:
Other Related Parties	$	-	$	8,555
Goods and services are purchased from associates			on	normal commercial
terms and conditions.

terms and conditions.
C.Receivables from related parties: D.Payables to related parties: March 31,2019 December 31,2018 Trade receivables: Other Related Parties 969 $ 4,178 $ Other receivables: Other Related Parties - 4,636 Total 969 $ 8,814 $ March 31,2019 December 31,2018 Accounts payable: Other Related Parties - $ - $ Other accounts payable: Other Related Parties 848 1,003 Total 848 $ 1,003 $	March 31,2018
	8,053 $ -
	8,053 $
	March 31,2018
	8,135 $ -
	8,135 $

(3) Key management compensation

~52~

Salaries and short-term employee benefits Post-employment benefits Total		For the three-month periods ended March 31, 2019		For the three-month periods ended March 31, 2018
		6,870 $ - 6,870 $		2,715 $ 14,000 16,715 $

8 、 PLEDGED ASSETS

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

Asset item Time deposits(Financial assets at amortised cost-Non current) Land and buildings Machinery and equipment	Book value	March 31,2018 29,723 $ 302,169 30,240 362,132 $	Purpose
	March 31,2019 December 31,2018 29,727 $ 29,727 $ - - - - 29,727 $ 29,727 $
			Outbound cargo guarantee and lease deposit Long-term borrowings Long-term borrowings

• 9 、 SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies

Subidiary - Innova Vision International Inc. (IVKK) imported contact lenses in March 2015 contained anti-UV material, which did not match up with the materials disclosed in the certification issued by Japanese government. Japanese government issued an oral order to ask IVKK make announcements on the newspapers about the material unmatched and stopped the selling activities in Japan. IVKK then discussed with its major agents to return the goods and negotiated a “return and change of the goods plan”. Some of the agents have already returned the goods one after plan.

The Group had recognized losses against returned contact lenses and all the compensation. Till 2019/3/31, the ending balance of the compensation payable is $18,192 and booked as “other current liabilities”

• (2) Commitment

Signed but not yet paid equipment maintenance contracts

10、 SIGNIFICANT DISASTER LOSS Machine maintenance	March 31,2019 December 31,2018 62,397 $ 33,765 $	March 31,2018
		52,781 $

None.

~53~

11、 SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL REPORTING PERIOD

None.

12、 OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.

During the year ended December 31, 2019, the Group’s strategy, which was unchanged from 2018, was to maintain the gearing ratio within reasonable security range. The gearing ratios at March 31, 2019 and 2018, and December 31, 2018 were as follows:

Total borrowings Less: Cash and cash equivalents Net debt Total equity Total capital Gearing ratio	March 31,2019 December 31,2018 March 31,2018 853,495 $ 591,000 $ 125,202 $ 591,382) ( 563,408) ( 433,699) ( 262,113 27,592 308,497) ( 2,630,291 2,573,811 2,558,293 2,892,404 $ 2,601,403 $ 2,249,796 $ 9.06% 1.06% -

(2) Financial instruments

A. Financial instruments by category

~54~

March 31, 2019 December 31, 2018 March 31, 2018

Financial assets

nancial assets
Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Notes receivable Accounts receivable Other receivables Guarantee deposits paid	801,586 $ 591,382 $ 86,009 738 549,290 7,823 12,969 1,248,211 $	731,826 $ 563,408 $ 84,062 1,277 601,330 18,243 12,867 1,281,187 $	526,015 $
			433,699 $ 133,883 728 493,276 20,031 13,681
			1,095,298 $

March 31, 2019 December 31, 2018 March 31, 2018

Financial liabilities

Financial liabilities
Financial liabilities at amortised cost Short-term borrowings Notes payable Accounts payable Other accounts payable Lease obligations Lease account payable Guarantee deposits received	853,495 $ 54 218,358 227,569 342,578 - 3,302 1,645,356 $	591,000 $ 54 236,387 288,678 - 18,119 3,223 1,137,461 $	99,315 $ 40 196,792 172,678 - 20,351 100
			489,276 $

~55~

B. Financial risk management policies

No major changes in the period, please see Note 12 in 2018 consolidated financial statements.

• C. Significant financial risks and degrees of financial risks

• (A) Market risks

i. Foreign exchange risk

The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, JPY and CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD JPY:NTD			Exchange rate Book value (NTD) 30.820 219,701 $ 4.580 158,523 30.820 42,670 0.2783 35,269 March 31,2019	Exchange rate Book value (NTD) 30.820 219,701 $ 4.580 158,523 30.820 42,670 0.2783 35,269 March 31,2019
			Exchange rate 30.820 4.580 30.820 0.2783
				219,701 $ 158,523 42,670 35,269

~56~

December 31, 2018

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD JPY:NTD (Foreign currency: functional currency) Financial assets Monetary items USD:NTD JPY:NTD Financial liabilities Monetary items USD:NTD JPY:NTD	USD 6,179 CNY 45,477 USD 2,576 JPY 113,393 Foreign currency amount (In thousands) USD 6,132 JPY 11,216 USD 523 JPY 74,845 Foreign currency amount (In thousands)	Exchange rate Book value (NTD) 30.715 189,786 $ 4.472 203,372 30.715 79,124 0.2782 31,546 Exchange rate Book value (NTD) 29.105 178,485 $ 0.2739 3,072 29.105 15,212 0.2739 20,500 March 31,2018	Book value (NTD)
		Exchange rate 29.105 0.2739 29.105 0.2739
			178,485 $ 3,072 15,212 20,500

ii. The total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month periods ended March 31, 2019 and 2018, amounted to $1,909 and ($3,786).

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

~57~

Price risk (Foreign currency: Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD JPY:NTD functional currency) Financial assets Monetary items USD:NTD JPY:NTD Financial liabilities Monetary items USD:NTD JPY:NTD	Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 2,197 $ - $ 1% 1,585 - 1% 427) ($ - 1% 353) ( - For the three-monthperiods ended March 31,2019 SensitivityAnalysis Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 1,785 $ - $ 1% 31 - 1% 152) ($ - 1% 205) ( - For the three-monthperiods ended March 31,2018 SensitivityAnalysis	Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 2,197 $ - $ 1% 1,585 - 1% 427) ($ - 1% 353) ( - For the three-monthperiods ended March 31,2019 SensitivityAnalysis Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 1,785 $ - $ 1% 31 - 1% 152) ($ - 1% 205) ( - For the three-monthperiods ended March 31,2018 SensitivityAnalysis	Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 2,197 $ - $ 1% 1,585 - 1% 427) ($ - 1% 353) ( - For the three-monthperiods ended March 31,2019 SensitivityAnalysis Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 1,785 $ - $ 1% 31 - 1% 152) ($ - 1% 205) ( - For the three-monthperiods ended March 31,2018 SensitivityAnalysis
		Effect on profit or loss
	1% 1% 1% 1%	1,785 $ 31 152) ($ 205) (	- $ - - -

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss .

• ii. The Group mainly invests in equity instruments comprised of shares and open-end funds. The value of equity instruments are susceptible to market price risk arising from uncertainties about future performance of equity markets. Assuming a hypothetical increase of 1% in the price of the aforementioned financial assets at fair value through profit or loss while the other conditions remain unchanged could increase the Group’s non-operating revenue for the three-month periods ended March 31, 2019 and

~58~

2018 by $8,016 and $5,260, respectively.

Cash flow and fair value Interest rate risk

• i. The Group’s main interest rate risk arises from short-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. For the three-month periods ended March 31, 2019 and 2018, the Group’s borrowings at variable rate were mainly denominated in New Taiwan dollars and US Dollars.

• ii. The Group’s borrowings are measured at amortized cost. The borrowings are periodically contractually reprised and to that extent are also exposed to the risk of future changes in market interest rates.

• iii. If the borrowing short term interest rate had increased/decreased by 1% with all other variables held constant, profit, net of tax for the three-month periods ended March 31, 2019 and 2018 would have decreased / increased by $8,535 and $993, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.

• (B) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost and fair value through profit or loss.

• ii. According to the Group’s credit policy, each operating entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors, and the utilization of credit limits is regularly monitored.

• iii. The Group refers to the forecast ability of global economic indicators to adjust the loss rate which is based on historical and current information when assessing the future default possibility of notes receivables, contract assets, accounts receivable, rents receivable and other receivables. The provision matrix as of March 31, 2019, December 31, 2018 and March 31, 2018 is as follows:

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Expected loss

	Expected loss
March 31,2019	rate		Total book value		Loss allowance
	0% 0% 5% 35% 50% 100% 8.01% Expected loss rate		306,222 $ 18,930 2,280 437 - - 250,307 578,176 $ Total book value		- $ - 114 153 - - 20,058 20,325 $ Loss allowance
Not past due Up to 30 days past due 31~90 days past due 91~180 days past due 181~360 days past due More than 360 days Individual provision Total December 31,2018
	0% 0% 5% 35% 50% 100% 0.77% Expected loss rate		281,845 $ 70,170 11,816 498 22 - 259,279 623,630 $ Total book value		- $ - 590 174 11 - 2,005 2,780 $ Loss allowance
Not past due Up to 30 days past due 31~90 days past due 91~180 days past due 181~360 days past due More than 360 days Individual provision Total March 31,2018
	0% 0% 5% 35% 50% 100% 2.19%		248,804 $ 29,938 1,813 673 - 1,573 238,361 521,162 $		- $ - 91 236 - 1,573 5,227 7,127 $
Not past due Up to 30 days past due 31~90 days past due 91~180 days past due 181~360 days past due More than 360 days Individual provision Total

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• iv. Movement in relation to the group applying the simplified approach to provide loss allowance for notes and trade receivable is as follows:

receivable is as follows:
		2019
	Accounts	receivable		Contract assets
At January 1	$	2,780	$	-
Provision for impairment		17,513		-
Write-offs during the period	(	2)		-
Foreign currency conversion		34		-
difference
March 31	$	20,325	$	-
		2018
	Accounts	receivable		Contract assets
At January 1_IAS 39	$	21,655	$	-
Adjustments under new		-		-
standards IAS 39
At January 1_IFRS 9		21,655		-
Reversal of impairment	(	723)		-
Write-offs transfer to other	(	12,628)		-
Reorganisation	(	1,177)		-
March 31	$	7,127	$	-

• (C) Liquidity risks

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Group treasury. The Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.

• ii. The surplus cash generated by each operating entities of the Group will be gathered back to the Group treasury. The Group treasury then invests surplus cash in demand deposits, time deposits, financial assets at fair value through profit or loss, financial assets at amortized cost and debt investments in no active market (time deposits with 3-12 months period), choosing instruments with appropriate maturities or sufficient to sufficient headroom as liquidity provide

• determined by the abovementioned forecasts. As of March 31, 2019, December 31, 2018 and March 31, 2018, the Group held financial assets at monetary market of $ 645,561, $614,561 and $535,261, respectively. Those are expected to readily generate cash inflows for managing liquidity risk.

• iii. Non-derivative financial liabilities:

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March 31, 2019 December 31, 2018 March 31, 2018

Fixed rate: Expiring within one year $ 186,505 $ 249,000 $ -

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

Non-derivative financial liabilities:

March 31, 2019 Short-term borrowings Notes payable Accounts payable Other payables Guarantee deposit received Lease liabilities December 31, 2018 Short-term borrowings Notes payable Accounts payable Other payables Guarantee deposit received Lease payable March 31, 2018 Short-term borrowings Notes payable Accounts payable Other payables Guarantee deposit received Long-term borrowings	Less than 1year 853,495 $ 54 218,358 227,569 - 23,635 Less than 1year 591,000 $ 54 236,387 288,678 - 8,987 Less than 1year 99,315 $ 40 196,792 172,678 - 1,668	Over 1year - $ - - - 3,302 377,806 Over 1year - $ - - - 3,223 10,132 Over 1year - $ - - - 100 24,219	Total
			853,495 $ 54 218,358 227,569 3,302 401,441 Total
			591,000 $ 54 236,387 288,678 3,223 19,119 Total
			99,315 $ 40 196,792 172,678 100 25,887

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(3) Fair value information

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

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an ongoing basis.

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

• Level 3: Unobservable inputs for the asset or liability, including financial assets available for sale in the Group.

• B. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, notes and trade receivables, other receivables, short-term borrowings, notes and trade payables, and other payables are reasonably approximate to the fair values.

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

March 31, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss December 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss	Level 1 778,207 $ Level 1 598,163 $	Level 2 - $ Level 2 - $	Level 3 23,379 $ Level 3 133,663 $	Total
				801,586 $
				Total
				731,826 $

~63~

March 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss	Level 1 385,420 $	Level 2 - $	Level 3 Total 140,595 $ 526,015 $

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

• (A) The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

==> picture [327 x 14] intentionally omitted <==

Market quoted price Closing price Net asset value

• (B) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the financial reporting date.

• (C) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheets. The pricing and inputs information used during valuation are carefully assessed and adjusted based on current market conditions.

• (D) The Group adjusted credit risks assessment into fair value calculation of financial and non-financial instruments to reflect the credit risk of counterparty and quality of the Group.

• E. For the three-month periods ended March 31, 2019 and 2018, there was no transfer between Level 1 and Level 2.

~64~

• F. The movement for the three-month periods ended March 31, 2019 and 2018 of Level 3 is as follows:

and 2018 of Level 3 is as follows:
		Equitysecurities
January 1, 2019	$	133,663
Recognised in profit or loss	(	18,753)
Acquired in the period	(	81,603)
Transfers out from level 3	(	9,928)
March 31, 2019	$	23,379
		Equitysecurities
January 1, 2018	$	143,502
Acquired in the period		1,746
Recognised in profit or loss	(	4,653)
March 31, 2018	$	140,595

• G. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

March 31, 2019

measurement: March 31, 2019	:
Fair value Unlisted shares $ 23,379 Venture capital shares Private equity fund - Nonderivative equity instrument:	Fair value	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
		Net asset value Net asset value	Net asset value Net asset value	- -	The higher the net asset value, the higher the fair value The higher the net asset value, the higher the fair value

~65~

December 31, 2018

December 31, 2018
Fair value Unlisted shares $ 48,915 Venture capital shares Private equity fund 84,748 Nonderivative equity instrument:	Fair value	Valuation technique	Significant unobservable input Range (weighted average) Net asset value - Net asset value -	Relationship of inputs to fair value The higher the net asset value, the higher the fair value The higher the net asset value, the higher the fair value
		Net asset value Net asset value

March 31, 2018

March 31, 2018
Fair value Unlisted shares $ 73,387 Venture capital shares Private equity fund 67,208 Nonderivative equity instrument:	Fair value	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
		Net asset value Net asset value	Net asset value Net asset value	- -	The higher the net asset value, the higher the fair value The higher the net asset value, the higher the fair value

• H. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in a different outcome. For financial assets and liabilities classified as Level 3, if the factors of assessment changed, then the impact to income or other comprehensive income is:

March 31, 2019

Input Financial assets Equity instrument Net asset value	Input	Change		Recognised in profit or loss	Recognised in profit or loss	Recognised in profit or loss		Recognised in other comprehensive income	Recognised in other comprehensive income	Recognised in other comprehensive income
				Favourable change	Unfavourab le change			Favourable change	Unfavourab le change
		± 1%		234 $		234) ($		- $		- $

~66~

December 31, 2018

Recognised in profit or Recognised in other loss com rehensive income p

Favourable Unfavourab Favourable Unfavourab Input Change change le change change le change Financial assets Equity Net asset ± 1% $ 1,337 ($ 1,337) $ - $ - instrument value

March 31, 2018 Recognised in profit or Recognised in other loss com rehensive income p

Favourable Unfavourab Favourable Unfavourab Input Change change le change change le change Financial assets Equity Net asset ± 1% $ 1,406 ($ 1,406) $ - $ - instrument value

13、 SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

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

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.

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

• E. Total purchases from or sales to related parties of at least $100 million or 20% of the paid-in capital: None .

• F. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.

• G. The amount of real estate acquired is NT$300 million or the paid -up capital is over 20%. ： None.

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

• I. Trading in derivative instruments undertaken during the reporting periods: None.

~67~

• J. Significant inter-company transactions during the reporting periods: Please refer to table 3.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 4.

(3) Information on investments in Mainland China

Please refer to table 5.

14、 SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the chief operating decision maker that are used to make strategic decisions.

The basis of the Group's corporate composition, divisional basis and departmental information has not changed significantly during the period.

(2) Segment information

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

For the three -month period ended March 31, 2019 ：

Revenue from external customers Inter-segment revenue Total segment revenue Segment income (loss) including: Depreciation Amortisation Financial cost Interest income Recognised investment profit or loss which is adopting equity method Segment assets		Mask and Semiconductor division		Medical division 32,749 $ - $ 28,783) ($ 4,573) ($ 38) ($ 186) ($ 1 $ - $ 278,855 $	Total 711,254 $ 13,628 $ 55,320 $ 42,222) ($ 1,773) ($ 3,091) ($ 771 $ 5,857) ($ 4,404,614 $
		678,505 $ 13,628 $ 84,103 $ 37,649) ($ 1,735) ($ 2,905) ($ 770 $ 5,857) ($ 4,125,759 $

~68~

For the three -month period ended March 31, 2018 ：

Revenue from external customers Inter-segment revenue Total segment revenue Segment income (loss) including: Depreciation Amortisation Financial cost Interest income Recognised investment profit or loss which is adopting equity method Segment assets		Mask and Semiconductor division		Medical division 48,169 $ 710 $ 6,890) ($ 8,287) ($ 26) ($ - $ 180 $ - $ 388,824 $	Total 631,624 $ 20,552 $ 68,638 $ 37,409) ($ 252) ($ 307) ($ 699 $ 12,305) ($ 3,244,817 $
		583,455 $ 19,842 $ 75,528 $ 29,122) ($ 226) ($ 307) ($ 519 $ 12,305) ($ 2,855,993 $

(3) Reconciliation for segment income (loss)

Inter-department sales are conducted on a fair-trade basis. External income reported to the chief operating decision is measured in a consistent manner with income in the income statement.

The consolidated profit and loss, assets and liabilities of the relevant departments are consistent with the consolidated profit and loss, consolidated assets and consolidated liabilities, so there is no adjustment information.

~69~

TAIWAN MASK CORPORATION AND SUBSIDIARIES

FINANCINGS PROVIDED

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

Table 1

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

No.	Financing Company	Counterparty	Other receivable Y Other receivable Y Other receivable Y Other receivable Y Other receivable Y Other receivable Y Financial Statement Account Rela ted Part y	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Interest Rate (%)	Nature for Financing	Transacti on Amounts	Reason for Financing	Loss Ending Balance allowance	Collateral	Financing Limits for Each Borrowing Company	1,050,404 $ 1 1,050,404 1 1,050,404 1 4,544 2 5,680 2 5,680 2 Financing Company’s Total Financing Amount Limits Note
												Item Value - - - - - - - - - - - -
0 0 0 1 1 1	TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION Innova Vision INC. Innova Vision INC. Innova Vision INC.	Miracle Technology CO., LTD. Youe Chung Capital Corporation Innova Vision INC. Innova Technology Company Innova Vision Shenzen Innova Vision Kabushiki Kaisha		200,000 $ 300,000 200,000 - - -	200,000 $ 300,000 200,000 - - -	65,780 $ 293,000 170,000 - 8,346 56,192	- - - - - -	The need for short- term financing The need for short- term financing The need for short- term financing The need for short- term financing The need for short- term financing The need for short- term financing	- - - 30,305 465 21,566	- - - - - -	- - - - - -		1,050,404 $ 1,050,404 1,050,404 4,544 5,680 5,680

~70~

TAIWAN MASK CORPORATION AND SUBSIDIARIES MARKETABLE SECURITIES HELD

(EXCLUDING INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES)

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

Table 2

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Held Company	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	For th	e three-month periods	ended March 31, 2	019	Note
				Shares	CarryingValue	%	Fair Value
TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation	Wk Technology Fund-Common Stock Tech Alliance Corp.-Common Stock Furun Investment Co., Ltd.-Common Stock Unicon Optical Co., Ltd.-Common Stock Spirox Corporation-Common Stock MechanicNet Group,Inc.-Preferred Stock MechanicNet Group,Inc.-Common Stock Telegraph Hill Partners II,L.P.-Fund Orgchem Technologies, INC.- Common Stock Spirox Corporation-Common Stock Macroblock, INC.-Common Stock Aptos Technology-Common Stock P-TWO INDUSTRIES INC.-Common Stock TAIWAN MASK CORPORATION- Common Stock	None None None None None None None None None None The company is a director of the company None None Parent company	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current	806,400 652,129 1,743,000 10,000,000 2,229,000 759,999 166,666 - 453,288 3,422,000 3,647,609 4,964,216 3,482,000 37,081,440	- $ - 17,430 111,000 59,403 - - - 5,949 91,196 388,470 12,411 128,138 1,001,199	1.89% 2.07% 10.53% 5.89% 2.15% Preferred Stock 3.74% 1.74% 0.83% 3.31% 8.96% 8.74% 3.18% 14.67%	- $ - 17,430 111,000 59,403 - - - 5,949 91,196 388,470 12,411 128,138 1,001,199

~71~

TAIWAN MASK CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

Table 3

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

No. (Note 1)	CompanyName	Related Party	Nature of Relationship (Note 2)		IntercompanyTransactions	IntercompanyTransactions
				Financial Statements Account	Amount	Terms	Percentage of Consolidated Net Revenue or Total Assets (Note 3)
0 0 0 0 0 0 1 1 1 1 1 2 3 3	TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Miracle Technology CO., LTD. MIKO Technology co., Ltd. MIKO Technology co., Ltd.	Innova Vision INC. Innova Vision INC. Youe Chung Capital Corporation Miracle Technology CO., LTD. Miracle Technology CO., LTD. MIKO Technology co., Ltd. Innova Technology Company Innova Technology Company Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha Innova Vision Shenzen MIKO Technology co., Ltd. Miracle International Enterprise(ShanHai) Co., Miracle International Enterprise(ShanHai) Co., Ltd.	1 1 1 1 1 1 3 3 3 3 3 3 3 3	Other receivables Interest income Other receivables Trade receivables Other receivables Sales Sales Trade receivables Sales Other receivables Other receivables Other current liabilities Sales Trade receivables	193,981 $ 1,105 293,856 2,890 66,204 10,404 7,367 11,670 7,100 56,996 8,472 43,218 5,785 14,112	Pay by agreed time Pay by agreed time Pay by agreed time Month-end 60 days Pay by agreed time Month-end 60 days Month-end 90 days Month-end 90 days Month-end 30 days Pay by agreed time Pay by agreed time Pay by agreed time Month-end 30 days Month-end 30 days	4.40% 0.16% 6.67% 0.07% 1.50% 1.46% 1.04% 0.26% 1.00% 1.29% 0.19% 0.98% 0.81% 0.32%

Note 1: TAIWAN MASK CORPORATION and its subsidiaries are coded as follows:

a. TAIWAN MASK CORPORATION is coded 0.

b.The subsidiaries are coded consecutively beginning from 1 in the order presented in the table above.

Note 2: Transactions are categorized as follows:

a. The parent company to subsidiary.

b. Subsidiary to parent company.

c. Subsidiary to subsidiary.

Note 3: The transaction amount accounts for the calculation of the combined total revenue or total assets ratio. In the case of assets and liabilities, the ending balance is calculated as the total assets. If it is a profit or loss item, the accumulated amount in the period accounts for the total

Note 4: Only transactions with a total amount of NT$1 million or more will be disclosed, and the transaction will not be disclosed separately.

~72~

TAIWAN MASK CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

Table 4

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Investor Company	Investee Company	Location	Main Businesses	Original Inves	tment Amount	Balance	as of March 31,2019	as of March 31,2019	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Note
				March 31, 2019	December 31, 2018	Shares	Percentage of Ownership	Carrying Value
Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Youe Chung Capital Corporation	SunnyLake Park International Holdings, Inc. Youe Chung Capital Corporation Innova Vision INC. Advagene Biopharma Co., Ltd. Miracle Technology CO., LTD. Weida Hi-Tech Innova Vision INC.	British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	Investing in communication business Investing in communication business Medical device manufacturing, wholesale and trading Medical, research and development, manufacturing Electronic component manufacturing, wholesale of Research, design, development, manufacturing and sales of display Medical device manufacturing, wholesale and trading	203,026 1,697,627 52,040 165,691 330,252 293,371 55,146	203,026 1,697,627 52,040 165,691 330,252 293,371 55,146	6,344,000 142,329,470 5,203,956 12,549,652 18,287,168 25,510,500 5,514,596	100 100 30.26 28.38 100 100 32.06	65,794 $ 454,490 3,437 94,348 297,879 217,629 3,642	19,274) ($ 370,985 29,094) ( 16,050) ( 19,197) ( 16,040) ( 29,094) (	19,274) ($ 50,230 8,803) ( 4,565) ( 19,197) ( 16,040) ( 9,329) (

~73~

TAIWAN MASK CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

Table 4

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Investor Company	Investee Company	Location	Main Businesses	Original Inves	tment Amount	Balance	as of March 31,2019	as of March 31,2019	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Note
				March 31, 2019	December 31, 2018	Shares	Percentage of Ownership	Carrying Value
Youe Chung Capital Corporation Youe Chung Capital Corporation Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision (B.V.I.) Inc.	Advagene Biopharma Co., Ltd. Aptos Technology Innova Technology Company Calaview International Holding Company Limited Innova Vision (B.V.I.) Inc. Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha	Taiwan Taiwan Taiwan Seychelles British Virgin Islands Japan Japan	Medical, research and development, manufacturing Design, packaging and testing of NAND flash memory and solid Contact lens sales Investing in communication business Investing in communication business Contact lens sales Contact lens sales	65,719 77,411 35,000 - 60,157 8,349 56,420	65,719 - 5,000 - 60,157 8,349 56,420	3,550,223 18,723,108 3,500,000 1,000,000 1,000,000 600 5,900	8.03 29.55 100 100 100 9.23 90.77	26,690 74,928 6,746) ( 8,368) ($ 47,193) ( 4,817) ( 47,362) (	16,050) ( 11,480) ( 1,423) ( 343) ($ 1,507) ( 1,660) ( 1,660) (	1,292) ( - 1,423) ( 343) ($ 1,507) ( 153) ( 1,507) (

~74~

TAIWAN MASK CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

Table 4

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Investor Company	Investee Company	Location	Main Businesses	Original Inves	tment Amount	Balance	as of March 31,2019	as of March 31,2019	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Note
				March 31, 2019	December 31, 2018	Shares	Percentage of Ownership	Carrying Value
Miracle Technology CO., LTD. Miracle Technology CO., LTD. MIRACLE(SAMOA)CO.,LTD Jingjing Investment Co., Ltd. Weida Hi-Tech Weida Hi-Tech Smart Touch Co.,Ltd.	Jingjing Investment Co., Ltd. Miracle(Samoa)Co., Ltd Misun Technology Co., Ltd Miko Technology Co., Ltd Smart Touch Co.,Ltd Central Star Ltd Central Star Ltd	Taiwan Samoa Mauritius Hong Kong British Virgin Islands Seychelles British Virgin Islands	Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business	10,012 10,215 10,215 37 14,602 4,076 13,714	10,012 10,215 10,215 37 14,602 4,076 13,714	1,400,000 - - 10,000 4,573 129,200 450,000	100 100 100 100 100 22.3 77.7	168,449 4,828 4,828 65,618 2 - 1	4,864 15,886) ( 15,886) ( 533 - - -	4,864 15,886) ( 15,886) ( 533 - - -

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TAIWAN MASK CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

Investee Company Table 5	Main Businesses	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Balance of Accumulated Outflow of Investment from Taiwan	Investment Flows	Balance Accumulated Outflow of Investment from Taiwan	(Amounts in th Net Income (Loss) of the Investee Company	ousands of new Tai Percentage of Ownership (%)	wan dollars and foreign currencies,Unless Specified Otherwise) Carrying Amount as of December 31, 2018 Balance of Accumulated Inward Remittance of Earnings Note Investment Income (Loss) Recognized in Current Period (Note 2 )	wan dollars and foreign currencies,Unless Specified Otherwise) Carrying Amount as of December 31, 2018 Balance of Accumulated Inward Remittance of Earnings Note Investment Income (Loss) Recognized in Current Period (Note 2 )	wan dollars and foreign currencies,Unless Specified Otherwise) Carrying Amount as of December 31, 2018 Balance of Accumulated Inward Remittance of Earnings Note Investment Income (Loss) Recognized in Current Period (Note 2 )
					Outflow Inflow
Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Sichuan Miracle Power h l d Innova Vision Shenzen Touch Hi-Tech Company Name	Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. IC product design, production and sales Medical device manufacturing, wholesale and tradin Research, design, development, manufacturing and sales of display panel control chips and modules Ending Balance of Accumulated Investment in Mainland China	3,283 $ 10,215 11,618 4,337 25,684 Investment Amounts Authorized by Investment Commission, MOEA	2 2 2 2 2 Upper Limit on Investment Authorized by Investment Commission, MOEA	3,283 $ 10,215 - 4,337 25,684	- $ - $ - - - - - - - -	3,283 $ 10,215 - 4,337 25,684	4,341 $ 15,886) ( 471) ( 343) ( 973) (	100% 100% 100% 100% 100%	4,341 $ 15,886) ( 471) ( 343) ( 973) (	116,724 $ - $ 4,828 - 25,521 - 8,394) ( - 1,118 -	Note2(2)B Note2(2)B Note2(2)B Note2(2)C Note2(2)C
Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Innova Vision Shenzen Touch Hi-Tech	3,283 $ 10,215 - 4,337 25,684	3,283 $ 10,215 - 4,337 25,684	$ 151,731 151,731 151,731 6,816 90,431

Note 1 ： The methods for engaging in investment in Mainland China include the following:

a. Direct investment in Mainland China.

b. Indirectly investment in Mainland China through companies registered in a third region (Please specify the name of the company in third region). c. Other methods.

Note 2 ： The investment income (loss) recognized in current period:Please specify no investment income (loss) has been recognized due to the investment is still during development stage. The investment income (loss) were determined based on the following basis:

a. The financial report was audited and certified by an international accounting firm in cooperation with an R.O.C. accounting firm.

b. The financial statements was audited and certificated by independent auditors of the parent company in Taiwan. c. Others.

Note 3: The relevant figures in this table should be listed in NTD.

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