ZERO ONE - Interim / Quarterly Report 2018

Code ： 3029

ZERO ONE TECHNOLOGY CO., LTD.

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR THE

NINE MONTHS ENDED SEPTEMBER 30, 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`～`20 20 20`～`39 39 40 40 40~41 41`、` 44`～`46 43`、`47 41 41`、`48 42~43	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 balance sheets of Zero One Technology Company Limited and its subsidiaries (collectively referred to as the Group) as of September 30, 2018 and 2017, consolidated statements of comprehensive income for the three months ended September 30, 2018 and 2017 and the nine months ended September 30, 2018 and 2017, consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2018 and 2017 and the related notes, including a summary of significant accounting policies (collectively referred to as the consolidated financial statements). 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”. 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 Group as of September 30, 2018 and 2017, its consolidated financial performance for the three months ended September 30, 2018 and 2017 and the nine months ended September 30, 2018 and 2017 and its consolidated cash flows for the nine months ended September 30, 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 (Taiwan) (referred to thereafter as ‘FSC’).

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 October 24, 2018

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents(Note 4&6) Financial assets at fair value through profit or loss – current(Note 4&7) Financial assets at fair value through other comprehensive income – current(Note 4&8) Available-for-sale financial assets - current(Note 4&10) Financial assets at amortized cost-current(Note 4&9) Debt investments with no active market - current(Note 4&12) Notes receivable(Note 4&13) Trade receivable(Note 4&13) Inventories(Note 14) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current(Note 4&7) Financial assets at fair value through other comprehensive income- non-current(Note 4&8) Available-for-sale financial assets - non-current(Note 4&10) Financial assets at amortized cost - non-current(Note 4,9&30) Financial assets measured at cost - non-current(Note 4&11) Debt investments with no active market - non-current(Note 4,12&30) Investments accounted for using the equity method(Note 4&16) Property, plant and equipment(Note 17&30) Other intangible assets Deferred tax assets(Note 4) Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings(Note 18) Trade payable Other payable(Note 19) Current tax liabilities(Note 4) Current portion of bonds payable(Note 20) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities(Note 4) Net defined benefit liabilities - non-current(Note 4&21) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY(Note 22) Share capital Ordinary shares Share capital to be registered Total share capital 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		September 30, 2018 (Reviewed) Amount % $ 187,716 5 81,811 2 11,869 - - - 507,076 14 - - 120,393 3 1,800,055 47 493,968 13 21,762 1 3,224,650 85 40,817 1 120,704 3 - - 73,636 2 - - - - 672 - 314,719 8 1,087 - 26,561 1 2,713 - 580,909 15 $ 3,805,559 100 $ 50,000 1 1,270,065 34 144,873 4 51,887 1 6,243 - 125,037 3 1,648,105 43 527 - 21,232 1 21,759 1 1,669,864 44 1,227,210 32 180 - 1,227,390 32 442,455 12 159,438 4 15,501 - 295,160 8 470,099 12 (12,542) - 2,127,402 56 8,293 - 2,135,695 56 $ 3,805,559 100		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 10,955 - 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 - - 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		September 30, 2017 (Reviewed)
						Amount % $ 610,935 18 80,346 2 - - 23,840 - - - 265,064 8 170,586 5 1,473,526 43 367,841 11 10,582 - 3,002,720 87 - - - - 60,848 2 - - 21,654 1 11,379 - 7,308 - 306,139 9 1,196 - 20,536 1 1,785 - 430,845 13 $ 3,433,565 100 $ - - 1,169,698 34 97,295 3 23,251 1 11,122 - 71,273 2 1,372,639 40 36 - 20,315 1 20,351 1 1,392,990 41 1,223,596 36 270 - 1,223,866 36 432,436 13 139,840 4 16,723 - 235,366 7 391,929 11 (17,095) (1) 2,031,136 59 9,439 - 2,040,575 59 $ 3,433,565 100

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Reviewed, Not Audited) (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUES(Note 4) Net sales OPERATING COSTS (Note 14&23) Cost of goods sold GROSS PROFIT OPERATING EXPENSES(Note 23) Selling and marketing expenses General and administrative expenses Research and development expenses 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 Income tax relating to remeasurement of defined benefit plans		For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30		For the Nine Months	EndedSeptember 30	EndedSeptember 30
		2018		2017		2018		2017
		Amount % $ 1,827,890 100 1,652,358 90 175,532 10 68,891 4 26,459 2 2,029 - 6,104 - 103,483 6 72,049 4 10,769 1 775 - (119 ) - (1,331) - 10,094 1 82,143 5 16,997 1 65,146 4 (11,812 ) (1 ) - - (11,812) (1)		Amount % $ 1,677,462 100 1,523,425 91 154,037 9 57,151 3 (4,364 ) - 2,002 - - - 54,789 3 99,248 6 3,005 - 902 - (78 ) - (1,867) - 1,962 - 101,210 6 17,822 1 83,388 5 - - - - - -		Amount % $ 4,895,004 100 4,410,440 90 484,564 10 185,632 4 77,105 2 6,239 - 4,818 - 273,794 6 210,770 4 19,020 1 3,426 - (201 ) - (3,774) - 18,471 1 229,241 5 45,713 1 183,528 4 (2,362 ) - 438 - (1,924) -		Amount % $ 4,538,046 100 4,093,355 90 444,691 10 151,840 4 104,147 2 8,392 - - - 264,379 6 180,312 4 9,241 - (539 ) - (308 ) - (4,644) - 3,750 - 184,062 4 38,129 1 145,933 3 - - - - - -

(Continued)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Reviewed, Not Audited) (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Nine Months	EndedSeptember 30
2018	2017	2018	2017
Amount % $ - - (11,812) (1) $ 53,334 3 $ 65,537 4 (391) - $ 65,146 4 $ 53,725 3 (391) - $ 53,334 3 $ 0.54 $ 0.53	Amount % $ 3,733 - 3,733 - $ 87,121 5 $ 83,535 5 (147) - $ 83,388 5 $ 87,268 5 (147) - $ 87,121 5 $ 0.68 $ 0.68	Amount % $ - - (1,924) - $ 181,604 4 $ 184,430 4 (902) - $ 183,528 4 $ 182,506 4 (902) - $ 181,604 4 $ 1.50 $ 1.49	Amount % $ (372) - (372) - $ 145,561 3 $ 146,766 3 (833) - $ 145,933 3 $ 146,394 3 (833) - $ 145,561 3 $ 1.20 $ 1.19

$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$

(Concluded)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

			Equity Attributable to Owners of the Company
	Share Capital	are capital to be registered Capital Surplus $ - $ 421,421 - - - - - - - - - - - - - 6,750 - - - 4,160 270 105 - - $ 270 $ 432,436 $ - $ 434,135 - - - 434,135 - - - - - - - - - - - - - 1,286 - 6,926 180 108 - - $ 180 $ 442,455	Retained Earnings	Total $ 391,853 - - (146,690 ) 146,766 - 146,766 - - - - - $ 391,929 $ 440,534 4,955 445,489 - - (159,484 ) 184,430 438 184,868 - - - (774) $ 470,099		Other Equity	Total $ (16,723 ) - - - - (372) (372) - - - - - $ (17,095) $ (15,501 ) 4,547 (10,954 ) - - - - (2,362) (2,362) - - - 774 $ (12,542)
					U A F	nrealized Gain (Loss) on Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other vailable-for-sale inancial Assets Comprehensive Income $ (16,723 ) $ - - - - - - - - - (372) - (372) - - - - - - - - - - - $ (17,095) $ - $ (15,501 ) $ - 15,501 (10,954) - (10,954 ) - - - - - - - - - (2,362) - (2,362) - - - - - - - 774 $ - $ (12,542)
Shares (In Thousand) 121,265 - - - - - - 1,095 - - - - 122,360 122,480 - 122,480 - - - - - - 232 - 9 - 122,721	Issued Capital Sh $ 1,212,655 - - - - - - 10,941 - - - - $ 1,223,596 $ 1,224,804 - 1,224,804 - - - - - - 2,316 - 90 - $ 1,227,210		Legal Reserve Special Reserve Unappropriated Earnings $ 117,432 $ 22,876 $ 251,545 22,408 - (22,408 ) - (6,153 ) 6,153 - - (146,690 ) - - 146,766 - - - - - 146,766 - - - - - - - - - - - - - - - $ 139,840 $ 16,723 $ 235,366 $ 139,840 $ 16,723 $ 283,971 - - 4,955 139,840 16,723 288,926 19,598 - (19,598 ) - (1,222 ) 1,222 - - (159,484 ) - - 184,430 - - 438 - - 184,868 - - - - - - - - - - - (774) $ 159,438 $ 15,501 $ 295,160

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Write-down (reversal of write-down) of inventories Interest income Depreciation expenses Compensation costs of employee share options Dividend income Expected credit loss recognized on trade receivable Net (gain) loss on foreign currency exchange Share of loss of associates accounted for using the equity method Net gain on fair value change of financial assets at fair value through profit or loss Amortization expenses Finance costs Impairment losses recognized on trade receivable Net loss on disposal of available-for-sale financial assets Changes in operating assets and liabilities Financial assets held for trading Notes receivable Trade receivable Inventories Other current assets Trade payable Other payable Other current liabilities Net defined benefit liabilities Cash (used in) generated from operations Income tax paid Net cash (used in) generated from operating activities		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 229,241 17,311 (11,764) 8,574 6,926 (5,122) 4,818 (4,144) 3,774 (2,216) 518 201 - - (30,251) 65,532 (338,927) (33,578) (10,266) 20,065 9,813 50,811 310 (18,374) (32,086) (50,460)	2017 $ 184,062 (7,934) (7,286) 5,356 4,160 (710) - 3,757 4,644 (3,996) 994 308 38,859 434 8,462 (61,653) 33,235 83,078 66,678 26,093 (55,420) 1,206 (520) 323,807 (40,786) 283,021

(Continued)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at amortized cost Purchase of financial assets at fair value through other comprehensive income Interest received Dividends received Proceeds from sale of financial assets at fair value through other comprehensive income Increase in refundable deposits Purchase of intangible assets Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of intangible assets Purchase of available-for-sale financial assets Purchase of financial assets measured at cost Proceeds from sale of debt investments with no active market Acquisition of investment accounted for using equity method Proceeds from sale of available for sale financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid to owners of the Company Proceeds from short-term borrowing Exercise of employee share options Interest paid Proceeds from long-term borrowings Repayment of long-term borrowings Change in non-controlling interests Dividends paid to non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) 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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 ($356,807) (53,511) 10,514 5,122 1,195 (927) (700) (372) 79 65 - - - - - (395,342) (159,484) 50,000 378 (81) - - - - (109,187) 1,586 (553,403) 741,119 $ 187,716	2017 $ - - 6,360 710 - (334) (333) (5,981) - - (23,791) (21,144) 17,597 (9,450) 598 (35,768) (146,690) - 375 (54) 4,000 (4,000) 3,000 (600) (143,969) (2,872) 100,412 510,523 $ 610,935

(Concluded)

ZERO ONE TECHNOLOGY CO., LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 and 2017

(Reviewed, Not Audited)

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

1. GENERAL

ZERO ONE TECHNOLOGY CO., LTD. (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 October 24, 2018.

3. ;APPLICATION OF NEW 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) (collectively, “IFRSs”) 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.

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	CarryingAmount	CarryingAmount	Re- mark
	IAS 39	IFRS9	IAS 39	IFRS9
Cash and cash equivalents Stock investments Fund beneficiary certificates Time deposits with original maturity of more than 3 months Note, trade and other receivable 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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Carrying Amount as of January 1, 2018 (IAS 39)	Reclassifi- cations	Remea- surements	Carrying Amounts as of January 1, 2018 (IFRS 9)	Retained Earnings Effect on January 1, 2018	Other Equity Effect on January 1, 2018	Re- mark
$ - -	$ 14,416 21,144 35,560 76,383 2,619,647 $2,731,590	$ - 3,266 3,266 6,236 - $ 9,502	$ 14,416 24,410 38,826 82,619 2,619,647 $2,741,092	$ 449 3,266 3,715 1,240 - $ 4,955	( $ 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 IFRS 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 classified 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 required, 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 equity 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 IFRS 9. Owing to retrospective application of IFRS 9, retain earnings will be increased 3,266 thousands on January 1, 2018.
C. ;Debt investments with no active market and bond investments measured at amortized 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 amortized 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.
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D. ; Notes receivable, trade receivable, and other receivable 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) the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC for application starting from 2019

by the FSC for application starting from 2019
New,Revised,Amended Standards and Interpretations	Effective Date Issued byIASB(Note 1)
Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” IFRS 16 “Leases” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty Over Income Tax Treatments”	January 1, 2019 January 1, 2019 (Note 2) January 1, 2019 January 1, 2019 (Note 3) January 1, 2019 January 1, 2019

Note 1: Unless stated otherwise, the above New, Revised, Amended Standards or Interpretations are 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: The Group shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.

IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

Definition of a lease

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

The Group as lessee

Upon initial application of IFRS 16, the Group will recognize right -of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value and short-term leases will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group will present the depreciation expense charged on right -of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cas h payments for the interest portion will be classified within operating activities. Currently, payments under operating lease contracts are recognized as expenses on a straight -line basis. Cash flows for operating leases are classified within operating act ivities on the consolidated statements of cash flows.

The Group anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard for retained earnings recognized on January 1, 2019. Comparative informatio n will not be restated.

Lease liabilities will be recognized on January 1, 2019 for leases currently classified as operating leases with the application of IAS 17. Lease liabilities will be measured at the present value of the remaining lease payments, di scounted using the lessee’s incremental borrowing rate on January 1, 2019. Right -of-use assets will be measured at their carrying amount of lease liabilities since the commencement date based on IFRS 16, and the Group will apply impairment valuated based on IAS 36 to all right-of-use assets.

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The Group as lessor

Except for sublease transactions, the Group will not make any adjustments for leases in which it is a lessor and will account for those leases with the application of IFRS 16 starting from January 1, 2019.

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

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

Effective Date New IFRSs Announced by IASB (Note 1) January 1, 2020 (Note 2)

Amendments to IFRS 3 “Definition of a Business”

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture”

IFRS 17 “Insurance Contracts” January 1, 2021

Note 1:Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2:The Company shall apply these amendments to business combinations for which the acquisition date is on or after the be ginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of above standards and 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 into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

A.; Level 1 inputs are quoted prices (unadjusted) 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.
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(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 t heir 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.

(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 f or the year ended December 31, 2017.

A. 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 meet the amortized cost criteria or the FVTOCI criteria.

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 remeasure ment 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 model whose objective is to hold financial assets in order to collect contractual cash flows; and

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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 meeting short-term cash commitments, include time deposits with original maturities within 3 month s 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 value.

(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 accumula ted in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, 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 recovery of part of the cost of the investment.

2017

Financial assets are classified into the following categories: Finan cial assets at fair value through profit or loss, available -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.

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

a).possible for elimination or a significant decrease of inconsistency by measurement or recognition; 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 management; or
c).A single or a component of an embedded derivative 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.

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(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 value 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 meeting 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).

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.

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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 objective 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 the 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 va lue 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 rela ted 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 t o 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 princi pal payments, it becomes probable that the borrower will enter bankruptcy or financial re -organization, or the disappearance of an active market 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.

In respect of available-for-sale equity securities, impairment loss previousl y 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 related 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. S uch 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 th e allowance account is recognized in profit or loss except for uncollectible trade receivable that is written off against the allowance account.

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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.

Before 2017, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. From 2018, 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 a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an inves tment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss 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 c ost 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 deducti ng 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 e quity 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.

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.

B. 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.

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Revenue from sale of goods

Revenue from sale of goods comes from sales of computer software, hard ware, accessories, equipment, and components, etc. Customers have the right of quotation and user, and the responsibility of resale as goods after shipment.

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 involvement 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 be nefits 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 economic 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.

C. 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 amendmen ts, settlements, or other significant one -off events.

D. 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.

E. Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The Group uses the equity method to account for its investments in associates.

Under the equity method, investments in an associ ate and a joint venture are initially recognized in the consolidated balance sheet at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Group also recognizes the changes in the equity of associates attributable to share proportion.

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When the Group subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate and joint venture. The Group records such a difference as an adjustment to investments accounted for by the equity method, with a corresponding amount charged or credited to capital surplus-Changes in net values of share of profit or loss of associated and joint ventures. If the Group’s ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

The entire carrying amount of the investment (i ncluding goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recogniz ed to the extent that the recoverable amount of the investment subsequently increases.

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 CASH EQUIVALENTS
September 30, 2018 December 31, 2017 September 30, 2017 Cash on hand and deposits in banks $ 202 $ 157 $ 524 Checking accounts and demand deposits 94,200 522,509 276,451 Cash equivalents Time deposits in banks 93,313 173,773 - Repurchase Bond - 44,678 333,958 Others 1 2 2 $ 187,716 $ 741,119 $ 610,935 As the end of reporting period, the interest rate at market of deposits, repurchas e bonds, and time deposits is as follows`：` September 30, 2018 December 31, 2017 September 30, 2017 Bank deposits 0.01%`～`0.46% 0.01%`～`0.46% 0.01%`～`0.46% Repurchase Bond - 1.90% 1.80% Time deposits 0.60%`～`2.05% 0.60%`～`2.13% - FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS September 30, 2018 December 31, 2017 September 30, 2017 Financial assets`－`current Designated as at fair value through profit or loss Domestic convertible bond $ 40,431 $ 51,009 $ 76,053 Held-to-maturity Derivatives`（`Not assigned for hedge`）` `－`Redemption & sell right for convertible bonds - 4 5 Non-derivative financial assets `－`Domestic public offering securities - 325 336 `－`Fund beneficiary certification - - 3,952 Total - 329 4,293		September 30, 2017
		0.01%`～`0.46% 1.80% - September 30, 2017
Financial assets`－`current Designated as at fair value through profit or loss Domestic convertible bond 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	September 30, 2018 $ 40,431 - - - -
			$ 76,053 5 336 3,952 4,293

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

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

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Mandatorily measured at FVTPL Derivatives`（`Not assigned for hedge`）` `－`Redemption & sell right for convertible bonds `－`Foreign Exchange Forward Contract (1) Non-derivative assets `－`Domestic public offering securities `－`Fund beneficiary certification Total Financial assets`－`non-current Mandatorily measured at FVTPL Non-derivative assets `－`Domestic public offering securities `－`Fund beneficiary certification	September 30, 2018 $ 2 1,086 198 40,094 41,380 $ 81,811 $ 14,618 26,199 $ 40,817	December 31, 2017 $ - - - - - $ 51,338 $ - - $ -	September 30, 2017	September 30, 2017
				$ - - - - - $ 80,346 $ - - $ -

(1)At the end of the reporting period, outstanding forwa rd exchange contracts not under hedge accounting are as follows:

September 30, 2018

September 30, 2018
Currency Buy Foreign exchange contracts USD/NTD The Group entered into forward exchange exchange rate fluctuations of foreign currency 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 Publicly traded and emerging stock Non-publicly traded stock	MaturityDate Notional Amount (In Thousands) 2018.10.09 USD 1,200/NTD 35,544 contracts to manage risk exposures due to denominated asse ts and liabilities. September 30,2018 $ 11,869 $ 120,704 September 30,2018 $ 11,869 $ 117,318 3,386 $ 120,704
		$ 11,869 $ 120,704 September 30,2018
			$ 11,869 $ 117,318 3,386 $ 120,704

Financial assets measured at FVTOCI -2018
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These long-term investments in equity instruments are held for receiving pro fits, under 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 classified as available-for-sale under IAS 39. Refer to Note 3, Note 10 a nd Note 11 for information relating to their reclassification and comparative information for 2017.

The Group acquired preferred shares of Cathay Financial Holding Co., Ltd. Preferred Stock A, Union Bank of Taiwan Preferred Stock A, Fubon Financial Hold ing Co., Ltd. Preferred Shares B, TAISHIN FINANCIAL HOLDING CO., LTD. Preferred Stock E, and CTBC Financial Holding Co., Ltd. Preferred Shares B, Cathay Financial Holding Co., Ltd. Preferred Stock B, and ordinary shares of China Electric Mfg. Corp., with investment amount of NT$2,198, 2,049, 21,011, 9,284, 4,811, 12,600, and 1,558 thousand in May, June, July, and August, 2018, respectively, and recognized these investment as financial assets measured at FVTOCI, held for medium to long -term business development strategic purposes.

As of January and March, 2018, the Group sold shares of common stocks for NT$339 and NT$856 thousand of ASLAN PHARMACEUTICALS LIMITED(ASLAN -KY), and Chunghwa Precision Test Tech. Co., Ltd. (CHPT) for decreasing investment risks. T he related other equity-unrealized gain or loss on financial assets at FVTOCI of NT$(774) thousand were transferred to retained earnings.

The Group recognized NT$ 4,666 and 5,122 thousand of dividends income, for three and nine months ended September 30, 2018.

9. FINANCIAL ASSETS AT AMORTIZED COST -2018

NCIAL ASSETS AT AMORTIZED COST-2018
Current Domestic investment Time deposits with original maturities more than three months(1) Non-current Domestic investment Pledged Time Deposit (2) Yuanta Securities Asia Financial Services Limited 2018 Non-secured USD-denominated Private Fixed Rate Notes(3)	September 30,2018
		$ 507,076 12,586 61,050 $ 580,712

(1) As of September 30, 2018, the market interest rate of time deposit over 3 months portion is 1.01%~3.00%, 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 amortized cost under pledge.
(3) The group purchased Yuanta Securities Asia Financial Services Limited issued 5 -year Non-secured Fixed Rate Notes, with the face value of USD 2,000 thousand and a coupon rate of 4.10%, on August, 2018.

10. 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	September 30,2017	September 30,2017
			$ 84,688 $ 23,840 $ 60,848

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11. FINANCIAL ASSETS CARRIED AT COST-2017

Non-current Domestic unpublic offering securities Unex Technology Corporation 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	September 30,2017	September 30,2017
			$ 510 - $ 21,144 $ 21,654 $ 21,654

Shares of Jotangi technology Co., Ltd. and Ijoing, Inc. had been adjusted into financial assets measured at cost - non-current in 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	September 30,2017	September 30,2017
			$ 265,064 $ 11,379

(1) On December 31 and September 30, 2017, the market interest rate of time deposit over 3 months portion is 0.60% ～ 2.13%, 1.01% ～ 1.80%, respectively.
(2) Please refer to Note 30 for more details on debt investments with no active market under pledge.

13. NOTES AND TRADE RECEIVABLE

Notes receivable Measured at amortized cost Total carrying values Deduct: Allowance for bad debts Trade receivable Measured at amortized cost Total carrying values Deduct: Allowance for bad debts		September 30, 2018 $ 120,393 - $ 120,393 $ 1,842,444 42,389) $ 1,800,055		December 31, 2017 $ 185,925 - $ 185,925 $ 1,503,811 37,571) $ 1,466,240		September 30, 2017
	(		(		(	$ 170,586 - $ 170,586 $ 1,523,229 49,703) $ 1,473,526

For the Nine Months Ended September 30, 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 pos sible irrecoverable amounts. In this regard, the Group’s management believes the Group’s credit risk was significantly reduced.

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The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use o f 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 default experience of the debtor and an analysis of the debtor’s current fina ncial 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 different levels 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:

September 30, 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 E		Credit Rank G	(	Credit Rank H		Total
	(	$ 293,033 156) $ 292,877	(	$ 1,080,049 3,031) $ 1,077,018	(	$ 277,912 3,765) $ 274,147	(	$ 67,505 2,893) $ 64,612	(	$ 90,856 7,094) $ 83,762	(	$ 31,921 25,444) $ 6,477		$ 1,168 6) $ 1,162	(	$1,842,444 42,389) $1,800,055

The above rate of the expected credit losses of th e Group, the customer of credit rank A~E shall be accessed between 0.05% and 16.00%. Credit rank G is customers who transacts with the Group at first time or whose credit limit were blacklisted, being accessed by 90%~100%. Credit rank H is of foreign custo mers, being accessed by 0.05%~1.00%.

Aging analysis of trade receivable, net ：

~100%. Credit rank H is of foreign custo mers, being accessed by g analysis of trade receivable, net`：`	0.05%~1.00%.	0.05%~1.00%.
0～60 days 61～90 days 91～120 days Over 121 days Total	September 30,2018
		$ 1,078,278 417,476 208,017 138,673 $ 1,842,444

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:

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 September 30, 2018	For the Nine Months Ended September 30, 2018	For the Nine Months Ended September 30, 2018
		$ 37,571 - 37,571 4,818 $ 42,389

For the Nine months ended September 30, 2017

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	September 30,2017
			$ 1,008,138 270,728 87,867 156,496 $ 1,523,229

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

As of December 31 and September 30, 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 :

14.	Balance at January 1, 2017 Add: Impairment losses/ bad debt expenses recognized on receivables Balance at September 30, 2017 INVENTORIES Raw materials Work in process Finished goods Commodities	Trade receivable uncollectible receivable $ 10,844 $ 337 38,859 - $ 49,703 $ 337 September 30, 2018 December 31, 2017 $ 2,816 $ 15,641 2,999 8,591 711 659 487,442 465,673 $ 493,968 $ 490,564	uncollectible receivable				Total
					$ 11,181 38,859 $ 50,040 September 30, 2017
						$ 12,373 4,456 8,617 342,395 $ 367,841

Allowance for inventory valuation and obsolescence loss, and reversal of the reserve for inventory write-downs resulting from the increase in net realizable value in the amount of NT$17,627 thousand and NT$2,500 thousand, respectively, were included in the cost of revenue for the three months ended from July 1 to September 30, 2018 and 2017; allowance for inventory valuation and obsolescence loss, and reversal of the reserve for inventory write-downs resulting from the increase in net realizable value in the amount of NT$17,311 and NT$7,934 thousand, respectively, were included in the cost of re venue for the nine months ended September 30, 2018 and 2017. The increase in net realizable value of inventories is recognized by disposal of the realized price losses of commodities.

15. SUBSIDIARIES

(1)Subsidiaries included in the consolidated financial statements

The consolidated entities were as follows:

Investor	Investee	Nature of Activities	Proportion	of Ownership (%)	of Ownership (%)	Re- mark
			September 30, 2018 85.37% 100.00% 70.00% 100.00%	December 31, 2017	September 30, 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%	1 1`、`2 1`、`3 1`、`4

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.
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16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Name of Associates Insignificant associates Trident Pacific Co., Ltd. Ijoing, Inc. Chi-Ta International Co., Ltd. Name of the Company Trident Pacific Co., Ltd. Ijoing, Inc. Chi-Ta International Co., Ltd.	September 30, 2018 $ 672 - - $ 672 September 30, 2018 29.82% - 30.00%	December 31, 2017 $ 4,446 - - $ 4,446 December 31, 2017 29.53% - 30.00%	September 30, 2017
			$ 7,146 162 - $ 7,308 September 30, 2017
			29.53% 43.98% 30.00%

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.

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.

The group invested Trident Pacific technolo gy, 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 infl uence as financial statements of the above investees 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	September 30, 2018 $ 234,892 58,789 38 11,091 2,089 7,820 $ 314,719	December 31, 2017 $ 234,892 60,151 462 13,827 - 751 $ 310,083	September 30, 2017
				$ 234,892 60,605 684 8,973 - 985 $ 306,139

Except for depreciation recognized, property, plant and equipment haven’t been increased, disposed and impaired for the nine months ended September 30, 2018 and 2017.

Depreciation expenses were depreciated on a straight -line basis over the estimated 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.

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18. ; LONG -TERM LOANS

December 31, 2017 $ - 2017. December 31, 2017 $ 54,177 15,658 65,047 $ 134,882 December 31, 2017 $ 10,000 ( 267) 9,733 ( 9,733) $ -	September 30, 2017	September 30, 2017
	$ - September 30, 2017
	$ 32,032 11,784 53,479 $ 97,295 September 30, 2017
( (	( (	$ 11,500 378) 11,122 11,122) $ -

On May 19, 2014, ZOTC issued no any interest unsecured convertible 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 0% 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 the last convertible date, if the closing price of Z OTC 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 convertible bonds originally outs tanding 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%.

Balance on January 1, 2017, liability components Interest (2.0618%) Convertible bonds changed into ordinary shares ( Balance on September 30, 2017, liability components Balance on January 1, 2018, liability components Interest (2.0618%) Convertible bonds changed into ordinary shares ( Balance on September 30, 2018, liability components	$ 28,563 254 17,695) $ 11,122 $ 9,733 115 3,605) $ 6,243

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21. RETIREMENT BENEFIT PLANS

For the three and nine months ended Septe mber 30, 2018 and 2017, the Group’s pension costs under the defined contribution method were made payment $145, $154, 436, and 463 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		September 30, 2018 150,000 $ 1,500,000 122,721 $ 1,227,210		December 31, 2017 150,000 $ 1,500,000 122,480 $ 1,224,804		September 30, 2017
						150,000 $ 1,500,000 122,360 $ 1,223,596

The change in share capital is mainly due to bonds payable that changes into ordinary shares, and employee stock options exercised.

As of September 30, 2018, due to the convertible corporate bond converted into ordinary shares but for change registration pending , 18 thousand shares are recognized as share capital to be registered.

(2)Capital Surplus

al 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	September 30, 2018 $ 398,347 25,343 2,481 895 536 14,853 $ 442,455	December 31, 2017 $ 396,486 25,343 2,481 300 850 8,675 $ 434,135	September 30, 2017
				$ 395,842 25,343 2,481 205 977 7,588 $ 432,436

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 cash dividends or transferre d 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 profits 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 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 employees’, directors’ and supervisors’ compensation for Note 23 -6.

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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 ear ning 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 Ans wers for Special Reserves Appropriated Following Adoption of IFRSs”, the Group shall appropriate or reverse to a special reserve.

The appropriations of 2017 and 2016 earnings have been approved by ZOTC’s shareholder’s meeting held on June 11, 2018 and Ju ne 14, 2017, respectively, were as follows:

Dividends Per Share(NT$)	Dividends Per Share(NT$)	Dividends Per Share(NT$)
For Fiscal Year 2017	$	For Fiscal Year 2016
$ 1.3 Assets ( ( ( (		$ 1.2 16,723 ) 806 ) 434 17,095) 15,501 ) 15,501 -
	$
	$
	$

(4)Other equity

A. Unrealized Gain/Loss from Available -for sale Financial Assets
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 Unrealized profits and losses`－`equity instruments Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal Balance at September 30, 2018	For the Nine Months Ended September 30, 2018
	$ - ( 10,954) ( 10,954 ) ( 2,362 ) 774 ($ 12,542)

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23. NET INCOME

(1)Other income

T INCOME Other income
For the Three Months Ended September 30, 2018 Interest income Financial assets at amortized cost $ 3,617 Bank deposits 748 Financial assets at FVTPL 398 Debt investments with no active market - Dividend income 4,666 Rental income 76 Others 1,264 $ 10,769 Other gains and losses For the Three Months Ended September 30, 2018 Net foreign exchange profit(loss) $ 1,642 Net gain(Loss) arising on financial assets at FVTPL ( 867 ) Loss on disposal of available- for-sale financial assets - $ 775 Financial costs For the Three Months Ended September 30, 2018 Interests on bank borrowings $ 86 Interests on convertible bonds 33 Total $ 119 Depreciation & amortization For the Three Months Ended September 30, 2018 Property, plant and equipment $ 3,076 Intangible assets 169 $ 3,245 An analysis of depreciation by function Operating costs $ 196 Operating expenses 2,880 $ 3,076 An analysis of amortization by function Operating expenses $ 169	For the Three Months Ended September 30, 2017 $ - 2,469 - 34 295 71 136 $ 3,005 For the Three Months Ended September 30, 2017 $ 79 1,257 ( 434) $ 902 For the Three Months Ended September 30, 2017 $ 12 66 $ 78 For the Three Months Ended September 30, 2017 $ 2,049 242 $ 2,291 $ 354 1,695 $ 2,049 $ 242	For the Nine Months Ended September 30, 2018 $ 8,663 2,703 398 - 5,122 252 1,882 $ 19,020 For the Nine Months Ended September 30, 2018 $ 1,210 2,216 - $ 3,426 For the Nine Months Ended September 30, 2018 $ 86 115 $ 201 For the Nine Months Ended September 30, 2018 $ 8,574 518 $ 9,092 $ 773 7,801 $ 8,574 $ 518	For the Nine Months Ended September 30, 2017
			$ - 3,822 240 3,224 710 214 1,031 $ 9,241 For the Nine Months Ended September 30, 2017
			( $ 4,101 ) 3,996 ( 434) ($ 539) For the Nine Months Ended September 30, 2017
			$ 54 254 $ 308 For the Nine Months Ended September 30, 2017
				$ 5,356 994 $ 6,350 $ 951 4,405 $ 5,356 $ 994

(2)Other gains and losses
(3)Financial costs
(4)Depreciation & amortization
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(5)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 September 30, 2018 $ 2,166 145 2,311 2,546 64,894 $ 69,751 $ 1,017 68,734 $ 69,751	For the Three Months Ended September 30, 2017 $ 1,665 154 1,819 1,316 55,830 $ 58,965 $ 859 58,106 $ 58,965	For the Nine Months Ended September 30, 2018	For the Nine Months Ended September 30, 2018	For the Nine Months Ended September 30, 2017	For the Nine Months Ended September 30, 2017
				$ 6,234 436 6,670 6,926 183,805 $ 197,401 $ 3,150 194,251 $ 197,401		$ 5,334 463 5,797 4,160 153,344 $ 163,301 $ 3,047 160,254 $ 163,301

(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 and nine months end ed September 30, 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 September 30, 2018 4.00% 2.00% For the Three Months Ended September 30, 2018 $ 3,611 1,806	For the Three Months Ended September 30, 2017 4.00% 2.00% For the Three Months Ended September 30, 2017 $ 4,301 2,151	For the Nine Months Ended September 30, 2018	For the Nine Months Ended September 30, 2017
			4.00% 2.00% For the Nine Months Ended September 30, 2018	4.00% 2.00% For the Nine Months Ended September 30, 2017
			$ 9,779 4,890	$ 7,856 3,928

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

The distribution amount of employees’, director’s, and supervisor’s compensation in 2017 and 2016 have been approved by ZOTC’s Board of Directors in its meeting held on February 26, 2018 and February 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 consolidated 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 2018 and 2017, on the website of “Market Observation Post System” of TWSE.

(7)Foreign exchange gain (loss)

Foreign exchange gain Foreign exchange loss Loss(Profit), net	For the Three Months Ended September 30, 2018 $ 388 1,254 $ 1,642	For the Three Months Ended September 30, 2017 $ 6,169 ( 6,090) $ 79	For the Nine Months Ended September 30, 2018 $ 2,786 ( 1,576) $ 1,210	For the Nine Months Ended September 30, 2017	For the Nine Months Ended September 30, 2017
		(	(	( (	$ 41,914 46,015) $ 4,101)

24. INCOME TAXES

INCOME TAXES
(1)Income tax recognized in profit or loss The major components of tax expenses we For the Three Months Ended September 30, 2018 Current tax In respect of the current period $ 18,842 Adjustments for prior periods - 18,842 Deferred tax Deferred tax for the period ( 1,845) Income tax expense recognized in profit or loss$ 16,997	re as follows: For the Three Months Ended September 30, 2017 $ 11,998 - 11,998 5,824 $ 17,822	For the Nine Months Ended September 30, 2018 $ 52,702 ( 348) 52,354 ( 6,641) $ 45,713	For the Nine Months Ended September 30, 2017
		( (	(	$ 41,680 1 41,681 3,552) $ 38,129

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 September 30, 2018 $ - $ -	For the Three Months Ended September 30, 2017 $ - $ -	For the Nine Months Ended September 30, 2018 $ 438 $ 438	For the Nine Months Ended September 30, 2017	For the Nine Months Ended September 30, 2017
					$ - $ -

(3)Income tax assessment

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

Co. Name Year of Assessment The company 2016 Zotech technology Co., Ltd. 2016 Zerone Win Investment Co., Ltd. － WingWill International Co., Ltd. － PetaCom technology Co., Ltd. －

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25. EARNINGS PER SHARE

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

;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 Shares Weighted average number of ordinary shares used in the computation of basic (loss) earnings per share Effect of potentially dilutive ordinary shares: Convertible bonds Employees’ compensation Employee share options Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended September 30, 2018 $ 65,537 37 $ 65,574 For the Three Months Ended September 30, 2018 122,480 430 495 632 124,037	For the Three Months Ended September 30, 2017 $ 83,535 62 $ 83,597 For the Three Months Ended September 30, 2017 122,261 817 416 187 123,681	For the Nine Months Ended September 30, 2018 $ 184,430 114 $ 184,544 For the Nine Months Ended September 30, 2018 122,694 509 749 585 124,537	For the Nine Months Ended September 30, 2017 $ 146,766 251 $ 147,017 For the Nine Months Ended September 30, 2017
					121,979 1,098 797 166 124,040

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 and considered 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 and nine months ended September 30, 2017. Owing to anti-diluted, it doesn’t be calculated in each diluted earnings per share.

The exercise price of the third and fourth issued employee stock options is higher than average market price of shares for the three and nine months ended September 30, 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, January 2018, and September 2018, 1,000, 1,860, 2000, and 2,000 options were granted to q ualified employees of the Group, and e ach 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 exercised 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 subsequent changes in the Group’s ordinary shares, the exercise p rice of options will be adjusted by the regulated formula, accordingly.

33 -

Information about employees’ stock options was as follows:

Information about employees’ stock options was as follows:	Information about employees’ stock options was as follows:
For the Nine Months Ended September 30,2018 For the Nine Months Ended September 30,2017 Employee Stock options Number of Options (In Thousands) Weighted Average Exercise Price (NT$) Number of Options (In Thousands) Weighted Average Exercise Price (NT$) Balance, beginning of period 2,633 $ 15.23 2,860 $ 16.50 Options vested 4,000 20.25 - - Options exercised ( 27 ) 14.57 ( 27 ) 13.90 Invalid options ( 60 ) 14.90 ( 140) 15.04 Outstanding options at the end of the period 6,546 18.30 2,693 15.22 Options exercised at the end of the period 544 213 Weighted-average fair value of options vested(NT$) $ 6.41 $ - Information about outstanding options at the end of reporting period was as follows: September 30, 2018 December 31, 2017 September 30, 2017 Range of Exercise Price(US$) Weighted- Average Remaining Contractual Life(Years) Range of Exercise Price(US$) Weighted- Average Remaining Contractual Life(Years) Range of Exercise Price(US$) Weighted- Average Remaining Contractual Life(Years) $ 13.10`（`Note`）` 2.92$ 13.90`（`Note`）` 3.67$ 13.90`（`Note`）` 3.92 15.00`（`Note`）` 3.93 15.90`（`Note`）` 4.68 15.90`（`Note`）` 4.93 18.80`（`Note`）` 5.26 - - - - 20.65 5.92 - - - -		For the Nine Months Ended September 30,2017
		Number of Options (In Thousands) Weighted Average Exercise Price (NT$) 2,860 $ 16.50 - - ( 27 ) 13.90 ( 140) 15.04 2,693 15.22 213 $ - period was as follows: September 30, 2017	Weighted Average Exercise Price (NT$)
Range of Exercise Price(US$) $ 13.10`（`Note`）` 15.00`（`Note`）` 18.80`（`Note`）` 20.65	Range of Exercise Price(US$) $ 13.90`（`Note`）` 15.90`（`Note`）` - -			Weighted- Average Remaining Contractual Life(Years)
				3.92 4.93 - -

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	adopts BOPM and Black-Scholes price model to evaluate inputs of stock	adopts BOPM and Black-Scholes price model to evaluate inputs of stock	adopts BOPM and Black-Scholes price model to evaluate inputs of stock
options in September 2018, January 2018, September 2016 and August 2015 as follows:
	September,2018	January,2018	September,2016	August,2015
Securities price of	20.65 Dollars	19.85 Dollars	16.95 Dollars	15.65 Dollars
the vested date
Exercised price	20.65 Dollars	19.85 Dollars	16.95 Dollars	15.65 Dollars
Foreseeable	32.96%	33.81%	38.26%	39.14%~40.47%
volatility rate
Duration	6 Years	6 Years	6 Years	4~5 Years
Foreseeable	0%	0%	0%	0%
dividend rate
No risk rates	0.72%	0.74%	0.56%	0.77%~0.87%

27. CAPITAL RISK MANAGEMENT

The Group engages mainly in the agent of software, without any plans of im posed capital requirements at present and in the future. 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 period ically reviews the policy of capital risk management, for 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.

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28. FINANCIAL INSTRUMENTS

(1)Information about Fair value of financial instruments that are not measured at fair value

Information about Fair value	value of financial instruments that are not measured at fair	value of financial instruments that are not measured at fair	value of financial instruments that are not measured at fair	value of financial instruments that are not measured at fair	value of financial instruments that are not measured at fair	value of financial instruments that are not measured at fair
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:
	September 30,		December 31,		September 30,
	2018		2017		2017
	Carrying		Carrying	Carrying
	Amount	Fair Value	Amount Fair Value	Amount Fair Value
Financial Assets
Measured at amortized cost
-domestic corporate bonds	$ 61,050	$ 60,928	$ - $ -	$	- $	-
Financial liabilities
Convertible bonds	6,243	9,406	9,733 12,600		11,122 13,455

(2)Information about fair value of financial instruments measured at fair value on a recurring basis.
A.Fair value hierarchy

September 30, 2018

September 30, 2018
Financial assets at FVTPL Convertible bonds Fund beneficiary certification Domestic public offering and emerging stock Derivatives Total Financial assets at FVTOCI Equity investments `－`Domestic public offering and emerging stock `－`Domestic unpublic offering stock Total December 31, 2017 Financial assets at FVTPL Convertible bonds Domestic public offering stock Derivatives Total Available-for-sale financial assets Equity investments `－`Domestic public offering and emerging stock	Level 1	Level 2 $ - - - 1,088 $ 1,088 $ - - $ - Level 2 $ - - 4 $ 4 $ -	Level 3 $ - - - - $ - $ 10,450 3,386 $ 13,836 Level 3 $ - - - $ - $ -	Total
	$ 40,431 66,293 14,816 - $ 121,540 $ 106,868 - $ 106,868 Level 1			$ 40,431 66,293 14,816 1,088 $ 122,628 $ 117,318 3,386 $ 120,704 Total

	$ 51,009 325 - $ 51,334 $ 90,289			$ 51,009 325 4 $ 51,338 $ 90,289

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September 30, 2017

September 30, 2017
Financial assets at FVTPL Convertible bonds Fund beneficiary certification Domestic public offering stock Derivatives Total Available-for-sale financial assets Equity investments `－`Domestic public offering and emerging stock		Level 1 $ 76,053 3,952 336 - $ 80,341 $ 84,688		Level 2 $ - - - 5 $ 5 $ -		Level 3 $ - - - - $ - $ -		Total
								$ 76,053 3,952 336 5 $ 80,346 $ 84,688

There were no transfers between Level 1 and Leve l 2 for nine months ended September 30, 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—Foreign exchange forward Discounted Cash Flow Method: Using exchange rate at contract the end period evaluates future cash flow through the contract. Disclosing the discount rate of credit risks in each counterpart should be separately discounted.

Derivatives—Redemption & sell right of convertible bonds

  - Valuation model of binomial tree of convertible bond: Using securities prices, no risk rate, and risk discount rate evaluates fair values of financial assets of convertible bonds.

C.Valuation techniques and assumptions u sed 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 expected present value of profits and losses calculated by held investments with refer ence to the publicly traded company and similar companies.
(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)	September 30, 2018 $ - 40,431 82,197 - - 2,695,414 132,573 1,471,181	December 31, 2017 $ 329 51,009 - 2,619,647 111,943 - - 1,397,491	September 30, 2017
			$ 4,293 76,053 - 2,537,126 106,342 - - 1,278,115

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 receivabl e, and refundable deposits.

Note 2:The balances included available-for-sale financial assets measured at cost.

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Note ; 3:The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, investments in debt ins truments, notes receivable, trad e receivable, other receivable and refundable depo sits.

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 internal 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 at any time.

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 cu rrency 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 reporting period are set out in Note 32.

Sensitivity analysis

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

The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation at the end 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 nine months ended September 30, 2018 and 2017 would increase /decrease by $4,855 thousand and decrease/increase $8,445 thousand, respectively.

(B) Interest rate risk

The Group exposed to the risk of interest rate at fair value, since holding the fixed-rate loan, accessing the interest rate of the bank loan regularly, observing influences on profits or losses from fluctuation 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 as follows:

follows:
Interest rate risks at fair value `－`Financial assets `－`Financial liabilities Interest rate risks at cash flows `－`Financial assets Sensitivity analysis	September 30, 2018 $ 538,395 56,243 229,830	December 31, 2017 $ 366,576 9,733 598,289	September 30, 2017
			$ 569,619 11,122 317,235

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.

37 -

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 nine months ended September 30, 2018 and 2017 would increase/ decrease by $862 thousand and $1,190 thousand, respectively. Exposure is triggered by risks of cash flows of the Group’s variable interest rates of deposits.

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 controlling risks by holding different investment portfolios.

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$6,1 31 thousand, because of the change in fair value of financial assets at FVTPL, respectively., at the end of the reporting period for the nine months ended September 30, 2018, the other comprehensive income would have increased/decreased by NT$6, 035 thousand, because of the change in fair value of financial assets at FVTOCI, respectively, at the end of the reporting period for the nine months ended September 30, 2018.

Assuming a hypothetical increase/decrease of 5% in prices of the equity investments, increased/decreased by NT$4,017 thousand, because of the change in fair value of investments held for trading, respectively, at the end of the reporting period for the nine months ended September 30, 2017, the other comprehensive income would have increased/decreased by NT$ 4,234 thousand, because of the change in fair value of available -for-sale financial assets, respectively.

B.;Credit risk

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 of 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 is arising from the carrying amount of the respective recognized financi al assets as stated in the consolidated 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 ins ignificant, 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.

The credit risk of the Group concentrates on 5 top customers of the Group. As of September 30, 2018, December 31, 2017 and September 30, 2017, the Group’s five largest customers accounted for 35%, 36% and 40% 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.

38 -

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 interest and principal 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.

September 30, 2018

September 30, 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 September 30, 2017 Non-derivative financial liabilities No Interest-bearing liabilities Fixed rate instruments	Less than 1 Year $ 1,414,938 56,300 $ 1,471,238 Less than 1 Year $ 1,387,758 10,000 $ 1,397,758 Less than 1 Year $ 1,266,993 11,500 $ 1,278,493	1-5 Years $ - - $ - 1-5 Years $ - - $ - 1-5 Years $ - - $ -	5+ Years
			$ - - $ - 5+ Years
			$ - - $ - 5+ Years
			$ - - $ -

The operating fund of the Group are sufficient to meet cash flow demand; If the demand exists, it shall be short-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 their rights of requiring the Group to repay the bank loans.

As of September 30, 2018, December 31, 2017 and September 30, 2017, the Group’s unused short-term credit of limit of the bank were 770,000 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 disclose d in this note. Besides as disclosed elsewhere in the other notes, details of transactions between the Group and other related parties were disclosed below.

Compensation of key management personnel

Short-term employee benefits	For the Three Months Ended September 30, 2018 $ 2,455	For the Three Months Ended September 30, 2017 $ 2,871	For the Nine Months Ended September 30, 2018	For the Nine Months Ended September 30, 2018	For the Nine Months Ended September 30, 2017 $ 23,596	For the Nine Months Ended September 30, 2017 $ 23,596
				$ 25,752		$ 23,596

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

39 -

30. PLEDGED ASSETS

;The following assets of the Group are guaranteed by the assets pledged for loans of the
bank and broker, as well as tariff of importing commodities.

Property, plant and equipment, Net Pledged Time Deposits(Financial assets at amortized cost`－`non-current) Pledged Time Deposits(Debt investments with no active market`－`non-current)	September 30, 2018 $ 293,681 12,586 - $ 306,267	December 31, 2017 $ 295,043 - 11,539 $ 306,582	September 30, 2017	September 30, 2017
				$ 295,497 - 11,379 $ 306,876

SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
(1)As of September 30, 2018, the group opens NT 87,000 thousand of cashier order for payment guaranteed for Microsoft Taiwan Corporation.
(2)As of September 30, 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:

September 30, 2018

September 30, 2018
F i n a n c i a l a s s e t s Monetary items USD F i n a n c i a l l i a b i l i t i e s Monetary items USD ;December 31, 2017 F i n a n c i a l a s s e t s Monetary items USD F i n a n c i a l l i a b i l i t i e s Monetary items USD	Foreign Currencies $ 18,580 21,761 Foreign Currencies $ 19,816 23,396	Exchange Rate 30.525`（`USD:NTD`）` 30.525`（`USD:NTD`）` Exchange Rate 29.735`（`USD:NTD`）` 29.835`（`USD:NTD`）`	Carrying Amount
			$ 567,155 $ 664,255 Carrying Amount
			$ 589,229 $ 698,020

40 -

September 30, 2017 F i n a n c i a l a s s e t s Monetary items USD F i n a n c i a l l i a b i l i t i e s Monetary items USD	Foreign Currencies $ 27,559 21,900	Exchange Rate 30.232`（`USD:NTD`）` 30.332`（`USD:NTD`）`		Carrying Amount
				$ 833,164 $ 664,271

The material foreign exchange profit/loss(realized and unrealized) was as follows:

For the Nine Months Ended September 30,2018 Exchange Rate Net Foreign exchange profit(loss) 29.915`（`USD:NTD`）` $ 1,210 For the Three Months Ended September 30,2018 Exchange Rate Net Foreign exchange profit(loss) 30.672`（`USD:NTD`）` $ 1,642	For the Nine Months Ended September 30,2017	For the Nine Months Ended September 30,2017	For the Nine Months Ended September 30,2017
	Exchange Rate Net Foreign exchange profit(loss) 30.539`（`USD:NTD`）` ($ 4,101) For the Three Months Ended September 30,2017	Net Foreign exchange profit(loss)
Exchange Rate 30.672`（`USD:NTD`）`	Exchange Rate 30.267`（`USD:NTD`）`	Net Foreign exchange profit(loss)
			$ 79

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 per iod (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: Please refer 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.
41 -

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 performanc e 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 September 30, 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 September 30, 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 $ 4,819,917 - $ 4,819,917 $ 311,378 The brand agent business division $ 4,420,273 - $ 4,420,273 $ 277,834		Other $ 75,087 1,862 $ 76,949 $ 18,685) Other $ 117,773 5,960 $ 123,733 $ 6,625		Eliminations $ - 1,862) $ 1,862) $ - Eliminations $ - 5,960) $ 5,960) $ -		Total
		(		( (		$ 4,895,004 - 4,895,004 $ 4,895,004 $ 292,693 ( 81,923 ) 19,020 3,426 ( 201 ) ( 3,774) $ 229,241 Total
				( (		$ 4,358,046 - 4,358,046 $ 4,358,046 $ 284,459 ( 104,147 ) 9,241 ( 539 ) ( 308 ) ( 4,644) $ 184,062

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.

42 -

(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 shouldn’t be recovered.

(3)Revenues of major products and services

Analysis of revenues of major products and services for continuing operations of the Group are as follows:

IT Infrastructure Network & Information Security Cloud Platform & Application Big Data & Application Other	For the Three Months Ended September 30, 2018 $ 455,241 1,047,303 220,363 101,963 3,020 $ 1,827,890	For the Three Months Ended September 30, 2017 $ 733,712 603,609 207,934 117,642 14,565 $ 1,677,462	For the Nine Months Ended September 30, 2018 $ 1,675,241 2,133,017 845,994 232,212 8,540 $ 4,895,004	For the Nine Months Ended September 30, 2017	For the Nine Months Ended September 30, 2017
					$ 1,785,642 1,764,138 692,971 255,768 39,527 $ 4,538,046

43 -

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES MARKETABLE SECURITIES HELD

FOR NINE MONTHS ENDED September 30, 2018

Table 1 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Holding Company	Marketable Securities Type and Issuer’s Name `（`Note 1`）`	Security Issuer’s Relationship with the HoldingCompany	Financial Statement Account		September	30,2018
				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 Regent Hotels Group－2 Elite Material Co., Ltd.－4 GIGASTORAGE Corp.－4 SINTRONIC Technology.－3 EVA Airways.－3 Yang Ming Marine Transport Corporation－5 Great Tree Pharmacy Co.,Ltd.－1 Tong Ming Enterprise Co., Ltd.－1stdomestic unsecured convertible corporate bonds Yuanta Securities Asia Financial Services Limited－2018 Non-secured USD- denominated Private Fixed Rate Notes	`－` `－` `－` `－` `－` `－` `－` `－` `－` `－` `－` `－` `－`	Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at FYTPL－ current Financial assets at amortized cost`－`non-current	40`（`Units`）` 150`（`Units`）` 30`（`Units`）` 30`（`Units`）` 20`（`Units`）` 10`（`Units`）` 50`（`Units`）` 5`（`Units`）` 30`（`Units`）` 40`（`Units`）` 7`（`Units`）` 10`（`Units`）` 20`（`Units`）`	$ 4,154 12,600 3,000 3,015 2,000 1,054 5,100 498 3,150 4,104 728 1,028 61,050	- - - - - - - - - - - - -	$ 4,154 12,600 3,000 3,015 2,000 1,054 5,100 498 3,150 4,104 728 1,028 61,050
							`（`Continued`）`

44 -

Marketable Securities Type and Issuer’s Name `（`Note 1`）`	Security Issuer’s Relationship with the HoldingCompany	Financial Statement Account		September 30,2018	September 30,2018
			Shares/Units	Carrying Values	Percentage of Ownership (%)	Market Prices/ Net value of equities
Securities Jiyuan Packaging Holdings Ltd. Cathay Financial Holdings Preferred Stock A Union Bank of Taiwan Preferred Stock A Global Mixed-mode Technology Inc. ASLAN Pharmaceuticals, Ltd. Chunghwa Precision Test Tech.Co., Ltd . Kaway Information Corp. China Electric Mfg. Corp. ASIX Electronics Corp.	`－` `－` `－` `－` `－` `－` The supervisor of the company `－` `－` `－` `－` `－` `－`	Financial assets at FYTPL－ current Financial assets at FYTPL－ non-current Financial assets at FYTPL－ non-current 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 FVTOCI `－`non-current Financial assets at FVTOCI `－`non-current	10,000 166,000 80,000 50,000 60,000 6,000 490,000 3,200,000 260,074 34,000 40,000 350,000 170,000	$ 198 10,458 4,160 3,380 2,490 2,769 16,415 31,264 6,879 2,142 2,080 21,350 9,095	- 0.02 0.04 0.06 0.04 0.02 1.60 0.80 0.48 0.00 0.02 0.05 0.03	$ 198 10,458 4,160 3,380 2,490 2,769 16,415 31,264 6,879 2,142 2,080 21,350 9,095
Cathay Financial Holding Co., Ltd. Preferred Stock A Union Bank of Taiwan Preferred Stock A Fubon Financial Holding Co., Ltd. Preferred Shares B TAISHIN FINANCIAL HOLDING CO., LTD. Preferred Stock E
						`（`Continued`）`

45 -

Holding Company	Marketable Securities Type and Issuer’s Name `（`Note 1`）`	Security Issuer’s Relationship with the HoldingCompany	Financial Statement Account		September 30,2018	September 30,2018
				Shares/Units	Carrying Values	Percentage of Ownership (%)	Market Prices/ Net value of equities
ZeroneWin PetaCom	CTBC Financial Holding Co., Ltd. Preferred Shares B	`－` `－` `－` `－` `－` `－` `－`	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 FYTPL－ non-current Financial assets at FVTOCI `－`current Financial assets at FYTPL－ current	78,000 210,000 1,000,000 175,000 7,000 7,000 2,972,055	$ 4,875 12,768 10,450 3,386 26,199 3,230 40,094	0.02 0.03 2.72 1.68 - 0.02 -	$ 4,875 12,768 10,450 3,386 26,199 3,230 40,094
	Cathay Financial Holding Co., Ltd. Preferred Stock B
	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

（ Concluded ）

Note 1 ： Securities, indicated by the above table, are derivative from stock, bonds, beneficiary certificates, and the above items, based on IFRS 9 “Financial Instruments”. Note 2 ： Relevant information about Investments in equity of subsidiaries, associates, see Table 2.

46 -

ZERO ONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES INFORMATION ON INVESTEES FOR NINE MONTHS ENDED SEPTEMBER 30, 2018

Table 2 (In Thousands of New T aiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses	Investment Amount	Investment Amount	As of September 30,2018	As of September 30,2018	As of September 30,2018	Net Income (Loss) of the Investee	Share of Profits/Losses of Investee	Note
				September 30, 2018	December 31, 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 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	$ 42,083 - 672 85,687 2,516 40,977	$ 3,097 ( 124 ) ( 12,489 ) ( 8,340 ) ( 4,519 ) ( 7,073 )	$ 2,643 - ( 3,774 ) ( 8,340 ) ( 3,164 ) ( 7,073 )	Subsidiary Subsidiary Sub- subsidiary Sub- subsidiary
	Navizot Inc.
	Trident Pacific Inc. ZeroneWin Investment Co., Ltd. WingWill International Co., Ltd. PetaCom technology Co., Ltd.

47 -

ZERO ONE TECHNOLOGY CO., LTD.AND SUBSIDIARIES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 2018

Table 3 (Amounts in Thousands of New Taiwan Dollars)

Table 3				(Amounts in Thousands of New	(Amounts in Thousands of New	(Amounts in Thousands of New	Taiwan Dollars)
No. `（`Note 1`）`	Company Name	Counterparty	Nature of Relationship `（`Note 2`）`	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 Guarantee deposits received	$ 714 84 286 90 405 1,072 782 410 89 257 511 626	Note 4 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 Cost of goods sold Service income Trade receivable 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; if the account is an income statement accoun t, 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 from those to non-related parties.
48 -

AI assistant

ZERO ONE — Interim / Quarterly Report 2018

52262_rns_2018-11-26_bf03b6e0-d6a1-4f78-baea-b1192c93fdeb.pdf

AND SUBSIDIARIES

§TABLE OF CONTENTS§

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Conclusion

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

ZERO ONE TECHNOLOGY CO., LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 and 2017

1. GENERAL

2. THE DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS

3. ;APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

IFRS 9 “Financial Instruments” and related amendments

Classification, measurement and impairment of financial assets

IFRS 16 “Leases”

Definition of a lease

The Group as lessee

The Group as lessor

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2017

2018

2017

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

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

9. FINANCIAL ASSETS AT AMORTIZED COST -2018

10. AVAILABLE -FOR - SALE FINANCIAL ASSETS -2017

11. FINANCIAL ASSETS CARRIED AT COST-2017

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET-2017

13. NOTES AND TRADE RECEIVABLE

For the Nine Months Ended September 30, 2018

For the Nine months ended September 30, 2017

15. SUBSIDIARIES

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

17. PROPERTY, PLANT AND EQUIPMENT

18. ; LONG -TERM LOANS

21. RETIREMENT BENEFIT PLANS

22. EQUITY

23. NET INCOME

Estimate Rate

24. INCOME TAXES

25. EARNINGS PER SHARE

;Net Profit for the Period

26. ;SHARE -BASED PAYMENT ARRANGEMENTS

27. CAPITAL RISK MANAGEMENT

28. FINANCIAL INSTRUMENTS

(4)Financial risk management objectives and policies

A. ;Market risk

Sensitivity analysis

(B) Interest rate risk

Sensitivity analysis

B.;Credit risk

Liquidity & interest rate risk table

September 30, 2018

29. RELATED PARTIES TRANSACTIONS

Compensation of key management personnel

30. PLEDGED ASSETS

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

SIGNIFICANT INFLUENCE

September 30, 2018

33. SEPARATELY DISCLOSED ITEMS

34. SEGMENT INFORMATION

(1)Segments revenue & operating results

(2)Total assets and liabilities of the department

ZERO ONE TECHNOLOGY CO., LTD. AND SUBSIDIARIES MARKETABLE SECURITIES HELD

ZERO ONE Interim / Quarterly Report 2018