Transcend — Interim / Quarterly Report 2014

Nov 6, 2014

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS MARCH 31, 2014 AND 2013

---

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

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR14000011

To the Board of Directors and Stockholders of Transcend Information, Inc.

We have reviewed the accompanying consolidated balance sheets of Transcend Information, Inc. and its subsidiaries as of March 31, 2014 and 2013 and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three-month periods then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

We conducted our reviews in accordance with the Statement of Auditing Standards No. 36 “Engagements to Review Financial Statements” in the Republic of China. A review consists primarily of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the “Rules Governing the Preparations of Financial Statements by Securities Issuers” and International Accounting Standard No. 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

May 7, 2014 Taipei, Taiwan

Republic of China

---

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

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

~1~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan Dollars)

(The consolidated balance sheets as of March 31, 2014 and 2013 are reviewed, not audited)

1100 1110 1147 1150 1170 1180 1200 1210 130X 1470 11XX 1523 1550 1600 1760 1840 1900 15XX 1XXX	Assets	Notes	March31,2014 AMOUNT % $ 10,757,242 44 - - 564,158 2 3,562 - 2,750,479 11 - - 274,232 1 10,457 - 5,974,014 24 18,183 - 20,352,327 82 299,624 1 221,092 1 3,279,621 13 301,587 1 96,262 1 218,853 1 4,417,039 18 $ 24,769,366 100	December31,2013 AMOUNT % $ 11,639,505 48 - - 123,698 1 4,158 - 2,732,001 11 - - 254,528 1 - - 5,075,939 21 36,311 - 19,866,140 82 264,422 1 221,255 1 3,330,875 14 303,232 1 78,915 - 183,691 1 4,382,390 18 $ 24,248,530 100	March31,2013	March31,2013
			AMOUNT $ 10,757,242 - 564,158 3,562 2,750,479 - 274,232 10,457 5,974,014 18,183 20,352,327 299,624 221,092 3,279,621 301,587 96,262 218,853 4,417,039 $ 24,769,366	AMOUNT $ 11,639,505 - 123,698 4,158 2,732,001 - 254,528 - 5,075,939 36,311 19,866,140 264,422 221,255 3,330,875 303,232 78,915 183,691 4,382,390 $ 24,248,530	AMOUNT $ 10,248,560 10,069 485,211 9,056 2,660,777 120,127 209,572 - 6,280,958 55,141 20,079,471 546,279 - 3,459,643 306,963 77,296 158,286 4,548,467 $ 24,627,938	%
	Current assets Cash and cash equivalents Current financial assets at fair value through profit or loss Current bond investments without active market Notes receivable, net Accounts receivable, net Accounts receivable due from related parties, net Other receivables Other receivables - related parties Inventories, net Other current assets Current Assets Non-current assets Available-for-sale financial assets-non-current Investments accounted for using equity method Property, plant and equipment Investment property, net Deferred tax assets Other non-current assets Non-current Assets Total Assets	6(1) 6(2) 6(3) 7 7 6(4) 6(5) 6(6) 6(7) and 8 6(8) 6(9) and 8				42 - 2 - 11 - 1 - 26 -
						82
						2 - 14 1 - 1
						18
						100

(Continued)

~2~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan Dollars)

(The consolidated balance sheets as of March 31, 2014 and 2013 are reviewed, not audited)

2100 2150 2170 2180 2200 2230 2300 21XX 2570 2600 25XX 2XXX 3110 3200 3310 3350 3400 31XX 3XXX	Liabilities and Equity	Notes	March31,2014 AMOUNT % $ 593,500 2 11 - 2,141,199 9 40,717 - 384,602 2 348,144 1 35,936 - 3,544,109 14 397,188 2 54,622 - 451,810 2 3,995,919 16 4,307,617 18 4,799,075 19 2,733,339 11 8,875,858 36 57,558 - 20,773,447 84 20,773,447 84 $ 24,769,366 100	December31,2013 AMOUNT % $ 579,040 2 1,215 - 2,669,584 11 45,801 - 393,810 2 239,967 1 50,013 - 3,979,430 16 395,542 2 49,349 - 444,891 2 4,424,321 18 4,307,617 18 4,799,075 20 2,733,339 11 7,975,047 33 9,131 - 19,824,209 82 19,824,209 82 $ 24,248,530 100	March31,2013	March31,2013
			AMOUNT $ 593,500 11 2,141,199 40,717 384,602 348,144 35,936 3,544,109 397,188 54,622 451,810 3,995,919 4,307,617 4,799,075 2,733,339 8,875,858 57,558 20,773,447 20,773,447 $ 24,769,366	AMOUNT $ 579,040 1,215 2,669,584 45,801 393,810 239,967 50,013 3,979,430 395,542 49,349 444,891 4,424,321 4,307,617 4,799,075 2,733,339 7,975,047 9,131 19,824,209 19,824,209 $ 24,248,530	AMOUNT $ 158,600 3,737 2,808,344 42,410 496,354 318,956 39,554 3,867,955 344,600 58,215 402,815 4,270,770 4,307,617 5,014,456 2,448,801 8,509,457 76,837 20,357,168 20,357,168 $ 24,627,938	%
	Current liabilities Short-term borrowings Notes payable Accounts payable Accounts payable to related parties Other payables Current tax liabilities Other current liabilities Current Liabilities Non-current liabilities Deferred tax liabilities Other non-current liabilities Non-current Liabilities Total Liabilities Share capital Common stock Capital surplus Capital surplus Retained earnings Legal reserve Unappropriated retained earnings Other equity interest Other equity interest Total equity attributable to owners of parent Total Equity Commitments and contingent liabilities Total Liabilities and Equity	6(10) 7 6(12) 6(13) 6(14) 6(16) 9				1 - 12 - 2 1 -
						16
						1 -
						1
						17
						18 20 10 35 -
						83
						83
						100

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

~3~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan Dollars, except earnings per share amounts) (Unaudited)

Items

Threemonths endedMarch31 2014 2013 Notes AMOUNT % AMOUNT % 6(17) and 7 $ 6,794,611 100 $ 7,051,129 100 6(4) and 7 ( 5,467,852)( 81)( 5,747,113)( 82) 1,326,759 19 1,304,016 18 6(20) ( 281,855)( 4)( 245,003)( 3) ( 91,112)( 1)( 94,523)( 1) ( 45,938)( 1)( 42,818)( 1) ( 418,905)( 6)( 382,344)( 5) 907,854 13 921,672 13 6(18) 42,665 1 25,967 - 6(19) 74,539 1 54,338 1 ( 2,666) - ( 5) - 6(6) ( 163) - - - 114,375 2 80,300 1 1,022,229 15 1,001,972 14 6(21) ( 121,418)( 2)( 132,327)( 2) $ 900,811 13 $ 869,645 12 $ 15,934 - $ 77,280 1 6(5) 35,202 1 128,962 2 6(21) ( 2,709) - ( 13,138) - $ 48,427 1 $ 193,104 3 $ 949,238 14 $ 1,062,749 15 $ 900,811 13 $ 869,645 12 $ 949,238 14 $ 1,062,749 15 6(22) $ 2.09 $ 2.02 $ 2.09 $ 2.01

4000 Operating Revenue 5000 Operating Costs 5900 Gross Profit Operating Expenses 6100 Sales and marketing expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating Profit Non-operating Income and Expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit/(loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before Income Tax 7950 Income tax expense 8200 Profit for the period Other Comprehensive Income 8310 Foreign exchange translation differences for foreign operations 8325 Unrealized gain on available-for-sale financial assets 8399 Income tax on other comprehensive income 8300 Other comprehensive income for period 8500 Total comprehensive income Net Profit attributable to: 8610 Owners of parent Comprehensive Income attributable to: 8710 Owners of parent Earnings Per Share 9750 Basic earnings per share 9850 Diluted earnings per share

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

~4~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(Unaudited)

For the three-month period ended March 31, 2013 Balance at January 1, 2013 Net income for the period Other comprehensive income for the period Balance at March 31, 2013 For the three-month period ended March 31, 2014 Balance at January 1, 2014 Net income for the period Other comprehensive income for the period Balance at March 31, 2014	Notes								Equityattributa	bl	e to owners of the	parent	parent				Total equity
			Common stock				Capital Surplus				Retain	ed	Earnings	Other equityinterest
					Additional paid-in capital		Donated assets received		Premium from merger		Legal reserve		Unappropriated retained earnings	Foreign exchange translation differences for foreign operations	Unrealized gain or loss on available-for-sale financial assets
	6(16) 6(16)		$ 4,307,617 - - $ 4,307,617 $ 4,307,617 - - $ 4,307,617		$ 4,975,222 - - $ 4,975,222 $ 4,759,841 - - $ 4,759,841		$ 4,106 - - $ 4,106 $ 4,106 - - $ 4,106		$ 35,128 - - $ 35,128 $ 35,128 - - $ 35,128		$ 2,448,801 - - $ 2,448,801 $ 2,733,339 - - $ 2,733,339		$ 7,639,812 869,645 - $ 8,509,457 $ 7,975,047 900,811 - $ 8,875,858	($ 95,549 ) - 64,142 ($ 31,407 ) $ 27,764 - 13,225 $ 40,989	($ 20,718 ) - 128,962 $ 108,244 ($ 18,633 ) - 35,202 $ 16,569		$ 19,294,419 869,645 193,104 $ 20,357,168 $ 19,824,209 900,811 48,427 $ 20,773,447

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

~5~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED MARCH 31

(Expressed in thousands of New Taiwan Dollars)

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated profit before tax for the period Adjustments to reconcile income before tax to net cash provided by operating activities: Income and expenses having no effect on cash flows Gain on disposal of financial assets Share of loss of associates and joint ventures accounted for using equity method Provision for bad debt expense Loss (gain) on market price decline (recovery) of inventory Depreciation expense Interest income Gains on disposal of property, plant and equipment Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Net gain on financial assets at fair value through profit or loss Notes and accounts receivable Other receivables Other receivables - related parties Inventories Other current assets Net changes in liabilities relating to operating activities Notes and accounts payable Other payables Other current liabilities Other non-current liabilities Cash (used in) provided by generated from operations Interest received Interest paid Income tax paid Net cash (used in) provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Increase in bond investments without active markets Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in other non-current assets Net cash used in investing activities Effect of foreign exchange rate changes (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

For the three-month periods ended March 31, Notes 2014 2013 $ 1,022,229 $ 1,001,972 6(2) ( 2,432 ) ( 4,936 ) 6(6) 163 - 6(3) - 314 6(4) 19,852 ( 29,789 ) 6(20) 59,742 58,993 6(18) ( 38,584 ) ( 22,320 ) ( 855 ) ( 1,970 ) - ( 10,069 ) ( 19,925 ) ( 199,440 ) ( 11,538 ) 58,633 ( 10,457 ) - ( 917,927 ) ( 28,839 ) 18,128 3,757 ( 534,673 ) ( 472,448 ) ( 6,845 ) 28,152 ( 14,077 ) ( 23 ) 5,273 ( 1,652 ) ( 431,926 ) 380,335 30,418 32,396 ( 2,363 ) - ( 31,651 ) ( 50,097 ) ( 435,522 ) 362,634 ( 436,329 ) ( 10,211 ) 6(7) ( 36,854 ) ( 18,412 ) 6(7) 42,298 4,024 ( 35,162 ) ( 320 ) ( 466,047 ) ( 24,919 ) 19,306 38,602 ( 882,263 ) 376,317 11,639,505 9,872,243 $ 10,757,242 $ 10,248,560

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

~6~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2014 AND 2013

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

(Unaudited)

1. HISTORY AND ORGANIZATION

Transcend Information, Inc. (the “Company”) was incorporated under the provisions of the Company Law of the Republic of China (R.O.C.) in August 1989. The main activities of the Company and its subsidiaries (collectively referred herein as the “Group”) are manufacturing, processing and the sale of computer software and hardware, peripheral equipment and other computer components. The Securities and Futures Commission of the Republic of China had approved the Company’s shares to be listed on the Taiwan Stock Exchange and the shares started trading on May 3, 2001.

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

These consolidated financial statements were authorized for issuance by the Board of Directors on May 7, 2014.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) None.

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

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC in preparing the consolidated financial statements. The related new standards, interpretations and amendments are listed below:

statements. The related new standards, interpretations and amendments	are listed below:
New Standards,Interpretations and Amendments	IASB Effective Date
Limited exemption from comparative IFRS 7 disclosures for first-time adopters (amendment to IFRS 1)	July 1, 2010
Severe hyperinflation and removal of fixed dates for first-time adopters (amendment to IFRS 1)	July 1, 2011
Government loans (amendment to IFRS 1)	January 1, 2013
Disclosures－Transfers of financial assets (amendment to IFRS 7)	July 1, 2011
Disclosures－Offsetting financial assets and financial liabilities (amendment to IFRS 7)	January 1, 2013
IFRS 10, ‘Consolidated financial statements’	January 1, 2013
	(Investment entities:
	January 1, 2014)

~7~

New Standards,Interpretations and Amendments	IASB Effective Date
IFRS 11,‘Joint arrangements’	January 1, 2013
IFRS 12,‘Disclosure of interests in other entities’	January 1, 2013
IFRS 13, ‘Fair value measurement’	January 1, 2013
Presentation of items of other comprehensive income (amendment to IAS 1)	July 1, 2012
Deferred tax: recovery of underlying assets (amendment to IAS 12)	January 1, 2012
IAS 19 (revised), ‘Employee benefits’	January 1, 2013
IAS 27,‘Separate financial statements’ (as amended in 2011)	January 1, 2013
IAS 28,‘Investments in associates and joint ventures’(as amended in 2011)	January 1, 2013
Offsetting financial assets and financial liabilities (amendment to IAS 32)	January 1, 2014
IFRIC 20, ‘Stripping costs in the production phase of a surface mine’	January 1, 2013
Improvements to IFRSs 2010	January 1, 2011
Improvements to IFRSs 2009－2011	January 1, 2013

Based on the Group’s assessment, the adoption of the 2013 version of IFRS has no significant impact on the consolidated financial statements of the Group, except for the following:

• A. IAS 1, ‘Presentation of financial statements’

• The amendment requires entities to separate items presented in OCI classified by nature into two groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the statement of comprehensive income.

• B. IFRS 12, ‘Disclosure of interests in other entitles’

• The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. And, the Group will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly.

• For the above items, the Group is assessing their impact on the consolidated financial statements and will disclose the affected amounts accordingly.

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

New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC:

~8~

New Standards,Interpretations andAmendments

IASB EffectiveDate

IFRS 9, ‘Financial instruments' IFRIC 14, 'Regulatory deferral accounts' Services related contributions fromemployees or third parties (admendments to IAS 19R) Recoverable amount disclosures for non-financial assets (amendments to IAS 36) Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013

Not yet been decided January 1, 2014 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014

The Group is assessing the potential impact of the new standards, interpretations and amendments above and has not yet been able to reliably estimate their impact on the consolidated financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the compliance statement, basis of preparation and basis of consolidation that are set out below, the rest of the principal accounting policies applied in the preparation of these consolidated financial statements are the same as those disclosed in Note 4 to the consolidated financial statements as of and for the year ended December 31, 2013. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

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

• B. The consolidated financial statements as of and for the three-month period ended March 31, 2014 should be read together with those as of and for the year ended December 31, 2013.

(2) Basis of preparation

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

• (a) Available-for-sale financial assets measured at fair value.

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

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

~9~

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:

Basis for preparation of these consolidated financial statements is the same as that for preparation of the consolidated financial statements as of and for the year ended December 31, 2013.

B. Subsidiaries included in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2014	December 31, 2013	March 31, 2013
Transcend Taiwan 〞 〞 〞 〞 Saffire Investment Ltd. Memhiro Pte. Ltd. 〞 〞 〞 〞	Saffire Investment Ltd. (Saffire) Transcend Japan Inc. (Transcend Japan) Transcend Information UK Limited (Transcend UK) Transcend Information Inc. (Transcend USA) Transcend Korea Inc. (Transcend Korea) Memhiro Pte. Ltd. (Memhiro) Transcend Information Europe B.V. (Transcend Europe) Transcend Information Trading GmbH, Hamburg (Transcend Germany) Transcend Information (Shanghai), Ltd. (Transcend Shanghai) Transtech Trading (Shanghai) Co., Ltd. (Transtech Shanghai) Transcend Information (Hong Kong), Ltd. (Transcend Hong Kong)	Investment holding company Wholesaler of computer memory modules and peripheral products Wholesaler of computer memory modules and peripheral products Wholesaler of computer memory modules and peripheral products Wholesaler of computer memory modules and peripheral products Investment holding company Wholesaler of computer memory modules and peripheral products Wholesaler of computer memory modules and peripheral products Manufacturing, processing and sale of computer software and hardware, peripheral equipment and other computer components Wholesaler of computer memory modules, peripheral equipment and other computer components Wholesaler of computer memory modules and peripheral products	100 100 - 100 100 100 100 100 100 100 100	100 100 - 100 100 100 100 100 100 100 100	100 100 100 100 100 100 100 100 100 100 100	- - Note 2 Note 1 - - - Note 1 - - -

Note 1:The financial statements of Transcend USA and Transcend Germany as of and for the year ended December 31, 2013 was audited by other independent accountants.

~10~

• Note 2:Transcend UK is in the process of liquidation for the purpose of reorganization for the Group’s operational requirments. The investment funds were repatriated in September, 2013.

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

• D. Adjustment for subsidiaries with difference balance sheet dates: None.

• E. Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.

5. CRITICALACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The related information is addressed below:

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

Investment property

The Group uses part of the property for its own use and part to earn rentals or for capital appreciation. When the portions cannot be sold separately and cannot be leased separately under finance lease, the property is classified as investment property only if the own-use portion accounts of the property is not material.

(2) Critical accounting estimates and assumptions

• A. Impairment assessment of investments accounted for using equity method

The Group assesses the impairment of an investment accounted for using equity method as soon as there is any indication that it might have been impaired and its carrying amount cannot be recoverable. The Group assesses the recoverable amounts of an investment accounted for using equity method based on the present value of expected future cash flows from the investee, and analyzes the reasonableness of related assumptions.

• B. Realisability of deferred tax assets

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred tax assets.

As of March 31, 2014, the Group recognised deferred tax assets amounting to $96,262.

• C. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory

~11~

comsumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of March 31, 2014, the carrying amount of inventories was $5,974,014.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Time deposits Cash equivalents - Bond with repurchase agreement Total	March 31,2014 852 $ 4,447,962 6,308,428 - 10,757,242 $	December 31,2013 736 $ 5,608,593 5,985,468 44,708 11,639,505 $	March 31,2013
			891 $ 3,845,261 6,402,408 -
			10,248,560 $

• A. The Group associates 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. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.

• B. Cash and cash equivalents pledged as collateral had been reclassified as ‘other non-current assets’ in the amounts of $3,050, $2,981 and $2,983, as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively. Please refer to Note 8.

• C. As of December 31, 2013, the bond with repurchase agreement recognized as cash equivalents is a 30-day highly-liquid investment with annual interest rate of 1.50%.

(2) Current bond investments without active markets

Items Current items： Funds-bonds Bond with repurchase agreement	March 31,2014 - $ 564,158 564,158 $	December 31,2013 49,185 $ 74,513 123,698 $	March 31,2013
			485,211 $ -
			485,211 $

• A. The counterparties of the Group’s funds investments, namely Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Shanghai Pudong Development Bank, are well-known banks in the People’s Republic of China. The bond with repurchase agreements is sold by Yuanta Asset Management Limited. The maximum exposure to credit risk at balance sheet date is the carrying amount of bond investments without active markets.

• B. The Group recognised gain on disposal of financial assets of $2,432 and $4,936 in profit or loss for the three-month periods ended March 31, 2014 and 2013, respectively.

~12~

• C. No bond investments without active market were pledged to others.

• (3) Accounts receivable

Accounts receivable
		March 31,2014	December 31,2013			March 31,2013
Accounts receivable	$	2,799,844	$	2,779,323	$	2,693,513
Less: Allowance for bad debts	(	49,365)	(	47,322)	(	32,736)
	$	2,750,479	$	2,732,001	$	2,660,777

• A.The Group has insured credit insurance that covers accounts receivable of its major customers. Should bad debt occur, the Group will receive 90% of the losses resulting from non-payment.

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

Up to 30 days 31 to 90 days 91 to 180 days	March 31,2014 508,116 $ 38,820 4,596 551,532 $	December 31,2013 656,958 $ 20,339 1,775 679,072 $	March 31,2013 176,278 $ 20,177 16,707 213,162 $

The above ageing analysis was based on past due date.

• C.Movement analysis of financial assets that were impaired is as follows:

• (a)As of March 31, 2014, December 31, 2013, and March 31, 2013, the Group’s accounts receivable that were impaired amounted to $49,365, $47,322 and $32,736, respectively.

• (b)Movements on the Group provision for impairment of accounts receivable are as follows:

AtJanuary 1 Provision for impairment Write-offs during the period Net exchange differences At March 31	2014 2013 Individualprovision Individualprovision 47,322 $ 57,267 $ - 314 - 24,845) ( 2,043 - 49,365 $ 32,736 $	2013
		Individualprovision
		32,736 $

D.The credit quality of accounts receivable that were neither past due nor impaired was in the following categories based on the Group’s Credit Quality Control Policy:

Group 1 Group 2	March 31,2014 649,371 $ 1,549,576 2,198,947 $	December 31,2013 682,540 $ 1,370,389 2,052,929 $	March 31,2013 941,370 $ 1,506,245 2,447,615 $

Group 1:Customers with credit line under $20,000, including a comprehensive consideration of revenues, capital, and operational performance.

• Group 2:Customers with credit line over $20,000, including a comprehensive consideration of revenues, capital, and operational performance.

~13~

• E.The Group’s maximum exposure to credit risk as of March 31, 2014, December 31, 2013 and March 31, 2013 was the carrying amount of every class of receivables less 90% of insurance claims.

• F.The Group does not hold any collateral as security.

(4) Inventories

March 31, 2014

			March 31,2014
Raw materials Work in progress Finished goods Total		Cost	Allowance for valuation loss		Book value
		3,832,992 $ 796,362 1,441,486 6,070,840 $	48,166) ($ 9,663) ( 38,997) ( 96,826) ($		3,784,826 $ 786,699 1,402,489 5,974,014 $

December 31, 2013

			December 31,2013	December 31,2013
Raw materials Work in progress Finished goods Total Raw materials Work in progress Finished goods Total		Cost	Allowanceforvaluation loss			Bookvalue
		2,581,990 $ 1,057,654 1,513,269 5,152,913 $	24,610) ($ 7,210) ( 45,154) ( 76,974) ($ March 31,2013			2,557,380 $ 1,050,444 1,468,115 5,075,939 $
		Cost		Allowance for valuation loss		Book value
		2,946,613 $ 1,329,996 2,061,202 6,337,811 $	34,532) ($ 9,332) ( 12,989) ( 56,853) ($			2,912,081 $ 1,320,664 2,048,213 6,280,958 $

• A.Expense and loss incurred on inventories for the three-month periods ended March 31, 2014 and 2013 were as follows:

For the three-month periods March 31

	For the three-monthperiods March 31	periods March 31
Cost of inventories sold (Reversal of) inventory write-down	2014 2013 5,448,000 $ 5,776,902 $ 19,852 29,789) ( 5,467,852 $ 5,747,113 $	2013
		5,747,113 $

The reversal of inventory write-down for the three-month period ended March 31, 2013 was caused by the price recovery of certain finished goods affecting the allowance of valuation loss on certain raw materials and work-in-process goods.

• B.No inventories were pledged to others.

~14~

(5) Non-current available-for-sale financial assets

Items		March 31,2014	December	31,2013		March 31,2013
Non-current items：
Listed stocks	$	281,930	$	281,930	$	436,910
Others		31,125		31,125		31,125
Subtotal		313,055		313,055		468,035
Valuation adjustments of
available-for-sale
financial assets		16,569	(	18,633)		108,244
Accumulated impairment	(	30,000)	(	30,000)	(	30,000)
Total	$	299,624	$	264,422	$	546,279

• A. The Group recognised $35,202 and $128,962 in other comprehensive income for fair value change for the three-month periods ended March 31, 2014 and 2013, respectively.

• B. Skyviia Corp., one of the Group’s equity investments, experienced an unexpected poor business performance in 2012. On November 29, 2012, the stockholders at the extraordinary stockholders’ meeting adopted a resolution to dissolve and liquidate Skyviia Corp. The Group assessed full impairment on the investment and recognized impairment loss of $30,000 for the year ended December 31, 2012.

• C. Equity investment in Taiwan IC Packaging Corporation was initially recognized as available-for-sale financial assets. On June 17, 2013, as resolved by the Board of Directors and the shareholders’ meeting, the Group and Group’s Chairman of the Board were elected as a director and the Chairman of the Board of Taiwan IC Packaging Corporation, respectively. Pursuant to the above, the Group gained significance influence on Taiwan IC Packaging Corporation. The Group, in accordance with IAS and IFRS, reclassified the investment to investment accounted for using equity method for the amount of $251,658. Please refer to Note 6(6).

• D. No available-for-sale financial assets were pledged to others.

(6) Investments accounted for using equity method

• A.Details are as follows:

.Details are as follows:
Investee Company		Percentage of ownership Bookvalue 13.55 221,092 $ March31,2014				December		Bookvalue 31,2013
		Percentage of ownership				Percentage of ownership
Taiwan IC Packaging Corp.		13.55		221,092 $		13.55		221,255 $

• B.Associates – Entity controlled by the Group’s key management

The financial information of the Company’s principal associates is summarized below:

~15~

March 31, 2014 Taiwan IC Packaging Corp. December 31, 2013 Taiwan IC Packaging Corp.	Assets 2,966,278 $ 3,051,768 $	Liabilities 428,223 $ 504,558 $	Revenue Profit/(Loss) 497,409 $ 9,155) ($ 2,249,714 $ 405,554) ($	% interest held
				13.55%
				13.55%

• C.Share of loss of investments accounted for using the equity method are as follows:

	For the three-monthperiods ended March	For the three-monthperiods ended March	For the three-monthperiods ended March	31
Investee Company		2014	2013
Taiwan IC Packaging Corp.	($	163)	$	-

• D.The Group’s investment in Taiwan IC Packaging Corporation has quoted market price. The fair value of Taiwan IC Packaging Corporation was $467,400 and $291,100 as of March 31, 2014 and December 31, 2013, respectively.

• E.The investment loss for the year ended December 31, 2013 was recognised based on the financial statements of the investee company which was audited by other independent accountants.

• F.The investment in Taiwan IC Packaging Corporation was reclassified from the non-current available-for-sale financial assets. Please refer to Note 6(5)C.

~16~

(7) Property, plant and equipment

At January 1, 2014 Cost Accumulated depreciation 2014 Opening net book amount Additions Disposals Depreciation charge Net exchange differences Closing net book amount At March 31, 2014 Cost Accumulated depreciation		Land	Buildings	Machinery	Vehicles	Office Equipment	Others	Total
		729,847 $ - 729,847 $ 729,847 $ - - - 5,975 735,822 $ 735,822 $ - 735,822 $	2,780,284 $ 648,599) ( 2,131,685 $ 2,131,685 $ 424 - 29,973) ( 5,019 2,107,155 $ 2,788,026 $ 680,871) ( 2,107,155 $	863,765 $ 431,096) ( 432,669 $ 432,669 $ 33,558 41,366) ( 25,093) ( 409 400,177 $ 814,837 $ 414,660) ( 400,177 $	12,411 $ 9,238) ( 3,173 $ 3,173 $ 691 52) ( 346) ( 10 3,476 $ 10,137 $ 6,661) ( 3,476 $	53,981 $ 39,088) ( 14,893 $ 14,893 $ - 2) ( 961) ( 42 13,972 $ 54,442 $ 40,470) ( 13,972 $	71,969 $ 53,361) ( 18,608 $ 18,608 $ 1,836 23) ( 1,403) ( 1 19,019 $ 73,343 $ 54,324) ( 19,019 $	4,512,257 $ 1,181,382) ( 3,330,875 $ 3,330,875 $ 36,509 41,443) ( 57,776) ( 11,456 3,279,621 $ 4,476,607 $ 1,196,986) ( 3,279,621 $

~17~

At January 1, 2013 Cost Accumulated depreciation 2013 Opening net book amount Additions Disposals Depreciation charge Net exchange differences Closing net book amount At March 31, 2013 Cost Accumulated depreciation		Land	Buildings	Machinery	Vehicles	Office Equipment	Others	Total
	748,603 $ - 748,603 $ 748,603 $ - - - 6,455) ( 742,148 $ 742,148 $ - 742,148 $		2,722,444 $ 517,899) ( 2,204,545 $ 2,204,545 $ 1,307 - 29,335) ( 24,582 2,201,099 $ 2,755,151 $ 554,052) ( 2,201,099 $	814,401 $ 330,516) ( 483,885 $ 483,885 $ 16,895 1,689) ( 24,116) ( 7,430 482,405 $ 840,795 $ 358,390) ( 482,405 $	17,820 $ 12,575) ( 5,245 $ 5,245 $ - - 594) ( 89 4,740 $ 18,057 $ 13,317) ( 4,740 $	52,365 $ 35,873) ( 16,492 $ 16,492 $ 53 - 1,429) ( 32 15,148 $ 52,047 $ 36,899) ( 15,148 $	66,298 $ 51,177) ( 15,121 $ 15,122 $ 157 365) ( 1,142) ( 331 14,103 $ 65,488 $ 51,385) ( 14,103 $	4,421,931 $ 948,040) ( 3,473,891 $ 3,473,892 $ 18,412 2,054) ( 56,616) ( 26,009 3,459,643 $ 4,473,686 $ 1,014,043) ( 3,459,643 $

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

~18~

(8) Investment property

Investment property
At January 1, 2014 Cost Accumulated depreciation and impairment 2014 Opening net book amount Additions Depreciation charge Net exchange differences Closing net book amount At March 31, 2014 Cost Accumulated depreciation and impairment At January 1, 2013 Cost Accumulated depreciation and impairment 2013 Opening net book amount Depreciation charge Net exchange differences Closing net book amount At March 31, 2013 Cost Accumulated depreciation and impairment		Land	Buildings	Total
		137,037 $ - 137,037 $ 137,037 $ - - - 137,037 $ 137,037 $ - 137,037 $ Land	232,509 $ 66,314) ( 166,195 $ 166,195 $ 345 1,966) ( 24) ( 164,550 $ 232,810 $ 68,260) ( 164,550 $ Buildings	369,546 $ 66,314) ( 303,232 $ 303,232 $ 345 1,966) ( 24) ( 301,587 $ 369,847 $ 68,260) ( 301,587 $ Total
		137,037 $ - 137,037 $ 137,037 $ - - 137,037 $ 137,037 $ - 137,037 $	226,931 $ 57,696) ( 169,235 $ 169,235 $ 2,377) ( 3,068 169,926 $ 229,999 $ 60,073) ( 169,926 $	363,968 $ 57,696) ( 306,272 $ 306,272 $ 2,377) ( 3,068 306,963 $ 367,036 $ 60,073) ( 306,963 $

~19~

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

For the three-month periods ended March 31,

Rental income from investment property Direct operating expenses arising from investment property that generated rental income in the period Direct operating expenses arising from investment property that did not generate rental income in the period	2014 4,081 $ 1,966 $ 211 $	2013
		3,647 $
		2,167 $
		211 $

• B. The fair value of the investment property held by the Group was $1,194,023, $1,027,201 and $839,517 as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively, which was based on the transaction prices of similar properties in the same area.

(9) Other non-current assets

Long-term prepaid rents Guarantee deposits paid Others	March 31,2014 115,898 $ 64,810 38,145 218,853 $	December 31,2013 116,669 $ 34,581 32,441 183,691 $	March 31,2013
			115,980 $ 33,517 8,789
			158,286 $

In May, 2005, the Group signed a land-use right contract with the People's Republic of China for the use of land with term of 50 years. All rentals had been paid on the contract date. The Group recognised rental expenses of $711 and $678 for the three-month periods ended March 31, 2014 and 2013, respectively.

(10) Short-term borrowings

Type of borrowings		March 31,2014	Interest rate	Collateral
Bank secured borrowings Bank unsecured borrowings Type of borrowings		298,600 $ 294,900 593,500 $ December 31,2013	0.65% 2.70% Interest rate	Transcend Japan’s Land and Buildings - Collateral
Bank secured borrowings Bank unsecured borrowings Type of borrowings		283,900 $ 295,140 579,040 $ March 31,2013	0.65% 2.46% Interest rate	Transcend Japan’s Land and Buildings - Collateral
Bank secured borrowings		158,600 $	0.91%	Transcend Japan’s Land and Buildings

~20~

(11) Pensions

• A.(a)The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit 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 contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with the Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

• (b)For the aforementioned pension plan, the Group recognised pension costs of $350 and $417 for the three-month periods ended March 31, 2014 and 2013, respectively.

• (c)Expected contributions to the defined benefit pension plans of the Group within one year from March 31, 2014 amounts to $2,978.

• 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. nationality. 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 Group’s mainland subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees' monthly salaries and wages, ranging from 12.5% to 22%. Other than the monthly contributions, the Group has no further obligations.

• (c)Transcend Japan, Transcend Korea, Transcend USA, Transcend Europe and Transcend Germany have a defined contribution plan. Monthly contributions are based on a certain percentage of employees’ monthly salaries and wages and are recognized as pension costs accordingly. Other than the monthly contributions, the Group has no further obligations.

• (d)The pension costs under defined contribution pension plans of the Group for the three-month periods ended March 31, 2014 and 2013 were $10,614 and $10,100, respectively.

(12) Share capital

As of March 31, 2014, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock (including 25 thousand shares reserved for employee stock options), and the paid-in capital was $4,307,617 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

(13) Capital surplus

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

~21~

paid-in capital each year. Capital reserve shall not be used to cover accumulated deficit unless the legal reserve is insufficient.

(14) Retained earnings

• A.In accordance with 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. The Company shall also set aside special reserve in accordance with the regulations. On the premise that there is no effect on the Company’s normal operations and no violation of regulations, the Company shall reserve certain amount for maintaining stability of dividends. The remainder, if any, is distributable earnings. When distributing earnings, the Company shall appropriate 0.2% of the total distributable amount as the directors’ and supervisors’ remuneration. Bonus distributed to the employees shall account for at least 1% of the total distributable earnings. The remainder to be appropriated shall be resolved by stockholders at the stockholders’ meeting, and cash dividends shall account for at least 5% of the total dividends distributed.

• B.The Company distributes dividends taking into consideration the Company's economic environment and growth phases, future demands of funds, long-term financial planning, and the cash flows that the stockholders desire. Cash dividends shall account for at least 5% of the total dividend distributed.

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

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

• E.For the three-month periods ended March 31, 2014 and 2013, employees’ bonus was accrued at $8,107 and $26,634, respectively, which was based on a certain percentage prescribed by the Company's Articles of Incorporation of net profit after taking into account the legal reserve and other factors (under the Company’s Articles of Incorporation, bonus distributed to the employees shall account for at least 1% and 3% of total distributable earnings the three-month periods ended March 31, 2014 and 2013, respectively.)

The difference between the actual appropriations of employees’ bonus for the year ended December 31, 2012 and the amount recognized in the 2012 financial statements was $6,650, and the difference had been adjusted in the comprehensive income for the year ended December 31, 2013. The actual appropriation of directors’ and supervisors’ remuneration was in agreement with the amount approved at the shareholders’ meeting.

Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

• F. The appropriation of earnings and distribution of capital reserve of year 2013 and 2012 had been resolved at the Board of Directors and stockholders’ meeting on March 19, 2014 and June 13, 2013, respectively. Details are summarized below:

~22~

Amount Dividends per share (in dollars) Amount Dividends per share (in dollars) Legal reserve 319,896 $ 284,538 $ Cash dividends 2,886,103 6.7 $ 2,584,571 6.0 $ Cash distribution from capital reserve - - 215,381 0.5 Total 3,205,999 $ 3,084,490 $ 2013 2012 2013 2012 Directors' and supervisors' remuneration 5,192 $ 5,166 $ Employees' cash bonus 25,962 85,361 31,154 $ 90,527 $	Amount Dividends per share (in dollars) Amount Dividends per share (in dollars) Legal reserve 319,896 $ 284,538 $ Cash dividends 2,886,103 6.7 $ 2,584,571 6.0 $ Cash distribution from capital reserve - - 215,381 0.5 Total 3,205,999 $ 3,084,490 $ 2013 2012 2013 2012 Directors' and supervisors' remuneration 5,192 $ 5,166 $ Employees' cash bonus 25,962 85,361 31,154 $ 90,527 $	Amount Dividends per share (in dollars) Amount Dividends per share (in dollars) Legal reserve 319,896 $ 284,538 $ Cash dividends 2,886,103 6.7 $ 2,584,571 6.0 $ Cash distribution from capital reserve - - 215,381 0.5 Total 3,205,999 $ 3,084,490 $ 2013 2012 2013 2012 Directors' and supervisors' remuneration 5,192 $ 5,166 $ Employees' cash bonus 25,962 85,361 31,154 $ 90,527 $	Amount Dividends per share (in dollars) Amount Dividends per share (in dollars) Legal reserve 319,896 $ 284,538 $ Cash dividends 2,886,103 6.7 $ 2,584,571 6.0 $ Cash distribution from capital reserve - - 215,381 0.5 Total 3,205,999 $ 3,084,490 $ 2013 2012 2013 2012 Directors' and supervisors' remuneration 5,192 $ 5,166 $ Employees' cash bonus 25,962 85,361 31,154 $ 90,527 $
	Amount
			6.0 $ 0.5 2012 5,166 85,361 90,527
		$
		$

The above appropriation of earnings of 2013 and legal reserve has to be resolved at the shareholders’ meeting of 2014.

(15) Share-based payment-employee compensation plan

• A.The Company’s share-based payment transactions were set forth below:

Type of arrangement	Grant date	Quantity granted (in thousands)	Contract period	Vesting conditions
Employee stock options	2007.10.15	4,536	6 years	2 years’ service

• B.The fair value of stock options granted on October 15, 2007 is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price	Exercise price	Expected price volatility	Expected vesting period	Expected dividend yieldrate	Risk-free interest rate	Fair value perunit
Employee stock options	2007.10.15	120 $	120 $	39.68%	4.375 years	0%	2.61%	43.32 $

• C.The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

Issue date approved	Expirydate	March 31,2013	March 31,2013
		No. of shares(in thousands)	Exerciseprice(in dollars)
2007.10.15	2013.10.15	1,160	107.8 $

• D.Detail of the employee stock options are set forth below:

~23~

Options outstanding at beginning of period Options expired Options outstanding at end of period Options exercisable at end of period		For the three-monthperiods ended March 31,	For the three-monthperiods ended March 31,	For the three-monthperiods ended March 31,	For the three-monthperiods ended March 31,
		2014		2013
		No. of shares (in thousands)	Weighted- average exercise price (in dollars)	No. of shares (in thousands)	Weighted- average exercise price (in dollars)
		- $ - - -	- $ - - -	1,192 $ 32) ( 1,160 1,160	107.8 $ 107.8 107.8 107.8

• E.The Company has no expense incurred on share-based payment transactions for the three-month periods ended March 31, 2014 and 2013.

~24~

(16) Other equity items

At January 1, 2014 Change in unrealized gains or losses for available-for-sale financial assets Foreign exchange translation differences for foreign operations Effect from income tax At March 31, 2014 At January 1, 2013 Change in unrealized gains or losses for available-for-sale financial assets Foreign exchange translation differences for foreign operations Effect from income tax At March 31, 2013	Unrealised gain or loss on Foreign exchange available-for- translation differences sale financial assets for foreign operations 18,633) ($ 27,764 $ 35,202 - - 15,934 - 2,709) ( 16,569 $ 40,989 $ Unrealised gain or loss on Foreign exchange available-for- translation differences salefinancialassets for foreignoperations 20,718) ($ 95,549) ($ 128,962 - - 77,280 - 13,138) ( 108,244 $ 31,407) ($	Total
		9,131 $ 35,202 15,934 2,709) ( 57,558 $ Total
		116,267) ($ 128,962 77,280 13,138) ( 76,837 $

(17) Operating revenue

Operating revenue
Sales revenue	For the three-monthperiods ended March 31,
	2014 6,794,611 $	2013
		7,051,129 $

~25~

(18) Other income

For the three-month periods ended March 31,

Interest income Rental revenue Total	2014 38,584 $ 4,081 42,665 $	2013
		22,320 $ 3,647
		25,967 $

(19) Other gains and losses

Other gains and losses
Net gain on financial assets at fair value through profit or loss Gain on disposal of financial assets Gain on disposal of property, plant and equipment Net currency exchange gain Others Total	For the three-monthperiods ended March 31,
	2014 - $ 2,432 855 69,260 1,992 74,539 $	2013
		25,236 $ 4,936 1,970 18,326 3,870
		54,338 $

(20) Expenses by nature

For the three-month periods endeds March 31,

Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses Depreciation on property, plant and equipment (including investment property)	2014 395,756 $ 39,992 10,964 15,514 59,742	2013
		343,277 $ 34,192 10,517 15,223 58,993

~26~

(21) Income tax

A. Income tax expense

(a)Components of income tax expense:

For the three-month periods ended March 31,

For the three-monthperiods ended March 31,	For the three-monthperiods ended March 31,	iods ended March 31,
)The income tax relating to components of other comprehensive income is as follows: 2014 2013 Current tax: Current tax on profits for the period 139,412 $ 115,320 $ Prior year income tax underestimated 416 4,938 Total current tax 139,828 120,258 Deferred tax: Origination and reversal of temporary differences 18,410) ( 12,069 Total deferred tax 18,410) ( 12,069 Income tax expense 121,418 $ 132,327 $ 2014 2013 Foreign exchange translation differences for foreign operations 2,709 $ 13,138 $ For the three-monthperiods ended March 31,		2013
		115,320 $ 4,938
		120,258
		12,069
		12,069
		132,327 $
	2014 2,709 $	2013
		13,138 $

• (b)The income tax relating to components of other comprehensive income is as follows:

• B. As of March 31, 2014, the Company’s income tax returns through 2011 have been assessed and approved by the National Taxation Bureau of Taipei, Ministry of Finance, except for 2009.

• C. Unappropriated retained earnings:

Earnings generated in and before 1997 Earnings generated in and after 1998	March 31,2014 121,097 $ 8,754,761 8,875,858 $	December 31,2013 121,097 $ 7,853,950 7,975,047 $	March 31,2013 121,097 $ 8,388,360 8,509,457 $

• D. As of March 31, 2014, December 31, 2013 and March 31, 2013, the balance of the imputation tax credit account was $1,028,929, $1,028,831 and $1,133,035, respectively. The creditable tax rate was 17.75% for 2012 and is estimated to be 15.89% for 2013.

~27~

(22) Earnings per share

Basic earnings per share Profit attributable to owners of parent Diluted earnings per share Profit attributable to owners of parent Dilutive potential ordinary shares : Employees’ bonus Profit attributable to owners of parent plus assumed conversion of as dilutive potential ordinary shares Basic earnings per share Profit attributable to owners of parent Diluted earnings per share Profit attributable to owners of parent Dilutive potential ordinary shares : Employees’ bonus Profit attributable to owners of parent plus assumed conversion of as dilutive potential ordinary shares		For the three-monthperiod ended	For the three-monthperiod ended	For the three-monthperiod ended	March 31,2014	March 31,2014
		Profit aftertax		Weighted-average outstanding common shares (inthousands)		Earnings per share (indollars)
					2.09 $ 2.09 $ March 31,2013
		Profit aftertax		Weighted-average outstanding common shares (inthousands)		Earnings per share (indollars)
		869,645 $ 869,645 $ - 869,645 $		430,762 430,762 1,442 432,204		2.02 $ 2.01 $

(23) Operating leases

A.The Group leases land and buildings to others under operating lease agreements. Rental revenue of $4,081 and $3,647 were recognised for these leases in profit or loss for the three-month periods ended March 31, 2014 and 2013, respectively. The leases for buildings have terms expiring between 2014 and 2016, and all these lease agreements are not renewable at the end of the lease period. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

~28~

Not later than one year Later than one year but not later than five years	March 31,2014 9,439 $ 15,435 24,874 $	December 31,2013 March 31,2013 10,059 $ 15,475 $ 17,640 24,255 27,699 $ 39,730 $	March 31,2013
			39,730 $

B.On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won Chin and Cheng Chuan, to build a new plant on the leased land. The lease has a term of 10 years from April 10, 2009 to April 9, 2019. The annual rental payment is $35,633 (exclusive of tax), which was determined based on the average rent of land near the leased land shown in the appraisal report issued by CCIS Real Estate Joint Appraisers Firm. Rent was paid on the contract date and become payable on the same date each following year until the end of the lease. The future aggregate minimum lease payments payable under non-cancellable operating leases are as follows:

leases are as follows:
Not later than one year Later than one year but not later than five years Later than five years	March31,2014 37,415 $ 149,659 3,118 190,192 $	December31,2013 37,415 $ 149,659 12,472 199,546 $	March31,2013
			37,415 $ 149,659 37,415
			224,489 $

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties

A.Sales

.Sales
Sales of goods－Entity controlled by the Group's key management	For the three-monthperiods ended March 31,
	2014 - $	2013
		190,306 $

The sales prices charged to related parties are almost equivalent to those charged to third parties. The credit term to Transcend H.K. and C-Tech Corporation is 120 days and 15 days after monthly billings, respectively. The credit term to third parties is 30 to 60 days after monthly billings.

~29~

B.Purchases of goods

For the three-month periods ended March 31,

Purchases of goods－Entity controlled by the Group's key management	2014 57,209 $	2013
		15,797 $

The purchase prices charged by related parties are almost equivalent to those charged by third parties. The credit term from Taiwan IC Packaging Corporation is 30 days after monthly billings. The credit term from third parties is 30 to 45 days after monthly billings.

C.Accounts receivable

Receivables from related parties－Entity controlled by the key management	March 31,2014 - $	December 31,2013 - $	March 31,2013
			120,127 $

The receivables from related parties arise mainly from sales transactions. The credit term to Transcend H.K. and C-Tech Corporation is 120 days and 15 days after monthly billings, respectively. The receivables are unsecured and bear no interest. There are no provisions held against receivables from related parties.

D.Accounts payable

.Accounts payable
Payables to related parties－ Entity controlled by the key management	March 31,2014 40,717 $	December 31,2013 45,801 $	March 31,2013
			42,410 $

The payables to related parties arise mainly from purchase transactions and are due 30 days after the date of purchase. The payables bear no interest.

E.Property transactions

Disposal of property, plant and equipment:

Entity controlled by the key management		Disposalproceeds Gain(loss) ondisposal Other receivables 10,457 $ - $ 10,457 $ For the three-monthperiods ended March 31,2014	Disposalproceeds Gain(loss) ondisposal Other receivables 10,457 $ - $ 10,457 $ For the three-monthperiods ended March 31,2014	Disposalproceeds Gain(loss) ondisposal Other receivables 10,457 $ - $ 10,457 $ For the three-monthperiods ended March 31,2014	Disposalproceeds Gain(loss) ondisposal Other receivables 10,457 $ - $ 10,457 $ For the three-monthperiods ended March 31,2014
		Disposalproceeds		Gain(loss) ondisposal - $
		10,457 $			10,457 $

The Group had no property transactions as of March 31, 2013.

F.Lease contracts

On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won Chin and Cheng Chuan, to build a new plant on the leased land. Please refer to Note 6(23).

~30~

(2) Compensation of key management

For the three-month periods ended March 31, 2014 2013 Salaries and other short-term employee benefits $ 23,972 $ 20,124

8. PLEDGED ASSETS

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

Nature of assets Property, plant and equipment Other non-current assets Time deposit				Book value		March 31,2013 1,007,123 $ 2,983 1,010,106 $	Pledgepurpose
		March 31,2014		December 31,2013
		985,510 $ 3,050 988,560 $		979,500 $ 2,981 982,481 $			Long-term and short-term loans Patent deposit

9. COMMITMENTS AND CONTINGENT LIABILITIES

As of March 31, 2014, in addition to the significant commitments and contingent liabilities mentioned in Note 13(1)B and the lease contract described in Note 6(23), the Group had unused letters of credit for purchases of merchandise inventory amounting to $50,000.

10. SIGNIFICANT CATASTROPHE

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

12. OTHERS

(1) Capital risk management

There is no significant change in this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2013 for the related information.

(2) Financial instruments

• A.Fair value information of financial instruments

There is no significant change in this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2013 for the related information.

• B.Financial risk management policies

There is no significant change in this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2013 for the related information.

• C. Significant financial risks and degrees of financial risks

There is no significant change except the following information. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2013 for the related

~31~

information.

Market risk

Foreign exchange risk

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

March 31, 2014

Financial assets Financial liabilities Financial assets Financial liabilities Financial assets Financial liabilities		Foreign Currency	Foreign Currency Amount 78,246 $ 591,593 43,739 2,779,093 11,339 101,583 $ 60,000 December	Exchange Rate 30.4950 4.9150 6.2035 0.2986 41.8700 30.4950 4.9150 31,2013	Book Value
		USD:NTD RMB:NTD USD:RMB JPY:NTD EUR:NTD USD:NTD RMB:NTD			2,386,112 $ 2,907,680 271,335 829,837 474,764 3,097,774 $ 294,900 Book Value
		Foreign Currency	Foreign Currency Amount Exchange Rate 100,687 $ 29.8050 459,499 4.9190 43,645 6.0592 2,512,345 0.2839 12,084 41.0900 119,640 $ 29.8050 60,000 4.9190 March 31,2013
		USD:NTD JPY:NTD USD:RMB JPY:NTD EUR:NTD USD:NTD RMB:NTD			3,000,976 $ 2,260,276 264,454 713,255 496,532 3,565,870 $ 295,140 Book Value
		Foreign Currency	Foreign Currency Amount 69,484 $ 2,885,012 833 13,217 2,998 77,882 $ 4,263	Exchange Rate 29.8250 0.3172 45.3200 38.2300 94.0259 29.8250 6.2097
		USD:NTD JPY:NTD GBP:NTD EUR:NTD USD:JPY USD:NTD USD:RMB			2,072,360 $ 915,126 37,752 505,286 281,890 2,322,831 $ 26,472

Sensitivity analyses relating to foreign exchange rate risks are primarily for financial reporting period end date of foreign currency monetary item. If the New Taiwan dollar exchange rate to the U.S. dollar increases or decreases by 1%, the Group’s net income will increase or decrease by $7,117 and $2,505 for the three-month periods ended March 31, 2014 and 2013, respectively.

~32~

(3) Fair value estimation

• A.The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows:

• Level 1:Quoted prices in active markets for identical assets or liabilities.

• Level 2:Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3:Inputs for the assets or liabilities that are not based on observable market data.

The following table presents the Group’s financial assets and liabilities that are measured at fair value at March 31, 2014, December 31, 2013 and March 31, 2013:

March 31,2014 Financial assets: Non-current available-for-sale financial assets December 31,2013 Financial assets: Non-current available-for-sale financial assets March 31,2013 Financial assets: Non-current available-for-sale financial assets Current financial assets at fair value through profit or loss	Level 1 298,499 $ Level 1 263,297 $ Level 1 545,154 $ - 545,154 $	Level 2 - $ Level 2 - $ Level 2 - $ 10,069 10,069 $	Level 3 1,125 $ Level 3 1,125 $ Level 3 1,125 $ - 1,125 $	Total
				299,624 $
				Total
				264,422 $
				Total
				546,279 $ 10,069
				556,348 $

• B.The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm‘s length basis. The quoted market price used for financial assets held by the Group is the closing price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments classified as available-for-sale financial assets.

• C.The fair value of financial instruments not traded in an active market (such as the derivate instruments which traded in GTSM) is base on the cost of investment.

• D.If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

~33~

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: None.

B. Provision of endorsements and guarantees to others:

Number (Note 1)	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/guarantee amount as of March 31, 2014 (Note 4)	Outstanding endorsement/guarantee amount as of March 31, 2014 (Note 4)	Actual amount drawn down (Note 5)	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/guarantee amount to net asset value of the endorser/guarantor company (%)	Ceiling on total amount of endorsements/ guarantees provided (Note 6)	Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Company name	Relationship with the endorser/guarantor (Note 2)
0	Transcend Taiwan	Transcend Japan Inc.	b	$ 4,154,689	$ 447,900	$ 447,900	$ 298,600	-	2	$ 8,309,378	Y	N	N	-

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows

• (a)The Company is ‘0’.

• (b)The subsidiaries are numbered in order starting from ‘1’.

• Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories:

• (a)Having business relationship.

• (b)The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

• (c)The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

• (d)The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

• (e)Mutual guarantee of the trade as required by the construction contract.

• (f)Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

• Note 3: Not exceeding 20% of the Company’s net asset value. ($20,773,447*20%=$4,154,689)

Note 4: The maximum outstanding endorsement/guarantee amount during and as of March 31, 2014 is JPY$1,500,000.

Note 5: The actual amount of endorsement drawn down is JPY$1,000,000.

Note 6: Not exceeding 40% of the Company’s net asset value. ($20,773,447*40%=$8,309,378)

Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary.

~34~

C. Holding of marketable securities as of March 31, 2014 (not including subsidiaries, associates and joint ventures):

Securities held by Transcend Taiwan	Marketable securities(Note 1)	Relationship with the securities issuer(Note 2) General ledger account	Relationship with the securities issuer(Note 2) General ledger account		As of March31,2014	As of March31,2014		Footnote (Note4)
				Number of shares or units 6,220,933 3,060,017 259,812 60,816 -	Bookvalue(Note3) 235,463 $ 63,036 - 1,125 299,624 $ 564,158 $	Ownership (%) 8 1 2 1 -	Fairvalue
	Stocks Alcor Micro Corp. Hitron Tech. Inc. Skyviia Corp. Dramexchange Tech Inc. Bonds Bond with repurchase agreement	- - - - -	Non-current available-for-sale financial assets 〞 〞 〞 Current bond investment without active market				235,463 $ 63,036 - 1,125 -	- - - - -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IAS 39 ‘Financial instruments: recognition and measurement’.

Note 2: Leave the column blank if the issuer of marketable securities is non-related party.

• Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

• Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

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

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

~35~

G.Purchases or sales of goods from or to related parties exceeding NT$100 million or 20% of the Company’ paid-in capital or more:

Purchaser/seller Transcend Taiwan 〞 〞 〞 〞 〞 Transcend Information Europe B.V. Transcend Taiwan	Counterparty Transcend Japan Inc. Transcend Information Europe B.V. Transcend Information, Inc. Transcend Information Trading GmbH, Hamburg Transcend Korea Inc. Transcend Information (H.K.) Ltd. Transcend Information Trading GmbH, Hamburg Transcend Shanghai	Relationship withthe counterparty	Sales (purchases) Sales 〞 〞 〞 〞 〞 〞 (Purchases)		Transaction	Transaction		Differences in transaction terms compared to thirdpartytransactions	Differences in transaction terms compared to thirdpartytransactions	Notes/accountsreceivable (payable)	Notes/accountsreceivable (payable)	Footnote
					Amount $ 873,827 705,263 211,769 210,511 175,126 144,491 191,979 ( 176,492)	13 11 3 3 3 2 25 3 Percentage of total sales (purchases)	Credit term			Balance $ 780,126 318,953 166,770 85,047 43,740 73,773 47,255 ( 1,321,738)	Percentage of total notes/accounts receivable (payable)
								Unit price No significant difference 〞 〞 〞 〞 〞 〞 Note 1	Credit term
		The Company's subsidiary Subsidiary of Memhiro The Company's subsidiary Subsidiary of Memhiro The Company's subsidiary Subsidiary of Memhiro Together with Transcend Information Europe B.V. are controlled by parent company Subsidiary of Memhiro					120 days after monthly billings 〞 〞 〞 60 days after monthly billings 120 days after monthly billings 30 days after receipt of goods 60 days after receipt of goods		30 to 60 days after monthly billings to third parties 〞 〞 〞 〞 〞 7 to 60 days after receipt of goods to third parties 7 to 30 days after receipt of goods to third parties		25 10 5 3 1 2 17 39	- - - - - - - -

Note 1:The purchase transactions between Transcend Taiwan and Transcend Shanghai were attributed to processing of supplied materials. No other similar transactions can be used for comparison. Note 2:The Company’s sales to subsidiaries were equivalent to subsidiaries’s purchases from the Company; accordingly, the Company did not disclose the information on subsidiaries’ purchases from the Company.

~36~

H.Receivables from related parties exceeding NT$100 million or 20% of the Company’s paid-in capital or more:

Overdue receivables

Creditor	Counterparty	Relationship with the counterparty	Balance as at March 31, 2014	Turnover rate	Amount	Action taken	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
Transcend Taiwan 〞 〞 Transcend Shanghai	Transcend Japan Inc. Transcend Information Europe B.V. Transcend Information Inc. Transcend Taiwan	Subsidiary of the Company Subsidiary of Memhiro Subsidiary of the Company Parent company	$ 780,126 318,953 166,770 1,321,738	4.86 8.63 4.48 4.85	$ - - - -	- - - -	$ 245,221 183,349 65,317 392,851	$ - - - -

I.Derivative financial instruments undertaken during the three-month periods ended March 31, 2014: None.

~37~

J.Significant inter-company transactions during the three-month period ended March 31, 2014:

Number (Note 1)	Company name	Counterparty	Relationship (Note 2)	Transaction	Transaction	Transaction	Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
0 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 1	Transcend Taiwan 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 Transcend Information Europe B. V.	Transcend Japan Inc. Transcend Information Europe B. V. Transcend Information, Inc. Transcend Information Trading GmbH, Hamburg Transcend Korea Inc. Transcend Information (H.K.) Ltd Transtech Trading (Shanghai) Co., Ltd. Transcend Information (Shanghai), Ltd. Transcend Japan Inc. Transcend Information Europe B. V. Transcend Information (Shanghai), Ltd. Transcend Information Trading GmbH, Hamburg	a 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 c	Sales 〞 〞 〞 〞 〞 〞 Purchases Accounts Receivable 〞 Accounts Payable Sales	$ 873,827 705,263 211,769 210,511 175,126 144,491 89,989 176,492 780,126 318,953 1,321,738 191,979	There is no significant difference in unit price from those to third parties. 〞 〞 〞 〞 〞 〞 Processing with supplied materials. No other similar transactions can be used for comparison. 120 days after monthly billings 〞 60 days after receipt of goods There is no significant difference in unit price from those to thirdparties.	13% 10% 3% 3% 3% 2% 1% 3% 3% 1% 5% 3%

Note 1: Transaction information between parent company and subsidiaries should be noted in the first column, the number is written as below:

• (a) Parent company: 0

• (b) Subsidiaries were numbered from 1.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

• (a) Parent company to subsidiary.

• (b) Subsidiary to parent company.

• (c) Subsidiary to subsidiaries.

• Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

~38~

(2) Information on investees (not including investees in Mainland China)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held at March 31,2014	Shares held at March 31,2014	Shares held at March 31,2014	Net profit (loss) of the investee for the three- month period ended March31,2014	Investment income (loss) recognized by the Company for the three- month period ended March31,2014(Note1)	Footnote
				Balance at March 31,2014	Balance at December 31, 2013	No. of Shares (inunits)	Ownership (%)	Bookvalue
Transcend Taiwan Saffire Investment Ltd. Memhiro Pte Ltd.	Saffire Investment Ltd. B.V.I. Transcend Japan Inc. Japan Transcend Information, Inc. United States of America Transcend Korea Inc. Korea Taiwan IC Packaging Corp. Taiwan Memhiro Pte Ltd. Singapore Transcend Information Europe B.V Netherlands		Investments holding company Wholesaler of computer memory modules and peripheral products Wholesaler of computer memory modules and peripheral products Wholesaler of computer memory modules and peripheral products Packaging of Semi- conductors Investments holding company Wholesaler of computer memory modules and peripheral products	$ 1,202,418 89,103 38,592 6,132 251,658 1,156,920 1,693	$ 1,202,418 89,103 38,592 6,132 251,658 1,156,920 1,693	36,600,000 6,400 625,000 40,000 41,000,000 55,132,000 100	100 100 100 100 13.55 100 100	$ 3,281,352 107,110 96,145 22,634 221,092 3,291,765 164,904	($ 3,901) ( 13,384) ( 16,133) ( 2,268) ( 9,155) ( 8,739) ( 17,484)	($ 3,901) ( 13,384) ( 16,133) ( 2,268) ( 163) ( 8,739) ( 17,485)	Note 2 Note 2 Note 2 Note 2 Note 5 Note 3 Note 4

.

~39~

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held at March	Shares held at March	31, 2014	Net profit (loss) of the investee for the three-month period ended March 31, 2014	Investment income (loss) recognized by the Company for the three-month period ended March 31, 2014 (Note 1)	Footnote
				Balance at March 31, 2014	Balance at December 31, 2013	No. of Shares (in units)	Ownership (%)	Book value
Memhiro Pte Ltd.	Transcend Information Trading GmbH, Hamburg Transcend Information (H.K.) Ltd.	Germany Hong Kong	Wholesaler of computer memory modules and peripheral products Wholesaler of computer memory modules and peripheral products	2,288 7,636	2,288 7,636	- 2,000,000	100 100	79,186 1,923	4,990 ( 6,423)	4,990 ( 6,423)	Note 4 Note 4

Note 1 ： The Company does not directly recognize the investment income (loss) except for the subsidiaries directly held.

Note 2 ： Subsidiaries of the Company.

Note 3 ： Subsidiary of Saffire. Note 4 ： Subsidiaries of Memhiro. . Note 5 ： Please refer to Note 6 (6).

~40~

(3) Information on investments in Mainland China

A.Basic information ：

Investee in Mainland China	Main business activities	Paid-in capital	Paid-in capital	Investment method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2014	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the three-month period ended March 31, 2014	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the three-month period ended March 31, 2014	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the three-month period ended March 31, 2014	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2014	Net income investee as of March 31, 2014	Ownership held by the Company (direct and indirect)	Ownership held by the Company (direct and indirect)	Investment income (loss) recognized by the Company for the three- month period ended March 31, 2014 （Note 2）	Book value of investments in Mainland China as of March 31, 2014	Accumulated amount of investment income remitted back to Taiwan as of March 31, 2014	Footnote
						Remitted to Mainland China	Remitted back to Taiwan
Transcend Information (Shanghai), Ltd.	Manufacturer and seller of computer memory modules, storage products and disks	$ 1,134,178		(2)	$ 1,134,178	-	-		$ 1,134,178	$ 15,738	100		$ 15,635	$ 3,014,723	-	-
Transtech Trading (Shanghai) Co., Ltd.	Manufacturer and seller of computer memory modules, storage products and disks. Wholesaler and agent of computer memory modules and Peripheral products. Retailer of computer components	16,310		(2)	16,310	-	-		16,310	( 5,387)	100		( 5,387)	8,432	-	-
Company name			Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2014					Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)				Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Transcend Information (Shanghai), Ltd.			$ 1,134,178					$ 1,134,178				$ -
Transtech Trading (Shanghai) Co., Ltd.			16,310					16,310				-
			$ 1,150,488					$ 1,150,488				$ 12,464,068

Note 1 ： Investment methods are classified into the following three categories:

(1) Directly invest in a company in Mainland China.

(2) Through investing in an existing company in the third area, which then invested in the invested in Mainland China. (3) Others.

Note 2 ： The financial statements that are audited and attested by R.O.C. parent company’s CPA.

Note 3 ： The numbers in this table are expressed in New Taiwan Dollars.

B.Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas: None.

~41~

14. SEGMENT INFORMATION

(1) General information

The Group operates business only in a single industry, allocating resources and assessing performance of the Group as a whole, and has identified that the Group has only one reportable operating segment.

(2) Segment information

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

Segment revenue Segment income		For the three-monthperiods ended March 31,	For the three-monthperiods ended March 31,
		2014 6,794,611 $ 900,811 $	2013 7,051,129 $ 869,645 $

(3) Reconciliation for segment income (loss)

None.

~42~