ZERO ONE - Interim / Quarterly Report 2018

Code ： 3029

ZERONE TECHONOLOGY COMPANY LIMITED AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 AND INDEPENDENT AUDITORS’ REPORT

Address: 10F., No.8, Ln. 360, Sec. 1, Neihu Rd., Taipei City. Dial: +886 2 2656 5656

§TABLE OF CONTENTS§

Contents 1`、`Cover 2`、`Table of Contents 3`、`Independent Auditors’ Review Report 4`、`Consolidated Balance Sheets 5`、`Consolidated Statements of Comprehensive Income 6`、`Consolidated Statements of Changes in Equity 7`、`Consolidated Statements of Cash Flows 8`、`Notes to Consolidated Financial Statements (1) General (2) The date and procedures of authorization of financial statements (3);Application of new and revised standards and interpretations (4) Summary of significant accounting policies (5) Critical Accounting judgements and key sources of estimation and uncertainty (6) Explanation of significant accounts (7) Related parties transactions (8) Pledged assets (9) Significant contingent liabilities and unrecognized commitments (10)Foreign-currency-denominated assets and liabilities that have significant influence (11) Separately disclosed items A. Information on significant transactions B. Information on investees C. Information on investment in Mainland China D. Intercompany relationships and significant intercompany transactions (12)Segment information	Page No. 1 2 3 4 5`～`6 7 8`～`9 10 10 10`～`13 13`～`19 20 20`～`38 38 38 38 38`～`39 39`、` 41`～`42 39`、`43 39 39`、`44 40	Financial Report’s Note No. - - - - - - - 1 2 3 4 5 6`～`28 29 30 31 32 33 33 33 33 34

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders Zero One Technology Company Limited

Introduction

We have reviewed the accompanying consolidated financial statements of Zero One Techonology Company Limited and its subsidiaries (the “Company” ） as of March 31, 2018 and 2017 and the consolidated statements of comprehensive income, changes in equity and cash flows for the three-month periods then ended March 31, 2018 and 2017, and the notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting,” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. 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.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects the financial position of the entity as at March 31, 2018 and 2017, and of its consolidated financial performance and its consolidated cash flows for the three-month periods then ended March 31, 2018 and 2017 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34,“Interim Financial Reporting,” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the audit resulting in this independent auditors' report are Wen Chin Lin and Hsin Wei Tai.

Deloitte & Touche

Taipei, Taiwan Republic of China April 25, 2018

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 2018, December 31, 2017, and March 31, 2017 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents(Note 4 and 6) Financial assets at fair value through profit or loss - current(Note 4 and 7) Financial assets at fair value through other comprehensive income - current(Note 4 and 8) Available-for-sale financial assets - current(Note 4 and 10) Financial assets at amortised cost-current(Note 4 and 9) Debt investments with no active market - current(Note 4 and 12) Notes receivable(Note 4 and 13) Trade receivable(Note 4 and 13) Inventories(Note 14) Current tax assets Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non current(Note 4 and 7) Financial assets at fair value through other comprehensive income- non current(Note 4 and 8) Available-for-sale financial assets - non-current(Note 4, 10 and 30) Financial assets at amortized cost - non-current(Note 4, 9 and 30) Financial assets measured at cost - non-current(Note 4 and 11) Debt investments with no active market - non-current(Note 4, 12 and 30) Investments accounted for using the equity method(Note 4 and 16) Property, plant and equipment(Note 17 and 30) Other intangible assets Deferred tax assets(Note 4 and 24) Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings(Note 18) Trade payable Other payables(Note 19) Current tax liabilities(Note 4 and 24) Current portion of bonds payable(Note 20) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities(Note 4 and 24) Net defined benefit liabilities - non-current(Note 4 and 21) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY(Note 22) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		March 31, 2018 (Reviewed) Amount % $ 841,477 24 104,386 3 16,814 1 - - 422,088 12 - - 33,910 1 1,205,855 34 380,452 11 804 - 27,729 1 3,033,515 87 39,056 1 73,076 2 - - 19,039 - - - - - 3,107 - 310,606 9 795 - 21,543 1 1,315 - 468,537 13 $ 3,502,052 100 $ - - 1,045,364 30 102,091 3 46,694 1 6,668 - 100,743 3 1,301,560 37 400 - 21,460 1 21,860 1 1,323,420 38 1,226,804 35 437,440 13 139,840 4 16,723 - 350,872 10 507,435 14 (1,714) - 2,169,965 62 8,667 - 2,178,632 62 $ 3,502,052 100		December 31, 2017 (Audited) Amount % $ 741,119 20 51,338 1 - - 21,724 1 - - 212,366 6 185,925 5 1,466,240 41 490,564 14 804 - 10,151 - 3,180,231 88 - - - - 68,565 2 - - 21,654 1 11,539 - 4,446 - 310,083 9 970 - 19,436 - 1,786 - 438,479 12 $ 3,618,710 100 $ - - 1,252,876 34 134,882 4 32,423 1 9,733 - 74,226 2 1,504,140 41 481 - 20,922 1 21,403 1 1,525,543 42 1,224,804 34 434,135 12 139,840 4 16,723 - 283,971 8 440,534 12 (15,501) - 2,083,972 58 9,195 - 2,093,167 58 $ 3,618,710 100		March 31, 2017 (Reviewed)
						Amount % $ 745,246 22 68,815 2 - - 3,545 - - - 285,902 9 78,515 2 1,167,882 35 456,523 14 - - 120,745 4 2,927,173 88 - - - - 56,231 2 - - 510 - 11,379 - 10,833 - 302,826 9 1,063 - 22,770 1 1,415 - 407,027 12 $ 3,334,200 100 $ 4,000 - 1,048,989 32 93,182 3 31,125 1 12,824 - 75,743 2 1,265,863 38 418 - 20,456 1 20,874 1 1,286,737 39 1,222,420 37 428,936 13 117,432 3 22,876 1 267,598 8 407,906 12 (19,247) (1) 2,040,015 61 7,448 - 2,047,463 61 $ 3,334,200 100

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited) (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE(Note 4) Net sales OPERATING COSTS(Note 14 and 23) Cost of goods sold GROSS PROFIT OPERATING EXPENSES(Note 23) Selling and marketing expenses General and administrative expenses Research and development expenses Gain on reversal of expected credit loss(Note 13) Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES(Note 23) Other income Other gains and losses Finance costs Share of profit or loss of associated and joint ventures Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE(Note 24) NET PROFIT OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Unrealized gain/(loss) on investments in equity instruments designated as at fair value through other comprehensive income(loss) Income tax relating to remeasurement of defined benefit plans		For the Three Months	For the Three Months	Ended March 31
		2018 Amount % $ 1,506,970 100 1,351,474 90 155,496 10 58,066 4 24,537 1 2,134 - (2,323) - 82,414 5 73,082 5 3,008 - (295) - (48) - (1,339) - 1,326 - 74,408 5 12,654 1 61,754 4 8,466 1 438 - 8,904 1		2017
				Amount % $ 1,408,480 100 1,288,700 92 119,780 8 47,423 3 50,253 4 3,375 - - - 101,051 7 18,729 1 2,128 - (494) - (147) - (1,119) - 368 - 19,097 1 3,468 - 15,629 1 - - - - - - (Continued)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited)

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Unrealized (loss)/gain on available-for-sale financial assets Other comprehensive income(loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME(LOSS) FOR THE PERIOD NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME(LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE(Note 25) From continuing operations Basic Diluted		For the Three Months	For the Three Months	Ended March 31
		2018 Amount % $- - 8,904 1 $ 70,658 5 $ 62,282 4 (528) - $ 61,754 4 $ 71,186 5 (528) - $ 70,658 5 $ 0.51 $ 0.50		2017
				Amount % $ (2,524) - (2,524) - $ 13,105 1 $ 16,053 1 (424) - $ 15,629 1 $ 13,529 1 (424) - $ 13,105 1 $ 0.13 $ 0.13

		$		$
		$		$
		$		$
		$		$
		$		$

(Concluded)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited)

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

			Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company
Share Capital Shares (In Capital- Thousand) Common Stock 121,265 $ 1,212,655 977 9,765 - - - - - - - - 122,242 $ 1,222,420 122,480 $ 1,224,804 - - 122,480 1,224,804 200 2,000 - - - - - - - - - - 122,680 $ 1,226,804	Capital Surplus $ 421,421 6,093 1,422 - - - $ 428,936 $ 434,135 - 434,135 1,111 2,194 - - - - $ 437,440		Retained Earnings	Total $ 391,853 - - 16,053 - 16,053 $ 407,906 $ 440,534 4,955 445,489 - - (774) 62,282 438 62,720 $ 507,435	Other Equity	Total $ (16,723) - - - (2,524) (2,524) $ (19,247) $ (15,501) 4,547 (10,954) - - 774 - 8,466 8,466 $ (1,714)
					Unrealized Gain/(Loss) on Financial Unrealized Assets at Fair Gain/(Loss) on Value Through Available-for- Other sale Financial Comprehensive Assets Income $ (16,723) $ - - - - - - - (2,524) - (2,524) - $ (19,247) $ - $ (15,501) $ - 15,501 (10,954) - (10,954) - - - - - 774 - - - 8,466 - 8,466 $ - $ (1,714)
		Legal Reserve $ 117,432 - - - - - $ 117,432 $ 139,840 - 139,840 - - - - - - $ 139,840	Special Unappropriated Reserve Earnings $ 22,876 $ 251,545 - - - - - 16,053 - - - 16,053 $ 22,876 $ 267,598 $ 16,723 $ 283,971 - 4,955 16,723 288,926 - - - - - (774) - 62,282 - 438 - 62,720 $ 16,723 $ 350,872

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited)

(In Thousands of New Taiwan Dollars)

CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited) (In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: (Reversal of write-down) write-down of inventories Depreciation expenses Interest income Expected credit loss reversed on trade receivable Net loss (gain) on foreign currency exchange Compensation costs of employee share options Share of loss of associates accounted for using the equity method Net gain on financial assets at fair value through profit or loss Amortization expenses Finance costs Impairment losses recognized on trade receivable Changes in operating assets and liabilities Financial assets held for trading Notes receivable Trade receivable Inventories Other current assets Trade payable Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets measured at cost Payments for property, plant and equipment Interest received Proceeds from sale of financial assets at fair value through other comprehensive income Decrease in refundable deposits Proceeds from disposal of property, plant and equipment Acquisition of investments accounted for using equity method Purchase of debt investments with no active market Net cash used in investing activities		For the Three Months Ended March 31
		2018 $ 74,408 (8,028) 2,611 (2,374) (2,323) 2,233 2,194 1,339 (719) 175 48 - (52,561) 152,015 261,568 118,140 (18,289) (204,078) (32,281) 26,517 538 321,133 (133) 321,000 (217,222) (3,149) 2,023 1,195 471 15 - - (216,667)	2017 $ 19,097 9,801 1,559 (1,997) - (311) 1,422 1,119 (1,097) 364 147 30,391 17,095 (160) 374,275 (21,637) (45,144) (85,532) (59,134) 5,676 (379) 245,555 (103) 245,452 - (573) 1,812 - 36 - (9,450) (3,241) (11,416) (Continued)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2018 and 2017

(Reviewed, Not Audited) (In Thousands of New Taiwan Dollars)

CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited) (In Thousands of New Taiwan Dollars)
CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Interest paid Net cash generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Three Months Ended March 31
		2018 $ - - - (3,975) 100,358 741,119 $ 841,477	2017 $ 4,000 (19) 3,981 (3,294) 234,723 510,523 $ 745,246

(Concluded)

ZERONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(Reviewed, Not Audited)

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

1. GENERAL

Zerone Technology Company Limited (ZOTC) was incorporated as a company limited by shares under the provisions of the Group Law of the Republic of China in June 27, 1980. On January 21, 2000, ZOTC’s Shares were listed on Taipei Exchange(TPEX). On August 26, 2002, ZOTC’s shares were listed on the Taiwan Stock Exchange(TWSE). ZOTC is a dedicated foundry in the technology industry which engages mainly in the design, manufacturing, packaging, selling, consulting and services of electronic information, computer software, hardware, accessories, components and Chinese data processing, etc.

The consolidated financial statements are expressed by the functional currency (New Taiwan Dollars) of the Group.

2. THE DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved by the Board of Directors and issued on April 25, 2018.

APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS (1)Initial application of the amendments to the Regulations Governing the Preparation of Financial

Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

The initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC for application would not have a significant effect on the Group’s accounting policies:

IFRS 9 “Financial Instruments” and related amendments

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting. Please refer to Note 4 for information relating to the relevant accounting policies.

The requirements for classification, measurement and impairment of financial assets have been applied retrospectively from January 1, 2018, and the other requirements for hedge accounting have been applied prospectively. IFRS 9 is not applicable to items that have already been derecognized at December 31, 2017.

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as at January 1, 2018, the Group has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods. The impact on measurement categories, carrying amounts and any changes when retrospectively applying IAS 39 and IFRS 9 on January 1, 2018 is detailed below:

The types of financial assets	Measurement Category	Measurement Category	Carrying	Amount	Re- mark
	IAS 39	IFRS 9	IAS 39	IFRS 9
Cash and cash equivalents Stock investments Fund beneficiary certificates Time deposits with original maturity of more than 3 months Notes, trade and other receivables Refundable deposits	Loans and receivables Available`‑`for`‑` sale financial assets Available`‑`for`‑` sale financial assets Financial assets measured at cost Debt investments with no active market Loans and receivables Loans and receivables	Amortized cost Mandatorily at FVTPL Investments in equity instruments measured at FVTOCI Mandatorily at FVTPL Amortized cost Amortized cost Amortized cost	$741,119 14,416 76,383 21,144 223,905 1,652,837 1,786	$741,119 14,416 82,619 24,410 223,905 1,652,837 1,786	(1) (1) (2) (3) (4)

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Financial Assets measured at FVTPL Add:Reclassification from available-for -sale financial assets (IAS 39) `－`Designated as at FVTPL in January 1, 2018. `－`mandatorily reclassification Financial Assets measured at FVTOCI `－` Equity instruments Add:Reclassification from available-for sale financial assets (IAS 39) Financial assets measured at amortised cost Add:Reclassification from loans and receivables (IAS 39) Total	Carrying Amount as of January 1, 2018 (IAS 39)		Reclassifi- cations $14,416 21,144 35,560 76,383 2,619,647 $2,731,590	Remea- surements	Carrying Amounts as of January 1, 2018 (IFRS 9) $14,416 24,410 38,826 82,619 2,619,647 $2,741,092	Retained Earnings Effect on January 1, 2018 $ 449 3,266 3,715 1,240 - $ 4,955	Other Equity Effect on January 1, 2018	Re- mark
	$ - - - - - $ -			$ - 3,266 3,266 6,236 - $ 9,502			( $ 449 ) - ( 449) 4,996 - $ 4,547	(1) (2) (1) (3) (4)

A. As stock investments that were previously classified as available -for-sale financial assets under IAS 39, the Group elected to designate all of these investments as at and FVTPL and FVTOCI under IFRS 9. As a result, the related other equity-unrealized gain/loss on available-for-sale financial assets of 449 and （ 15,950 ） thousand is reclassified to retained earnings and other equity - unrealized gain/loss on financial assets at FVTOCI.

As stock investments of unpublic offering securities previously measured at cost under IAS 39 are remeasured at fair value, being classified as measured at FVTOCI, based on IFRSs 9, an increase in other equity-unrealized gain/loss on financial assets measured at FVTOCI of 6,236 thousand on January 1, 2018.

For those equity investments previously classi fied as measured at cost financial assets under IAS 39, the impairment losses that the Group had recognized have been accumulated in retained earnings. Since these investments were designated as at FVTOCI under IFRS 9 and no impairment assessment is requir ed, the adjustments would result in a decrease in other equity - unrealized gain/loss on financial assets at FVTOCI of NT$1,240 thousand and an increase in retained earnings of NT$ 1,240 thousand on January 1, 2018.

B. ; Fund beneficiary certificates investments previously measured at cost in accordance with IAS 39 are not classified as eqity instruments, since their interests are not completely calculated by interests paid calculated by principal and principal outstanding, but are classified as mandatorily measured at FVTPL based on IFRSs 9. Owing to retrospective application of IFRS 9, retain earnings will be increased 3,266 thousands on January 1, 2018.
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C. ;Debt investments with no active market and bond investments measured at amortised cost previously recognized under IAS 39 by contractual cash flows from interests paid calculated by principal and principal outstanding, and the Group assesses operating models for receiving contractual cash flows, and then classifies the above investments as measured at amortised cost under IFRS 9 with an assessment of expected credit losses, classifying on the basis of the facts and circumstances of investments on January 1, 2018.
D. ; Notes receivable, trade receivable, and other receivables previously classifying as loans and receivables under IAS 39, were classified as measured at amortized cost with an assessment of expected credit losses under IFRS 9.
(2) IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC

IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC
New,Revised or Amended Standards and Interpretations Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 16 “Leases” IFRS 17 “Insurance Contracts” 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”	Effective Date Issued byIASB(Note 1)
	January 1, 2019 January 1, 2019 (Note 2) To be determined by IASB January 1, 2019 (Note 3) January 1, 2021 January 1, 2019 (Note 4) January 1, 2019 January 1, 2019

IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC

New,Revised or Amended Standards and Interpretations
Annual Improvements to IFRSs 2015-2017 Cycle

Amendments to IFRS 9 “Prepayment Features with Negative Compensation”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between
An Investor and Its Associate or Joint Venture”

IFRS 16 “Leases”

IFRS 17 “Insurance Contracts”

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”

Effective Date Issued
byIASB(Note 1)

January 1, 2019
January 1, 2019 (Note 2)
To be determined by IASB
January 1, 2019 (Note 3)
January 1, 2021
January 1, 2019 (Note 4)
January 1, 2019
January 1, 2019

Note 1: Unless stated otherwise, the above New IFRSs a re effective for annual periods beginning on or after their respective effective dates.
Note 2: The FSC permits the election for early adoption of the amendments starting from January 1, 2018.
Note 3: On December 19, 2017, the FSC announced that IFRS 16 will take effect starting from January 1, 2019.
Note 4: The Group shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.
A.;IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for le ases that will supersede IAS 17 “Leases” and a number of related interpretations.

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low -value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within financing activities.

The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as lessor.

When IFRS 16 becomes effective, the Group may elect to apply this standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this standard recognized at the date of initial application.

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A. IFRIC 23“Uncertainty over Income Tax Treatments”

IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Group should assume that the taxation authority will have full knowledge of all related information when making related examinations. If the Group concludes that it is probable that the taxation authority will accept an uncertain tax treatment, the Group should determine the taxable profit, tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatments used or planned to be used in its income tax filings. If it is not probable that the taxation authority will accept an uncertain tax treatment, the Group should make estimates using either the most likely amoun t or the expected value of the tax treatment, depending on which method the entity expects to better predict the resolution of the uncertainty. The Group has to reassess its judgments and estimates if facts and circumstances change.

The Group may elect to apply IFRIC 23 either retrospectively to each prior reporting period presented, if this is possible without the use of hindsight, or retrospectively with the cumulative effect of the initial application of IFRIC 23 recognized at the date of initial application.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1)Statement of compliance

These interim consolidated financial statements 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 and issued into effect by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements prepared under the IFRSs endorsed and issued into effect.

(2)Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value, and present value of defined benefits plans deducts net defined benefit liabilities measured at fair value.

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

  - A.; Level 1 inputs are quoted prices (unadjus ted) in active markets for identical assets or liabilities, which can be acquired during measurement date ;

B. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
- C. Level 3 inputs are unobservable inputs for the asset or liability.
(3)Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Group and the entities controlled by the Group (i.e. its subsidiaries). When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Group and to the non-controlling interests even if this results in the non -controlling interests having a deficit balance.

See Note 15 & Tables 2 for the detailed information of subsidiaries , the percentage of ownership and main business.

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(4)Other Significant Accounting Policies

Except for the following with respect to financial instruments and revenue recognition , the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2017.

A. Impairment of tangible and intangible assets

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

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

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

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss, without amortization or depreciation, been recognized for the asset, cash-generating unit or contract cost in prior years. A reversal of an impairment loss is recognized in profit or loss.

B. Financial instruments

Financial assets and financial liabilities are recognized on consolidated balance sheets when a group entity becomes a party to the contractual provisions of the instruments.

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

a. (A)Financial assets

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

a. Measurement category 2018

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

(a)Financial assets at FVTPL

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified as or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not m eet the amortized cost criteria or the FVTOCI criteria.

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At initial recognition, financial assets shall be designated as FVTPL, as designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss excludes any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 28.

(b)Financial assets at amortized cost

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

a).The financial asset is held within a business mode l whose objective is to hold financial assets in order to collect contractual cash flows; and
b).The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

Interest income is calculated by applying the effective interest rate to multiple the gross carrying amount of a financial asset.

Cash equivalents, held for the purpose of meeting short-term cash commitments, include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash, as well as deposits in the bank and repurchase bonds, which are subject to an insignificant risk of changes in va lue.

(c)Investments in equity instruments at FVTOCI

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

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

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

2017

Financial assets are classified into the following categories: Financial assets at fair value through profit or loss, a vailable-for-sale financial assets, and loans and receivables.

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

Financial asset is classified in this category if it is classified as held for trading or is designated as FVTPL on initial recognition.

Financial assets are classified as being designated on initial recognition at fair value through profit or loss as follows:

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a).possible for elimination or a significant decrease of inconsistency by measurement or recognization; or
b).Performance of a set of or both of financial assets and losses are valuated by based management of fair values, based on the written strategy of risk management and investment. And, the Group shall provide information regarding the investment portfolio, at fair value, to internal anagement ;or
c).A single or a component of an embedded d erivative for a hybrid contract is designated as such.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss without incorporating any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 28.

(b) ; Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available -for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.

Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair val ue cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are presented in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between the carrying amount and fair value is recognized in other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.

(c)Loans and receivables

Loans and receivables (including notes receivable, trade receivable, cash and cash equivalent, debt instrument investments with no active market, and refundable deposits) are measured at amortized cost using the effective interest method, less any impairment, except for interests of short-term receivables recognized is immaterial.

Cash equivalent includes 3 months’ portion of time deposits with highly liquid, readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value of deposits in the bank and repurchase bonds. These cash equivalents are held for the purpose of meetin g short-term cash commitments.

b. Impairment of financial assets

2018

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

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The Group always recognizes the loss allowance by lifetime Expected Credit Loss (i.e. ECL) for trade receivable on duration . For all other financial instruments, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance at an amount equal to 12-month ECL.

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

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

2017

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is obje ctive evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortized cost, such as trade receivable, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s experience of collecting payments, an increase in the number of delayed payments in the portfolio past th e average credit period of days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortized cost, the amount of the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial assets at the date the impairment loss is reversed does not exceed what the amortized cost would have been had the impairment loss not been recognized.

For any available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract such as a default or delinquency in interest or principal payments, it becomes probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active mar ket for those financial assets because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income is reclassified to profit or loss in the year.

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In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss is not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available -for-sale debt securities, impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively re lated to an event occurring after the recognition of the impairment loss.

For financial assets that are measured at cost, the amount of the impairment loss is measured as the difference between such an asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets, where the carrying amount is reduced through the use of an allowance account of trade receivable. When trade receivable is considered uncollectible, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account is recognized in profit or loss except for uncollectible trade receivable that is written off against the allowance accou nt.

c. De-recognition of financial assets

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

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

(B)Financial liabilities
a. Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

b. De-recognition of financial liabilities

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

(C)Convertible bonds

The component parts of compound instruments (convertible bonds) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar non -convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or the instrument’s maturity date. Any non-equity embedded derivative liability is measured at fair value.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in the liability and equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to capital surplus - share premium. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premium.

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Transaction costs that relate to the issue of the convertible bonds are allocated to the liability and equity components in proportion to the allocation of the gross proceeds.

C. Revenue recognition

2018

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

Revenue from sale of goods

Revenue from sale of goods comes from sales of computer software, hardware, accessories, equipment, amd components, etc. Revenue of the Group from sale of goods shall be recognized after shipment, and the Group shall recognize revenues and trade receivable during that period.

2017

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Allowances for sales returns are recognized at the time of sale to access the seller’s reliable estimate of future returns, based on past experience and other relevant factors.

(A)Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

a. The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. The Group retains neither continuing managerial involvem ent to the degree usually associated with ownership nor effective control over the goods sold;
c. The amount of revenues can be measured reliably;
d. It is probable that the economic benefits associated with the transaction will flow to the Group; and
e. The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(B)Revenues from dividends & Interest income

Revenues from dividends from investments in shares that are accounted for at equity are recognized when revenues can be stated, under the premise that the Group acquires ecnomic benefits regarding with transactions.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

D. Defined benefits of retirement

Pension cost for an interim period is calculated on a year -to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one -off events.

E. ;Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre -tax income of the interim period. The effect of a change in tax rate resulting from a change in tax law is recognized consistent with the accounting for the transaction itself which gives rise to the tax consequence, and is recognized in profit or loss, other comprehensive income or directly in equity in full in the period in which the change in tax rate occurs.

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5. ;CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

Key sources of the same critical accounting judgments, estimates and uncertainty assumption have been followed in these consolidated financial statements for the year ended December 31, 2017.

6. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
Cash and deposits in banks Checking accounts and demand deposits Cash equivalents Deposits in banks Repurchase Bond Others		March 31, 2018 $ 219 679,689 117,699 43,870 - $ 841,477	December 31, 2017 $ 157 522,509 173,773 44,678 2 $ 741,119		March 31, 2017
					$ 456 609,038 30,457 105,295 - $ 745,246

As the end of reporting period, the interest rate at market of deposits and repurchase bonds is as follows ：

7.	March 31, 2018 December 31, 2017 Cash in banks 0.01%-0.46% 0.01%-0.46% Repurchase Bond 1.90% 1.90% Deposits in banks 0.60%-2.03% 0.60%-2.13% FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS	March 31, 2017
		0.01%-0.38% 1.45% 1.26%

Financial assets`－`current Designated as at fair value through profit or loss Domestic convertible bond Credit linked notes(1) Total Held-to-maturity Derivatives`（`Not assigned for hedge`）` `－`Redemption & sell right for convertible bonds Non-derivative financial assets `－`Domestic public offering securities `－`Fund beneficiary certification Total Mandatorily measured at FVTPL Derivatives`（`Not assigned for hedge`）` `－`Redemption & sell right for convertible bonds Non-derivative assets `－`Domestic public offering securities `－`Fund beneficiary certification Total		March 31, 2018 $ 64,091 - 64,091 - - - - 4 283 40,008 40,295 $ 104,386	December 31, 2017 $ 51,009 - 51,009 4 325 - 325 - - - - $ 51,338		March 31, 2017
					$ 57,440 10,007 67,447 3 449 916 1,365 - - - - $ 68,815

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Financial assets`－`non-current Mandatorily measured at FVTPL Non-derivative assets `－`Domestic public offering securities `－`Fund beneficiary certification		March 31, 2018 $ 14,646 24,410 $ 39,056	December 31, 2017 $ - - $ -		March 31, 2017
					$ - - $ -

(1)As the end of the reporting period, current credit linked notes are as follows:

March 31, 2018 ： None.

December 31, 2017 ： None.

March 31, 2017

Issuer	Target	Actual Interest Rate`％`	Period 2014.6.11- 2017.6.19		Notional amount	Fair value $ 10,007		Carrying amount
Fubon Securities Co., Ltd.	Unsecured bonds-Phihong technology Co., Ltd.	2.40%			$ 10,000			$ 10,007

The group holds credit linked notes is a form of structured notes, mainly combined with fixed-income securities abd credit derivative, combined with recognized contracts and embedded derivatives when acquired embedded derivatives cannot be stated individually, assigned to be valued at fair value, recognized c hange in fair value of financial assets as profits and losses.

Financial assets measured at FVTOCI -2018

Financial assets measured at FVTOCI-2018
Current Investments in equity instruments at FVTOCI Non-current Investments in equity instruments at FVTOCI Investments in equity instruments at FVTOCI Current Domestic Publicly traded stock Non-current Domestic Non-publicly traded and emerging stock Non-publicly traded stock	March 31,2018
	$ 16,814 $ 73,076 March 31,2018
		$ 16,814 $ 69,690 3,386 $ 73,076

These investments in equity instruments(ordinanry shares) are held for for medium to long-term business development strategic purposes. Accordingly, the Group’s management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes. These investments in equity instruments were previously classified as available-for-sale financial assets and financial assets measured at cost under IAS 39. Please refer to Note 3, 10, and 11 for information relating to their reclassification and comparative information for 2017.

In January and March 2018, the Group adjusted its investment strategy to reduce risks , and sold 339 and 856 thousand of ordinary shares of ASLAN Pharmaceuticals and Chunghwa － Precision Test Tech.Co., Ltd. at fair value, and relevant other equities (774)thousand of unrealized losses of financial assests at FVTOCI shall transfer into retian earnings.

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9. FINANCIAL ASSETS AT AMORTIZED COST -2018

March 31, 2018

Current Domestic investment Time deposits with original maturities more than three months(1) Non-current Domestic investment Pledged Time Deposit (2)	$ 422,088 19,039 $ 441,127

(1) For three months ended March 31, 2018, the market interest rate of time deposit over 3 months portion is 0.20%~2.50%, respectively. Time deposit over 3 months portion previously was classified as debt investments with no active market under IAS 39. Please refer to Note 3 and 12 for information relating to their reclassification and comparative information for 2017.
(2) Please refer to Note 30 for more details on financial assets at amortised cost under pledge.
AVAILABLE -FOR - SALE FINANCIAL ASSETS -2017

Domestic Publicly traded and emerging stock Current portion Non-current portion	December 31,2017 $ 90,289 $ 21,724 $ 68,565	March 31,2017	March 31,2017
			$ 59,776 $ 3,545 $ 56,231

Please refer to Note 30 for details on available-for-sale financial assets under pledge.

11. FINANCIAL ASSETS CARRIED AT COST-2017

Non-current Domestic unpublic offering securities Unex Technology Corporation Jotangi technology Co., Ltd. Ijoing, Inc. Fund Beneficiary Certification Yuanta Diamond Funds SPC Distinguished by the assessing types of financial assets Available-for-sale financial assets	December 31,2017 $ 510 - - 21,144 $ 21,654 $ 21,654	March 31,2017	March 31,2017
			$ 510 - - - $ 510 $ 510

Shares of Jotangi technology Co., Ltd. and Ijoing, Inc. had been adjusted into financial assets measured at cost - non-current in April and December 2017. Please reference for Note 16.

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET-2017

Current Time deposit over 3 months’ portion (1) Non-current Pledged Time Deposit (2)	December 31,2017 $ 212,366 $ 11,539	March 31,2017	March 31,2017
			$ 285,902 $ 11,379

(1) On December 31 and March 31, 2017, the market interest rate of time deposit over 3 months portion is 0.60% ～ 2.13%, 1.01% ～ 1.91%, respectively.
(2) Please refer to Note 30 for more details on debt investments with no active market under pledge.
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13. NOTES AND TRADE RECEIVABLE

Notes receivable For operating Deduct:Allowance for bad debts Trade receivable Measured at amortised cost Total carrying values Deduct:Allowance for bad debts		March 31, 2018 $ 33,910 - $ 33,910 $ 1,241,103 35,248) $ 1,205,855		December 31, 2017 $ 185,925 - $ 185,925 $ 1,503,811 37,571) $ 1,466,240	( (	March 31, 2017
	(		(			$ 109,092 30,577) $ 78,515 $ 1,178,540 10,658) $ 1,167,882

For the Three Months Ended March 31, 2018

The average credit period of sales of goods of the Group was 60-90 days, and no interest was charged on trade receivable.

In order to minimize credit risk, the Group’s management has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue receivables. In addition, the Group reviews the recoverable amount of each individual trade receivable at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the Group’s management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach to providin g for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivable. The expected credit losses of trade receivable on durable are estimated using a provision matrix by reference to past def ault experience of the debtor and an analysis of the debtor’s current financial position and past experience of receivable,and the change in global and regional economic conditions of uncollectible accounts, deciding the rate of the expected credit losses by the level of credit limits of customers and actual conditions, based on the degree of doubtful accounts triggered by customers of different industries.

The following table details the loss allowance of trade receivable:

March 31, 2018

Total carrying values Allowance for losses( Expected credit losses on duration) Amortized cost		Credit Rank A		Credit Rank B		Credit Rank C		Credit Rank D	Credit Rank D		Credit Rank E	Credit Rank E		Credit Rank G	Credit Rank G		Credit Rank H	Credit Rank H		Total
	(	$173,510 95) $173,415	(	$749,952 1,846) $748,106	(	$200,364 2,655) $197,709	(		$ 34,233 572) $ 33,661	(		$ 53,255 4,667) $ 48,588	(		$ 28,419 25,406) $ 3,013	(		$ 1,370 7) $ 1,363		$1,241,103 (35,248) $1,205,855

The above rate of the expected credit losses of the Group, the customer of credit rank A~E shall be accessed between 0.05% and 16.00%. Credit rank G is customers whose credit limit were blacklisted or who transacts with the Group at first time, being accessed by 90%. Credit rank H is of foreign customers, being accessed by 0.05%~1.00%.

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Aging analysis of trade receivable, net ：

Aging analysis of trade receivable, net`：`
0～60 days 61～90 days 91～120 days Over 121 days Total		March 31, 2018
		$ 782,089 296,534 31,531 130,949 $ 1,241,103

The above aging analysis was based on the beginning booked date.

The following table details information about the change in the loss allowance of trade receivable

receivable
Balance at January 1, 2018 (IAS 39) Effect of retrospective application of IFRS 9 Balance at January 1, 2018 (IFRS 9) Deduct:Reversal of impairment losses Balance at March 31, 2018 For the three months ended March 31, 2017	For the Three Months Ended March 31, 2018
		$ 37,571 - 37,571 ( 2,323) $ 35,248

The Group’s policy of credit limit in 2017 is the same as that in 2018.

Aging analysis of trade receivable, net:

Aging analysis of trade receivable, net:
0～60 days 61～90 days 91～120 days Over 121 days Total	December 31,2017 $ 795,750 300,932 247,958 159,171 $ 1,503,811	March 31,2017
			$ 845,919 232,311 53,490 46,820 $ 1,178,540

The above aging analysis was based on the beginning booked date.

As of December 31, 2017 and March 31, 2017, the Group’s trade receivable hadn’t been past due and impaired amounted.

The movements of the loss allowance of trade receivable were as follows:

Movements of the allowance for bad debts ：

Balance at January 1, 2017 Add: Impairment losses/ bad debt expenses recognized on receivables Deduct: Impairment losses/ bad debt expenses reversed on receivables Balance at March 31, 2017	Notes receivable $ - 30,577 - $ 30,577	Trade recivable $ 10,844 - ( 186) $ 10,658	uncollectible receivable	uncollectible receivable	(	Total
		(		$ 337 - - $ 337		$ 11,181 30,577 186) $ 41,572

INVENTORIES

NVENTORIES
Raw materials Work in process Finished goods Commodities		March 31, 2018 $ 4,859 3,239 351 372,003 $ 380,452	December 31, 2017 $ 15,641 8,591 659 465,673 $ 490,564		March 31, 2017
					$ 10,978 5,238 1,003 439,304 $ 456,523

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The increase in net realizable value of inventories is in the amount of NT$8,028 thousand and write-down of inventories is in the amount of NT$9,801 thousand, respectively, for the three months ended March 31, 2018 and 2017. The increase in net realizable value of inventories is recognized by the disposal of commodities as previously recognized realized price losses.

SUBSIDIARIES
(1)Subsidiaries included in the co nsolidated financial statements

The consolidated entities were as follows :

Investor	Investee	Nature of Activities	Proportion of Ownership (%)	Proportion of Ownership (%)	Proportion of Ownership (%)	Re- mark
			March 31, 2018	December 31, 2017	March 31, 2017
The Company Zerone Win Investment Co., Ltd.	Zotech technology Co., Ltd. Zerone Win Investment Co., Ltd. WingWill International Co., Ltd. PetaCom technology Co., Ltd.	Manufacturing for computer equipment Investment Services of Cloud & information software Services of information product agent	85.37% 100.00% 70.00% 100.00%	85.37% 100.00% 70.00% 100.00%	85.37% - - -	A A,B A,C A,D

A. These are not significant subsidiaries, and its financial statements haven’t been reviewed by CPAs, beside the management personnel of the Group considers no material influence as financial statements of the above subsidiaries haven’t been reviewed by CPAs.
B. ; Zerone Win Investment Co., Ltd. was established on April, 2017.
C. ;WingWill International Co., Ltd. was established on July, 2017.
D. ;PetaCom technology Co., Ltd. was established on July, 2017.
(2)Subsidiaries excluded from the consolidated financial statements ： None.

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Name of Associates Insignificant associates Trident Pacific Co., Ltd. Ijoing, Inc. Chi-Ta International Co., Ltd. Jotangi technology Co., Ltd. Name of the Company Trident Pacific Co., Ltd. Ijoing, Inc. Chi-Ta International Co., Ltd. Jotangi technology Co., Ltd.		March 31, 2018 $ 3,107 - - - $ 3,107 March 31, 2018 29.82% - 30.00% -	December 31, 2017 $ 4,446 - - - $ 4,446 December 31, 2017 29.53% - 30.00% -		March 31, 2017
					$ 9,450 1,383 - - $ 10,833 March 31, 2017
					29.53% 43.98% 30.00% 31.85%

The group invested and founded Chi-Ta International Co., Ltd., that engaged mainly in researching and manufacturing hardware of auto-used electronic equipment, with investment amount to 10,000 thousand, and share-holding ratio of 30% in March 2014, since it kept net losses, foresaw decrease in future cash flows, evaluated recognized NT 7,243 of impairment losses thousand in 2015, and recognized book value of 0 thousand after recognized deficits.

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The Group invested Ijoing Co., Ltd., engaging in publishing mobile games and information software, with investment amount to 5,000 thousand, and share-holding ratio of 43.98% in June 2016. Ijoing Co., Ltd increased cash capital in December 2017, without subscribing by share-holding ratio, the Group’s share-holding ratio decreasing from 43.98% to 10.00%. The Group lost material influences, and recognized it as financial assets measured at cost-non-current.

Jotangi technology Co., Ltd. increased cash capital in April 2017. S ince the Group hasn’t subscribed more shares, it losses material influences, the Group’s share-holding ratio decreasing from 31.85% to 16.94%, and recognizes it as financial assets measured at cost-non-current.

The group invested Trident Pacific technology, Co., Ltd., engaging in researching, developing and packaging of space flight equipment, with investment amount to NT 9,450 thousand, and share-holding ratio of 29.53% in March 2017. Since it decreased capital in January 2018, its share-holding ratio changed into 29.82%.

Investments for equity method as well as profit(loss), and other comprehensive income of the Group, haven’t been calculated by reviewed financial report of CPAs, beside the management personnel of the Group considers no material influence as financial statements of the above sub sidiaries haven’t been reviewed by CPAs.

17. PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT
Land Buildings Machinery equipment Office equipment Delivery equipment Other equipment		March 31, 2018 $ 234,892 59,697 288 12,856 2,335 538 $ 310,606	December 31, 2017 $ 234,892 60,151 462 13,827 - 751 $ 310,083		March 31, 2017
					$ 234,892 61,513 1,239 4,558 - 624 $ 302,826

Except for depreciation recognized, property, plant and equipment haven ’t been increased, disposed and impaired for the three months ended March 31, 2018 and 2017. Depreciation expenses were depreciated on a straight-line basis over the estimated useful life of the asset:

useful life of the asset:
Buildings	7-50 Years
Machinery equipment	3 Years
Office equipment	3-5 Years
Delivery equipment	5 Years
Other equipment	2-3 Years

Please refer to Note 30 for more details on property, plant and equipment under pledge .

18. SHORT-TERM LOANS

SHORT-TERM LOANS
Guaranteed Loan`（`Note 30`）` `－`Broker Loan (1)		March 31, 2018 $ -	December 31, 2017 $ -		March 31, 2017
					$ 4,000

(1)Interest rate of bank loans is 1.7% on March 31 2017.

(2)The Group was made a loan of 4,000 thousand at the fixed rate of 1.7% by the security firm, stock held by the Group under pleadge, and repaid it earlier in August 2017.

19. OTHER PAYABLE

OTHER PAYABLE
Salaries and bonuses payable Employees', directors', and supervisors' compensation payable Others		March 31, 2018 $ 26,062 20,653 55,376 $ 102,091	December 31, 2017 $ 54,177 15,658 65,047 $ 134,882		March 31, 2017
					$ 24,375 19,492 49,315 $ 93,182

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20. BOND PAYABLE

BOND PAYABLE
Unsecure domestic convertible Deduct:Discounted bond payable Total of bond payable Deduct:due components in a year Total		March 31, 2018 $ 6,800 ( 132) 6,668 ( 6,668) $ -	December 31, 2017 $ 10,000 ( 267) 9,733 ( 9,733) $ -		March 31, 2017
					$ 13,400 ( 576) 12,824 ( 12,824) $ -

On May 19, 2014, ZOTC issued no any interest unsecured bonds (the second tranche). The bonds had an aggregate face value of $500,000 thousand, with each unit having a face value of NT$100 thousand, and the offering price was $100.2% of the face value, and its conversion period is 5 years from June 20, 2014 to May 9, 2019. The conversion price was $20 per share on issuance date.

Within the period between one month after the issuance date and 40 days before t he last convertible date, if the closing price of ZOTC common shares on the TWSE for a period of 30 consecutive trading days before redemption has been at least 30% of the conversion price in effect on each such trading day, or in the event that the principal amount of the bonds originally outstanding is 10 % lower than the issued amount of the bonds, ZOTC may redeem all bonds at face value by cash.

The convertible bonds issued over 3 years, the holder could ask the Group to redeem bonds at face value by cash.

The convertible bonds include liabilities and equity. The equity components were accounted for ZOTC as paid-in capital –option. The effective interest rate of liability components recognized is 2.0618%.

Convertible bonds issued(deduct transaction costs of $5,355 thousand)

Equity components
(
Deferred tax assets
Financial liabilities
(
Issuance date of liability components
Interest (2.0618%)
Redeemed convertible bonds
(
Convertible bonds changed into ordinary shares
(
Balance on March 31, 2017, liability components

Balance on January 1, 2018, liability components

Interest (2.0618%)
Convertible bonds changed into ordinary shares
(
Balance on March 31, 2018, liability components

$ 495,645

42,470 )
910
3,023)
451,062
10,731

49,256 )
399,713)
$ 12,824
$ 9,733
48
3,113)
$ 6,668

21. RETIREMENT BENEFIT PLANS

For the three months ended March 31, 2018 and 2017, the Group’s pension costs under the defined benefit plan were made payment $145 and $154 thousand, respectively, decided by actuarial pension costs rate on December 31 2017, and 2016 .

22. EQUITY

(1)Ordinary Shares

Ordinary Shares
Authorized shares (in thousands) Authorized capital Issued and paid shares (in thousands) Issued capital		March 31, 2018 150,000 $ 1,500,000 122,680 $ 1,226,804		December 31, 2017 150,000 $ 1,500,000 122,480 $ 1,224,804		March 31, 2017
						150,000 $ 1,500,000 122,242 $ 1,222,420

The change in share capital is mainly due to bonds payable that changes into ordinary shares.

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(2)Capital Surplus

Capital Surplus
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital(A) Premium on shares issued above par value Treasury stock transactions Only be used to offset a deficit From shares of changes in equities of ;subsidiaries (B) Invalid employees stock options May not be used for any purpose Stock options Employees stock options		March 31, 2018 $ 397,869 25,343 $ 2,481 300 578 10,869 $ 437,440	December 31, 2017 $ 396,486 25,343 $ 2,481 300 850 8,675 $ 434,135		March 31, 2017
					$ 394,775 25,343 $ 2,481 - 1,138 5,199 $ 428,936

A. Such capital surplus may be used to offset a deficit; in addition, when the Group has no deficit, such capital surplus may be distributed as cas h dividends or transferred to share capital (limited to a certain percentage of the Group’s paid-in capital surplus and once a year).
B. The capital surplus from share of unrealized changes in equities of subsidiaries not acquired or disposed is an affective recognized by changes in equity of subsidiaries, or the Group recognizes subsidiaries’ capital surplus adjustments for equity method.
(3)Retained earnings and dividend policy

The Group’s Articles of Incorporation provide that, when allocating the net pr ofits for each fiscal year, ZOTC shall first pay taxes and offset its losses in previous years and then set aside the legal capital reserve at 10% of the profits left over, and then set aside or reverse the legal capital reserve. Any balance left over shall be added accumulated undistributed earnings of previous year and and allocated according to the resolution, provided from the board meeting, of the shareholders’ meeting. Please reference the distribution policy regulated by the Group’s Articles of Incorporation of employee, directors’ and supervisors’ compensation for Note 23-6.

Distribution of earnings shall be made preferably by way of surplus cash dividend, according to future capital budget plan, and operating fund requirements. The Group considers its influences on diluted earning per shares and return on equity, but the ratio for cash dividend shall not exceed 10% of the total distribution.

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

Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Group shall appropriate or reverse to a special reserve.

For distribution of retained earnings, shareholders shall acquire imputation credit calculated by tax deduction ratio, during the distribution date of cash dividends, except for share holders who reside outside of the ROC.

The appropriations of 2017 and 2016 earnings have been approved by ZOTC’s Board of Directors in its meeting held on April 25, 2018 and shareholders’ meeting on June 14, 2017, respectively, were as follows:

Legal capital reserve Special reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2017 For Fiscal Year 2016 $ 19,598 $ 22,408 ( 1,222 ) ( 6,153 ) 159,452 146,690	Dividends Per Share(NT$)	Dividends Per Share(NT$)
	For Fiscal Year 2017 $ 19,598 ( 1,222 ) 159,452	For Fiscal Year 2017 $ 1.3	For Fiscal Year 2016 $ 1.2

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The appropriations of earnings for 2017 are to be pres ented for approval in the shareholders’ meeting to be held on June 11, 2018 (expected).

(4)Other equity

A. Unrealized Gain/Loss from Available -for sale Financial Assets Balance at January 1, 2017 ( In respect of the current period Unrealized profits and losses ( Balance at March 31, 2017 ( Balance at January 1, 2018 (IAS 39) ( Effect of retrospective application of IFRS 9 Balance at January 1, 2018 (IFRS 9)	$ 16,723 ) 2,524) $ 19,247) $ 15,501 ) 15,501 $ -

B. Unrealized Gain/Loss from financial assets measured at FVTOCI

Balance at January 1, 2018`（`IAS 39`）` Effect of retrospective application of IFRS 9 Balance at January 1, 2018`（`IFRS 9`）` In respect of the current period Unrealised profits and losses`－`equity instruments Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal Balance at March 31, 2018	For the Three Months Ended March 31, 2018	For the Three Months Ended March 31, 2018
	( ( (	$ 15,501 ) 4,547 10,954 ) 8,466 774 $ 1,714)

23. NET INCOME

(1)Other income

Other income
Interest income Financial assets at amortised cost Cash in banks Debt investments with no active market Financial assets at FVTPL Rental income Others Other gains and losses Net foreign exchange loss Net gain arising on financial assets at FVTPL Financial costs Interests on bank borrowings Interests on convertible bonds Total	For the Three Months Ended March 31, 2018 $ 1,638 736 - - 119 515 $ 3,008 For the Three Months Ended March 31, 2018 ( $ 1,014 ) 719 ($ 295) For the Three Months Ended March 31, 2018 $ - 48 $ 48	For the Three Months Ended March 31, 2017
		$ - 642 1,272 83 72 59 $ 2,128 For the Three Months Ended March 31, 2017
		( $ 1,591 ) 1,097 ($ 494) For the Three Months Ended March 31, 2017
			$ 25 122 $ 147

(2)Other gains and losses
(3)Financial costs
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(4)Depreciation & amortization

)Depreciation & amortization
Property, plant and equipment Intangible assets An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses )Employee benefits expense Post-employment benefits Defined contribution plans Defined benefit plans`（`Note 21`）` Share-Based Payment Equity Swap Other employee benefits Total Employee benefits expense summarized by function Recognized in cost of revenue Recognized in operating expenses	For the Three Months Ended March 31, 2018 $ 2,611 175 $ 2,786 $ 289 2,322 $ 2,611 $ 175 For the Three Months Ended March 31, 2018 $ 1,881 145 2,026 2,194 56,100 $ 60,320 $ 1,128 59,192 $ 60,320	For the Three Months Ended March 31, 2017
		$ 1,559 364 $ 1,923 $ 253 1,306 $ 1,559 $ 364 For the Three Months Ended March 31, 2017
			$ 1,888 154 2,042 1,422 48,577 $ 52,041 $ 1,228 50,813 $ 52,041

(5)Employee benefits expense

(6)Employees’, directors, and supervisors’ compensation

ZOTC shall allocate compensation to employees’, Director’s, and Supervisor’s of ZOTC not less than 1%~15% and not more than 3% of annual profits during the period, respectively, and the estimate of employees’, Director’s, and Supervisor’s compensation for the three months ended March 31, 2018 and 2017 is as follows:

Estimate Rate

Estimate Rate
Employee compensation Director’s & Supervisor’s compensation Amount Employee compensation Director’s & Supervisor’s compensation	For the Three Months Ended March 31, 2018 4.00% 2.00% For the Three Months Ended March 31, 2018 $ 3,330 $ 1,665	For the Three Months Ended March 31, 2017
		4.00% 2.00% For the Three Months Ended March 31, 2017
			$ 831 $ 415

If changes in the very amount after the end of the reporting period, it will be booked next year, based on accounting estimate regulations.

The distribution amount of employees’, director’s, and supervisor’s compensati on in 2017 and 2016 have been approved by ZOTC’s Board of Directors in its meeting held on Feburary 26, 2018 and Feburary 24, 2017, respectively, were as follows:

Employee compensation Director’s & Supervisor’s compensation	2017 Cash Stock $ 10,439 $ - 5,219 -	2016	2016
	Cash $ 10,439 5,219	Cash $ 11,152 5,576	Stock $ - -

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The distribution amount of employees’, director’s, and supervisor’s compensation in 2017, and 2016 has no difference compared to the recognized amount of consolida ted financial statements in 2017 and 2016.

Please search for relevant information about employees’, director’s, and supervisor’s compensation, decided by the board of directors in 201 8 and 2017, on the website of “Market Observation Post System” of TWSE.

(7)Foreign exchange gain (loss)

)Foreign exchange gain (loss)
Foreign exchange gain Foreign exchange loss Loss, net	For the Three Months Ended March 31, 2018 $ 1,002 ( 2,016) ($ 1,014)	For the Three Months Ended March 31, 2017
	( (	( (	$ 29,260 30,851) $ 1,591)

INCOME TAXES
(1)Income tax recognized in profit or loss

The major components of tax expense s were as follows:

Current tax In respect of the current period Deferred tax In respect of the current period Income tax expense recognized in profit or loss	For the Three Months Ended March 31, 2018 $ 14,404 ( 1,750) $ 12,654	For the Three Months Ended March 31, 2017	For the Three Months Ended March 31, 2017
	(	(	$ 8,872 5,404) $ 3,468

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20% effective in 2018. The change in tax rate on deferred tax losses was recognized as the change in tax rate incurred at the current period. In addition, the rate of the corporate surtax applicable to 2018 unappropriated earnings will be reduced from 10% to 5%.

(2)Income tax expense recognized in other comprehensive income

Deferred income tax Tax rate changes `－`Remeasurement of defined benefit plans Total income tax expense recognized in other comprehensive income	For the Three Months Ended March 31, 2018 $ 438 $ 438	For the Three Months Ended March 31, 2017	For the Three Months Ended March 31, 2017
			$ - $ -

(3)Income tax assessment

The Company and subsidiaries’ income tax returns have been assessed by the Tax Authority as follows:

The Company and subsidiaries’ income tax returns have been Authority as follows:	assessed by the Tax
Co. Name The company Zotech technology Co., Ltd. Zerone Win Investment Co., Ltd. WingWill International Co., Ltd. PetaCom technology Co., Ltd.	Year of Assessment
	2015 2016 `－` `－` `－`

25. EARNINGS PER SHARE

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

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Net Profit for the Period

Net Profit for the Period
Net Profit for the Period Effect of potentially dilutive ordinary shares: Effect of convertible bonds after tax Earnings in computation of diluted earnings per share Weighted average number of ordinary shares outstanding for basic earnings per share Effect of potentially dilutive ordinary shares: Convertible bonds Employees’ compensation Employee stock options Weighted average number of ordinary shares outstanding for diluted earnings per share	For the Three Months Ended March 31, 2018 $ 62,282 45 $ 62,327 122,480 625 495 385 123,985	For the Three Months Ended March 31, 2017
			$ 16,053 122 $ 16,175 121,436 1,476 396 117 123,425

If the Group will distribute bonus to employees and the bonus will be settled in cash or shares, the Group will assume that the entire amount of the compensation or bonus will be settled in shares and the resulting potential shares are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

The exercise price of the second issued employee stock options is higher than average market price of shares for the three months ended March 31, 2017. Owing to anti-diluted, it doesn’t be calculated in each diluted earnings per share.

The exercise price of the third issued employee stock options is higher than average market price of shares for the three months ended March 31, 2018. Owing to anti-diluted, it doesn’t be calculated in each diluted earnings per share.

26. SHARE -BASED PAYMENT ARRANGEMENTS

In August 2015, September 2016 and January 2018, 1,000, 1,860 and 2,000 options were granted to qualified employees of the Group. Each option entitles the holder to subscribe for 1,000 thousand ordinary shares of the Group when exercisable. The options granted are valid for 6 years and shall be excercised a portion of them after two years from the date of grant. The options were granted at an exercise price equal to the fair value of the Group’s ordinary shares on the grant date. For any subsequ ent changes in the Group’s ordinary shares, the exercise price will be adjusted by the regulated formula, accordingly.

Information about employees’ stock options was as follows:

Employee Stock options Balance, beginning of period Options vested Outstanding options Options exercised Weighted-average fair value of options vested(NT$)	For the Three Months Ended March 31,2018 Number of Exercisable Options (In Thousands) Weighted Average Exercise Price (NT$) 2,633 $ 15.23 2,000 19.85 4,633 17.22 183 $ 6.67	For the Three Months Ended March 31,2017	For the Three Months Ended March 31,2017
	Number of Exercisable Options (In Thousands) 2,633 2,000 4,633 183 $ 6.67	Number of Exercisable Options (In Thousands) 2,860 - 2,860 - $ -	Weighted Average Exercise Price (NT$)
			$ 16.50 - 16.50

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Information about outstanding options at the end of reporting period was as follows:

For the Three Months Ended March 31,2018 Range of Exercise Price(US$) Weighted- Over-Age Remaining Contractual Life (Years) $ 13.90`（`Note`）` 3.42 15.90`（`Note`）` 4.43 19.85 5.76	For the Three Months Ended December 31,2017 Range of Exercise Price(US$) Weighted- Over-Age Remaining Contractual Life(Years) $ 13.90`（`Note`）` 3.67 15.90`（`Note`）` 4.68 ;- -	For the Three Months Ended March 31,2017	For the Three Months Ended March 31,2017
Range of Exercise Price(US$) $ 13.90`（`Note`）` 15.90`（`Note`）` 19.85	Range of Exercise Price(US$) $ 13.90`（`Note`）` 15.90`（`Note`）` ;-	Range of Exercise Price(US$) $ 15.65 16.95 -	Weighted- Over-Age Remaining Contractual Life(Years)
			4.42 5.43 -

Note:The Issued price will be adjusted by methods of issuance.

The Group adopts BOPM and Black-Scholes price model to evaluate inputs of stock options in January 2018, September 2016 and August 2015 as follows:

Securities price of the vested date Exercised price Foreseeable volatility rate Duration Foreseeable dividend rate No risk rates	January2018 19.85 Dollars 19.85 Dollars 33.81% 6 Years 0% 0.74%	September 2016 16.95 Dollars 16.95 Dollars 38.26% 6 Years 0% 0.56%	August 2015
			15.65 Dollars 15.65 Dollars 39.14%~40.47% 4~5 Years 0% 0.77%~0.87%

27. CAPITAL RISK MANAGEMENT

The Group engages mainly in the agent of software, without any plans of imposed capital requirements. The Group manages its capital to ensure requirements of operating funds and dividend expenses, based on growth and development of scale of enterprise and prospective of the industry. The Group periodically reviews the policy of capital risk management, for the purpose of seeking a steady and conservative policy.

The capital structure of the Group consists of net debt and equity (comprising share capital, capital reserves, retained earnings and other equity).

The Group is not subject to any externally imposed capital requirements.

28. FINNANCIAL INSTRUMENTS

(1)In for mation about Fair value of financial instruments that are not measured at fair value

Except as detailed in the following table, the management believes the carrying amounts of financial liabilities not measured at fair value recognized in the consolidated financial statements approximate or cannot be measured their fair values:

Financial liabilities Convertible bonds	March 31, 2018	March 31, 2018	December 31, 2017	December 31, 2017	March 31, 2017	March 31, 2017
	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
	$ 6,668	$ 10,186	$ 9,733	$ 12,600	$ 12,824	$ 16,080

(2)Information about fair value of financial assets measured at fair value on a recurring basis.
33 -

A.Fair value hierarchy
March 31, 2018
	Level 1		Level 2			Level 3		Total
Financial assets at FVTPL
Convertible bonds	$ 64,091	$		-	$		-	$ 64,091
Fund beneficiary certification	64,418			-			-	64,418
Domestic public offering and
emerging stock	14,929			-			-	14,929
Derivatives	-			4			-	4
Total	$ 143,438	$		4	$		-	$ 143,442
Financial assets at FVTOCI
Equity investments
`－`Domestic public offering and
emerging stock	$ 76,054	$		-	$	10,450		$ 86,504
`－`Domestic unpublic offering
stock	-			-		3,386		3,386
Total	$ 76,054	$		-	$	13,836		$ 89,890
December 31, 2017
	Level 1		Level 2			Level 3		Total
Financial assets at FVTPL
Convertible bonds	$ 51,009	$		-	$		-	$ 51,009
Domestic public offering
stock	325			-			-	325
Derivatives	-			4			-	4
Total	$ 51,334	$		4	$		-	$ 51,338
Available-for-sale financial assets
Equity investments
`－`Domestic public offering
and emerging stock	$ 90,289	$		-	$		-	$ 90,289
March 31, 2017
	Level 1		Level 2			Level 3		Total
Financial assets at FVTPL
Convertible bonds	$ 57,440	$		-	$		-	$ 57,440
Fund beneficiary certification	916			-			-	916
Domestic public offering
stock	449			-			-	449
Credit linked notes	-		10,007				-	10,007
Derivatives	-			3			-	3
Total	$ 58,805	$	10,010		$		-	$ 68,815
Available-for-sale financial assets
Equity investments
`－`Domestic public offering
and emerging stock	$ 59,776	$		-	$		-	$ 59,776
There were no transfers	between Le vel 1		and Level		2 for three			months ended
March 31, 2018 and 2017, respectively.

B. Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

Financial Instruments Valuation Techniques and Inputs Derivatives—Redemption & sell Valuation model of binomial tree of convertible bond; Using right of convertible bonds securities prices, no risk rate, and risk discount rate evaluates fair values of financial assets of convertible bonds.

C.Valuation techniques and assumptions used in Level 3 fair value Measurement The market approach is used to arrive at their fair value, for which, the estimate and assumption regarding relevant information of expexted present value of profits and losses calculated by held investments with reference to the publicly traded company and similar companies.

34 -

(3)Categories of financial instruments

Financial assets Financial assets measured at FVTPL Held for trading Designated as at FVTPL Mandatorily measured at FVTPL Loans and receivables (Note 1) Available-for-sale financial assets `（`Note 2`）` Financial assets measured at amortized cost (Note 3) Financial assets measured at FVTOCI`－`Investments in equity instruments Financial liabilities Measured at amortized cost(Note4)	March 31, 2018 $ - 64,091 79,351 - - 2,527,033 89,890 1,154,123	December 31, 2017 $ 329 51,009 - 2,619,647 111,943 - - 1,397,491	March 31, 2017
			$ 1,368 67,447 - 2,295,396 60,286 - - 1,158,995

Note 1:The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt instruments with no active market, note receivable, trade receivable, other receivable and refundable deposits.
Note 2:The balances included available-for-sale financial assets measured at cost.
Note ; 3:The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, investments in debt instruments, notes receivable, trade receivable, other receivable and refundable deposits.
Note 4:The balances included financial liabilities measured at amortized cost, which comprise short-term loans, trade payable, other payable, and current portion of bonds payable.
(4)Financial risk management objectives and policies

The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk based on related protocols and int ernal control procedures. The Group’s financial department measures the aforementioned risks based on the Group’s risk appetite, and reports to the board of directors for carrying out relevant policies.

A. ;Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates.

(A) Foreign currency risk

The Group’s purchases and investments are denominated in foreign currencies. Consequently, the Group is exposed to foreign currency risks. To protect against reductions in value of foreign currency denominated assets and the volatility of future cash flows caused by changes in foreign exchange rates, the Group utilizes derivative financial instruments, such as forward exchange contracts and options, for avoiding foreign currency risks.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities of non-functional currency calculated (including those eliminated on consolidation) at the end of the reporti ng period are set out in Note 32.

Sensitivity analysis

The Group’s exchange rate exposure was in the e xchange rate of U.S. dollars.

35 -

The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation at the en d of the reporting period for a 5% change in foreign currency rates. If interest rates had been 5 % higher/lower, the Group’s net profit for the three months ended March 31, 2018 and 2017 would increase/decrease by $1,541 thousand and $1,111 thousand, respectively.

(B) Interest rate risk

The Group exposed to the risk of interest rate at fair value, since holding the fixed-rate loan, accessesing the interest rate of the bank loan regularly, observing influences on profits or losses from flunctuation range of the interest rate, keeping contact with the bank based on the actual requirement, and acquiring the best interest rate of the loan.

The carrying amount of the Group’s financial assets and financial liabilities with exposure to risks of interest rates at the end of the reporting period were a s follows:

follows:
Interest rate risks at fair value `－`Financial assets `－`Financial liabilities Interest rate risks at cash flows `－`Financial assets	March 31, 2018 $ 467,066 6,668 815,319	December 31, 2017 $ 366,576 9,733 598,289	March 31, 2017
			$ 373,319 16,824 668,749

Sensitivity analysis

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the reporting period.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s pre-tax profit for the three months ended March 31, 2018 and 2017 would increase/ decrease by $1,019 thousand and $836 thousand, respectively. Exposure is triggered by risks of cash flows of the Group’s variable interest rates of deposits.

(C) Other price risk

The Group is exposed to equity price risks arising from equity investments of public offering securities. Equity investments should be approved by the management, for controling risks by holding different investment portfolio s.

Sensitivity analysis

The following sensitivity analysis is based on risk exposure of equity prices at the end of the reporting period.

Assuming a hypothetical increase/decrease of 5% in prices of the equity investments, increased/decreased by NT$7,172 thousand, because of the change in fair value of financial assets at FVTPL, respectively., at the end of the reporting period for the three months ended March 31, 2018 , the other comprehensive income would have increased/decreased by NT$ 3,803 thousand, because of the change in fair value of financial assets at FVTOCI, respectively, at the end of the reporting period for the three months ended March 31, 2018.

Assuming a hypothetical increase/decrease of 5% in prices of the equity investments, increased/decreased by NT$2,940 thousand, because of the change in fair value of investments held for trading, respectively, at the end of the reporting period for the three months ended March 31, 2017, the other comprehensive income would have increased/decreased by NT$ 2,989 thousand, because of the change in fair value of available -for-sale financial assets, respectively.

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B.;Credit risk

A Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end o f the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group is arising from the carrying a mount of the respective recognized financial assets as stated in the condensed balance sheets.

The Group adopted a policy of only dealing with creditworthy counterparties . Credit exposure is controlled by counterparty limits that are reviewed and approved by the financial department regularly.

To decrease a credit risk, the key management personnel of the Group is responsible for decision of rating criteria, credit limits approval, and other censor procedure, etc., in order to collect delinquent trade receivable. Otherwise, the group reviews each trade receivable to assure allowance of impairment losses of uncollectable bad debts, hence the key management personnel considers credit concentration risk of trade receivable is insignificant.

The credit concentration risk of the current fund is insignificant, since the Group only transacts with financial institutions with good rating.

Trade receivable consisted of a large number of customers. Ongoing credit evaluation is performed on the financial condition of certain customer’s trade receivable. If necessary, purchasing insurance for credit enhancing procedures is a must.

As of March 31, 2018, December 31, 2017 and M arch 31, 2017, the Group’s five largest customers accounted for 40%, 36% and 35% of trade receivable, respectively.

C. ; Liquidity risk

The Group manages and maintains sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Group’s management supervises financing line of the banking facilities and ensures compliance with the terms of loan agreements .

Liquidity & interest rate risk table

The table below summarizes the due analysis of the maturity profile of the Group’s non-derivative financial liabilities, enacted by contractual undiscounted payments of cash flow of financial liabilities, according to remaining contracts on the earliest date on which the Group may be required to pay, including principal and interest of cash flows.

The following tables detail the bank loans are listed on the earliest date on which the Group may be required to pay without considering the probability of the lending bank executing its rights; other non-derivative financial liabilities are listed at their contract repayment dates.

March 31, 2018

March 31, 2018
Non-derivative financial liabilities No Interest-bearing liabilities Fixed rate instruments December 31, 2017 Non-derivative financial liabilities No Interest-bearing liabilities Fixed rate instruments	Less than 1 Year $ 1,147,455 6,800 $ 1,154,255 Less than 1 Year $ 1,387,758 10,000 $ 1,397,758	1-5 Years $ - - $ - 1-5 Years $ - - $ -	5+ Years
			$ - - $ - 5+ Years

			$ - - $ -

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March 31, 2017

March 31, 2017
Non-derivative financial liabilities No Interest-bearing liabilities Fixed rate instruments	Less than 1 Year $ 1,142,171 17,400 $ 1,159,571		1-5 Years $ - - $ -		5+ Years
					$ - - $ -

The operating fund of the Group are sufficient to meet cas h flow demand; If the demand exists, it shall be shrt-term. Thus, bank loans within 1 year are the maximum amounts with available limit of credit. After considering the financial position of the Group, the management does not think the banks will execute t heir rights of requiring the Group to repay the bank loans.

As of March 31, 2018, December 31, 2017 and M arch 31, 2017, the Group’s unused short-term credit of limit of the bank were 995,000 thousand, 995,000 thousand and 1,025,000 thousand, respectively.

The Group’s cash and cash equivalents are sufficient to meet the demand of operating demands; the Group does not apply for the overdraft limit from the bank.

29. RELATED PARTIES TRANSACTIONS

Transactions and balances apply for the profits and losses, revenues and expenses between the Group and its subsidiaries, which were related parties of the Group, had been eliminated on consolidation and are not disclosed in this note. Besides as disclosed elsewhere in the other notes, details of transactions betwee n the Group and other related parties were disclosed below.

Compensation of key management personnel

Short-term employee benefits

For the Three Months For the Three Months Ended March 31, 2018 Ended March 31, 2017 $ 17,492 $ 17,794

;

Salaries of the boarders and other key management personnel is decided by personal performance and economic market trend through the compensation committee.

30. PLEDGED ASSETS

;The following assets of the Group is guaranteed by the assets pledged for loans of the
bank, and tariff of importing commodities.

Property, plant and equipment, Net Pledged Time Deposits(Financial assets at amortosed cost`－`non-current) Pledged Time Deposits(Debt investments with no active market`－`non-current) Stock(Available-for-sale financial assets `－`non -current)		March 31, 2018 $ 294,589 19,039 - - $ 313,628	December 31, 2017 $ 295,043 - 11,539 - $ 306,582		March 31, 2017
					$ 296,405 - 11,379 10,275 $ 318,059

SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
a.; As of March 31, 2018, the group opens NT 87,000 thousand of cashier order for payment guaranteed for Microsoft Taiwan Corporation.
b.;As of March 31, 2018, the group opens NT 50,000 thousand of cashier order for payment guaranteed for Microsoft Regional Sales Corporation.

32. ; FOREIGN - CURRENCY- DEMONINATED ASSETS AND LIABILITIES THAT HAVE SIGNIFICANT INFLUENCE

The following information was summarized according to the foreign currencies other than the functional currency of the Group. The exchange rates disclosed were used to translate the foreign currencies into the functional currency. The significant financi al assets and liabilities denominated in foreign currencies were as follows:

38 -

March 31, 2018

March 31, 2018
Financial assets Monetary items USD Financial liabilities Monetary items USD December 31, 2017 Financial assets Monetary items USD Financial liabilities Monetary items USD March 31, 2017 Financial assets Monetary items USD Financial liabilities Monetary items USD	Foreign Currencies $ 19,748 18,689 Foreign Currencies $ 19,816 23,396 Foreign Currencies $ 18,726 19,459	Exchange Rate 29.105 (USD:NTD) 29.105 (USD:NTD) Exchange Rate 29.735 (USD:NTD) 29.835 (USD:NTD) Exchange Rate 30.325 (USD:NTD) 30.325 (USD:NTD)	Carrying Amount
			$ 574,766 $ 543,943 Carrying Amount
			$ 589,229 $ 698,020 Carrying Amount
			$ 567,866 $ 590,094

The material foreign exchange profit(loss) was as follows:

Foreign currencies USD	For the Three Months Ended March 31,2018 Exchange Rate Net Foreign exchange profit(loss) 29.105`（`USD:NTD`）`($ 1,014)	For the Three Months Ended March 31,2018 Exchange Rate Net Foreign exchange profit(loss) 29.105`（`USD:NTD`）`($ 1,014)	For the Three Months Ended March 31,2017	For the Three Months Ended March 31,2017	For the Three Months Ended March 31,2017
	Exchange Rate 29.105`（`USD:NTD`）`		Exchange Rate 31.095`（`USD:NTD`）`	Net Foreign exchange profit(loss)
		(		(	$ 1,591)

33. SEPARATELY DISCLOSED ITEMS

Information on (1) significant transactions and (2) investees:

A.; Financing provided to others: None.
B.;Endorsements/guarantees provided: None.
C. ;Holding of marketable securities at the end of the period (not including subsidiaries,
- associates and joint ventures): Please refer to Table 1.
D. ; Marketable securities acquired and disposed at costs or prices at least NT$300
- million or 20% of the paid-in capital: None.
E.; Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.
F.;Disposal of individual real estate at prices of at least NT$300 million or 20% of the
- paid-in capital: None.
G. ;Total purchases from or sales to related parties amounting to at least NT$100
- million or 20% of the paid-in capital: None.
H.;Trade receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.
I. ;;Trading in derivative instruments:Appendix 7.
J.; Other:The business relationship between the parent and the subsidiaries and significant transactions between them: Table 3.
K.;Information on investees: Table 2.
(3)Information on investment in Mainland China ： None.
39 -

34. SEGMENT INFORMATION

The management monitors the operating results focusing on the types of products and services acquired or provided of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The department of the Group’s brand agent business division or others shall be reported.

(1)Segments revenue & operating results

The reporting on operating segments revenue and results of the Group, based on its business unit separately, was as follows:

January 1, 2018 to March 31, 2018 Revenues from external customers Inter-segment revenues Segment revenues Consolidated revenues Segment profit (loss) General administration division costs and directors’ compensation Other income Other profit (loss) Financial costs Share of profit or loss of associates and joint ventures Net income before tax January 1, 2017 to March 31, 2017 Revenues from external customers Inter-segment revenues Segment revenues Consolidated revenues Segment profit (loss) General administration division costs and directors’ compensation Other income Other profit (loss) Financial costs Share of profit or loss of associates and joint ventures Net income before tax		The brand agent business division $ 1,477,324 - $ 1,477,324 $ 89,731 $ 1,366,473 - $ 1,366,473 $ 81,206		Other $ 29,646 802 $ 30,448 $ 5,565 $ 42,007 1,656 $ 43,663 $ 12,224)		Eliminations $ - 802) $ 802) $ - $ - 1,656) $ 1,656) $ -		Total
			(		( ( ( (		$ 1,506,970 - 1,506,970 $ 1,506,970 $ 95,296 ( 22,214 ) 3,008 ( 295 ) ( 48 ) ( 1,339) $ 74,408 $ 1,408,480 - 1,408,480 $ 1,408,480 $ 68,982 ( 50,253 ) 2,128 ( 494 ) ( 147 ) ( 1,119) $ 19,097

Segment profits indicate earning profits of each segment, not including management segment costs and directors’ compensation, investments accounted for using equity method of associates, rental income, interest income, profit(loss) of disposal of Property, plant and equipment, disposal of profit(loss) of investments, net profit(loss) of foreign exchange, valuated profit(loss) of financial instruments, finance costs, and income tax expenses. The management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

(2)Total assets and liabilities of the department

The assets and liabilities of the Group haven’t been provided to the operating management personnel, hence valuation number of assets and liabilities should n’t be recovered.

40 -

ZERONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES MARKETABLE SECURITIES HELD

Table 1 (In Thousands of New Taiwan Dollars)

Holding Company	Marketable Securities Type and Issuer’s Name （Note 1）	Security Issuer’s Relationship with the Holding Company	Financial Statement Account	March 31,2018	March 31,2018	March 31,2018		Note
				Shares/Units	Carrying Values	Percentage of Ownership (%)	Market Prices/Net value of equities
The company	Corporate bond Walton Advanced Engineering, Inc.－2 Giga Solar Materials Corp.－2 China Airlines－6 ShunSin Technology Holdings Ltd.－1 EVERLIGHT ELECTRONICS CO., LTD.－6 Regent Hotels Group－2 Dacin Construction Co., Ltd.－4 Elite Material Co., Ltd.－4 GIGASTORAGE Corp.－4 SINTRONIC Technology.－3 Chilisin Electronics Corp.－5 EVA Airways.－3 Hkssteel Technology corp.－5 Securities Jiyuan Packaging Holdings Ltd. Cathay Financial Holdings Preferred Stock A Union Bank of Taiwan Preferred Stock A	－－－－－－－－－－－－－－－－	Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－non-current Financial assets at fair value through profit or loss－non-current	40（Units） 120（Units） 30（Units） 30（Units） 240（Units） 20（Units） 20（Units） 10（Units） 50（Units） 5（Units） 10（Units） 30（Units） 20（Units） 10,000 166,000 80,000	$ 4,400 11,670 3,051 3,180 24,000 2,010 2,270 1,070 5,240 515 1,226 3,141 2,318 283 10,574 4,072	- - - - - - - - - - - - - - 0.02 0.04	$ 4,400 11,670 3,051 3,180 24,000 2,010 2,270 1,070 5,240 515 1,226 3,141 2,318 283 10,574 4,072

（ Continued ）

41 -

Holding Company	Marketable Securities Type and Issuer’s Name （Note 1）	Security Issuer’s Relationship with the Holding Company	Financial Statement Account		March 31,2018	March 31,2018
				Shares/Units (In Thousands)	Carrying Value	Percentage of Ownership (%)	Market Prices/Net value of equities
ZeroneWin PetaCom	Global Mixed-mode Technology Inc. ASLAN Pharmaceuticals, Ltd. Chunghwa Precision Test Tech.Co., Ltd . Kaway Information Corp. China Electric Mfg. Corp. ASIX Electronics Corp. Promaster Technology Corp. Unex Technology Corp. Beneficiary certifications Yuanta Diamond Funds SPC Securities Chunghwa Precision Test Tech.Co., Ltd . Beneficiary certifications Taishin 1699 Money Market Fund	`－` `－` `－` Supervisors of the company `－` `－` `－` `－` `－` `－` `－`	Financial assets at FVTOCI `－`current Financial assets at FVTOCI `－`current Financial assets at FVTOCI `－`current Financial assets at FVTOCI `－`non-current Financial assets at FVTOCI `－`non-current Financial assets at FVTOCI `－`non-current Financial assets at FVTOCI `－`non-current Financial assets at FVTOCI `－`non-current Financial assets at fair value through profit or loss`－`non-current Financial assets at FVTOCI `－`current Financial assets at fair value through profit or loss`－`current	50,000 60,000 6,000 490,000 3,040,000 260,074 1,000,000 175,000 7,000 7,000 2,972	$ 3,440 3,000 4,788 18,865 33,288 7,087 10,450 3,386 24,410 5,586 40,008	0.06 0.05 0.02 1.60 0.76 0.49 2.72 1.68 - 0.02 -	$ 3,440 3,000 4,788 18,865 33,288 7,087 10,450 3,386 24,410 5,586 40,008

Note 1 ： Securities, indicated by the above table, are derivative from stock, bonds, beneficiary certificates, and the above items, based on IFRSs 9 “Financial Instruments”.

Note 2 ： Relevant information about Investments in equity of subsidiaries, associates, see Table 2.

42 -

ZERONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES INFORMATION ON INVESTEES FOR THREE MONTHS ENDED MARCH 31, 2018

Table 2 (In Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	As of 31 March	As of 31 March	2018	Net Income (Loss) of the Investee	Share of Profits/Losses of Investee	Note
				31 March 2018	31 December 2017	Number of Ownership	Percentage of Ownership	Carrying Values
The Company ZeroneWin Investment Co., Ltd.	Zotech Technology Co., Ltd.	Taipei City Taipei City Hsinchu City Taipei City Taipei City Taipei City	Services of telecommunication apparatus Services of telecommunication apparatus Service of air material Investment Services of cloud of information software Services of information product agent	$ 35,000 10,000 9,450 100,000 7,000 50,000	$ 35,000 10,000 9,450 100,000 7,000 50,000	3,500,000 597,960 945,000 10,000,000 700,000 5,000,000	85.37 30.00 29.82 100.00 70.00 100.00	$ 38,383 - 3,107 93,057 4,878 45,511	( $ 1,262 ) ( 47 ) ( 4,325 ) ( 3,326 ) ( 1,145 ) ( 2,539 )	( $ 1,077 ) - ( 1,339 ) ( 3,326 ) ( 802 ) ( 2,539 )	Subsidiary Subsidiary Sub- subsidiary Sub- subsidiary
	Navizot Inc.
	Trident Pacific Inc. ZeroneWin Investment Co., Ltd. WingWill International Co., Ltd. PetaCom technology Co., Ltd.

43 -

ZERONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THREE MONTHS ENDED MARCH 31, 2018

Table 3 ; ( Amounts in Thousands of New Taiwan Dollars)

No. `（`Note 1`）`	Company Name	Counterparty	Nature of Relationship `（`Note 2`）`		Transactions Details	Transactions Details
				Financial Statement Account	Amount	Transaction Terms	Percentage of Consolidated Total Revenues or Total Assets`（`Note 3`）`
0	The company	Zotech Technology Co., Ltd. WingWill international Co., Ltd. PetaCom Technology Co., Ltd.	1 1 1	Service income Cost of goods sold Trade receivable Trade payable Guarantee deposits received	$ 240 84 263 600 90 135 457 79 86 110 263	Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4	- - - - - - - - - - -
				Rental income Sales revenue Service income Rental income Service income Rental income

Note 1 ： Business between the parent and subsidiaries is numbered as follows:

Parent:0.
Subsidiaries are numbered from 1 in order.
Note 2 ： 3 types of relationship between parties is numbered as follows:
Parent to subsidiary.
Subsidiary to parent.
Between subsidiaries.
Note 3 ： Percentage of transaction amounts to consolidated operating revenues or consolidated total assets: If the account is a balance sheet account, it shall be calculated by dividing the ending balance into consolidated total assets; i f the account is an income statement account, it shall be calculated by dividing the yearly cumulative balance into consolidated operating revenues.
Note 4 ： The sales prices and payment terms of the intercompany partners are not significantly different fro m those to non-related parties.
44 -

AI assistant

ZERO ONE — Interim / Quarterly Report 2018

52262_rns_2018-11-26_7e5eb2d4-bdc0-4c56-9c02-90cefa064f4d.pdf

§TABLE OF CONTENTS§

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Conclusion

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 2018, December 31, 2017, and March 31, 2017 (In Thousands of New Taiwan Dollars)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited) (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited)

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2018 and 2017 (Reviewed, Not Audited)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2018 and 2017

1. GENERAL

2. THE DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS

Classification, measurement and impairment of financial assets

A. IFRIC 23“Uncertainty over Income Tax Treatments”

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2017

2017

5. ;CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

9. FINANCIAL ASSETS AT AMORTIZED COST -2018

11. FINANCIAL ASSETS CARRIED AT COST-2017

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET-2017

13. NOTES AND TRADE RECEIVABLE

For the Three Months Ended March 31, 2018

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

17. PROPERTY, PLANT AND EQUIPMENT

18. SHORT-TERM LOANS

19. OTHER PAYABLE

20. BOND PAYABLE

21. RETIREMENT BENEFIT PLANS

22. EQUITY

23. NET INCOME

(5)Employee benefits expense

(6)Employees’, directors, and supervisors’ compensation

Estimate Rate

25. EARNINGS PER SHARE

26. SHARE -BASED PAYMENT ARRANGEMENTS

27. CAPITAL RISK MANAGEMENT

28. FINNANCIAL INSTRUMENTS

Sensitivity analysis

(B) Interest rate risk

Sensitivity analysis

(C) Other price risk

Sensitivity analysis

B.;Credit risk

C. ; Liquidity risk

Liquidity & interest rate risk table

29. RELATED PARTIES TRANSACTIONS

Compensation of key management personnel

30. PLEDGED ASSETS

32. ; FOREIGN - CURRENCY- DEMONINATED ASSETS AND LIABILITIES THAT HAVE SIGNIFICANT INFLUENCE

33. SEPARATELY DISCLOSED ITEMS

34. SEGMENT INFORMATION

(1)Segments revenue & operating results

ZERONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES MARKETABLE SECURITIES HELD

ZERONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES INFORMATION ON INVESTEES FOR THREE MONTHS ENDED MARCH 31, 2018

ZERONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THREE MONTHS ENDED MARCH 31, 2018

More from ZERO ONE

ZERO ONE Interim / Quarterly Report 2018