1

Contents

Letter to Shareholders 2

Introduction to MTI Products and Market Outlook 5

Financial Review 10

Selected Financial Data 10

Consolidated Results of Operations 11

Report of Independent Accountant 13

Consolidated Financial Statements 15

Notes to Consolidated Financial Statements 21

Corporate Directory 79

2

I. Letter to Shareholders

Dear Shareholders:

First of all, we would like to thank you for your long-term support of Microelectronics

Technology Inc. Looking back on 2012, our consolidated operating revenue was

NT$7.561 billion at 13% growth rate compared to 2011, driven by the high demand in

two-way satellite broadband VSAT transceiver with over 60% growth in 2012 due to

the customer's new satellite launched in October 2011. The low-noise block down

converter (LNB) for satellite TV reception also grew by 30%, as we are the main

supplier for the two major North America customers. Consolidated gross profit was

NT$517 million and the gross profit margin rebounded to 7% compared to 2011.

Overall gross profit was not satisfactory due to new products still in the introductory

phase and not yet up to economic scale. In addition, we have been investing in the

R&D projects towards 4G LTE communication technology products, thus our

consolidated net loss for 2012 was NT$1.035 billion, or NT$3.82 net loss per share

after tax. The management team takes full responsibility for the company's

performance, and all employees will make all efforts to turn the Company into profit in

this fiscal year.

Overcoming Challenges and Pursuing New Opportunities

In 2012, satellite communication products contributed the highest percentage at 61%

of our total revenue. The two-way satellite broadband VSAT transceiver was in high

demand for 2012 and grew by more than 60%. For this year, VSAT Ka Band product

shipments will continue to grow driven by the high demand in broadband satellite

applications. The newer high-end LNB for satellite TV reception will be launched this

year to further expand the market share and improve profit margins.

For the terrestrial microwave backhaul products, we have already developed the

hardware/software designs for remote radio head (RRH) equipment targeted at

various bands and output power levels in response to customers’ demand. Integrated

with the high-speed optical fiber interface, our DSP technology not only improves

power efficiency, but also enhances the product differentiation and competitiveness.

We have successfully introduced the RRH equipment developed for a wide range of

3G/LTE networking infrastructures. Our RRH product range has transitioned from 3G

RRH to LTE RRH with simultaneous support for FDD and TDD LTE standards. As a

result, we are very optimistic about the shipment of LTE RRH products.

3

R&D for Innovation

In 2012, Microelectronics Technology Inc. was awarded with nine utility patents and

one design patent. In addition, the UHF Band RFID Reader won the 21st Taiwan

Excellence Award in 2013. These accolades are further proof of Microelectronics

Technology's strength in technology and research development.

The emerging 4G LTE networking market in 2013 will continue to drive demand and

innovation for more competitiveness in RRH equipment regarding DPD/CFR DSP

Technology with high bandwidth and linearity. This will also lay down the roadmap for

the LTE-A standard to boost our lead in the RRH market. Our microwave digital

technology for shared Ku/Ka band in Very Small Aperture Terminal (VSAT) satellite

ground stations will contribute much to the development of the new high-end LNB

products.

Strategic Alliances for Competitiveness

CyberTAN Technology and Foxconn Group have become our strategic investors

since the second half of last year. The additional fund from our partners strengthened

the company's working capital and financial structure. MTI will leverage its

microwave, satellite communication technology and customer resources, together

with CyberTAN's networking expertise, as well as Foxconn's supply chain

management system and manufacturing capability, to further reduce the production

costs and enhance the operating scale, and ultimately expand the business

successfully in the near future.

Looking to the Future

In 2013, MTI will continue to strengthen the competitiveness of our core business,

enhance our existing product platform, and grow together with our customers. The

strategic alliance with Foxconn and CyberTAN will also bring remarkable benefits.

We can expect the significant growth both in revenue and profit margin.

Once again we would like to express our sincere gratitude to our shareholders and all

our employees for their long-standing support and contributions. We would also like to

thank our board members, supervisors, customers, and our partners for their

continuous support, encouragement, contributions, and efforts. We will continue to

4

uphold our corporate philosophy of honesty, refinement, and sustainability. We will

persist with our best efforts to overcome all challenges and march towards the

milestone of the next NT$10 billion revenue.

Sincerely,

Patrick Wang

Chairman of the Board

Chi-Chia Hsieh

Vice Chairman of the Board

Allen Yen

President and CEO

~5~

II. Overview of Operations

1. Business Scope

(a) Main Business and Percentage of Revenues by Product

(Financial data taken from our audited financial statements)

MTI’s main business in 2012 included satellite communication products and

telecommunication products. Satellite communication products include satellite TV

receiving equipments and Very Small Aperture Terminal (VSAT) systems.

Telecommunication products include point-to-point and point-to-multipoint microwave

radios, mobile base station power amplifiers, and wireless LAN equipment. In 2012,

satellite communication products made up 61% of total revenue while the rest went to

telecommunication products at 39%.

(b) Industry Overview

Below we provide analyses of satellite communications systems and telecommunication

systems and equipment as well as an overview of their respective markets:

Satellite Communications Systems and Equipment

With the demand for high-definition television

(HDTV) sets and HDTV programming constantly

increase and the rapid growth of regional and

multilingual channels, direct broadcast satellite TV

operators currently offer close to a thousand TV

channels and a substantial number of broadcast

channels. This has undoubtedly created a

significant demand for satellite transponders and

satellite TV receivers. Direct-to-Home (DTH)

satellite TV services have always done well in the

US, European, and Japanese markets.

~6~

While in recent years, emerging markets such as

India and Latin America are expanding faster than

ever. North America is still the world's largest

market (approx. 46%) with the Dish Network and

Direct TV as the largest satellite TV broadcast

operators. The European market comes in

second at approximately 20%. At the end of 2012,

Direct TV has reached 35.56 million subscribers

(including Latin America), whereas Dish Network

has 14.06 million subscribers. The growth of

subscribers has been stable.

In contrast, there are marked differences in TV

programming among European countries, and

subscriber bases are smaller by comparison. As a

result, satellite TV operators and TV content

providers are independent from one another.

In recent years they have begun to emulate their

counterparts in North America. BBC's

HD programming broadcast is also gradually

opening up demand for HD set-top boxes (STB)

and high-end low-noise block downconverters

(LNB) to replace existing units in the local

markets.

~7~

For Very Small Aperture Terminal (VSAT)

equipment, their main area of applications is to

provide high-speed two-way satellite broadband

internet access to users in remote locations

where there is no access to cable modem and

DSL services. The Ka satellite band is used by

ViaSat and HughesNet in their satellite

broadband services in the North American market.

ViaSat-1 is the world's most advanced

communication satellite with the highest bandwidth capacity. The ViaSat Exede

Internet is serviced through this satellite, reaching 285,000 subscribers just one year

after the satellite's launch in October 2011, and will continue to gain more subscribers

in the future.

While HughesNet boasts 659,000 broadband

subscribers at the end of 2012, it is also

enlisting the service of the Spaceway 3 satellite

for additional coverage in conjunction with

the EchoStar 17/Jupiter. In Europe, several new

broadband satellite projects are currently

underway, including the Kasat satellite

of Eutelsat, Astra2 connect satellite of SES and

Hylas satellite of Avanti. With the impetus

provided by these projects, it is expected

that Europe will become the world's second

largest satellite broadband services market in 2012. NSR, Broadband Satellite

Markets, reports that there will be 3.8 million satellite broadband subscribers

worldwide in 2021.

Source: NSR, Broadband Satellite Markets,

11th Edition Market Forecast from 2011 to 2019

~8~

Terrestrial Microwave Backhaul Equipment

In recent years, wireless applications have turned

to WiMAX and LTE standards with the

development of high-speed packet access and

maturing technologies. Mobile networks are

clearly moving in the direction of

end-to-end Ethernet networks. Bandwidth of the

backhaul network infrastructure has already been

saturated by the increasing number of connected

smart devices on the market. System operators

must act fast in setting up the fourth generation of mobile networks to accommodate

for the inevitable explosive demand with regards to the mobile broadband services.

The number of LTE subscribers in the past

three years has grown exponentially

reaching 68 million worldwide users at the

end of 2012. The number will reach 600

million in 2016 with the highest number of

users in the Asia region.

2012 global LTE base station revenue was still

centered on the major suppliers. Infonetics

Research's latest report has shown that up until

2012 Q3, Ericsson remains the revenue leader

in LTE equipment. Nokia Siemens leap-frogged

both Alcatel-Lucent and Huawei became the

second largest LTE equipment supplier in the

world. For the individual regions, the US, Japan,

and South Korea had all demonstrated strong

Source: GSA, 2013/2 DIGITIMES, 2013/3

Source: Infonetics Research 2012 Q3 global LTE

supplier ranking

~9~

LTE developments in Q3 of 2012. Global revenue of LTE equipment also grew by

30% in the third quarter.

However, market share and ranking of each supplier are subject to further changes as

newer operators venture into the LTE market along with new projects opening up in all

regions. New generation of base stations are trending towards the multi standard

radio (MSR) and software defined radio (SDR) infrastructures to effectively reduce

costs and improve compatibility with a wide range of technologies and standards.

An increasing number of telecom operators around the world have been actively

involved in the implementation of 4G/LTE networks. According to statistics from Global

Mobile Suppliers Association (GSA), there are a total of 327 worldwide operators with

investments in LTE commercial services at the end of June 2012. There are a total of

38 nations with LTE commercial services in operation, 267 networks under

construction in 86 countries, and at least 144 commercial networks going online at the

end of 2012.

(c) Technology and Research and Development Overview

1) Our R&D investment is focused on core technologies in RF and DSP, while our

two main product lines are developed in conjunction to the growing sales:

Satellite Communications Systems and Equipment

� Low-noise block downconverters (LNB)

� Very Small Aperture Terminal (VSAT)

Terrestrial Microwave Backhaul Equipment

� Point-to-Point Microwave Systems (Digital Radio)

� Terrestrial Microwave Backhaul Equipment for Base Station Wireless

Communication

� - Power Amplifier (PA)

� - 3G/LTE Remote Radio Head (Remote Radio Head)

� UHF Band RFID Reader and System Integration (UHF Band RFID Reader)

~10~

Financial Review

The following sections review the consolidated financial results of Microelectronics Technology, Inc. and its subsidiaries for the year 2012 and 2011.

Selected Financial Data (consolidated)

2012 2011

(Expressed in thousands of New Taiwan dollars, except earnings per share data)

Income Statement Data:

Sales revenues 7,561,289 6,678,293

Cost of Goods Sold (7,044,138) (6,385,368)

Gross profit 517,151 292,925

Operating expenses (1,572,956) (1,850,669)

Operating income (1,055,805) (1,557,744)

Non-operating income (expenses) 2,269 (376,986)

Income before income tax (1,053,536) (1,934,730)

Income tax income (expense) 18,908 157,323

Minority interest 2,205 1,522

Net income (1,032,423) (1,775,885)

Earnings Per Share Data:

Net earnings per share (NT$) (1) (3.82) (6.58)

Balance Sheet Data

Current Assests 5,650,315 6,220,303

Investment 330,029 355,664

Fixed Assets 1,092,421 1,300,193

Intangibles 599,210 635,064

Other Assets 441,121 365,259

Total assets 8,113,096 8,876,483

Current liabilities 4,200,679 4,919,328

Long-term liabilities 224,914 950,380

Other liabilities 233,489 226,371

Stockholders' equity 3,454,014 2,780,404

Total Liabilities and Equities 8,113,096 8,876,483

(1) Based on weighted average outstanding common shares.

~11~

Consolidated Results of Operations

The following discussion should be read in conjunction with the Company's consolidated

financial statements, together with the notes thereto, included elsewhere in this report.

Sales Revenue

The consolidated net revenue reached NT$7,561 million. Our satellite communications sector

which includes LNB and VSAT, contributed 61 percent of total revenue. Telecommunication

contains Mobile (includes RRH and PA), Radio and other sector, contributed 39 percent of

total revenue.

Gross Profit

The consolidated gross profit in 2012 was NT$517 million, which was 7% of the total

consolidated operating revenue. Compared to 2011, the consolidated gross profit ratio of net

sales increased by 3 percent.

Operating Expenses and Income

Consolidated operating expenses in 2012 were NT$1,573 million. Sales and marketing

expenses, general and administrative expenses and research and development expenses

accounted for 5%, 4%, and 12% of sales revenue, respectively. The operating expenses ratio

is 21% of sales revenue, mainly due to the development of fourth generation mobile

communications technology and LTE related products, this is a reflection of our endeavor to

safeguard our technological advantages and enhance our market position. Consolidated

operating loss in 2012 was NT$1,056 million.

Non-Operating Income and Loss

With regard to consolidated non-operating income, there was a gain of NT$2 million in 2012.

~12~

Taxation

MTI carried forward deferred income tax assets of NT$392 million as of December 31, 2012.

There was NT$19 million income tax benefit in 2012.

Net Income After Tax

MTI’s consolidated net loss after tax in 2012 was NT$1,032 million, equivalent to basic earnings

per common share of loss NT$ 3.82, compared to loss NT$ 6.58 per share in 2011.

Liquidity and Capital Structure

As of December 31 2012, our total assets were NT$8,113 million and total liabilities

were NT$4,659 million. Total liabilities to total assets ratio was 57 percent in 2012. Current

ratio was 135% in 2012, reflecting a healthy balance sheet with substantial liquidity. MTI with a

solid consolidated balance sheet includes NT$1,539 million of cash and cash equivalents at

the end of year 2012.

~13~

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR12000355

To the Board of Directors and Stockholders of

Microelectronics Technology, Inc.

We have audited the accompanying consolidated balance sheets of Microelectronics Technology, Inc.

and its subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of

income, of changes in stockholders’ equity and of cash flows for the years then ended, expressed in

thousands of New Taiwan dollars. These financial statements are the responsibility of the Company’s

management. Our responsibility is to express an opinion on these financial statements based on our

audits.

We conducted our audits in accordance with the “Rules Governing the Examination of Financial

Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic

of China. Those rules and standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation. We believe that our

audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the financial position of Microelectronics Technology, Inc. and its subsidiaries as of

December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then

ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities

Issuers” and generally accepted accounting principles in the Republic of China.

Microelectronics Technology expects to adopt International Financial Reporting Standards,

International Accounting Standards, and Interpretations developed by the International Financial

Reporting Interpretations Committee or the former Standing Interpretations Committee (collectively

referred herein as the IFRSs) as recognized by the Financial Supervisory Commission (FSC) and the

~14~

“Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be applied in

2013 in the preparation of consolidated financial statements of Microelectronics Technology and its

subsidiaries starting from January 1, 2013. Information relating to the adoption of IFRSs by

Microelectronics Technology is disclosed in Note 13 in accordance with Jin-Guan-Zheng-Shen-Zi

Letter No. 0990004943 of the FSC, dated February 2, 2010. The IFRSs may be subject to changes

during the time of transition; therefore, the actual impact of IFRSs adoption on Microelectronics

Technology and its subsidiaries may also change.

PricewaterhouseCoopers, Taiwan

March 21, 2013

------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31 (Expressed in thousands of New Taiwan dollars)

2012 2011

ASSETS Notes AMOUNT % AMOUNT %

~15~

Current Assets

Cash and cash equivalents 4(1) $ 1,539,379 19 $ 1,852,273 21

Financial assets at fair value through profit or loss -

current

4(2)

11,269 - 203,743 2

Accounts receivable, net 4(3) and 6 1,320,204 16 1,650,924 19

Other receivables 106,674 2 124,992 1

Inventories, net 4(4) 1,560,057 19 2,020,398 23

Prepaid expenses 31,762 1 44,476 -

Prepayments 66,821 1 168,952 2

Deferred income tax assets - current 4(19) 99,831 1 139,949 2

Restricted current assets 4(13) and 6 914,318 11 14,596 -

Total current assets 5,650,315 70 6,220,303 70

Funds and Investments

Financial assets carried at cost - non-current 4(5) 330,029 4 355,664 4

Property, Plant and Equipment 4(6) and 6

Costs

Buildings 795,527 10 793,634 9

Machinery and equipment 2,010,221 25 2,264,836 26

Transportation equipment 3,527 - 3,662 -

Office equipment 127,092 1 124,899 1

Leased assets 15,470 - - -

Leasehold improvements 136,351 2 138,381 2

Cost and revaluation increments 3,088,188 38 3,325,412 38

Less: Accumulated depreciation ( 2,146,482 ) ( 26 ) ( 2,183,350 ) ( 25 )

Construction in progress and prepayments for

equipment

150,715 2 158,131 2

Total property, plant and equipment, net 1,092,421 14 1,300,193 15

Intangible Assets

Goodwill 4(7) 364,355 4 373,741 4

Deferred pension costs 4(18) 58,693 1 4,182 -

Other intangible assets 4(7) 176,162 2 257,141 3

Total intangible assets 599,210 7 635,064 7

Other Assets

Assets leased to others 6 34,068 - 35,357 1

Refundable deposits 7,507 - 8,623 -

Deferred expenses 107,873 1 115,767 1

Deferred income tax assets - non-current 4(19) 291,673 4 205,512 2

Total other assets 441,121 5 365,259 4

TOTAL ASSETS $ 8,113,096 100 $ 8,876,483 100

(Continued)

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31 (Expressed in thousands of New Taiwan dollars)

2012 2011

LIABILITIES AND STOCKHOLDERS' EQUITY Notes AMOUNT % AMOUNT %

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 21, 2013.

~16~

Current Liabilities

Short-term loans 4(9) $ 1,939,556 24 $ 2,117,740 24

Financial liabilities at fair value through profit or

loss - current

4(10)

1,520 - - -

Accounts payable 1,261,408 16 1,464,419 16

Income tax payable 4(19) - - 509 -

Accrued expenses 4(11) 374,736 5 472,978 5

Other payables 4(4) 160,901 2 232,356 3

Receipts in advance 33,749 - 46,625 1

Long-term liabilities - current portion 4(12) and 6 384,355 5 479,053 5

Lease payable - current 4(6) 5,602 - - -

Accrued warranty liabilities 30,759 - 96,220 1

Other current liabilities 8,093 - 9,428 -

Total current liabilities 4,200,679 52 4,919,328 55

Long-term Liabilities

Long-term loans 4(12) and 6 214,200 2 810,156 9

Long-term accounts payable - - 136,938 2

Long-term lease payable 4(6) 10,714 - 3,286 -

Total long-term liabilities 224,914 2 950,380 11

Other Liabilities

Accrued pension liabilities 4(18) 231,624 3 225,146 3

Guarantee deposits received 1,865 - 1,225 -

Total other liabilities 233,489 3 226,371 3

Total liabilities 4,659,082 57 6,096,079 69

Stockholders' Equity

Parent Company Stockholders' Equity

Capital 4(14)

Common stock 4,153,372 51 4,130,372 46

Capital Surplus 4(15)

Paid-in capital in excess of par value of common

stock

- - 59,920 1

Premium on conversion of convertible bonds - - 28,676 -

Capital reserve from long-term investments 2,538 - 2,538 -

Stock warrants 4(13) 1,779,300 22 - -

Retained Earnings 4(16)

Legal reserve - - 160,405 2

Accumulated deficit ( 2,473,799 ) ( 30 ) ( 1,688,077 ) ( 19 )

Other Stockholders' Equity Adjustments

Cumulative translation adjustments 25,706 - 87,592 1

Unrecognized pension cost 4(18) ( 35,383 ) - ( 5,645 ) -

Total Parent Company Stockholders' Equity 3,451,734 43 2,775,781 31

Minority interest 2,280 - 4,623 -

Total stockholders' equity 3,454,014 43 2,780,404 31

Commitments And Contingent Liabilities 7

TOTAL LIABILITIES

AND STOCKHOLDERS' EQUITY

$ 8,113,096 100 $ 8,876,483 100

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars, except loss per share amounts) 2012 2011

Notes AMOUNT % AMOUNT %

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

See report of independent accountants dated March 21, 2013.

~17~

Operating Revenue Sales $ 7,593,313 100 $ 6,732,672 101 Sales returns ( 29,713 ) - ( 45,873 ) ( 1 ) Sales discounts ( 2,311 ) - ( 8,506 ) - Net Sales 7,561,289 100 6,678,293 100 Operating Costs 4(4)(21) Cost of goods sold ( 7,044,138 ) ( 93 ) ( 6,385,368 ) ( 96 ) Gross profit 517,151 7 292,925 4 Operating Expenses 4(21) Sales and marketing expenses ( 412,153 ) ( 5 ) ( 372,580 ) ( 6 ) General and administrative expenses ( 265,203 ) ( 4 ) ( 321,382 ) ( 5 ) Research and development expenses ( 895,600 ) ( 12 ) ( 1,156,707 ) ( 17 ) Total Operating Expenses ( 1,572,956 ) ( 21 ) ( 1,850,669 ) ( 28 ) Operating loss ( 1,055,805 ) ( 14 ) ( 1,557,744 ) ( 24 ) Non-operating Income and Gains Interest income 11,033 - 20,655 - Dividend income 7,291 - - - Gain on disposal of property, plant and

equipment

2,827 - - - Gain on disposal of investments 4(5) - - 6,057 - Gain on valuation of financial assets 4(2) 6,835 - - - Gain on valuation of financial liabilities 4(10) - - 2,478 - Other non-operating income 4(4) 84,103 1 37,900 1 Non-operating Income and Gains 112,089 1 67,090 1 Non-operating Expenses and Losses Interest expense ( 64,164 ) ( 1 ) ( 40,615 ) ( 1 ) Loss on disposal of property, plant and

equipment

- - ( 4,250 ) - Loss on disposal of investments ( 4,652 ) - - - Foreign exchange loss, net ( 11,020 ) - ( 3,332 ) - Impairment loss on assets 4(5)(8) ( 14,896 ) - ( 5,933 ) - Loss on valuation of financial assets 4(2) - - ( 11,468 ) - Loss on valuation of financial liabilities 4(10) ( 1,520 ) - - - Other non-operating losses 4(4) ( 13,568 ) - ( 378,478 ) ( 6 ) Non-operating Expenses and Losses ( 109,820 ) ( 1 ) ( 444,076 ) ( 7 ) Loss from continuing operations before

income tax

( 1,053,536 ) ( 14 ) ( 1,934,730 ) ( 30 ) Income tax benefit 4(19) 18,908 - 157,323 3 Consolidated net loss ( $ 1,034,628 ) ( 14 ) ( $ 1,777,407 ) ( 27 ) Attributable to: Equity holders of parent company ( $ 1,032,423 ) ( 14 ) ( $ 1,775,885 ) ( 27 ) Minority interest ( 2,205 ) - ( 1,522 ) - ( $ 1,034,628 ) ( 14 ) ( $ 1,777,407 ) ( 27 ) Before Tax After Tax Before Tax After Tax Basic loss per share (in dollars) Net loss 4(20) ( $ 3.95 ) ( $ 3.82 ) ( $ 6.89 ) ( $ 6.58 ) Diluted loss per share (in dollars) Net loss 4(20) ( $ 3.95 ) ( $ 3.82 ) ( $ 6.89 ) ( $ 6.58 )

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 (Expressed in thousands of New Taiwan dollars)

Capital reserves Retained earnings

Common stock

Paid-in capital in excess of par value of common

stock

Capital reserve from conversion of convertible bonds

Capital reserve from long-term investments

Capital reserve from stock warrants

Legal reserve

(Accumulated deficit)

undistributed earnings

Cumulative translation adjustments

Unrecognized pension

cost Minority interest Total

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

See report of independent accountants dated March 21, 2013.

~18~

Year 2011 Balance at January 1, 2011 $ 4,129,682 $ 59,451 $ 28,676 $ 8,326 $ - $ 160,405 $ 87,808 $ 4,795 ($ 15,797 ) $ 41,931 $ 4,505,277

Net loss for 2011 - - - - - - ( 1,775,885 ) - - ( 1,522 ) ( 1,777,407 )

Issuance of stock from employee stock options exercised 690 469 - - - - - - - - 1,159

Adjustment arising from subsidiaries' share-based payment-cash-settled - - - ( 5,788 ) - - - - - - ( 5,788 )

Unrecognized pension cost - - - - - - - - 10,378 - 10,378

Proportionate share in adjustment of subsidiaries' unrecognized pension cost - - - - - - - - ( 226 ) - ( 226 )

Translation adjustments of long-term investments - - - - - - - 82,797 - 373 83,170

Purchase of minority interest - - - - - - - - - ( 36,159 ) ( 36,159 )

Balance at December 31, 2011 $ 4,130,372 $ 59,920 $ 28,676 $ 2,538 $ - $ 160,405 ($ 1,688,077 ) $ 87,592 ($ 5,645 ) $ 4,623 $ 2,780,404

Year 2012 Balance at January 1, 2012 $ 4,130,372 $ 59,920 $ 28,676 $ 2,538 $ - $ 160,405 ($ 1,688,077 ) $ 87,592 ($ 5,645 ) $ 4,623 $ 2,780,404

Net loss for 2012 - - - - - - ( 1,032,423 ) - - ( 2,205 ) ( 1,034,628 )

Private-placement mandatory convertible bonds - - - - 1,800,000 - - - - - 1,800,000

Conversion of convertible bonds 23,000 - ( 2,300 ) - ( 20,700 ) - - - - - -

Capital reserve and legal reserve used to cover accumulated deficit - ( 59,920 ) ( 26,376 ) - - ( 160,405 ) 246,701 - - - -

Unrecognized pension cost - - - - - - - - ( 29,738 ) - ( 29,738 )

Translation adjustments of long-term investments - - - - - - - ( 61,886 ) - ( 138 ) ( 62,024 )

Balance at December 31, 2012 $ 4,153,372 $ - $ - $ 2,538 $ 1,779,300 $ - ($ 2,473,799 ) $ 25,706 ($ 35,383 ) $ 2,280 $ 3,454,014

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars)

2012 2011

~19~

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net loss ( $ 1,034,628 ) ( $ 1,777,407 )

Adjustments to reconcile consolidated net loss to net cash used in

operating activities

Provision for loss on inventory obsolescence and market price

decline 12,230 102,032

Provision for bad debts 1,454 2,682

Depreciation 245,568 219,880

Amortization 142,275 141,179

(Gain) loss on disposal of property, plant and equipment, net ( 2,827 ) 4,250

(Gain) loss on valuation of financial assets, net ( 6,835 ) 11,468

Loss (gain) on disposal of investments 4,652 ( 6,057 )

Impairment loss on financial assets, net 12,000 5,933

Impairment loss on property, plant and equipment, net 2,896 -

Loss (gain) on valuation of financial liabilities, net 1,520 ( 2,478 )

Loss on compensation for damage - 355,822

Gain on reversal of compensation loss ( 51,335 ) -

Foreign currency exchange loss (gain) on restricted current

assets 278 ( 192 )

Foreign currency exchange (gain) loss on long-term loans ( 15,679 ) 3,033

Changes in assets and liabilities

Financial assets at fair value through profit or loss 191,817 ( 125,199 )

Accounts receivable 301,529 21,321

Other receivables 2,897 ( 66,093 )

Inventories 432,959 ( 388,105 )

Prepaid expenses 20,838 ( 12,865 )

Prepayments 96,064 ( 96,121 )

Other current liabilities ( 1,404 ) -

Deferred income tax assets ( 38,286 ) ( 175,282 )

Accounts payable ( 172,415 ) 161,122

Income tax payable ( 509 ) ( 15,578 )

Accrued expenses ( 90,455 ) ( 21,887 )

Other payables ( 125,874 ) ( 21,446 )

Receipts in advance ( 24,846 ) 37,799

Accrued warranty liabilities ( 65,117 ) 67,704

Other current liabilities ( 1,987 ) 3,556

Accrued pension liabilities ( 77,771 ) ( 2,557 )

Net cash used in operating activities ( 240,991 ) ( 1,573,486 )

(Continued)

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars)

2012 2011

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 21, 2013.

~20~

CASH FLOWS FROM INVESTING ACTIVITIES

Increase in restricted current assets ( $ 900,000 ) $ -

Decrease in financial assets carried at cost - 3,047

Acquisition of property, plant and equipment ( 75,316 ) ( 378,666 )

Proceeds from disposal of property, plant and equipment 7,684 63

Decrease (increase) in refundable deposits 959 ( 3,623 )

Increase in deferred charges ( 53,887 ) ( 76,052 )

Net cash used in investing activities ( 1,020,560 ) ( 455,231 )

CASH FLOWS FROM FINANCING ACTIVITIES

(Decrease) increase in short-term loans ( 158,163 ) 790,778

Proceeds from long-term loans - 785,898

Repayment of long-term loans ( 672,379 ) -

Decrease in capital lease payables - non-current ( 2,108 ) ( 2,094 )

Increase (decrease) in guarantee deposits received 640 ( 250 )

Purchase of minority interest - ( 61,698 )

Proceeds from exercise of employee stock options - 1,159

Proceeds from private-placement mandatory convertible bonds 1,800,000 -

Net cash provided by financing activities 967,990 1,513,793

Effect of change in exchange rates ( 19,333 ) 46,544

Decrease in cash and cash equivalents ( 312,894 ) ( 468,380 )

Cash and cash equivalents at beginning of year 1,852,273 2,320,653

Cash and cash equivalents at end of year $ 1,539,379 $ 1,852,273

SUPPLEMENTAL DISCLOSURES OF CASH FLOW

INFORMATION:

Interest paid $ 65,856 $ 36,308

Income tax paid $ 19,821 $ 20,986

INVESTING ACTIVITIES PARTIALLY PAID BY CASH:

Increase in property, plant and equipment $ 72,294 $ 323,837

Less: Payable for equipment at the end of the year ( 6,603 ) ( 24,832 )

Add: Payable for equipment at the beginning of the year 24,832 79,661

Less: Lease payable at the end of the year ( 15,207 ) -

Net cash paid $ 75,316 $ 378,666

~21~

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(expressed in thousands of New Ta iwan dol lar s, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

(1) The Company was approved under the "Sta tute for t he Establ ishment and Administ ra t ion of

Science -Based Indus tr ia l Park" in September 1982 and was incorporated on March 31, 1983 under

the provis ions of the Company Law of the Republic of China (R.O.C.) . The Company c ommenced

i t s operat ions on Apri l 29, 1983.

The Compan y is mainly engaged in the design and manufacture of wire less communicat ion

produc ts and s tandard products , inc luding microwave products , d igita l microwave radio

transceivers and sys tems, VSAT, TVRO/DBS products and microwave components . The Compan y

also manufactures cus tom des igned produc ts sui ted to the specif ic requi rements of i t s customers '

var ious microwave systems.

On Januar y 1 , 2011, the Company merged with a subsidia ry – Global PCS Inc. . The Compan y

became the surviving company and Global PCS Inc . became the dissolved company.

As of December 31, 2012, the Compan y and i t s subsidiar ies had 1,934 employees.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompan ying financia l s tatements of the Company and i ts subsidiar ies ( together r eferred

herein a s the Group) are prepa red in accordance with the “Rules Governing the Prepara t ion

of Financ ia l Sta tements by Secur i t ies Issue rs” and account ing pr inc iples general ly accepted in

the Republic of China. The Group’s account ing pol ic ie s are summar ized be low:

(1) Principles of consol ida tion

A. All ma jor i ty- owned subsidiar ies and cont rol led enti t ies a re inc luded in the consol idated

financia l s ta tements. The Group prepares quar te r ly consol ida ted f inancia l sta tements which

include the subs idiar ies in which the Company owns more than 50% of vot ing r ights or has

effect ive cont rol . Al l s igni f icant inte rcompany accounts and transact ions are el iminated in

the consol ida ted f inancial s tatements.

B. Subs idiar ies inc luded in the consol idated f inancia l sta tements and the ir changes in 2012 and

2011:

~22~

Primary

Investor Company name business 2012 2011 Note

Microelectronics Sasson International Note 1 100% 100%

Technology, Inc. Holdings Inc.

Sasson International Welltop Technology Notes 1 and 3 100% 100%

Holdings Inc. Co., Ltd.

" Jupiter Network Corp. Note 1 100% 100%

Corp. (Jupiter)

Welltop Technology

Co. , Ltd

MTI Laboratory, Inc. Note 3 100% 100%

" MTI Network, Inc. Note 2 100% 100%

" RadioComp ApS Note 2 100% 100%

Jupiter Network Jupiter Technology Note 3 100% 100%

Corp. (Jupiter) (Wuxi) Inc.

Sasson International Greast Communication Note 4 81.94% 81.94%

Technology Co., Ltd.

Percentage of

direct

ownership

Note 1: Investment planning and consult ing.

Note 2: Manufacture of advanced personal communication products and wirele ss access products.

Note 3: Sa tel l i te and microwave communicat ion and consul t ing services.

Note 4: Research, development, design, production, manufactur ing and sa les of WCDMA

technique and radio f requenc y sub-syst em.

C. Subs idiar ies not inc luded in the consol ida ted f inancia l s tatements : None.

D. Adjustments for subsidiaries wi th di fferent balance sheet da tes: None.

E. Specia l operat ing ri sks in foreign subsidiar ies: None.

F. Nature and extent of the rest ric t ions on fund remit tance f rom subsidiari es to the parent

company: None.

G. Contents of subsidiar ies ' secur i t ies i ssued by the pa rent company: None.

H. Informat ion on conver t ible bonds and new shares i ssued by subs idiar ies : None.

(2) Trans la t ion of f inancia l s tatements of fore ign subsidiar ie s in to New Taiwan dol lar s

Asse ts and l iabi l i t ies of fore ign subsidiar ies are trans lated into New Taiwan dol la rs a t the

exchange ra tes prevai l ing at t he ba lance sheet date ; equity accounts a re transla ted at h is tor ica l

ra tes , except for beginning re ta ined earnings which i s t r ansferred f rom prior years’s ending

re ta ined earnings ; and income and expense accounts a re trans lated into New Taiwan dol lars a t the

average ra tes of exchange prevail ing dur ing the year. Transla t ion adjustments are taken direct ly

to a separa te component of s tockholders’ equi ty, “cumulat ive translat ion adjustment .”

~23~

(3) Trans la t ion of fore ign currenc y t ransactions

A. Transactions denominated in foreign currencies are translated into functional currency at the spot exchange rates

prevailing at the transaction dates.

B. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates prevailing at

the balance sheet date. Exchange gains or losses are recognized in profit or loss.

(4) Classif icat ion of current and non-current i tems

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as

non-current assets:

(a)Assets arising from operating activities that are expected to be realized or consumed, or are intended to be sold

within the normal operating cycle;

(b)Assets held mainly for trading purposes;

(c)Assets that are expected to be realized within twelve months from the balance sheet date;

(d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or

used to pay off liabilities more than twelve months after the balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as

non-current liabilities:

(a)Liabilities arising from operating activities that are expected to be paid off within the normal operating cycle;

(b)Liabilities arising mainly from trading activities;

(c)Liabilities that are to be paid off within twelve months from the balance sheet date;

(d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the

balance sheet date.

(5) Financial asse t s and f inancia l l iabil i t ies a t f air va lue through prof i t or loss

A. Financial assets and financial liabilities at fair value through profit or loss are initially recognized at fair value. Those

in the form of equity securities are accounted for using the trade date accounting, while those in the form of debt

securities, beneficiary certificates, and derivative instruments are accounted for using settlement date accounting.

B. These financial instruments are subsequently remeasured and stated at fair value, and the gain or loss is recognized in

profit or loss. The fair value of listed equity securities, closed-end funds and beneficiary certificates are determined

by the closing prices at the balance sheet date. The fair value of open-end funds is determined by the net asset value

at the balance sheet date.

C. When a derivative is an ineffective hedging instrument, it is initially recognized at fair value on the date a derivative

contract is entered into and is subsequently remeasured at its fair value. If a derivative is a non-option derivative, the

fair value initially recognized is zero.

(6) Financial asse t s carr ied at cos t

A. Financial assets carried at cost are initially recognized at fair value plus transaction costs and are accounted for using

trade date accounting.

B. Impairment loss is recognized when there is objective evidence that the assets are impaired. Reversal of the

~24~

foregoing impairment loss is not allowed.

(7) Notes, accounts and other receivables

A. Notes and accounts receivable are claims resulting from the sale of goods or services. Receivables arising from

transactions other than the sale of goods or services are classified as other receivables. Notes, accounts and other

receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective

interest method, less provision for impairment.

B. The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or a

group of financial assets is impaired. If such evidence exists, a provision for impairment of financial asset is

recognized. The amount of impairment loss is determined based on the difference between the asset’s carrying

amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

When the fair value of the asset subsequently increases and the increase can be objectively related to an event

occurring after the impairment loss was recognized in profit or loss, the impairment loss shall be reversed to the

extent of the loss previously recognized in profit or loss. Such recovery of impairment loss shall not result to the

asset’s carrying amount greater than its amortized cost where no impairment loss was recognized. Subsequent

recoveries of amounts previously written off are recognized in profit or loss.

(8) Inventor ies

The perpetual inventor y sys tem is adopted for inventor y recogni t ion. Inventor ies are s tated a t

cos t . The cos t is de termined using the weighted-average method. Fixed manufac tur ing overhea d

is a l loca ted on the basis of the normal capaci ty of the produc t ion equipment . At the end of

per iod, inventor ie s a re eva luated at the lower of cost or ne t real izable va lue, and the individual

i tem approach i s used in the comparison of cos t and net rea l izable value . The ca lcula t ion of ne t

real izable va lue i s based on the est ima ted sel l i ng pr ice in the normal course of business , ne t of

es t imated cost s of comple t ion and est ima ted se l l ing expenses.

(9) Proper ty, plant and equipment

A. Property, plant and equipment are stated at cost. Depreciation is provided under the straight-line method based on the

assets’ estimated economic service lives. Salvage value of the fully depreciated assets that are still in use is

depreciated based on the re-estimated economic service lives.

B. The estimated useful lives are 40 years for buildings and improvements and 3 to 8 years for other fixed assets.

C. Major improvements and renewals are capitalized and depreciated accordingly. Maintenance and repairs are

expensed as incurred.

(10) Intangible assets

A. The excess of acquisition costs over the fair value of identifiable net tangible assets is recognized as goodwill

and is reviewed for impairment testing annually.

B. Intangible assets, mainly technology know-how, are amortized on a straight-line basis over 5 years.

~25~

(11) Deferred charges

Deferred charges, mainly land-use r ight and computer sof tware expenditures , are s tated a t

cos t and amor tized over the est imated l ife of 50 and 3 years, respective ly, us ing the

s traight - l ine method.

(12) Impairment of non-financia l asse ts

The Group recognizes impa irment loss when the re i s indica tion that the recoverable amount of

an asse t i s less than i t s carrying amount. The recoverable amount is the highe r of the fa ir

va lue less cos ts to se l l and value in use. The fa ir va lue less costs to se l l i s the amount

obtainable f rom the sale of the asse t in an arm’s length t ransact ion af ter deduct ing any direc t

incremental di sposa l costs . The value in use i s the present value of est imated future cash

f lows to be derived f rom cont inuing use of the asse t and f rom it s disposa l a t the end of i ts

useful l i fe . When the impa irment no longer exis ts , the impairment los s recognized in pr ior

yea rs shal l be recovered.

The recove rable amount of goodwill shal l be evaluated pe riodica lly. Impairment loss wi l l be

recognized wheneve r there is indica t ion tha t the recoverable amount of these assets i s less

than thei r respect ive carr ying amount . Impairment loss of goodwil l recognized in pr ior

yea rs i s not recoverable in the fol lowing years .

(13) Bonds payable

For the bonds pa yable with conversion opt ion, put opt ion and cal l opt ion i ssued af ter Januar y

1, 2006, the Company c lassif ies the instrument, or i t s component par ts , on ini t ia l r ecogni t ion

as a f inancial asse t , a f inancia l l iabi l i t y, or shareholders’ equi ty (capita l re serve f rom stoc k

warrants) in accordance with the substance of the cont rac tua l arrangement . These bonds are

accounted for as fol lows:

A. The difference between the issue price and face value of the bonds is accounted for as premium or discount

which is required to be amortized over the period from the date of issuance to maturity date using the interest

method and is recorded as ‘interest expense’.

B. The value of put option and call option embedded in the bonds payable is recognized as ‘financial assets or

financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value

on each balance sheet date, and the gain or loss is recognized in ‘gain or loss on valuation of financial assets or

financial liabilities’. At the maturity of the redemption period, if the market value of common stock exceeds the

agreed-upon redemption price, the fair value of the put option is all reclassified to ‘capital reserve’; however, if the

market value of common stock is lower than the agreed-upon redemption price, the fair value of the put option is

recognized in profit or loss.

C. Conversion option embedded in the bonds is recognized in ‘capital reserve from warrants’ if it meets the

definition of equity. When a bondholder exercises his/her conversion option, the liability component of the bonds

(including corporate bonds and embedded derivatives) shall be revalued at fair value on the conversion date, and

the resulting difference shall be recognized in profit or loss. The book value of the common stocks issued due to

~26~

the conversion shall be based on the adjusted book value of the above-mentioned liability component plus the book

value of the stock warrants.

D. Costs incurred on issuance of convertible bonds are proportionally charged to the liabilities and equities of the

underlying instruments based on initial recognition costs.

(14) Reserve for product war ranty

Under the warranty provi sions of i t s sa les cont rac ts, the Group i s obl iga ted to correc t any

def ic iencie s in i t s product s that occur under norma l opera t ion wi thin a cer ta in per iod af ter the

da te of sa le . The Group provides a reserve for produc t warranty based on a cer tain percentage

of the sa les va lue of each product l i ne, taking into account histor ica l exper ience.

(15) Retirement plan and net per iodic pension cos t

Under the def ined benefi t pension plan, ne t per iodic pension costs a re recognized in

accordance with the actuar ia l calcula t ions. Net per iodic pension cost s include service cost ,

in terest cos t , and expected re turn on plan a sse ts , and amor tiza t ion of unrecognized ne t

t ransi t ion obl iga tion and ga ins or l osses on plan assets . Unrecognized net t ransi t ion

obl iga tion i s amor tized on a s tra ight - l ine basis over 12 years.

Under the def ined cont r ibut ion pension plan, ne t per iodic pension costs a re recognized as

incurred.

(16) Income tax

A. Provision for income tax includes deferred income tax resulting from temporary differences, investment tax

credits and loss carryforward. Valuation allowance on deferred tax assets is provided to the extent that it is more

likely than not that the tax benefit will not be realized. Over or under provision of prior years’ income tax liabilities

is included in current year’s income tax. When a change in the tax laws is enacted, the deferred tax liability or asset

is recomputed accordingly in the period of change. The difference between the new amount and the original amount,

that is, the effect of changes in the deferred tax liability or asset, is recognized as an adjustment to current income

tax expense (benefit).

B. Investment tax credits arising from expenditures incurred on acquisitions of equipment or technology, research

and development, employees’ training, and equity investments are recognized in the year the related expenditures

are incurred.

C. An additional 10% tax is levied on the inappropriate retained earnings and is recorded as income tax expense in

the year the stockholders resolve to retain the earnings.

(17) Share-based payment - employee compensa tion p lan

A.The employee stock options granted from January 1, 2004 through December 31, 2007 are accounted for in

accordance with EITF 92-070, EITF 92-071 and EITF 92-072 “Accounting for Employee Stock Options”, as

prescribed by the Accounting Research and Development Foundation, R.O.C., dated March 17, 2003. Under the

share-based employee compensation plan, compensation cost is recognized using the intrinsic value method and

pro forma disclosures of net income and earnings per share are prepared in accordance with the R.O.C. SFAS No.

~27~

39, “Accounting for Share-based Payment”.

B. For the grant date of the share-based payment agreements set on or after January 1, 2008, the Company shall

measure the services received during the vesting period by reference to the fair value of the equity instruments

granted and account for those amounts as payroll expense during that period.

(18) Employees’ bonuses and direc tor s’ and supervisors’ remunera tion

Effec t ive Januar y 1 , 2008, pursuant to EITF 96-052 of the Account ing Research and

Development Foundation, R.O.C., da ted March 16, 2007, “Account ing for Employees’

Bonuses and Director s’ and Supervisors’ Remuneration” , t he costs of employees’ bonuses and

di rec tors’ and supervisors’ remunerat ion are accounted for as expenses and l iabil i t ies,

provided that such recogni t ion i s required unde r legal or const ruc tive obl iga t ion and those

amounts can be es t imated reasonably. However, i f the accrued amounts for employees’

bonuses and direc tor s’ and supervisors’ remunera t ion a re s ignif icantly di fferent f rom the

ac tua l di str ibuted amounts resolved by the s tockholders at their annual s tockholders’ meet ing

subsequently, the differences shal l be recognized as ga in or loss in the following yea r. In

addit ion, according to EITF 97-127 of the Account ing Research and Development Foundat ion,

R.O.C., da ted March 31, 2008, “Cr iter ia for Listed Companies in Calculat ing the Number of

Shares of Employees’ Stock Bonus”, the Company ca lculates the number of shares of

employees’ s tock bonus based on the clos ing price of the Compan y’s common s tock at the

previous day of the stockholders’ meeting he ld in the year fol lowing the f inancial r eport ing

year, and af ter taking into account the effects of ex-r ights and ex-dividends.

(19) Revenues, cos ts and expenses

A. Revenues are recognized when the earning process is substantially completed and are realized or realizable.

Costs and expenses are recognized as incurred.

B. The Company sells raw materials to certain factories for processing. Most of the finished goods are then

repurchased by the Company directly from the subsidiary and sold to customers. Although the ownership of raw

materials is transferred during the sale, the risk is not transferred in substance. Pursuant to the ruling letter Tai

Tsai Sheng 6 No. 00747 issued by the Securities and Futures Bureau of the Financial Supervisory

Commission, Executive Yuan on March 18, 1998, such transactions shall not be recorded as sales and purchases.

Accordingly, raw materials sold to processing factories that are not yet processed at year-end are reclassified back

to inventories from accounts receivable.

(20) Capita l expendi tures

Cos ts and expenditures that have future economic benef i t s are capi ta l ized as asse ts.

Otherwise they are expensed when incurred.

(21) Use of es t imates

The prepara tion of f inancia l s tatements in conformity wi th genera lly accepted account ing

pr inciple s requires management to make est imates and a ssumpt ions tha t a ffec t the amounts of

~28~

asse ts and l iabi l i t ies and the disc losures of cont ingent asse ts and l iabil i t ies at the da te of the

f inancia l s ta tements and the amounts of r evenues and expenses dur ing the repor t ing per iod.

Actual r esult s could differ f rom those assumpt ions and est imates .

(22) Set t lement da te account ing

If an ent i ty recognizes f inancial asse ts using se t t lement da te account ing, any change in the

fair va lue of the asse t to be received during the period between the trade date and the

se t t lement da te/ba lance sheet dat e i s not r ecogn ized for assets carr ied a t cos t or amort ized

cos t . For f inanc ial assets or f inancia l l iabi l i t ies cl ass if ied as a t fa ir value through prof i t or

loss, the change in fa ir va lue i s r ecognized in prof i t or loss. For avai lable-for- sale financia l

asse ts , the change in fai r value i s recognized direct ly in equi ty.

(23) Operating segments

Opera ting segments are repor ted in a manner consis tent with the internal repor t ing provided

to the chief operating dec ision-maker. The chief opera ting decision-maker, who is

responsible for al loca t ing resources and assessing performance of the operat ing segments,

has been ident if ied as the Genera l Manager who makes stra tegic decis ions.

In accordance with R.O.C. SFAS No. 41, “Operat ing Segment s”, segment informat ion i s

disclosed in the consol idated f inancial s ta tements ra ther than in the separa te f inancia l

s tatements of the Company.

3. CHANGES IN ACCOUNTING PRINCIPLES

(24) Notes, accounts and other rece ivables

Effec t ive Januar y 1 , 2011, the Group adopted the amendments to R.O.C. SFAS No. 34,

“Financ ial Inst ruments : Recogni t ion and Measurement”. A provision for impairment (bad

debts) of notes , accounts and other receivab les i s recognized when there i s object ive

evidence that t he rece ivable s are impaired. This change in account ing pr inc iple had no

s igni f icant e ffec t on the Group’s f inanc ia l s ta tements as of and for the year ended December

31, 2011.

(25) Operating segments

Effec t ive January 1 , 2011, the Group adopted R.O.C. SFAS No. 41, “Operating Segments” in

place of the or igina l R.O.C. SFAS No. 20, “Segment Report ing”. In accordance wi th such

s tandard, the Company r es tated the segment informat ion for 2010 upon the fi rs t adopt ion of

R.O.C. SFAS No. 41. This change in accounting pr inciple had no effect on net loss and loss

per share for t he year ended December 31, 2011.

~29~

4. DETAILS OF SIGNIFICANT ACCOUNTS

(26) Cash and cash equiva lents

2012 2011

Cash on hand 568$ 590$

Checking accounts 1,263 727

Savings accounts 812,974 453,161

Time deposits 724,574 1,397,795

1,539,379$ 1,852,273$

December 31,

(27) Financia l asse ts a t fa ir va lue through prof i t or loss - current

2012 2011

Financial assets held for trading-beneficiary certificates 13,661$ 213,175$

Fair value adjustment 2,392)( 15,130)(

11,269 198,045

Fair value adjustment-financial derivatives - 5,698

11,269$ 203,743$

December 31,

A. In 2012 and 2011, loss recognized for the changes in fair values of the financial assets at fair value through profit or

loss amounted to $6,835 (which consists of gain on valuation of beneficiary certificates of $12,533 and loss on

valuation of financial derivatives of $5,698) and $11,468 (which consists of loss on valuation of beneficiary

certificates of $7,551 and loss on valuation of financial derivatives of $3,917), respectively.

B. The nature and cont rac tua l t erms of der iva tives are as fol lows:

Contract Amount Fair Value Contract Period

Forward exchange contracts USD 10,000 thousand 2,320$ 2011.10.27~2012.05.10

(Buy USD sell NTD)

Forward exchange contracts EUR 2,050 thousand 3,378 2011.10.05~2012.04.12

(Sell EUR buy USD)

5,698$

December 31, 2011

The derivative financial instruments held by the Company are primarily forward selling foreign exchange contracts,

which are intended to hedge exchange rate risk of export proceeds. However, these forward foreign exchange

contracts are not used for hedge accounting purposes.

~30~

(28) Notes and accounts r ece ivable , ne t

2012 2011

Notes receivable 1,386$ 1,441$

Accounts receivable 1,323,748 1,652,765

1,325,134 1,654,206

Allowance for doubtful accounts 4,930)( 3,282)(

1,320,204$ 1,650,924$

December 31,

On September 28 and October 1, 2011, the Company entered into an agreement with HSBC Bank (Taiwan) and Taishin

International Bank, respectively, to sell its accounts receivable. Under the agreements, the Company is not required to

bear uncollectible risk of the underlying accounts receivable, but is liable for the losses incurred on any business dispute;

the two banks should pay the Company consideration in the specified periods; the Company should issue a promissory

note with par value of US$5,600 thousand to Taishin International Bank, and Taishin International Bank may request

damages by cashing the promissory note when, and only when, the business dispute is attributed to the Company. These

accounts receivable meet the derecognition criteria for financial assets. The Company has derecognized the accounts

receivable sold to HSBC Bank (Taiwan) and Taishin International Bank, net of the losses estimated for possible

business disputes.

As of December 31, 2012 and 2011, the outs tanding accounts receivable sold to HSBC Bank

(Taiwan) and Taishin Internationa l Bank were a s fol lows:

Purchaser of Accounts Amount Amount

accounts receivable receivable sold derecognized Limit advanced Interest rate

Taishin International Bank 140,607$ 140,607$ 203,280$ 100,070$ 1.66%

December 31, 2012

Purchaser of Accounts Amount Amount

accounts receivable receivable sold derecognized Limit advanced Interest rate

HSBC Bank (Taiwan) 54,933$ 54,933$ 127,155$ 16,344$ 1.05%

Taishin International Bank 152,566 152,566 151,375 110,196 1.62%

207,499$ 207,499$ 278,530$ 126,540$

December 31, 2011

~31~

(29) Inventor ies , ne t

Cost Allowance Book value

Raw materials 744,146$ 106,839)($ 637,307$

Work in process 262,367 31,959)( 230,408

Finished goods 755,455 64,750)( 690,705

Inventory in transit 1,637 - 1,637

Total 1,763,605$ 203,548)($ 1,560,057$

Cost Allowance Book value

Raw materials 1,195,171$ 125,762)($ 1,069,409$

Work in process 437,635 7,203)( 430,432

Finished goods 620,789 100,728)( 520,061

Inventory in transit 496 - 496

Total 2,254,091$ 233,693)($ 2,020,398$

December 31, 2012

December 31, 2011

Expense and loss incurred on inventor ies for the years ended December 31, 2012 and 2011 were

as fol lows:

2012 2011

Cost of inventories sold 6,895,459$ 6,165,693$

Provision for loss on inventory obsolescence

and market price decline 12,230 102,032

Others 107,864 21,399)(

Related inventory loss 92,426 135,477

7,107,979$ 6,381,803$

For the years ended December 31,

The Compan y detec ted some potentia l r i sk in a cer ta in model of base s ta t ion power ampl if ie rs. For

the future appl ica t ion of th is product and a respons ible a t t i tude toward customers, the Company

reca lled those amplif ier s and made the necessary repairs . As a result of the product defects and

repair costs , the Company had accrued the possible effec t of th is event in the f inancia l sta tements

for the s ix-month per iod ended June 30, 2011, inc luding loss on inventor y obsolescence and

market pr ice decl ine, repair and maintenance costs , and other losses tota l ing $454,154. Through a

re-assessment of the effec t of th is event on the Company’s f inances, the Company reve rsed other

losses by $51,335 ( recorded in ‘other income’) for the yea r ended December 31, 2012. As of

December 31, 2012 and 2011, the pa yables re lat ing to other losses accrued were $152,716 and

$347,572 ( inc luding payables of $136,938 due af ter one year) , respect ive l y.

~32~

(30) Finanica l asse ts carr ied a t cos t

Ownership

percentage Amount

Ownership

percentage Amount

Taicom Capital Inc. 11.43% 213,740$ 11.43% 234,940$

Optical Scientific Inc. 6.02% 57,821 7.94% 60,280

Firetide Inc. 1.67% 29,040 1.67% 30,275

Intelligent Epitaxy Technology, Inc. 1.93% 17,424 1.92% 18,165

Taiwan Aerospace Corp. 0.48% 11,138 0.48% 11,138

Others Note 866 Note 866

330,029$ 355,664$

December 31,

2012 2011

A. Impairment loss of $12,000 and $5,933 was recognized on the shares of the investee – Taicom Capital Ltd., which

were carried at cost, for the years ended December 31, 2012 and 2011.

B. The funds of NAVF II-GP and NAVF II-LP held by the Company had matured on June 26, 2011, and underwent fund

liquidation and dissolution procedures. The Company received liquidation cash distribution amounting to US$220

thousand, and recognized gain on disposal of such investments amounting to $6,057.

C. All shares of Intelligent Epitaxy Technology Inc., Bayspec Inc. and some shares of Taicom Capital Ltd. are preferred

stocks.

D. The above financial assets are not traded in active markets and their fair values cannot be reliably measured.

Note: As the book values of the investments in TRANSCOM, INC. and Applied Wireless Identifications Group, Inc.

were minor, they were both presented in “Others”.

(31) Proper ty, plant and equipment, net

2012 2011

Buildings 795,527$ 793,634$

Machinery and equipment 2,010,221 2,264,836

Transportation equipment 3,527 3,662

Furniture and fixutures 127,092 124,899

Leased assets 15,470 -

Leasehold improvements 136,351 138,381

3,088,188 3,325,412

Less: Accumulated depreciation 2,146,482)( 2,183,350)(

Prepayments for equipment and

construction in progress 150,715 158,131

1,092,421$ 1,300,193$

December 31,

P roper ty, p lant and equipment were pledged as secur i ty for long- term loans. Please refer Note

6 for det ai ls .

~33~

In August , 2012, t he Company signed a two-year equipment lea se contract wi th another

company under a capi tal lease, with the te rm expir ing on August 25, 2014. The rent payable for

the f ir s t s ix months is $438 per month, and for the 7 t h to 24 t h months i s $824 per month. The

Company may purchase the equipment for $5,600 on the expiry da te of the lease. The rent

payable i s as fol lows:

2012 2011

Total rent payable 20,875$ -$

Less: Unamortized interest 5,668)( -

15,207 -

Less: Book value of rent payable-current 5,602)( -

Book value of rent payable 9,605$ -$

Notes payable for the lease 20,875$ -$

December 31,

(32) Intangible assets

2012 2011

Cost:

Goodwill - Greast Communication Technology Co. Ltd. $ 94,693 $ 98,720

Goodwill - Global PCS Inc. 29,450 29,450

Goodwill - TelASIC and RadioComp 240,212 245,571

Other intangible assets 404,895 404,895

769,250 778,636

Accumulated amortization ( 228,733) ( 147,754)

540,517$ 630,882$

December 31,

A.To enhance international competitiveness and global market share of broadband wireless products, the Company

acquired jointly with its overseas subsidiary - MTI Laboratory Inc. (MTI-Lab.) the tangible, intangible assets and

R&D team of TelASIC Communications Inc. (U.S.) (TelASIC) on May 22, 2009. Total acquisition cost (inclusive of

MTI-Lab.) was US$8,633 thousand, comprising of intangible assets (expertise of US$5,480 thousand) and tangible

assets (fixed assets of US$518 thousand MTI’s portion) and goodwill of US$2,635 thousand that was the excess of

the acquisition cost over the acquired net asset value.

B.To improve the Company’s operating performance and pursue its maximum long-term benefits, the Company

acquired the intellectual property rights from RadioComp ApS in October, 2010 in the amount of US$6,828

thousand, and acquired indirectly 100% share ownership of RadioComp Aps amounting to $4,702 thousand through

its overseas subsidiary-Welltop Technology Co., Ltd. with the acquisition cost of US$5,645 thousand (including the

part of its subsidiary). The excess of the acquisition cost over the acquired net asset value of RadioComp ApS

amounting to US$5,282 thousand (including the part of its subsidiary) was recognized as goodwill.

C.To effectively integrate the Group’s resources, reduce administrative costs and increase profitability, the Board of

~34~

Directors of the Company adopted a resolution on November 26, 2010 to merge with a subsidiary – Global PCS Inc.

in accordance with Article 19 of Business Mergers And Acquisitions Act, “Simple merger”. The acquisition cost of

the minority shares of Global PCS Inc. was $61,698. The excess of the acquisition cost over the acquired net asset

value of Global PCS Inc., amounting to $29,450, was recognized as goodwill. After the merger, the Company

became the surviving company and Global PCS Inc. became the dissolved company. The merger effective date

was on January 1, 2011.

D. Goodwill impairment test was conducted in accordance with the R.O.C. SFAS No. 35, “Impairment of Assets”. On

December 31, 2012 and 2011, the Company evaluated the recoverable amount of assets used for operations and

goodwill based on their value in use. The value in use is the present value of estimated future cash flows to be

derived from continuing use of the asset and goodwill and from their disposal at the end of their useful life, which is

based on the five-year financial forecast with the discount rate of 9.9% and 5.3%, respectively. The following sets

forth the methods and assumptions used to estimate the recoverable amount of assets and goodwill:

(a)Estimated operating revenue: it is calculated based on industrial and market information and the Company’s

future operations and sales planning.

(b)Estimated operating cost: it is calculated based on the estimated gross profit margin, which is derived from prior

years’ operating costs and the Company’s future operations and sales planning.

(c)Estimated operating expense: it is calculated based on prior years’ operating expenses and the Company’s future

operations and sales planning.

The recoverable amount calculated based on the foregoing assumptions is higher than the sum of carrying value of

identifiable assets and goodwill on December 31, 2012 and 2011. Therefore, no impairment loss was recognized.

(33) Idle asse ts

2012 2011

Cost 149,129$ 132,551$

Less: Accumulated depreciation 98,790)( 85,108)(

Accumulated impairment 50,339)( 47,443)(

-$ -$

December 31,

Impairment loss of $2,896 was recognized on the id le asse ts tha t had no value in use for the

year ended December 31, 2012.

~35~

(34) Short- te rm loans

2012 2011

Materials, L/C loans 182,696$ 886,030$

Credit loans 1,212,520 888,815

Pre-export loans 428,180 342,895

Accounts receivable factoring 116,160 -

1,939,556$ 2,117,740$

Interest rate per annum 1.12%~2.61% 1.47%~3.75%

December 31,

(35) Financia l l iabi l i t ies at fa ir va lue through prof i t or loss – current

2012 2011

Fair value adjustment-financial derivatives 1,520$ -$

December 31,

A. In 2012 and 2011, loss and gain recognized for the changes in the fair values of the financial liabilities at fair value

through profit were $1,520 and $2,478, respectively.

B. The nature and contractual terms of derivatives are as follows:

Contract amount Fair value Contract period

Forward exchange contracts USD 2,000 thousand 186$ 2012.12.21~2013.01.03

(Sell USD buy NTD)

Forward exchange contracts EUR 2,050 thousand

(Sell EUR buy USD) 1,334 2012.10.09~2013.07.02

1,520$

December 31, 2012

The purpose of the forward exchange contracts is to hedge the change of exchange rate due to export transactions,

without adopting hedge accounting.

(36) Accrued expenses

2012 2011

Accrued payroll and bonus 135,828$ 130,538$

Accrued human resource outsourcing expense 12,767 56,724

Other miscellaneous purchases payable 43,722 82,071

Accrued shipment fees 20,420 30,927

Others 161,999 172,718

374,736$ 472,978$

December 31,

~36~

(37) Long- term loans

Interest rate

Bank name and type of loan and repayment term 2012 2011

Mega International

Commerical Bank 357,000$ 500,000$

Syndicated loan Floating rate-equal semiannual

installments starting April 2012

and ending April 2015

Syndicated loan Floating rate-equal annual 241,555 486,459

installments ending

April 2013

HSBC Bank (Taiwan)

Limited Project loan Floating rate-equal semiannual - 302,750

installments ending June 2015

598,555 1,289,209

Current portion 384,355)( 479,053)(

214,200$ 810,156$

Interest rate per annum 1.51%~2.63% 1.35%~2.50%

December 31,

A.The syndicated loan led by Mega International Commercial Bank was obtained to finance working capital. Under

the terms of the loan agreement, the Company is required to maintain certain annual consolidated financial ratios,

including current ratio, liability ratio, and interest coverage ratio.

B. Please refer to Note 6 for guarantees provided for long-term loans.

(38) Mandator y-conversion conver t ib le bonds

A. Domestic convertible bonds issued by the Company

(a)The terms of the domestic unsecured mandatory-conversion convertible bonds issued by the Company are as

follows:

1.In 2012, the Company issued $900,000, 0%, first domestic unsecured mandatory-conversion convertible bonds

through private placement. The bonds mature 3 years from the issue date (September 24, 2012 ~ September

23, 2015). At maturity, the bonds will not be redeemed in cash, but will be converted into common shares of

the Company in a mandatory manner based on the then conversion price.

2.The bondholders have the right to ask for conversion of the bonds into common shares of the Company during

the period from September 25, 2012 to 10 days before the maturity date, except the stop transfer period as

specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares

converted from the bonds are the same as the issued and outstanding common shares.

3.The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject

to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will

be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms.

The initial conversion price was $9 per share.

(b)The terms of the domestic secured mandatory-conversion convertible bonds issued by the Company are as

follows:

~37~

1. In 2012, the Company issued $900,000, 0%, second domestic secured mandatory-conversion convertible bonds

through private placement. The bonds mature 1 year from the issue date (September 28, 2012 ~ September 27,

2013). At maturity, the bonds will not be redeemed in cash, but will be converted into common shares of the

Company in a mandatory manner based on the then conversion price.

2. The bondholders have the right to ask for conversion of the bonds into common shares of the Company during

the period from September 29, 2012 to 10 days before the maturity date, except the stop transfer period as

specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares

converted from the bonds are the same as the issued and outstanding common shares.

3. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject

to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will

be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms.

The initial conversion price was $9 per share.

4. The bonds are fully secured with time deposit of $900,000 (shown under ‘restricted assets’), which is pledged to

the trustee-Chinatrust Commercial Bank.

5. As of December 31, 2012, the bonds had been converted into 2,300 thousand shares of the Company’s common

shares, which had been registered.

B. Since, the bonds above will not be redeemed in cash at maturity, but will be converted into common shares at

maturity of the Company in a mandatory manner based on the then conversion price, they are attributed to equity

and as of December 31, 2012, the amount of $1,779,300 was recognized in ‘capital reserve from stock warrants’.

(39) Common s tock

(a)Voting

Holders of GDRs have no right to directly exercise voting rights or attend the Company's shareholders' meeting.

A holder or holders together holding at least 51% of the GDRs outstanding at the relevant record date of the

shareholders' meeting may instruct the Depositary to vote in the same direction in respect of one or more

resolutions to be proposed at the meeting.

(b)Sale and withdrawal of GDRs

Under the current R.O.C. law, the shares represented by the GDRs may not be withdrawn by holders of GDRs

commencing three months after the initial issue of GDRs. A holder of GDR may, provided that the Company

has delivered to the custodian physical share certificates in respect of the Deposited Shares, request the

Depositary to sell or cause to be sold on behalf of such holder the shares represented by such GDRs.

(c)Dividends

GDR holders are entitled to receive dividends to the same extent as the holders of common stock subject to the

terms of the Deposit Agreement and applicable laws of the R.O.C.

As of December 31, 2012, the Company had 18,335 units of GDRs outstanding.

~38~

In 2011, the Company issued 69,000 shares of new common stock at $16.8 (in dollars) per share, due to the exercise

of employee stock options of 69,000 units. The effective date of the capital increase was March 16, 2011. The capital

increase had been registered.

In the fourth quarter of 2012, the Company issued 2,300 thousand shares of common shares for the conversion of

convertible bonds, with the conversion price of $9 per share. The effective date of the share capital increase was on

December 5, 2012. The share capital increase had been registered.

As of December 31, 2012, the Company's authorized share capital was 700 million common shares (of which 50

million shares are reserved for corporate bonds with subscription right, stock warrants and special shares with

subscription right issued) with a par value of NT$10 (in dollars) per share. As of December 31, 2012, the total issued

and outstanding common shares were 415,337 thousand shares.

To improve the Company’s financial structure, the shareholders at the extraordinary shareholders’ meeting

on November 27, 2012 made a resolution to cover accumulated deficits of $1,439,076 by reducing share capital on the

effective date of January 10, 2013, which would retire 143,907,678 shares outstanding (including 143,110,764 shares

of listed common shares and 796,914 shares of private-placement common shares). The share capital reduction had

been registered on January 17, 2013.

(40) Capita l r eserves

A. Pursuant to the R.O.C Securities and Exchange Law, capital reserve shall be exclusively used to cover accumulated

deficit or to increase capital and shall not be used for any other purpose. However, capital reserve arising from

paid-in capital in excess of par value on issuance of common stock and donations can be capitalized once a year,

provided that the Company has no accumulated deficit and the amount to be capitalized does not exceed 10% of

the paid-in capital.

B. Information on the ‘capital reserve from warrants’ is provided in Note 4(13).

(41) Reta ined earnings

A. The R.O.C. Company Law requires that at least 10% of the net income each year, less losses of prior years, shall be

set aside as legal reserve until the accumulated reserve equals the total registered capital of the Company and can

be used to offset against accumulated deficit.

B. In accordance with the R.O.C. Securities and Exchange Act, the Company allocates a certain portion of earnings as

special reserve and shown as deduction in stockholders’ equity.

C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share

ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of

stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the

reserve exceeds 25% of the Company’s paid-in capital.

D. In accordance with the Company's Articles of Incorporation, 1% and no less than 7% of net income, after deducting

legal reserve and special reserve, shall be distributed as directors' and supervisors' remuneration and employees'

bonus, respectively, at the time dividends are declared.

~39~

E.As the Company operates in the stable growth stage, the residual dividend policy is adopted taking into

consideration the Company’s funding requirements, future capital expenditures and long-term financial plans.

According to the dividend policy adopted by the Board of Directors, 30% ~ 100% of the Company’s total dividends

distributed shall be first appropriated as cash dividends; the remaining will then be appropriated as stock dividends.

The dividends appropriation, including appropriation terms, timing, amount and types, is adjusted based on

economic and industrial developments and the Company’s profitability and shall be proposed by the Board of

Directors and resolved by the stockholders.

F. The proposal for covering of accumulated deficits of 2011 and 2010 was passed by the stockholders at their

stockholders’ meeting on May 4, 2012 and June 9, 2011, respectively. There was no earnings distribution for 2011

and 2010.

The covering of accumulated deficits of 2011 and 2010 was in agreement with that proposed by the Board of

Directors on March 22, 2012 and March 17, 2011, respectively.

G. The Company did not accrue employees’ bonus and directors’ and supervisors’ remuneration for 2012 and 2011 as

it incurred losses in that year.

H. Information on the appropriation of the Company’s employees’ bonus and directors’ and supervisors’ remuneration

as resolved by the Board of Directors and approved by the stockholders will be posted in the “Market Observation

Post System” at the website of the Taiwan Stock Exchange.

(42) Share-based payment-employee compensation p lan

A.As of December 31, 2011, the Company's share-based payment transactions are set forth below:

Type of

arrangement Grant date

Quantity

granted

(In thousands of

shares)

Contract

period

Vesting

conditions

Third Employee stock option 2007.12.26 17,800 8 years Note 1

Cash Settled-

Incentive Compensation Agreement 2010.10.01 5,000 5.25 years Note 2

Cash Settled-

Incentive Compensation Agreement 2010.12.31 700 5 years Note 3

Note 1: Professional: 25% can be exercised after 3 years of grant; 50% can be exercised after 4 years of grant; 75%

can be exercised after 5 years of grant; 100% can be exercised after 6 years of grant.

Management: 25% can be exercised after 4 years of grant; 50% can be exercised after 5 years of grant;

75% can be exercised after 6 years of grant; 100% can be exercised after 7 years of grant.

Note 2: 25% can be exercised after 1 year of grant; 50% can be exercised after 2 years of grant; 75% can be

exercised after 3 years of grant; 100% can be exercised after 4 years of grant.

Note 3: 50% can be exercised after 1 year of grant; 100% can be exercised after 2 years of grant.

B. Details of the employee stock options are set forth below:

~40~

No. of

shares

Weighted-

average

exercise price

No. of

shares

Weighted-

average

exercise price

(in thousands) (in dollars) (in thousands) (in dollars)

Options outstanding at

beginning of year

17,731 $ 16.80 17,800 $ 16.80

Options granted - - - -

Options waived - - - -

Forfeited for resignation ( 3,080) - - -

Options exercised - - ( 69) 16.80

Options revoked - - - -

Options outstanding at

end of year 14,651 16.80 17,731 16.80

Options exercisable at

end of year 10,159 2,921

December 31, 2012 December 31, 2011

(a)As of December 31, 2012 and 2011, the exercise price of stock options outstanding was $16.80 (in dollars),

respectively, and the remaining contract period was 3 years and 4 years, respectively.

(b)The following sets forth the pro forma net income and earnings per share based on the assumption that the

compensation cost is accounted for using the fair value method for the stock options granted before the

affectivity of R.O.C. SFAS No. 39 “Accounting for Share-based Payment”:

2012 2011

Net loss Net loss stated

in the statement of income

1,032,423)($ 1,775,885)($

Pro forma net loss 1,046,225)( 1,803,896)(

Basic loss per

share (LPS) (in dollars)

LPS stated in the

statement of income

3.82)( 6.58)(

Pro forma LPS 3.87)( 6.68)(

Diluted loss per

share (LPS) (in dollars)

LPS stated in the

statement of income

3.82)( 6.58)(

Pro forma LPS 3.87)( 6.68)(

For the years ended December 31,

(c)For the stock options granted before January 1, 2008 with the compensation cost accounted for using the fair

value method, their fair value on the grant date is estimated using the Black-Scholes option-pricing model. The

weighted-average parameters used in the estimation of the fair value are as follows:

~41~

Exercise Expected Fair value

price Expected Expected dividend Risk-free per unit

Type of Grant (in price vesting yield interest (in

arrangement date dollars) volatility period rate rate dollars)

Employee

stock options

2007.12.26 18.45$ 49.51% 6.3 years 0% 2.44% 9.35$

Employee

stock options

2007.12.26 18.45$ 50.93% 6.8 years 0% 2.44% 9.87$

C.Details of the Incentive Compensation Agreement are set forth below:

No. of

shares

Weighted-average

exercise price

No. of

shares

Weighted-average

exercise price

(in thousands) (in dollars) (in (in dollars)

Options outstanding at

beginning of year

5,700 $ 16.76 5,700 $ 16.76

Options granted - - - -

Options waived - - - -

Options exercised - - - -

Options revoked - - - -

Options outstanding at

end of year 5,700 16.76 5,700 16.76

Options exercisable at

end of year 3,200 -

December 31, 2012 December 31, 2011

(a) As of December 31, 2012 and 2011, the exercise price of stock options outstanding was $16.76 (in dollars) and

the weighted-average remaining vesting period was 3 years and 4 years, respectively.

(b)Under the Company’s “Incentives Compensation Agreement”, the incentive rewards for the employees are

calculated based on the spread between the average closing price of the Company’s common stock for the 30

successive Taiwan stock trading days before the exercise date and the exercise price are paid by cash. Any

active employee can receive the incentive rewards on the vesting date. Their fair value on the grant date is

estimated using the Black-Scholes option-pricing model. The weighted-average parameters used in the

estimation of the fair value are as follows:

~42~

December 31, 2012

Exercise Expected Fair value

price Expected Expected Expected dividend Risk-free per unitType of Grant (in price (in price vesting yield interest (in

arrangement date dollars) dollars) volatility period rate rate dollars)

Incentive

Compensation

Agreement 2010.10.01 13.15$ 16.80$ 7.78% 1.59 years 0% 0.97% -$

Incentive

Compensation

Agreement 2010.12.31 13.15$ 16.50$ 7.05% 1.25 years 0% 0.93% -$

December 31, 2011

Exercise Expected Fair value

price Expected Expected Expected dividend Risk-free per unitType of Grant (in price (in price vesting yield interest (in

arrangement date dollars) dollars) volatility period rate rate dollars)

Incentive

Compensation

Agreement 2010.10.01 5.56$ 16.80$ 7.78% 2.59 years 0% 0.97% -$

Incentive

Compensation

Agreement 2010.12.31 5.56$ 16.50$ 7.05% 3.25 years 0% 0.93% -$

(c)Expenses incurred on share-based payment transactions are shown below:

2012 2011

Cash-settled-Incentive Compensation Agreement -$ 1,884)($

December 31,

(d)Liabilities arising from share-based payment transactions are shown below:

2012 2011

Liabilities on cash-settled share-based payment -$ -$

Total intrinsic value where vesting conditions

have been met -$ -$

December 31,

D.As of December 31, 2012 and 2011, Global PCS Inc.’s, a subsidiary now merged with the Company, share-based

payment transactions are set forth below:

Type of

Quantity

granted Contract Vesting

arrangement Grant date (in thousands) period conditions

Second employee stock 2009.09.01 1,614 6 years Note

options

~43~

Note: 50% can be exercised after 2 years of grant; 75% can be exercised after 3 years of grant; and 100% can be

exercised after 4 years of grant.

Details of the employee stock options are set forth below:

No. of

Weighted-

average

exercise price No. of

Weighted-

average

exercise price

shares (in dollars) shares (in dollars)

Options outstanding at beginning of year - $ - 1,614 $ 10.00

Options granted - - - -

Distribution of stock dividends /

adjustments for number of shares

granted for one unit of option

- - - -

Options waived - - - -

Options exercised - - ( 1,614) 23.70

Options revoked - - - -

Options outstanding at end of year - - - -

Options exercisable at end of year - -

Options approved but not yet issued

at the end of the year - -

December 31, 2012 December 31, 2011

E. Under the original second share-based employee compensation plan, the weighted-average remaining vesting

period of stock options outstanding was 4.42 years. However, since Global PCS Inc. merged with Microelectronic

Technology, Inc., as resolved by the Board of Directors on November 26, 2010, Global PCS Inc. has stipulated

additional regulations on the employee stock options in case of business merger as follows:

When another company merges with Global PCS Inc., Global PCS Inc. may decide to retrieve and retire all the

stock options that have been issued but have not had the right to be exercised, and the other company will pay the

compensation to the holders of the stock options that were retired. The compensation amount is calculated based on

the cash distributed to the stockholders upon merger. The holders of the stock options must pay the taxes on the

compensations on their own.

(十一)The Company merged with Global PCS Inc. on January 1, 2011. The employee stock options as stated above

had been fully taken back and retired. The Company paid compensation amounting to $15,711.

(43) Pension expense

A. The Company has a non-contributory and funded defined benefit pension plan in accordance with the Labor

Standards Law, covering all regular employees. Employees are entitled to 2 base units for each year of service for

the first 15 years and 1 base unit for each additional year thereafter, up to a maximum of 45 units. The benefits

~44~

provided are based on the length of service and the average salaries of the last six months prior to retirement. Under

the plan, the Company contribute 2% of monthly salaries to an independent pension fund deposited with the Bank

of Taiwan. The funded status of the pension plan of the Company are as follows:

(a) Actuarial assumptions - Microelectronics Technology, Inc.

2012 2011

Discount rate 1.75% 1.90%

Future salary increase rate 2.50% 2.50%

Expected rate of return on plan assets 1.75% 1.90%

(b)The funded status of the pension plan is as follows:

2012 2011

Benefit obligation

Vested benefit obligation 92,655)($ 31,876)($

Non-vested benefit obligation 244,322)( 315,587)(

Accumulated benefit obligation 336,977)( 347,463)(

Additional benefits based on future salaries 132,787)( 127,711)(

Projected benefit obligation 469,764)( 475,174)(

Plan assets at fair value 107,198 113,693

Funded status 362,566)( 361,481)(

Unrecognized transition obligation 8,079 9,234

Unrecognized prior service cost 50,614 5,052)(

Unrecognized net actuarial loss 168,170 141,928

Additional accrued pension liabilities 94,076)( 18,399)(

Next adjustment 1,845)( 8,624

Accrued pension liabilities 231,624)( 225,146)(

Vested benefit 86,635$ 34,923$

Deferred pension costs 58,693$ 4,182$

Unrecognized pension cost 35,383$ 5,645$

December 31,

(c)The Company recognized net pension cost based on the actuarial report. Net pension cost components are as

follows:

~45~

2012 2011

Service cost 7,297$ 8,062$

Interest cost 9,028 8,685

Expected return on plan assets 2,160)( 2,080)(

Amortization of unrecognized

net transition obligation 1,154 1,154

Unrecognized prior service cost 1,684)( 1,684)(

Unrecognized pension loss 6,744 7,642

Next adjustment 1,897 768)(

Net periodic pension cost 22,276$ 21,011$

For the years ended December 31,

B. Effective July 1, 2005, under the new “Labor Pension Act” (the “Act”), the Company set up a defined contribution

pension plan. Under the Act, current employees have the option to participate in the defined contribution pension

plan. The Company contributes monthly an amount of at least 6% of the employees’ monthly salaries and wages to

the employees’ individual pension accounts at the Bureau of Labor Insurance. Benefits accrued are portable upon

termination of employment. Pensions are paid by monthly installments or in lump sum based on the accumulated

balance of the employees’ individual pension accounts. The pension costs of $22,757 and $22,345 under the

defined contribution pension plan for the years ended December 31, 2012 and 2011, respectively, were recognized

by the Company’s subsidiary -Sasson International Holdings Inc.

C. The Company’s subsidiaries, Jupiter Technology (Wuxi) Inc. and Greast Communication Technology Co., Ltd., are

required to participate in a government pension scheme whereby it shall pay monthly an amount of 20% of the

employees’ monthly salaries and wages to the employees’ individual pension accounts to a government-managed

fund. Under the scheme, retirement benefits of existing and retired employees are to be provided by the

government-managed fund and the said subsidiaries have no further obligations beyond the monthly contributions.

The net pension costs recognized under the defined contribution plan for the years ended December 31, 2012 and

2011 were $28,843 and $51,296, respectively.

D. The Company’s subsidiaries, MTI Laboratory Inc., Optical Microwave Network Inc., and RadioCompApS

maintain a 401(k) retirement/savings plan (the Plan) for all employees who are over the age of 21 and have

completed three months of service. Participants may make voluntary contributions up to the maximum amount

allowable by law. Those subsidiaries may make a discretionary matching contribution equal to the percentage of

each participant’s contributions up to a maximum of 2.25% of participant’s compensation. No contributions were

made to the Plan for the years ended December 31, 2012 and 2011.

(44) Income tax

A. Details of deferred income tax assets are as follows:

~46~

2012 2011

Deferred income tax assets – current 171,477$ 203,623$

Less: Valuation allowance 71,646)( 63,674)(

99,831$ 139,949$

Deferred income tax assets – non-current 511,285$ 340,685$

Less: Valuation allowance 219,612)( 135,173)(

291,673$ 205,512$

December 31,

B.Details of temporary differences, loss carryforwards and investment tax credits resulting in deferred income tax

assets are as follows:

Amount Tax effect Amount Tax effect

Current items:

Temporary differences

Warranty provision 30,571$ 5,730$ 96,089$ 17,298$

Allowance for doubtful accounts 7,478)( 1,186)( 5,868)( 848)(

Provision for inventory loss 278,967 51,083 305,410 53,766

Unrealized losses 155,642 26,459 344,918 58,636

Others 80,117 17,745 43,224 9,819

99,831 138,671

Investment tax credits 71,646 64,952

Loss: Valuation allowance 71,646)( 63,674)(

99,831 139,949

Non-current items:

Temporary differences

Loss on idle assets 50,339$ 8,558 47,446$ 8,066

Accrued pension liabilities 137,458 23,383 215,319 36,604

Foreign investment income

accounted for under the

equity method 551,843)( 93,813)( 574,872)( 97,728)(

Others 134,179 32,164 104,330 24,702

29,708)( 28,356)(

Investment tax credits - 71,646

Loss carryforwards 3,079,492 546,258 1,686,199 315,335

Less: Valuation allowance 219,612)( 135,173)(

296,938 223,452

Cumulative translation

adjustments 30,971 5,265)( 105,532)( 17,940)(

391,504$ 345,461$

December 31, 2012 December 31, 2011

~47~

C. Income tax benefit and income tax payable are reconciled as follows:

2012 2011

Income tax at the statutory tax rate 14,336$ 19,098$

Foreign income tax expense 5,485 -

Tax effect of permanent differences 174,887 49,691)(

Over provision of prior year's income tax 509)( 1,139)(

Tax effect of loss carryforwards 305,518)( 278,065)(

Tax effect of valuation allowance 92,411 152,474

Income tax benefit 18,908)( 157,323)(

Add: Net change of deferred income tax assets 50,895 157,342

Tax effect of cumulative translation adjustments - 17,940

Unpaid amount on income tax payable of

consolidated entities - 1,686

Over provision of prior year's income tax 509 1,139

Less: Payment on behalf of Global PCS Inc. for its tax

on unappropriated earnings for 2009 - 1,177)(

Tax effect of cumulative translation adjustments 12,675)( -

Foreign income tax paid 5,485)( -

Prepaid and withholding taxes 14,336)( 19,098)(

Income tax payable -$ 509$

December 31,

D.The Company is eligible for income tax exemption for a period of the five consecutive years due to an expansion of

production equipment through increase in capital. The effective date of this exemption is to be decided by the

Company within two years from the start of operation of the new machinery and equipment. The deferral of the

five-year tax holiday shall not exceed four years. The details are as follows:

Capital increase method Tax-exempt period

Unappropriated earnings and employees'

bonus capitalized in 2002

January 1, 2010~December 31, 2014

E.The Company’s subsidiaries, Jupiter Technology (Wuxi) Inc. and Greast Communication Technology Co., Ltd., are

foreign-invested manufacturing enterprises established in the People’s Republic of China (PRC). Under the PRC

tax regulations, they are exempt from corporate income tax for the first and second profit-making years and are

subject to a 50% reduction of corporate income tax from the third through fifth profit-making years. Jupiter

Technology (Wuxi) Inc. and Greast Communication Technology Co., Ltd. are eligible for the tax exemption starting

from 2006 and 2008, respectively.

F.As of December 31, 2012, the Company’s income tax returns through 2010 have been assessed and approved by the

Tax Authority; Global PCS Inc.’s income tax returns through 2010 have been assessed and approved by the Tax

Authority; Millennium Telecom, Inc.’s income tax returns (period of liquidation) through 2011 have been assessed

and approved by the Tax Authority.

~48~

G.As of December 31, 2012, the details of unused investment tax credits and loss carryforwards are as follows:

Year of expiration Investment tax credits

2013 71,646$

Year of expiration Loss carryforwards

2019 31,953$

2021 208,787

2022 234,439

2016 71,079

546,258$

H.As of December 31, 2012 and 2011, the Company’s deductible credit account balance for stockholders’ income tax

was $61,820 and $62,367, respectively.

Note: The Company incurred operating losses both in 2011 and 2010. There was no earnings distribution for 2011

and 2010, as resolved by the stockholders at their stockholders’ meeting on May 4, 2012 and June 9, 2011,

respectively.

I. There was no undistributed retained earnings as of December 31, 2012 and the undistributed retained earnings as of

December 31, 2011 have been earned before 1998.

(45) Loss per share

Weighted-

average

Loss outstanding Loss

before common before

income Net shares income Net

tax loss (in thousands) tax loss

Consolidated net loss 1,053,536)($ 1,034,628)($

Basic loss per share:

Net loss 1,066,451)($ 1,032,423)($ 270,033 3.95)($ 3.82)($

Weighted-

average

Loss outstanding Loss

before common before

income Net shares income Net

tax loss (in thousands) tax loss

Consolidated net loss 1,934,730)($ 1,777,407)($

Basic loss per share:

Net loss 1,858,747)($ 1,775,885)($ 269,926 6.89)($ 6.58)($

Amount share (in dollars)

For the year ended December 31, 2012

Loss per

Amount share (in dollars)

For the year ended December 31, 2011

Loss per

~49~

The above weighted-average outstanding common shares of 2012 and 2011 have been

adjus ted ret roact ive ly in proport ion to the reduct ion of capi tal to cover accumulated

def ic i t s on January 10, 2013.

For the years ended December 31, 2012 and 2011, as employee s tock options and

domestic conve rt ible bonds i ssued by the Company had anti-di lut ive effec t , the y

were not included in the calcula t ion of di luted loss per share.

Effec t ive Januar y 1 , 2008, as employees’ bonus could be dis tr ibuted in the form of

stoc k, the di luted EPS computat ion shal l inc lude those est imated shares tha t would

be increased f rom employees’ stock bonus i ssuance in the ca lcula t ion of the

weighted-average number of common shares ou ts tanding dur ing the repor t ing year,

taking into account the di lut ive effects of stock bonus on potential common shares ;

whereas , basic EPS shall be calcula ted based on the weighted-average number of

common shares outstanding dur ing the repor t ing year tha t inc lude the shares of

employees’ s tock bonus for the appropr iat ion of pr ior yea r earnings , which have

already been resolved a t the s tockholders’ meet ing he ld in the repor t ing year. S ince

capi tal iza t ion of employees’ bonus no longer be longs to dis tr ibution of stoc k

dividends, the ca lcula t ion of basic EPS and di luted EPS for a l l per iods presented

sha ll not be adjusted re t roact ive ly.

~50~

(46) Personnel expenses , depreciat ion and amort iza t ion

Operating

costs

Operating

expenses

Non-

operating

expenses Total

Operating

costs

Operating

expenses

Non-

operating

expenses Total

Personnel expenses

Salary 535,371$ 391,915$ -$ 927,286$ 535,109$ 394,815$ -$ 929,924$

Labor and health insurance 21,337 27,094 - 48,431 20,348 26,256 - 46,604

Pension 19,850 54,026 - 73,876 18,939 75,713 - 94,652

Others 124,430 46,310 - 170,740 159,694 44,672 - 204,366

Depreciation 193,052 49,912 2,604 245,568 165,919 52,129 1,832 219,880

Amortization 16,242 126,033 - 142,275 8,948 132,231 - 141,179

For the years ended December 31,

2012 2011

~51~

5. RELATED PARTY TRANSACTIONS

(47) Name and re la t ionship of rela ted par ty: None

(48) The rewards information of ke y management is as fol lows:

2012 2011

Salaries 60,194$ 59,872$

Bonuses 5,256 17,204

Service execution fees 8,135 8,791

Total 73,585$ 85,867$

For the years ended December 31,

A. Salaries include regular wages, special responsibility allowances, pensions, severance pay, etc.

B. Bonuses include various bonus and rewards.

C. Service execution fees include trade allowances, housing and vehicle benefits, etc.

D. The relevant information above will be posted in the Group's annual report.

6. PLEDGED ASSETS

Assets 2012 2011 Purpose of pledge

Buildings (Note 1) 352,300$ 369,681$ Long-term loans

Time deposits (Note 2) 914,318 14,596 Collateral for lawsuits and

private-placement convertible bonds

Account receivable 173,356 - Collateral for short-term loans

1,439,974$ 384,277$

December 31,

Note 1: Including leased asse ts.

Note 2: Recognized a s restr ic ted asse ts.

7. COMMITMENTS AND CONTINGENT LIABILITIES (49) The Company leases land under a non-cancelable opera t ing lease agreement . As of December

31, 2012, the future minimum lease payments under th is lease are as fol lows:

Period Rental payable Present value

January 2013~December 2017 77,036$ 67,801$

January 2018~December 2026 138,665 77,661

215,701$ 145,462$

~52~

(50) On Oc tober 21, 2004, the Company was informed tha t European agent, FTA, sued the

Company wi th the Luxembourg Court for the business dispute occurr ing in the agency. The

Company had appointed at torne ys tending to th is case . On June 29, 2011, Luxembourg Cour t

dismissed the indemnity reques t of FTA in the lawsui t through the fi rs t t r ia l judgment. The

lawsui t i s current ly under the judicia l proceedings ; the possible e ffects of the lawsui t on the

Company’s business and f inance depend on i t s fur ther re sul ts . However, the Company bel ieves

the lawsuit wi l l not have any s igni ficant e ffec t on i t s f inance and opera tions.

(51) On December 5, 2011, Powerwave Technologies , Inc . sued the Company with the Cal i fornia

Cour t , al leging infr ingement of i t s pa tent by the Compan y and i t s subsidiary - MTI-Lab. The

Company has appointed at torneys to take legal ac t ions agains t Powerwave Technologies , Inc. The

Company bel ieves tha t this case wil l not have any signif icant e ffect on i t s f inance and opera tions .

8. SIGNIFICANT CATASTROPHE

None.

9. SUBSEQUENT EVENTS

None.

~53~

10. OTHERS (52) Financia l s tatement pre senta t ion

Cer ta in accounts in the 2011 f inanc ia l s ta tements have been rec lassif ied to conform to the 2012 f inanc ial s ta tement presentat ion. (53) Fair va lue of f inancia l instruments

Book value Market Estimate Book value Market Estimate

Non-derivative financial instruments

Financial assets

Financial assets with fair values equal to book values 3,888,082$ -$ 3,888,082$ 3,651,408$ -$ 3,651,408$

Financial assets at fair value through profit or loss 11,269 11,269 - 198,045 198,045 -

Financial assets carried at cost-noncurrent 330,029 - - 355,664 - -

4,229,380$ 4,205,117$

Financial liabilities

Financial liabilities with fair values equal to book values 3,754,782)($ -$ 3,754,782)($ 4,428,942)($ -$ 4,428,942)($

Long-term loans 598,555)( - 598,555)( 1,289,209)( - 1,289,209)(

4,353,337)($ 5,718,151)($

Derivative financial instruments

Financial assets

Forward exchange contracts -$ -$ -$ 5,698$ -$ 5,698$

Financial liabilities

Forward exchange contracts 1,520)($ -$ 1,520)($ -$ -$ -$

December 31, 2012 December 31, 2011

Fair value Fair value

~54~

The methods and assumptions used to e st imate the fa ir va lues of the above financia l

instruments are summar ized be low:

A.Financia l assets / l iabil i t ies with fa ir va lue equal to book value: The carr ying amounts of these

asse ts / l iabil i t ie s approximate fair va lues due to the ir shor t maturi t ies . Thi s applies to cash and

cash equiva lents , accounts rece ivable, other receivables, res tr icted current assets , r efundable

deposi t s, shor t- te rm loans, accounts payable, accrued expenses, other payables and guarantee

deposi t s rece ived.

B.Financial assets at f air va lue through prof i t or loss (non-der iva tive f inancia l instruments) :

Instruments classif ied in this ca tegory are ma inly inves tments in open-ended mutual funds. The

fa ir va lue i s de termined by the ne t asse t va lue at the ba lance sheet da te .

C.For long- term loans with f loat ing interes t ra te s, the fa ir va lues are based on the ir book value. For

long- term loans with f ixed interes t rates , f air va lue i s est imated based on the discounted future

cash f lows. Di scount ra te i s determined based on the Company’s credi t adjus ted bor rowing rate,

which approximate the f loa t ing interest r ates .

D.Deriva tive f inancia l instruments: Fa i r va lue i s est imated based on the amount receivable f rom or

payable to the counterpar ty assuming the cont rac ts a re terminated a t the balance sheet da te,

which inc ludes the cont racts’ unrea l ized gain or loss . (54) Informat ion of signi f icant income ( loss) on f inanc ia l instruments and equi ty i tems

In 2012 and 2011, the loss or ga in recognized f rom the changes in fair values de termined us ing the

foregoing evaluat ion t echniques amounted to $7,218 and $1,439, r espective ly. (55) Informat ion on interest ra te f luc tua tion

As of December 31, 2012 and 2011, f inancia l asse ts tha t are exposed to fair va lue interes t rate r i sk

are $714,632 and $1,352,251, r espect ive ly; f inancia l assets tha t are exposed to cash f low int erest

rate r i sk are $1,737,234 and $513,301, respect ive ly; and f inancia l l iabi l i t ies that are exposed to

cash f low interest ra te r i sk are $2,538,111 and $3,406,949, re spect ively. (56) Financia l r i sk management

The Group, in accordance wi th i t s pol icy on the acquisi t i on and disposa l of f inancia l der iva t ives,

has es tabl i shed a r isk management program to eva luate and manage the rela ted r isk assessment of

individual transact ions. (57) Informat ion on signi fi cant f inancial r i sk

A. Market risk The Group’s activities involve some non-functional currency operations (the Group’s functional currency is New Taiwan dollars). The information on assets and liabilities denominated in foreign currency whose values would be materially affected by the fluctuations of the foreign exchange rates is as follows:

~55~

Foreign Exchange Foreign Exchange

Financial assets currency rate currency rate

Monetary items

　USD：NTD 71,118$ 29.04 71,048$ 30.28

　EUR：NTD 443 38.49 2,357 39.18

USD：CNY 1,409 6.2855 29,696 6.3009

Financial liabilities

Monetary items

　USD：NTD 37,205$ 29.04 71,017$ 30.28

　EUR：NTD 160 38.49 1,890 39.18

USD：CNY 24,868 6.2855 31,077 6.3009

December 31,

2012 2011

(a)Foreign exchange risk The majority of the sales and purchases of the Group is denominated in U.S. dollars. Therefore the fair value of the related assets and liabilities are exposed to foreign exchange rate risk. The Group monitors the fluctuations in foreign exchange rates and adjusts the net positions in each foreign currency, enters into forward contracts, if necessary, to reduce the market rate risk.

(b)Price risk The bond fund investments (shown in “financial assets at fair value through profit or loss”) are determined based on the net asset value of open-end funds. The Group evaluates related investment performances on a periodic basis and does not expect to have significant market risk in these financial assets.

B. Credit risk

(a)The counterparties of the financial derivatives and beneficiary certificates are reputable financial institutions and the Group also deals with multiple counterparties to diversify the credit risk. The Group believes its exposure to potential default risk is low. The maximum loss to the Group is the book value.

(b)The Company has lower significant concentrations of credit risk. It has policies in place to ensure that wholesale sales of products are made to customers with an appropriate credit history. The maximum loss to the Group is the book value of accounts receivable.

(c)Loan guarantees provided by the Group are in compliance with the Group’s “Procedures for Provision of Endorsements and Guarantees” and are only provided to affiliated companies which the Group owns directly. As the Group is fully aware of the credit conditions of these related parties, it has not asked for collateral for the loan guarantees provided. In the event that these related parties fail to comply with loan agreements with banks, the maximum loss to the Group is the total amount of loan guarantees as listed above.

C. Liquidity risk

(a)The Group has lower significant concentrations of liquidity risk for forward exchange contracts since the exchange rate was known.

(b)For financial assets carried at cost, the Group is exposed to a higher liquidity risk since there is no active market. However, the Group has no intention to hold these financial assets for trading and does not expect to sell these financial assets frequently. Therefore, the exposure to liquidity risk would be effectively reduced.

(c)The Group also expects no significant liquidity risk since it has sufficient working capital.

D. Cash flow interest rate risk The Group’s interest rate risk arises from short-term and long-term borrowings issued at variable rates which expose the Group to cash flow interest rate risk.

~56~

11. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU (1) Rela ted information of s ignif icant tr ansact ions

The informat ion about the inves tees was prepared based on the ir audi ted f inanc ial s tatements . The tr ansact ions be tween the Company and i ts

subsidiar ies had been e l imina ted when prepar ing the consol idated f inancia l s ta tements; the y are disc losed below onl y for reference：

a. Loans granted during the year ended December 31, 2012: None.

b. Endorsements and guarantees provided by the Company to others as of December 31, 2012:

Ratio of

Limit of Maximum outstanding Outstanding Amount of accumulated guarantee Ceiling of the

Relationship with guarantee guarantee amount guarantee amount guarantee with amount to net asset outstanding guarantees

Guarantor Name the Company for such party during 2012 (Note) at Dec. 31, 2012 collateral placed value of the Company for the respective party(Note)

Microelectronics

Technology, Inc.

Jupiter Technology

(Wuxi) Inc.

100% owned subsidiary 3,451,734$ 798,660$ 377,520$ None 10.94% 3,451,734$

" Greast Communication

Technology Co., Ltd.

81.94% owned subsidiary 3,451,734 44,820 - None - 3,451,734

" MTI Laboratory, Inc. 100% owned subsidiary 3,451,734 960 929 None 0.03% 3,451,734

(Note)：The upper limits on total guarantees and endorsements provided by the Company to a single party and all parties are both based on the net assets value of the Company as per its most recent financial statements.

Company being guaranteed

c. Details of marketable securities held as at December 31, 2012:

Relationship of

Type of marketable Marketable the securities issuers General ledger

Investor securities securities with the Company accounts Number of shares Book value Percentage Market value (Note)

Microelectronics

Technology, Inc.

Stock Sasson International Holdings Inc. Wholly-owned subsidiary Long-term equity

investments accounted for

under the equity method

3,920 1,727,205$ 100.00% 1,727,205$

" " Taiwan Aerospace Corp. None Financial assets carried at

cost-noncurrent

648,576 11,138 0.48% -

" " Transcom Inc. " " 200,000 866 0.08% -

(Note)：The market value of investments accounted for under the equity method was based on the net asset value of the investee company.

December 31, 2012

d. Acquisition or sale of the security with the accumulated cost exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012：None.

e. Acquisition of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012：None. f. Disposal of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012：None.

~57~

g. Purchases from and sales to related parties exceeding $100 million or 20% of the Company’s paid-in capital during the year ended December 31, 2012:

Percentage of Percentage of

Relationship Purchases purchases accounts receivable

Company Counterparty with the Company (sales) Amount (sales) Term Unit price Credit term Balance (payable) Note

Microelectronics

Technology, Inc.

Jupiter Technology

(Wuxi) Inc.

Wholly-owned subsidiary Purchases 3,384,436$ 56% 90 days N/A N/A 471,173)($ 45% -

" MTI Network, Inc. Wholly-owned subsidiary Sales 1,090,206 15% 30 days N/A N/A 112,489 9% -

Differences in transaction terms

Transactions compared to third party transactions Accounts receivable (payable)

h. Receivables from related parties exceeding $100 million or 20% of the Company’s paid-in capital as at December 31, 2012.

Company Counterparty

Relationship

with the

Company

Accounts

receivable

Other

receivables Total

Turnover

rate Amount

Action adopted

for overdue

accounts

Subsequent

collection

Allowance for doubtful

accounts provided

Microelectronics

Technology, Inc.MTI Network, Inc.

The Company’s

indirect subsidiary 112,489$ -$ 112,489$ 11.97 -$ N/A -$ -$

I. Derivative financial instruments undertaken during the year ended December 31, 2012: Refer to Notes 4(2), 4(10) and 10.

Balance of receivable from related parties Overdue receivables

~58~

(2) Disclosure information of investee company a.

Net income Net income

Main Number (loss) of the (loss) recognized

Investor Investee Location activities 2012 2011 of shares Percentage Book value investee by the Company Note

Microelectronics

Technology, Inc.

Sasson

International

Holdings Inc.

BVI Investment

planning

and consulting

1,159,643$ 1,159,643$ 3,920 100.00% 1,727,205$ 23,029)($ 23,029)($ Note 1

Sasson

International

Holdings Inc.

Welltop

Technology

Co., Ltd.

BVI " US$7,834,000

(in dollars)

US$7,834,000

(in dollars)

7,834,000 100.00% 220,841 12,508 12,508 Note 2

" Jupiter

Network Corp.

BVI " US$21,071,800

(in dollars)

US$21,071,800

(in dollars)

21,071,800 100.00% 555,386 3,782 3,782 Note 2

" Greast

Communication

Technology

Co., Ltd.

Nanjing,

China

Communications US$3,970,000

(in dollars)

US$3,970,000

(in dollars)

- 48.42% 38,092 12,292)( 5,952)( Note 2

Welltop

Technology

Co., Ltd.

MTI Laboratory,

Inc.

California,

USA

" US$1,500,000

(in dollars)

US$1,500,000

(in dollars)

1,500,000 100.00% 66,641 406 406 Note 2

" MTI Network, Inc. Delaware,

USA

" US$100,000

(in dollars)

US$100,000

(in dollars)

100,000 100.00% 9,069 5,143 5,143 Note 2

" RadioComp ApS Denmark " US$4,702,000

(in dollars)

US$4,702,000

(in dollars)

1,527,944 100.00% 144,308 7,028 7,028 Note 2

Jupiter

Network Corp.

Jupiter Technology

(Wuxi) Inc.

Wuxi,

China

" US$21,000,000

(in dollars)

US$21,000,000

(in dollars)

- 100.00% 554,861 3,849 3,849 Note 2

Related information on companies for the year ended December 31, 2012:

Initial investment amount Shares held as at December 31, 2012

December 31,

~59~

Net income Net income

Main Number (loss) of the (loss) recognized

Investor Investee Location activities 2011 2010 of shares Percentage Book value investee by the Company Note

Jupiter Technology

(Wuxi) Inc.

Greast

Communication

Technology

Co., Ltd.

Nanjing,

China

" CNY

$15,954,000

(in dollars)

CNY

$15,954,000

(in dollars)

- 33.52% 67,029 12,292)( 4,120)( Note 2

Note 1: Subsidiary of the Company.

Note 2: Indirect subsidiary of the Company.

December 31,

Initial investment amount Shares held as at December 31, 2011

b. Loans granted during the year ended December 31, 2012:

Item Value

Sasson International

Holdings Inc.

Jupiter Techology

(Wuxi) Inc.

Other

receivables 479,840$ 464,640$ - b Note Operations -$ Note -$ 711,721$ 711,721$

MTI Laboratory, Inc. MTI Network, Inc.

Other

receivables 16,577 16,171 3% b Note Operations - Note - 29,040 29,040

Note1: a. Business transaction.

b. Short-term financing.

Note2: If the nature of the loans belongs to business association, the loans granted to others should be equivalent to the business association amount; if the nature of the loans belongs to short-term financing, both limit on

loans granted to a single party and ceiling on total loans granted to all parties should not exceed 40% of the net assets value of the creditor company as per its most recent financial statements. The ceiling on total

loans granted by the Company’s subsidiary to all parties should not exceed 40% of the net assets value of the Company as per its most recent financial statements. However, the ceiling on total loans granted by

Sasson International Holdings Inc. to all wholly-owned foreign subsidiaries of parent company is not subject to the restriction above.

Maximum

outstanding

guarantee

amount during

2012 (Note 2)

Allowance for

bad debts

CollateralLimit on

loans granted

to a single partyCreditor Borrower

General ledger

account

Maximum

outstanding

balance

during 2012

Balance at

December

31, 2012 Interest rate

Nature of

loan (Note 1)

Amount of

transactions

with the

borrower

Reason of

short-term

financing

c. Endorsements and guarantees provided during the year ended December 31, 2012: None.

~60~

d. Marketable securities as at December 31, 2012:

Type of marketable Relationship of the securities Number of Book Ownership Market

Securities held by securities Marketable securities issuers with the Company General ledger accounts shares value (%) value (Note)

Sasson International

Holdings Inc.

Stock Welltop Technology Co., Ltd. Wholly-owned

subsidiary

Long-term equity

investments accounted for

under the equity method

7,834,000 220,841$ 100.00% 220,841$

" " Jupiter Network Corp. " " 21,071,800 555,386 100.00% 555,386

" " Greast Communication Technology Co., Ltd. Investee accounted for

under the equity method

" - 38,092 48.42% 38,092

" " Optical Scientific, Networks Inc. None Financial assets carried at

cost-noncurrent

16,023 57,821 6.02% -

" " Taicom Capital Ltd. " " 20,000 213,740 11.43% -

" " Intelligent Epitaxy Technology, Inc. " " 500,001 17,424 1.93% -

" " Applied Wireless Identification Group, Inc. " " 187,784 - 0.41% -

" " Firetide Inc. " " 1,333,360 29,040 1.66% -

" " Ishares A50 (2823, HK) " Financial assets at fair

value through profit

or loss-current

270,000 11,269 - 11,269

Welltop

Technology

Co., Ltd.

Stock MTI Laboratory, Inc. Wholly-owned

subsidiary

Long-term equity

investments accounted for

under the equity method

1,500,000 66,641 100.00% 66,641

" " MTI Network, Inc. " " 100,000 9,069 100.00% 9,069

" " RadioComp Aps " " 1,527,944 144,308 100.00% 144,308

Jupiter Network Corp. " Jupiter Technology (Wuxi) Inc. " " - 554,861 100.00% 554,861

Jupiter Technology

(Wuxi) Inc.

" Greast Communication Technology Co., Ltd. Investee accounted for

under the equity method

" - 67,029 33.52% 67,029

Note : The market value of financial assets at fair value trough profit or loss is based on latest quoted fair prices of the accounting period.

The market value of investments accounted for under the equity method is based on the net asset value of the investee company.

~61~

e. Acquisition or sale of the security with the accumulated cost exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012：None.

f. Acquisition of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012：None.

g. Disposal of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012：None.

h. Purchase from or sales to related parties exceeding $100 million or 20% of the Company's paid-in during the year ended December 31,2012：Refer to Note 11(1)g.

i. Receivables from related parties over $100 million or 20% of the Company's capital stock as of December 31, 2012:

Company Counterparty

Relationship

with the

Company

Accounts

receivable

Other

receivables Total

Turnover

rate Amount

Action adopted

for overdue

accounts

Subsequent

collection

Allowance for doubtful

accounts provided

Jupiter Technology

(Wuxi) Inc.

Microelectronic

Technology Inc. Parent company 471,173$ -$ 471,173$ 7.47 -$ N/A -$ -$

Balance of receivable from related parties Overdue receivables

j . Informa tion on der iva tive tr ansactions : None.

(3) Disclosure of information on indirec t inves tments in Mainland China

~62~

a. Basic information, change in investment balance and profits/losses recognized from the indirect investment:

Investee in Investment

Accumulated

amount of

remittance

to Mainland

China as of

Amount

remitted to

Mainland China

Amount

remitted back

to Taiwan

Accumulated

amount of

remittance to

Mainland

China as of

December

Ownership

held by the

Company

(direct

Investment

income (loss)

recognized by

the Company

for the

year ended

December 31,

2012

Book value

of investments

in Mainland

China as of

December

Accumulated

amount of

investment

income

remitted back

to Taiwan as

of December

Mainland China Main activities Paid-in capital method January 1, 2012 during the year during the year 31, 2012 and indirect) (Note) 31, 2012 31, 2012

Jupiter

Technology

(Wuxi) Inc.

Satellite

communication,

microwave

communication

and consulting

services

$ 609,840 Invest in

Mainland

China

through set

up of a new

company

in third area

$ 609,840 -$ -$ $ 609,840 100.00% 3,849$ 554,861$ -$

Greast

Communication

Technology

Co., Ltd.

Design and

manufacture of

W-CDMA and

Base band RF

Sub-system

110,237 Invest in

Mainland

China

through

activating

a company

in third area

115,289 - - 115,289 81.94% 10,072)( 105,121 -

Note: Profit (loss) was recognized based on the financial statements audited by the Company's independent auditors.

Ceiling of investment in Mainland China

$ 725,129 $ 842,392

Ending balance of investment from Taiwan as of Approved investment amount by Ministry of

December 31, 2012 (in dollars) Economic Affairs R.O.C. (in dollars)

$ 2,078,131

~63~

B.Significant transactions with the direct and indirect investments in Mainland China (the amount represents the figures prior to eliminating the purchases and sales transactions between the Company and the investee companies in China through its subsidiaries.)

(a) Purchases

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 3,497,470$ 58 2,253,616$ 35

(b) Sales

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 113,034$ 2 442,218$ 7

(c) Accounts receivable

Amount % Amount %

Jupiter Technology (Wuxi) Inc. -$ - 11,127$ 1

(d) Other receivables

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 10,917$ 15 212,454$ 356

(e) Accounts payable

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 472,258$ 45 434,643$ 31

December 31,

2012 2011

For the years ended December 31,2012 2011

For the years ended December 31,2012 2011

December 31,

2012 2011

December 31,2012 2011

(f)Property transactions

Item Amount Gain Amount Gain

Jupiter Technology (Wuxi) Inc. Sales of Machinery 5,248$ 156$ 5,302$ 818$

Jupiter Technology (Wuxi) Inc. Purchase of 9,047)( - - - machinery and

equipment

The disposals are approximately at book value.

For the years ended December 31,

2012 2011

(g)Loans to subsidiaries in other countries: Please refer to Note 11.

~64~

(h)Edorsements and quarantees provided by the Company to Mainland China subsidiaries:

Subsidiary name Line of credit

Outstanding

balance

of credit line

December 31, 2012

Jupiter Technology (Wuxi) Inc. 377,520$ 377,520$

December 31, 2011

Jupiter Technology (Wuxi) Inc. 817,425$ 787,150$

Greast Communication Technology Co., Ltd. 45,413 14,415

862,838$ 801,565$

(i)Other significant transactions which affect current income or financial conditions: None.

~65~

(4) Signif icant in tercompany t ransactions f or the year ended December 31, 2012

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

0 Microelectronics

Technology, Inc.

Jupiter Technology (Wuxi), Inc. 1 Purchases and manufacturing 3,384,436$ Similar with general transactions 44.76%

0 " " 1 Other receivables 4,922 Net 90 days 0.06%

0 " " 1 Loss of disposal of property,

plant and equipment

156 Similar with general transactions 0.00%

0 " " 1 Accounts payable 471,173 Net 30 days 5.81%

0 " MTI Laboratory, Inc. 1 Research and development

expenses

309,608 Similar with general transactions 4.09%

0 " " 1 Sales and marketing expenses 6,549 " 0.09%

0 " " 1 Accrued expenses 17,424 Net 30 days 0.21%

0 " Welltop Technology Co., Ltd. 1 Sales revenue 1,465 Similar with general transactions 0.02%

0 " " 1 Accounts receivable 1,418 Net 30 days 0.02%

0 " Greast Communication Technology

Co., Ltd.

1 Research and development

expenses 6,300 Similar with general transactions 0.08%

0 " RadioComp ApS 1 Purchases and manufacturing 5,319 " 0.07%

" " 1 Research and development

expenses

191,320 " 2.53%

0 " MTI Network, Inc. 1 Sales revenue 1,090,206 " 14.42%

" " 1 Accounts receivable 112,489 Net 30 days 1.39%

0 " Sasson International Holdings Inc. 1 other payables 464,640 For operations; to transact

with contract

5.73%

~66~

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

1 Jupiter Technology (Wuxi),

Inc.

Microelectronics Technology, Inc. 2 Sales revenue 3,384,436$ Similar with general transactions 44.76%

1 " " 2 Accounts payable 4,922 Net 90 days 0.06%

1 " " 2 General and administrative

expense

156 Similar with general transactions 0.00%

1 " " 2 Accounts receivable 471,173 Net 30 days 5.81%

2 MTI Laboratory, Inc. Microelectronics Technology, Inc. 2 Sales revenue 316,157 Similar with general transactions 4.18%

2 " " 2 Accounts receivable 17,424 Net 30 days 0.21%

2 Welltop Technology Co., Ltd. Microelectronics Technology, Inc. 2 Purchases and manufacturing 1,465 Similar with general transactions 0.02%

3 " " 2 Accounts payable 1,418 Net 30 days 0.02%

4 Greast Communication

Technology Co., Ltd.

Microelectronics Technology, Inc. 2 Sales revenue 6,300 Similar with general transactions 0.08%

5 RadioComp Aps Microelectronics Technology, Inc. 2 Sales revenue 196,639 " 2.60%

6 MTI Network, Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing 1,090,206 " 14.42%

6 MTI Network, Inc. Microelectronics Technology, Inc. 2 Accounts payable 112,489 Net 30 days 1.39%

7 Sasson International Holdings

Inc.

Jupiter Technology (Wuxi)

Inc.

3 Other receivables 464,640 For operations; to transact

with contract

5.73%

8 Jupiter Technology (Wuxi),

Inc.

Greast Communication

Technology Co., Ltd.

3 Sales revenue 5,743 Similar with general transactions 0.08%

8 Jupiter Technology (Wuxi),

Inc.

Greast Communication

Technology Co., Ltd.

3 Accounts receivable 5,224 Net 180 days 0.06%

8 Jupiter Technology (Wuxi),

Inc.

Greast Communication

Technology Co., Ltd.

3 Other receivable 715 Net 180 days 0.01%

8 Jupiter Technology (Wuxi),

Inc.

Greast Communication

Technology Co., Ltd.

3 Technology service revenue 883 Similar with general transactions 0.01%

8 Jupiter Technology (Wuxi),

Inc.

Greast Communication

Technology Co., Ltd.

3 Other receivable 16,171 For operations; to transact

with contract

0.20%

Transaction

~67~

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

9 Greast Communication

Technology Co., Ltd.

Jupiter Technology (Wuxi),

Inc.

3 Purchases and manufacturing 5,743$ Similar with general transactions 0.08%

9 Greast Communication

Technology Co., Ltd.

Jupiter Technology (Wuxi),

Inc.

3 Accounts payable 5,939 Net 180 days 0.07%

9 Greast Communication

Technology Co., Ltd.

Jupiter Technology (Wuxi),

Inc.

3 Other revenue 883 Similar with general transactions 0.01%

9 Greast Communication

Technology Co., Ltd.

Jupiter Technology (Wuxi),

Inc.

3 Other payable 16,171 For operations; to transact

with contract

0.20%

10 Greast Communication

Technology Co., Ltd.

Sasson International Holdings

Inc.

3 Other revenue 12,661 Similar with general transactions 0.17%

11 Sasson International Holdings

Inc.

Greast Communication

Technology Co., Ltd.

3 Technology service revenue 12,661 Similar with general transactions 0.17%

Transaction

(5) Signifi cant i n tercompany t ransac tions for the year ended December 31, 2011

~68~

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

0 Microelectronics

Technology, Inc.

Jupiter Technology (Wuxi), Inc. 1 Purchases and manufacturing 1,811,398$ Similar with general transactions 27.12%

0 " " 1 Accounts receivable 2 Net 90 days 0.00%

0 " " 1 Other receivables 8,327 " 0.09%

0 " " 1 Loss of disposal of property,

plant and equipment

818 Similar with general transactions 0.01%

0 " " 1 Accounts payable 434,643 Net 30 days 4.90%

0 " " 1 Accrued expenses 3 " 0.00%

0 " MTI Laboratory, Inc. 1 Research and development

expenses

385,667 Similar with general transactions 5.77%

0 " " 1 Sales and marketing expenses 6,405 " 0.10%

0 " " 1 Accrued expenses 3,633 Net 30 days 0.04%

0 " Welltop Technology Co., Ltd. 1 Sales revenue 9,440 Similar with general transactions 0.14%

0 " " 1 Accounts receivable 1,835 Net 30 days 0.02%

0 " " 1 Other receivables 1,008 " 0.01%

0 " Greast Communication Technology

Co., Ltd.

1 Research and development

expenses 4,610 Similar with general transactions 0.07%

0 " RadioComp ApS 1 Research and development

expenses

191,042 " 2.86%

0 " MTI Network, Inc. 1 Sales revenue 192,893 " 2.89%

0 " " 1 Accounts receivable 69,693 Net 30 days 0.79%

~69~

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

1 Jupiter Technology (Wuxi),

Inc.

Microelectronics Technology, Inc. 2 Sales revenue 1,811,398$ Similar with general transactions 27.12%

1 " " 2 Accounts payable 2 Net 90 days 0.00%

1 " " 2 Accrued expenses 8,327 " 0.09%

1 " " 2 General and administrative

expense

818 Similar with general transactions 0.01%

1 " " 2 Accounts receivable 434,643 Net 30 days 4.90%

1 " " 2 Other receivables 3 Similar with general transactions 0.00%

2 MTI Laboratory, Inc. Microelectronics Technology, Inc. 2 Sales revenue 392,072 " 5.87%

2 " " 2 Accounts receivable 3,633 Net 30 days 0.04%

3 Welltop Technology Co., Ltd. Microelectronics Technology, Inc. 2 Purchases and manufacturing 9,440 Similar with general transactions 0.14%

3 " " 2 Accounts payable 1,835 Net 30 days 0.02%

3 " " 2 Accrued expenses 1,008 " 0.01%

4 Greast Communication

Technology Co., Ltd.

Microelectronics Technology, Inc. 2 Sales revenue 4,610 Similar with general transactions 0.07%

5 RadioComp Aps Microelectronics Technology, Inc. 2 Sales revenue 191,042 " 2.86%

6 MTI Network, Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing 192,893 " 2.89%

6 " " 2 Accounts payable 69,693 Net 30 days 0.79%

Transaction

Note a : The tr ansaction informat ion of the Company and consol ida ted subsidiar ies i s noted in column "Number ". The number means: 1.Number 0 represents the Company. 2.The consol ida ted subs idiar ies a re in order f rom number 1. Note b: The relat ionship wi th the tr ansac tion par t ie s are as fol lows: 1.The Company to the consol ida ted subsidiar y. 2.The consol ida ted subs idiary to the Company. 3.The consol ida ted subs idiary to the consol idated subsidiar y. Note c : Rat io of asse t / l iabil i t y i s divided by consol ida ted tota l asse ts , and rat io of prof i t / loss accounts i s divided by consol ida ted sa les revenues.

~70~

12. SEGMENT INFORMATION

General information Management has de termined the repor table opera ting segments based on the repor ts r eviewed by the General Manage r that a re used to make s trategic decis ions. The General Manager eva luates the business f rom a product per spect ive.

Measurement of segment informat ion The General Manager assesses the performance of the opera ting segments based on the income ( loss) before tax.

Informat ion on segment prof i t ( loss) , asse ts and l iabi l i t ies

The segment informat ion provided to the General Manage r for the repor table segments for the years

ended December 31, 2012 and 2011 is as fol lows:

For the year ended

December 31, 2012

Telecommunication

segment

Satellite

communication

segment Total

Revenue from external customers 2,961,899$ 4,599,390$ 7,561,289$

Inter-segment revenue -$ -$ -$

Segment loss 845,453)($ 197,177)($ 1,042,630)($

Segment assets - inventory 886,784$ 673,273$ 1,560,057$

For the year ended

December 31, 2011

Telecommunication

segment

Satellite

communication

segment Total

Revenue from external customers 3,477,092$ 3,201,201$ 6,678,293$

Inter-segment revenue -$ -$ -$

Segment loss 1,455,293)($ 463,673)($ 1,918,966)($

Segment assets - inventory 1,038,811$ 981,587$ 2,020,398$

Reconci l iat ion for segment prof i t ( loss ) and assets

Sales be tween segments are carr ied out at arm’s- length. The revenue f rom external par t ies r epor ted

to the Genera l Manager is measured in a manner cons istent with tha t in the income sta tement. A

reconcil iat ion of to tal segments prof i t ( loss ) to prof i t ( loss) before tax and discont inued opera tions

is provided as fol lows:

2012 2011

Total segments loss ($1,042,640.00) ($1,918,966.00)

Unallocated items (10,906) (15,764)

Loss before tax and discontinued operations ($1,053,546.00) ($1,934,730.00)

The amounts provided to the Genera l Manager with respec t to total a ssets are measured in a manner

consis tent with that in the ba lance sheet . ‘Repor table segments’ assets a re reconc iled to to ta l

asse ts a s fol lows:

~71~

December 31, 2012 December 31, 2011

Segment assets for reportable segments 1,560,057$ 2,020,398$

Unallocated items 6,553,039 6,856,085

Total assets per balance sheet 8,113,096$ 8,876,483$

Revenue information by categor y

Revenues from external customers are a l l derived f rom the sales of goods. Breakdown of the

revenue from a l l sources is as fol lows:

2012 2011

Sales of goods 7,561,289$ 6,678,293$

Revenue informa tion by geographic area

Revenue informa tion by geographic area for 2012 and 2011 is as fol lows:

Revenue Non-current assets Revenue Non-current assets

USA 5,751,273$ 35,989$ 4,090,410$ 50,120$

Taiwan 45,368 789,199 190,545 928,306

Mainland China 369,627 575,694 394,378 715,894

Finland 94,477 - 535,386 -

Thailand 186,209 - 341,653 -

France 273,141 - 192,168 -

Italy 38,195 - 163,173 -

Singapore 63,735 - 158,809 -

Denmark - 17,089 - 22,701

Others 739,264 60 611,771 60

7,561,289$ 1,418,031$ 6,678,293$ 1,717,081$

2012 2011

~72~

Sa les to major customers

Customer name Amount Department Amount Department

D customer 1,983,998$ Telecommunication 1,739,096$ Telecommunication

A customer 1,434,409 Satellite communication 1,455,687 Satellite communication

G customer 1,407,040 Satellite communication 699,613 Satellite communication

I customer 1,177,662 Satellite communication 202,190 Satellite communication

For the years ended December 31,

2012 2011

13. Disc losures re la t ing to the adopt ion of IFRSs

Pursuant to the regula t ions of the Financia l Supervisory Commiss ion, Execut ive Yuan, R.O.C. ,

ef fec tive Januar y 1 , 2013, a public company whose s tock i s l i sted on the Taiwan Stock Exchange

Corpora tion or t raded in the GreTa i Secur i t ie s Marke t should prepare f inancial s tatements in

accordance wi th the International Financia l Repor t ing Standards, International Account ing

Standards, and Interpre ta t ions /bul let ins (col lec t ively referred here in as the IFRSs) as recognized

by the Financial Supervisor y Commission, Execut ive Yuan, R.O.C. and the “Rules Governing the

Preparat ion of Financia l Sta tements by Secur i t ies Issuers” tha t a re expected to be applicable in

2013.

The Compan y di scloses the fol lowing information in advance pr ior to the adopt ion of IFRSs under

the requirements of J in-Guan-Zheng-Shen-Zi Order No. 0990004943 of the Financ ial Supervisor y

Commiss ion, da ted Februar y 2 , 2010: A. Major contents and status of execution of the Company’s plan for IFRSs adoption:

The Company has formed an IFRSs group headed by the Company’s Chief Financial Off icer,

which i s respons ible for se t t ing up a plan re lat ive to the Company’s transi t ion to IFRSs. The

major contents and s tatus of execution of th is plan are out l ined below:

Working Items for IFRSs Adoption Status of Execution

1. Formation of an IFRSs group Done

2. Setting up a plan relative to the Company’s transition to IFRSs Done

3. Identification of the differences between current accounting policies

and IFRSs

4. Identification of consolidated entities under the IFRSs framework Done

5. Evaluation of the impact of each exemption and option on the

Company under IFRS 1 – First-time Adoption of International

Financial Reporting Standards

6. Evaluation of needed information system adjustments Done

7. Evaluation of needed internal control adjustments Done

8. Establish IFRSs accounting policies Done

9. Selection of exemptions and options available under IFRS 1 – First-

time Adoption of International Financial Reporting Standards

10.Preparation of statement of financial position on the date of transition

to IFRSs

11.Preparation of IFRSs comparative financial information for 2012 On schedule

12.Completion of relevant internal control (including financial reporting

process and relevant information system) adjustments

Done

Done

Done

Done

Done

B. Material differences that may arise between current accounting policies used in the preparation of financial statements and IFRSs and “Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be used in the preparation of financial statements in the future:

~73~

The Company uses the IFRSs already ratified currently by the Financial Supervisory Commission and the “Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be applied in 2013 as the basis for evaluation of material differences in accounting policies as mentioned above. However, the Company’s current evaluation results may be different from the actual differences that may arise when new issuances of or amendments to IFRSs are subsequently ratified by the Financial Supervisory Commission or relevant interpretations or amendments to the “Rules Governing the Preparation of Financial Statements by Securities Issuers” come in the future. Material differences identified by the Company that may arise between current accounting policies used in the preparation of financial statements and IFRSs and “Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be used in the preparation of financial statements in the future are set forth below:

different accounting policies adopted as at January 1, 2012：Accounting

Standards in

R.O.C.

Adjustment IFRSs Remark

Deferred income tax assets

- current

$ 139,949 ($ 139,949) $ - (1)

Financial assets carried at

cost - current

355,664 ( 307,224) 48,440 (2)

Available-for-sale

financial assets - non -

- 307,224 307,224 (2)

Fixed Assets 1,300,193 24,535 1,324,728 (3)

Deferred pension costs 4,182 ( 4,182) - (5)

Other intangible assets 257,141 88,258 345,399 (3)(4)

Assets leased to others 35,357 ( 35,357) - (3)

Deferred expenses 115,767 ( 114,306) 1,461 (4)

Deferred income tax assets

- non-current

205,512 256,933 462,445 (1)

Other assets - non-current - 36,870 36,870 (4)

Others 6,462,718 - 6,462,718

Total assets $ 8,876,483 $ 112,802 $ 8,989,285

Deferred income tax assets

- non-current

- 116,984 116,984 (1)

Accrued pension liabilities 225,146 151,399 376,545 (5)

Others 5,870,933 - 5,870,933

Total liabilities $ 6,096,079 $ 268,383 $ 6,364,462

Cumulative translation

adjustments

87,592 ( 87,592) - (6)

Unrecognized pension ( 5,645) 5,645 - (5)

Capital surplus-employee

stock options

- 64,910 64,910 (7)

Capital surplus-long-term

investments

2,538 ( 2,538) - (8)

Accumulated deficit ( 1,688,077) ( 136,006) ( 1,824,083) (5)(6)

(7)(8)

Others 4,383,996 - 4,383,996

Total stockholders’ equity $ 2,780,404 ($ 155,581) $ 2,624,823

(a)Reconciliation of balance sheet accounts with material differences between

Reconciliation item：

1.Tax In accordance with current accounting standards in R.O.C., a deferred tax asset or liability should, according to

~74~

the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting, should be classified as current or noncurrent according to the expected time period to realise a deferred tax asset or liability. On the date of transition to IFRSs, deferred tax assets and liabilities should all be classified as noncurrent, and a deferred tax asset and liability can be offset only when they meet certain criteria. Therefore, the Company decreased deferred tax assets-current by $139,949, and increased deferred tax assets-noncurrent and deferred tax liabilities by $256,933 and $116,984, respectively, on the date of transition to IFRSs.

2. Financial assets measured at cost-noncurrent In accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” before amendment on July 7, 2011, unlisted stocks and emerging stocks held by the Company were measured at cost and recognised as ‘Financial assets measured at cost’. However, in accordance with IAS 39, ‘Financial Instruments: Recognition and Measurement’, they should be measured at fair value. Therefore, the Company decreased financial assets measured at cost-noncurrent by $307,224 and increased available-for-sale financial assets-noncurrent by $307,224 on the date of transition to IFRSs.

3. Assets leased to others and prepayments on equipment As the Company’s assets leased to others did not meet the definition of investment property under IFRSs, the Company decreased assets leased to others by $35,357, increased fixed assets by $24,535 and increased other intangible assets by $10,822 on the date of transition to IFRSs.

4. Deferred expenses In accordance with current accounting standards in R.O.C., the use right of land is classified as deferred expenses. However, in accordance with IAS 17, ‘Leases’, it should be presented in ‘Long-term prepayments’. The Company accounted for computer software in ‘deferred expenses’ in accordance with current accounting standards in R.O.C., but reclassified it to ‘other intangible assets’ on the date of transition to IFRSs.

Therefore, the Company decreased deferred expenses by $114,306, increased other non-current assets by $36,870 and increased other intangible assets by $77,436 on the date of transition to IFRSs.

5. Pensions

The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan. In accordance with current accounting standards in R.O.C., the unrecognized transitional net benefit obligation should be amortized on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognized transitional net benefit obligation should be recognized as an expense immediately at the date of adoption. In accordance with current accounting standards in R.O.C., the excess of the accumulated benefit obligation over the fair value of the pension plan (fund) assets at the balance sheet date is the minimum amount of pension liability that is required to be recognized on the balance sheet (“minimum pension liability”). However, IAS 19, “Employee Benefits”, has no regulation regarding the minimum pension liability. In accordance with current accounting standards in R.O.C., actuarial pension gain or loss of the Company is recognized in net pension cost of current period using the ‘corridor’ method. However, IAS 19, “Employee Benefits”, requires that actuarial pension gain or loss should be recognized immediately in other comprehensive income. Therefore, the Company increased accrued pension liabilities and accumulated loss by $151,399 and $161,226, respectively, and decreased net loss not recognized as pension cost and deferred pension cost by $5,645 and $4,182, respectively, on the date of transition to IFRSs.

6. Cumulative translation differences The Company has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign entities under ROC GAAP to zero at the opening IFRS balance sheet date, and to deal with translation differences arising subsequent to the opening IFRS balance sheet date in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”.

Therefore, the Company decreased cumulative translation adjustment and accumulated loss both by $87,592, on the date of transition to IFRSs.

7. Capital reserve-employee stock options

The employee stock options granted from January 1, 2004 through December 31, 2007 are accounted for in

~75~

accordance with ARDF Interpretation 92-070, ARDF Interpretation 92-071 and ARDF Interpretation 92-072, ‘Accounting for Employee Stock Options’, dated March 17, 2003. Compensation cost of such employee stock options is recognised as an expense using the intrinsic value method. However, according to IFRS 2, ‘Share-based Payment’, the cost of the share-based payment arrangements stated above should be expensed at the fair value of the equity instruments over the vesting period. Therefore, the Company increased capital reserve-employee stock options and accumulated loss both by $64,910, on the date of transition to IFRSs.

8. Capital reserve-long-term investments The Company elected the exemption for previous business combinations, and adjusted capital reserve for the previous ROC GAAP capital reserve that did not meet the regulations of IFRSs. Therefore, the Company decreased capital reserve-long-term investments and accumulated loss both by $2,538, on the date of transition to IFRSs.

~76~

different accounting policies adopted as at December 31, 2012：Accounting

Standards in

R.O.C.

Adjustment IFRSs Remark

Deferred income tax assets

- current

$ 99,831 ($ 99,831) $ - (1)

Financial assets carried at

cost - current

330,029 ( 283,565) 46,464 (2)

Available-for-sale

financial assets - non -

- 283,565 283,565 (2)

Fixed Assets 1,092,421 26,392 1,118,813 (3)

Deferred pension costs 58,693 ( 58,693) - (5)

Other intangible assets 176,162 79,516 255,678 (3)(4)

Assets leased to others 34,068 ( 34,068) - (3)

Deferred expenses 107,873 ( 106,536) 1,337 (4)

Deferred income tax assets

- non-current

291,673 200,361 492,034 (1)

Other assets - non-current - 34,696 34,696 (4)

Others 5,922,346 - 5,922,346

Total assets $ 8,113,096 $ 41,837 $ 8,154,933

Deferred income tax assets

- non-current

- 100,530 100,530 (1)

Accrued pension liabilities 231,624 93,433 325,057 (5)

Others 4,427,458 - 4,427,458

Total liabilities $ 4,659,082 $ 193,963 $ 4,853,045

Cumulative translation

adjustments

25,706 ( 87,592) ( 61,886) (6)

Unrecognized pension ( 35,383) 35,383 - (5)

Capital surplus-employee

stock options

- 69,787 69,787 (7)

Capital surplus-long-term

investments

2,538 ( 2,538) - (8)

Accumulated deficit ( 2,473,799) ( 167,166) ( 2,640,965) (5)(6)

(7)(8)

Others 5,934,952 - 5,934,952

Total stockholders’ equity $ 3,454,014 ($ 152,126) $ 3,301,888

(a)Reconciliation of balance sheet accounts with material differences between

Reconciliation item：

1. Tax In accordance with current accounting standards in R.O.C., a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting, should be classified as current or noncurrent according to the expected time period to realise a deferred tax asset or liability. On the date of transition to IFRSs, deferred tax assets and liabilities should all be classified as noncurrent, and a deferred tax asset and liability can be offset only when they meet certain criteria. Therefore, the Company decreased deferred tax assets-current by $99,831, and increased deferred tax assets-noncurrent and deferred tax liabilities by $200,361 and $100,530, respectively.

2. Financial assets measured at cost-noncurrent In accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” before amendment on July 7, 2011, unlisted stocks and emerging stocks held by the Company were measured at cost and recognised as ‘Financial assets measured at cost’. However, in accordance with IAS 39, ‘Financial

~77~

Instruments: Recognition and Measurement’, they should be measured at fair value. Therefore, the Company decreased financial assets measured at cost-noncurrent by $283,565 and increased available-for-sale financial assets-noncurrent by $283,565.

3. Assets leased to others and prepayments on equipment As the Company’s assets leased to others did not meet the definition of investment property under IFRSs, the Company decreased assets leased to others by $34,068, increased fixed assets by $26,392 and increased other intangible assets by $7,676.

4. Deferred expenses

In accordance with current accounting standards in R.O.C., the use right of land is classified as deferred expenses. However, in accordance with IAS 17, ‘Leases’, it should be presented in ‘Long-term prepayments’. The Company accounted for computer software in ‘deferred expenses’ in accordance with current accounting standards in R.O.C., but reclassified it to ‘other intangible assets’ on the date of transition to IFRSs. Therefore, the Company decreased deferred expenses by $106,536, increased other non-current assets by $34,696 and increased other intangible assets by $71,840.

5. Pensions The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan. In accordance with current accounting standards in R.O.C., the unrecognized transitional net benefit obligation should be amortized on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognized transitional net benefit obligation should be recognized as an expense immediately at the date of adoption. In accordance with current accounting standards in R.O.C., the excess of the accumulated benefit obligation over the fair value of the pension plan (fund) assets at the balance sheet date is the minimum amount of pension liability that is required to be recognized on the balance sheet (“minimum pension liability”). However, IAS 19, “Employee Benefits”, has no regulation regarding the minimum pension liability. In accordance with current accounting standards in R.O.C., actuarial pension gain or loss of the Company is recognized in net pension cost of current period using the ‘corridor’ method. However, IAS 19, “Employee Benefits”, requires that actuarial pension gain or loss should be recognized immediately in other comprehensive income.

6. Cumulative translation differences The Company has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign entities under ROC GAAP to zero at the opening IFRS balance sheet date, and to deal with translation differences arising subsequent to the opening IFRS balance sheet date in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”. Therefore, the Company decreased cumulative translation adjustment and accumulated loss both by $87,592, on the date of transition to IFRSs.

7. Capital reserve-employee stock options The employee stock options granted from January 1, 2004 through December 31, 2007 are accounted for in accordance with ARDF Interpretation 92-070, ARDF Interpretation 92-071 and ARDF Interpretation 92-072, ‘Accounting for Employee Stock Options’, dated March 17, 2003. Compensation cost of such employee stock options is recognised as an expense using the intrinsic value method. However, according to IFRS 2, ‘Share-based Payment’, the cost of the share-based payment arrangements stated above should be expensed at the fair value of the equity instruments over the vesting period. Therefore, the Company increased capital reserve-employee stock options and accumulated loss by $69,787 and $64,910, respectively, and increased operating expense by $4,877, on the date of transition to IFRSs.

8. Capital reserve-long-term investments

The Company elected the exemption for previous business combinations, and adjusted capital reserve for the previous ROC GAAP capital reserve that did not meet the regulations of IFRSs. Therefore, the Company decreased capital reserve-long-term investments and accumulated loss both by $2,538, on the date of transition to IFRSs.

~78~

C. Reconciliation of income statement accounts with material differences between different accounting policies ：

Accounting

Standards in

R.O.C.

Adjustment IFRSs Remark

Operating income 1,572,956)($ 5,147$ 1,567,809)($ (1)

Other 538,328 - 538,328

Loss before income tax ($ 1,034,628) $ 5,147 ($ 1,029,481)

Reconciliation item：

1. Computing share-based payment transactions and reversing pension expenses in accordance with IFRSs.

The Company has elected the following exemptions in accordance with IFRS 1, “First-time Adoption of International Financial Reporting Standards” and “Rules Governing the Preparation of Financial Statements by Securities Issuers” that are expected to be applicable in 2013: Business combinations The Company has elected not to apply the requirements in IFRS 3, “Business Combinations”, retrospectively to business combinations that occurred prior to transition to IFRSs. Share-based payment transactions The Company has elected not to apply the requirements in IFRS 2, “Share-based Payment”, retrospectively to equity instruments that were vested arising from share-based payment transactions prior to transition to IFRSs. Employee benefits The Company has elected to recognize all cumulative actuarial gains and losses for all employee benefit plans in ‘retained earnings’ at the opening IFRS balance sheet date, and to disclose the information of present value of defined benefit obligation, fair value of plan assets, gain or loss on plan assets and experience adjustments under the requirements of paragraph 120A (P), IAS 19, “Employee Benefits”, based on their prospective amounts for financial periods from the opening IFRS balance sheet date. Cumulative translation differences The Company has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign entities under ROC GAAP to zero at the opening IFRS balance sheet date, and to deal with translation differences arising subsequent to the opening IFRS balance sheet date in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”. Compound financial instruments The Company has elected not to segregate between liability components and equity components of compound financial instruments whose liability components were not outstanding at the opening IFRS balance sheet date. Designation of previously recognized financial instruments The Company has elected to designate certain financial assets carried at cost as ‘Available-for-sale financial assets’ at the opening IFRS balance sheet date. The selection of exemptions above may be different from the actual selection at the date of transition to IFRSs due to the issuance of related regulations by competent authorities, changes in economic environment, or changes in the evaluation of the impact of the Company’s selection of exemptions.

~79~

Corporate Directory

Directors and Executive Officers

Patrick Wang Chairman of the Board

Chi-Chia Hsieh Vice-Chairman of the Board

Lee Ting Director of the Board

Wayne Chan Director of the Board

Andrew Chu Supervisor

Sue-Fung Wang Supervisor

Allen Yen Director of the Board , President and Chief Executive Officer

Allen Chen Vice President, GM of Radio Division

Shu-Huei Fuong Vice President

Hualin Chi Chief Financial Officer

Location Headquarter

Microelectronics Technology Inc. No.1, Innovation Road II Hsinchu Science Park, Taiwan Tel: 886-3-577-3335 Fax: 886-3-577-0688 MTI laboratory Inc. 201 Continental Boulevard #300, El Segundo, CA 90245 Tel: 1-310-955-3700 Fax: 1-310-955-3770 Radiocomp MTI Krakasvej 17, DK-3400 Hillerød, Denmark Tel: +45-70-23-10-24 Overseas Manufacturing Sites

Jupiter Technology (Wuxi) Co., Ltd. No.13 Minjiang Rd. Wuxi State High & New Technology Industry Development Zone, Jiangsu Province, China Tel: 86-510-8522-8800 Fax: 86-510-8522-9892