Address: 8F, No.3-1, YuanQu St., Taipei 115, Taiwan, R.O.C. (NanKang Software Park) Telephone: 886-2-2655-3988

CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT AUDITORS FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2016 AND Address: 8F, No.3-1, YuanQu St., Taipei 115, Taiwan, R.O.C. (NanKang Software Park) Telephone: 886-2-2655-3988 The reader is advised that these consolidated financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail. 1

INDEX Items Pages Cover 1 Index 2 Report of Independent Auditors 3 Consolidated Balance Sheets 4-5 Consolidated Statements of Comprehensive Income 6 Consolidated Statements of Changes in Equity 7 Consolidated Statements of Cash Flows 8 Notes to Consolidated Financial Statements 9-83 2

English Translation of Consolidated Financial Statements Originally Issued in Chinese CONSOLIDATED BALANCE SHEETS 2016, 31 December and ( 2016 and are unaudited) (Expressed in Thousands of New Taiwan Dollars) As of 2016 31 December Assets Notes Amount % Amount % Amount % Current assets Cash and cash equivalents 4 and 6 $6,828,519 31 $5,364,658 24 $5,220,762 27 Current financial assets at fair value through profit or loss 4, 5 and 6 928-5,026-8,968 - Current derivative financial assets for hedging 4, 5 and 6 151,070 1 246,129 1 365,656 2 Notes receivable, net 4 and 6 1,844,730 8 2,497,357 11 1,974,573 10 Accounts receivable, net 4 and 6 3,083,245 14 4,030,978 18 3,115,380 16 Other receivables, net 6 345,287 2 339,378 1 248,329 1 Current tax assets 4, 5 and 6 - - - - 5,158 - Inventories, manufacturing business 4 and 6 5,031,506 23 5,368,951 24 4,173,354 22 Prepayments 220,313 1 147,365 1 152,241 1 Other current assets 7 20,056-29,975-51,340 - Total current assets 17,525,654 80 18,029,817 80 15,315,761 79 Non-current assets Non-current available-for-sale financial assets 4, 5 and 6 57,653-59,797-71,631 - Non-current financial assets measured at cost 4 and 6 63,375-63,375-10 - Property, plant and equipment 4 and 6 3,421,693 16 3,380,603 15 3,260,786 17 Intangible assets 4 and 6 297,820 1 307,021 1 128,945 1 Deferred tax assets 4, 5 and 6 272,596 1 250,471 1 201,719 1 Prepayments for business facilities 22,893-131,901 1 88,417 - Guarantee deposits paid 8 22,983-29,968-25,684 - Other non-current financial assets 6 and 9 163,719 1 163,219 1 161,771 1 Long-term prepaid rents 103,362 1 106,238 1 108,032 1 Other non-current assets 1,954-5,573 - - - Total non-current assets 4,428,048 20 4,498,166 20 4,046,995 21 Total assets $21,953,702 100 $22,527,983 100 $19,362,756 100 (continued) 4

English Translation of Consolidated Financial Statements Originally Issued in Chinese CONSOLIDATED BALANCE SHEETS 2016, 31 December and ( 2016 and are unaudited) (Expressed in Thousands of New Taiwan Dollars) As of 2016 31 December Liabilities and Equity Notes Amount % Amount % Amount % Current liabilities Short-term borrowings 6 $2,354,911 11 $2,632,498 12 $3,081,753 16 Current financial liabilities at fair value through profit or loss 4, 5 and 6 5,760-3,787 - - - Current derivative financial liabilities for hedging 4, 5 and 6 143,037 1 147,298 1 - - Notes payable - - 18,940-70,823 - Accounts payable 8,810,692 40 9,230,544 41 6,950,513 36 Other payables 2,589,746 12 2,707,153 12 1,760,980 9 Current tax liabilities 4, 5 and 6 255,447 1 215,453 1 195,997 1 Current provisions 4, 5 and 6 110,360-68,168-65,093 1 Bonds payable, current portion 4 and 6 199-19,996-231,659 1 Current lease obligations payable 4 and 6 13,179-13,113-12,919 - Other current liabilities 9 310,709 1 271,556 1 227,933 1 Total current liabilities 14,594,040 66 15,328,506 68 12,597,670 65 Non-current liabilities Bonds payable 4 and 6 - - 38,830-19,834 - Deferred tax liabilities 4, 5 and 6 29,964-20,080-78,156 1 Non-current lease obligations payable 4 and 6 138,990 1 142,892 1 153,198 1 Net defined benefit liabilities noncurrent 4, 5 and 6 48,875-49,287-39,678 - Guarantee deposits received 10,012-10,753-10,269 - Total non-current liabilities 227,841 1 261,842 1 301,135 2 Total liabilities 14,821,881 67 15,590,348 69 12,898,805 67 Equity attributable to owners of parent 4 and 6 Share capital Ordinary share 2,411,278 11 2,411,278 11 2,301,397 12 Advance receipts for share capital 17,859-2,358-8,590 - Total capital stock 2,429,137 11 2,413,636 11 2,309,987 12 Capital surplus Additional paid-in capital arising from ordinary share 123,521 1 123,521 1 124,381 1 Additional paid-in capital arising from bond conversion 1,382,328 6 1,333,518 6 1,236,808 6 Employee share options 51,353-41,065-8,911 - Share options 19-5,433-22,851 - Restricted stocks to employees 25,934-25,934-26,312 - Total capital surplus 1,583,155 7 1,529,471 7 1,419,263 7 Retained earnings Legal reserve 617,780 3 617,780 3 522,850 3 Special reserve 131,678 1 131,678-131,678 - Unappropriated retained earnings 2,170,121 10 1,887,935 8 1,542,822 8 Total retained earnings 2,919,579 14 2,637,393 11 2,197,350 11 Other equity interest 196,428 1 358,567 2 532,452 3 Non-controlling interest 6 3,522 - (1,432) - 4,899 - Total equity 7,131,821 33 6,937,635 31 6,463,951 33 Total liabilities and equity $21,953,702 100 $22,527,983 100 $19,362,756 100 The accompanying notes are an integral part of the consolidated financial statements. 5

English Translation of Consolidated Financial Statements Originally Issued in Chinese CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three-month periods ended 2016 and (Expressed in Thousands of New Taiwan Dollars Except Earnings Per Share Information) For the three-month periods ended 2016 Note Amount % Amount % Operating revenues 4, 5 and 6 $8,809,588 100 $6,347,384 100 Operating costs 6 (7,572,967) (86) (5,483,448) (86) Gross profit form operations 1,236,621 14 863,936 14 Operating expenses 5, 6,7 and 9 Selling expenses (267,449) (3) (197,189) (3) Administrative expenses (218,837) (2) (179,518) (3) Research and development expenses (401,845) (5) (300,313) (5) Total operating expenses (888,131) (10) (677,020) (11) Net operating income 348,490 4 186,916 3 Non-operating income and expenses 6 Other income 20,102-27,820 - Other gains and losses 8,385 - (2,098) - Finance costs (26,095) - (11,138) - Total non-operating income and expenses 2,392-14,584 - Income before tax 350,882 4 201,500 3 Income tax expenses 4, 5 and 6 (63,613) - (34,801) - Net Income 287,269 4 166,699 3 Other comprehensive income(loss) 4 and 6 Items that way be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations (88,582) (1) (35,044) (1) Unrealized gain(loss) on available-for-sale financial assets (2,144) - 12,862 - Cash flow hedges (58,816) (1) 266,091 5 Income tax relating to components of other comprehensive income (12,726) - (45,915) (1) Other comprehensive income (loss), net of tax (162,268) (2) 197,994 3 Total comprehensive income $125,001 2 $364,693 6 Net income attributable to : Owners of parent $282,186 $167,836 Non-controlling interests 5,083 (1,137) $287,269 $166,699 Comprehensive income attributable to: Owners of parent $120,047 $365,884 Non-controlling interests 4,954 (1,191) $125,001 $364,693 Earnings per share( NT$) 4 and 6 Basic earnings per share $1.17 $0.73 Diluted earnings per share $1.15 $0.70 The accompanying notes are an integral part of the consolidated financial statements. 6

English Translation of Consolidated Financial Statements Originally Issued in Chinese CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the three-month periods ended 2016 and (Expressed in Thousands of New Taiwan Dollars) Ordinary share Share capital Advance receipts for share capital Capital surplus EQUITY ATTRIBUTABLE TO OWNERS OF PARENT Legal reserve Retained earnings Special reserve Unappropriated retained earnings Exchange differences on translation of foreign financial statements Other equity interest Unrealized gains Gains (losses) on (losses) on availablefor-sale portion of effective financial cash flow assets hedges Non-vesting restricted shares of stock distributed to employees Total equity attributable to owners of parent Non- Controlling interest Balance as of 1 January $2,292,181 $7,442 $1,390,698 $522,850 $131,678 $1,374,986 $245,994 $7,885 $83,319 $(4,176) $6,052,857 $6,090 $6,058,947 Total Equity Net income (loss) for the three-month ended - - - - - 167,836 - - - - 167,836 (1,137) 166,699 Other comprehensive gain (loss), net of tax for the three-month ended - - - - - - (34,990) 12,862 220,176-198,048 (54) 197,994 Total comprehensive income - - - - - 167,836 (34,990) 12,862 220,176-365,884 (1,191) 364,693 Conversion of convertible bonds 9,216 1,148 28,565 - - - - - - - 38,929-38,929 Compensation cost arising from restricted shares of stock - - - - - - - - - 1,382 1,382-1,382 Balance as of $2,301,397 $8,590 $1,419,263 $522,850 $131,678 $1,542,822 $211,004 $20,747 $303,495 $(2,794) $6,459,052 $4,899 $6,463,951 Balance as of 1 January 2016 $2,411,278 $2,358 $1,529,471 $617,780 $131,678 $1,887,935 $229,165 $12,353 $117,049 $- $6,939,067 $(1,432) $6,937,635 Net income for the three-month ended 2016 - - - - - 282,186 - - - - 282,186 5,083 287,269 Other comprehensive gain (loss), net of tax for the three-month ended 2016 - - - - - - (88,453) (2,144) (71,542) - (162,139) (129) (162,268) Total comprehensive income - - - - - 282,186 (88,453) (2,144) (71,542) - 120,047 4,954 125,001 Conversion of convertible bonds - 15,501 43,396 - - - - - - - 58,897-58,897 Compensation cost arising from restricted shares of stock - - 10,288 - - - - - - - 10,288-10,288 Balance as of 2016 $2,411,278 $17,859 $1,583,155 $617,780 $131,678 $2,170,121 $140,712 $10,209 $45,507 $- $7,128,299 $3,522 $7,131,821 The accompanying notes are an integral part of the consolidated financial statements. 7

English Translation of Consolidated Financial Statements Originally Issued in Chinese CONSOLIDATED STATEMENTS OF CASH FLOWS For the three-month periods ended 2016 and (Expressed in Thousands of New Taiwan Dollars) For the three-month periods For the three-month periods ended ended 2016 2016 Cash flows from operating activities: Cash flows from investing activities: Net income before tax $350,882 $201,500 Acquisition of property, plant and equipment (185,475) (61,155) Adjustments to reconcile net income before tax to net cash provided Proceeds from disposal of property, plant and equipment 69 1,836 by operating activities: Decrease (increase) in refundable deposits 6,985 (1,246) Depreciation expense 108,776 103,101 Acquisition of intangible assets (12,491) (10,905) Amortization expense 19,622 13,672 Decrease in other non-current assets 3,619 - Net loss (Gain) on financial assets at fair value through profit or loss 6,071 (1,245) Decrease (increase) in prepayments for business facilities 109,008 (6,334) Interest expense 25,825 9,626 Net cash flows used in investing activities (78,285) (77,804) Amortization of discount on bonds payable 270 1,512 Interest income (15,143) (21,565) Compensation cost arising from share-based payment plans 10,288 1,382 Cash flows from financing activities: Loss on disposal of property, plant and equipment - 1,813 Increase in short-term loans (277,587) 540,059 Changes in operating assets and liabilities: Decrease in guarantee deposits received (741) (670) Current financial assets at fair value through profit or loss - (8,648) Decrease in lease payable (3,836) (3,303) Notes receivable, net 652,627 (351,602) Net cash flows provided by financing activities (282,164) 536,086 Accounts receivable, net 947,760 (326,823) Effect of exchange rate changes on cash and cash equivalents (52,428) (19,182) Inventories 337,445 (543,870) Net increase (decrease) in cash and cash equivalents 1,463,861 (2,943) Other receivable, net 5,527 97,923 Cash and cash equivalents at beginning of period 5,364,658 5,223,705 Prepayments (70,072) 19,584 Cash and cash equivalents at end of period $6,828,519 $5,220,762 Other current assets 9,919 (4,204) Notes payable (18,940) 70,823 Accounts payable (419,852) 377,035 Other payable (116,843) 95,003 Current provisions 43,621 10,843 Other current liabilities 39,219 10,198 Net defined benefit liabilities (412) (390) Cash inflow (outflow) generated from operations 1,916,590 (244,332) Interest received 3,207 6,100 Interest paid (26,455) (31,571) Income taxes paid (16,604) (172,240) Net cash provided by (used in) operating activities 1,876,738 (442,043) The accompanying notes are an integral part of the consolidated financial statements. 8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Three-Month Periods Ended 2016 and (Expressed in Thousands of New Taiwan Dollars unless Otherwise Stated) 1. History and organization Sercomm Corporation ( the Company ) was incorporated on 29 July 1992 under the laws of the Republic of China (R.O.C.). The Company is a worldwide manufacturer of broadband and wireless networking equipment which engages mainly in the software and firmware development of broadband networking. The Company s common shares were traded on the Taipei Exchange of the R.O.C. in May 1999, and its shares were publicly listed and traded on the Taiwan Stock Exchange (TSE) in December 2007. The Company s registered office and the main business location are at 8F, No.3-1, Park St., Nangang Dist., Taipei City, Taiwan (R.O.C.). 2. Date and procedures of authorization of financial statements for issue The consolidated financial statements of the Company and its subsidiaries ( the Group ) were authorized for issue in accordance with a resolution of the Board of Directors meeting on 4 May 2016. 3. Newly issued or revised standards and interpretations Standards or interpretations issued by IASB but not yet endorsed by FSC at the date when the Group s financial statements were authorized for issue are listed below. (1) IAS 36 Impairment of Assets (Amendment) This amendment relates to the amendment issued in May 2011 and requires entities to disclose the recoverable amount of an asset (including goodwill) or a cash-generating unit when an impairment loss has been recognized or reversed during the period. The amendment also requires detailed disclosure of how the fair value less costs of disposal has been measured when an impairment loss has been recognized or reversed, including valuation techniques used, level of fair value hierarchy of assets and key assumptions used in measurement. The amendment is effective for annual periods beginning on or after 1 January 2014. 9

(2) IFRIC 21 Levies This interpretation provides guidance on when to recognize a liability for a levy imposed by a government (both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain). The interpretation is effective for annual periods beginning on or after 1 January 2014. (3) IAS 39 Financial Instruments: Recognition and Measurement (Amendment) Under the amendment, there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The interpretation is effective for annual periods beginning on or after 1 January 2014. (4) IAS 19 Employee Benefits (Defined benefit plans: employee contributions) The amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to provide a policy choice for a simplified accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. The amendment is effective for annual periods beginning on or after 1 July 2014. (5) Improvements to International Financial Reporting Standards (2010-2012 cycle): IFRS 2 Share-based Payment The annual improvements amend the definitions of vesting condition and market condition and add definitions for performance condition and service condition (which were previously part of the definition of vesting condition ). The amendment prospectively applies to share-based payment transactions for which the grant date is on or after 1 July 2014. 10

IFRS 3 Business Combinations The amendments include: (a) deleting the reference to "other applicable IFRSs" in the classification requirements; (b) deleting the reference to "IAS 37 Provisions, Contingent Liabilities and Contingent Assets or other IFRSs as appropriate", other contingent consideration that is not within the scope of IFRS 9 shall be measured at fair value at each reporting date and changes in fair value shall be recognized in profit or loss; (c) amending the classification requirements of IFRS 9 Financial Instruments to clarify that contingent consideration that is a financial asset or financial liability can only be measured at fair value, with changes in fair value being presented in profit or loss depending on the requirements of IFRS 9. The amendments apply prospectively to business combinations for which the acquisition date is on or after 1 July 2014. IFRS 8 Operating Segments The amendments require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments. The amendments also clarify that an entity shall only provide reconciliations of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly. The amendment is effective for annual periods beginning on or after 1 July 2014. IFRS 13 Fair Value Measurement The amendment to the Basis for Conclusions of IFRS 13 clarifies that when deleting paragraph B5.4.12 of IFRS 9 Financial Instruments and paragraph AG79 of IAS 39 Financial Instruments: Recognition and Measurement as consequential amendments from IFRS 13 Fair Value Measurement, the IASB did not intend to change the measurement requirements for short-term receivables and payables. IAS 16 Property, Plant and Equipment The amendment clarifies that when an item of property, plant and equipment is revalued, the accumulated depreciation at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset. The amendment is effective for annual periods beginning on or after 1 July 2014. 11

IAS 24 Related Party Disclosures The amendment clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity. The amendment is effective for annual periods beginning on or after 1 July 2014. IAS 38 Intangible Assets The amendment clarifies that when an intangible asset is revalued, the accumulated amortization at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset. The amendment is effective for annual periods beginning on or after 1 July 2014. (6) Improvements to International Financial Reporting Standards (2011-2013 cycle) IFRS 1 First-time Adoption of International Financial Reporting Standards The amendment clarifies that an entity, in its first IFRS financial statements, has the choice between applying an existing and currently effective IFRS or applying early a new or revised IFRS that is not yet mandatorily effective, provided that the new or revised IFRS permits early application. IFRS 3 Business Combinations This amendment clarifies that paragraph 2(a) of IFRS 3 Business Combinations excludes the formation of all types of joint arrangements as defined in IFRS 11 Joint Arrangements from the scope of IFRS 3; and the scope exception only applies to the financial statements of the joint venture or the joint operation itself. The amendment is effective for annual periods beginning on or after 1 July 2014. IFRS 13 Fair Value Measurement The amendment clarifies that paragraph 52 of IFRS 13 includes a scope exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis. The objective of this amendment is to clarify that this portfolio exception applies to all contracts within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation. The amendment is effective for annual periods beginning on or after 1 July 2014. 12

IAS 40 Investment Property The amendment clarifies the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property; in determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3 Business Combinations and investment property as defined in IAS 40 Investment Property, separate application of both standards independently of each other is required. The amendment is effective for annual periods beginning on or after 1 July 2014. (7) IFRS 14 Regulatory Deferral Accounts IFRS 14 permits first-time adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognize such amounts, the Standard requires that the effect of rate regulation must be presented separately from other items. IFRS 14 is effective for annual periods beginning on or after 1 January 2016. (8) IFRS 11 Joint Arrangements (Accounting for Acquisitions of Interests in Joint Operations) The amendments provide new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments require the entity to apply all of the principles on business combinations accounting in IFRS 3 Business Combinations, and other IFRS (that do not conflict with the guidance in IFRS 11), to the extent of its share in a joint operation acquired. The amendment also requires certain disclosure. The amendment is effective for annual periods beginning on or after 1 January 2016. (9) IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets Clarification of Acceptable Methods of Depreciation and Amortization The amendment clarified that the use of revenue-based methods to calculate depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset, such as selling activities and change in sales volumes or prices. The amendment also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The amendment is effective for annual periods beginning on or after 1 January 2016. 13

(10) IFRS 15 Revenue from Contracts with Customers The core principle of the new Standard is for companies to recognize revenue to depict the transfer of promised goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The new Standard includes a cohesive set of disclosure requirements that would result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers. The Standard is effective for annual periods beginning on or after 1 January 2018. (11) IAS 16 Property, Plant and Equipment and IAS 41 Agriculture Agriculture: Bearer Plants The IASB decided that bearer plants should be accounted for in the same way as property, plant and equipment in IAS 16 Property, Plant and Equipment, because their operation is similar to that of manufacturing. Consequently, the amendments include them within the scope of IAS 16, and the produce growing on bearer plants will remain within the scope of IAS 41. The amendment is effective for annual periods beginning on or after 1 January 2016. (12) IFRS 9 Financial Instruments The IASB has issued the final version of IFRS 9, which combines classification and measurement, the expected credit loss impairment model and hedge accounting. The standard will replace IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9 Financial Instruments (which include standards issued on classification and measurement of financial assets and liabilities and hedge accounting). 14

Classification and measurement: Financial assets are measured at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity s business model for managing the financial assets and the financial asset s contractual cash flow characteristics. Financial liabilities are measured at amortized cost or fair value through profit or loss. Furthermore there is requirement that own credit risk adjustments are not recognized in profit or loss. Impairment: Expected credit loss model is used to evaluate impairment. Entities are required to recognize either 12-month or lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial recognition. Hedge accounting: Hedge accounting is more closely aligned with risk management activities and hedge effectiveness is measured based on the hedge ratio. The new standard is effective for annual periods beginning on or after 1 January 2018. (13) IAS 27 Separate Financial Statements Equity Method in Separate Financial Statements The IASB restored the option to use the equity method under IAS 28 for an entity to account for investments in subsidiaries and associates in the entity s separate financial statements. In 2003, the equity method was removed from the options. This amendment removes the only difference between the separate financial statements prepared in accordance with IFRS and those prepared in accordance with the local regulations in certain jurisdictions. The amendment is effective for annual periods beginning on or after 1 January 2016. (14) IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full. 15

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors interests in the associate or joint venture. The effective date of this amendment has been postponed indefinitely, but early adoption is allowed. (15) Improvements to International Financial Reporting Standards (2012-2014 cycle) IFRS 5 Non-current Assets Held for Sale and Discontinued Operations The amendment clarifies that a change of disposal method of assets (or disposal groups) from disposal through sale or through distribution to owners (or vice versa) should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. The amendment also requires identical accounting treatment for an asset (or disposal group) that ceases to be classified as held for sale or as held for distribution to owners. The amendment is effective for annual periods beginning on or after 1 January 2016. IFRS 7 Financial Instruments: Disclosures The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset and therefore the disclosures for any continuing involvement in a transferred asset that is derecognized in its entirety under IFRS 7 Financial Instruments: Disclosures is required. The amendment also clarifies that whether the IFRS 7 disclosure related to the offsetting of financial assets and financial liabilities are required to be included in the condensed interim financial report would depend on the requirements under IAS 34 Interim Financial Reporting. The amendment is effective for annual periods beginning on or after 1 January 2016. IAS 19 Employee Benefits The amendment clarifies the requirement under IAS 19.83, that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. The amendment is effective for annual periods beginning on or after 1 January 2016. 16

IAS 34 Interim Financial Reporting The amendment clarifies what is meant by elsewhere in the interim financial report under IAS 34; the amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report. The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. The amendment is effective for annual periods beginning on or after 1 January 2016. (16) Disclosure Initiative Amendment to IAS 1 Presentation of Financial Statements : The amendments contain (a) clarifying that an entity must not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. The amendments reemphasize that, when a standard requires a specific disclosure, the information must be assessed to determine whether it is material and, consequently, whether presentation or disclosure of that information is warranted, (b) clarifying that specific line items in the statement(s) of profit or loss and OCI and the statement of financial position may be disaggregated, and how an entity shall present additional subtotals, (c) clarifying that entities have flexibility as to the order in which they present the notes to financial statements, but also emphasize that understandability and comparability should be considered by an entity when deciding on that order, (d) removing the examples of the income taxes accounting policy and the foreign currency accounting policy, as these were considered unhelpful in illustrating what significant accounting policies could be, and (e) clarifying that the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, classified between those items that will or will not be subsequently reclassified to profit or loss. The amendment is effective for annual periods beginning on or after 1 January 2016. (17) IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities, and IAS 28 Investments in Associates and Joint Ventures Investment Entities: Applying the Consolidation Exception The amendments contain (a) clarifying that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity when the investment entity measures all of its subsidiary at fair value, (b) clarifying that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated when all other subsidiaries of an investment entity are measured at fair value, and (c) allowing the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries. The amendment is effective for annual periods beginning on or after 1 January 2016. 17

(18) IFRS 16 Leases The new standard requires lessees to account for all leases under a single on-balance sheet model (subject to certain exemptions). Lessor accounting still uses the dual classification approach: operating lease and finance lease. The Standard is effective for annual periods beginning on or after 1 January 2019. (19) IAS 12 Income Taxes Recognition of Deferred Tax Assets for Unrealized Losses The amendment clarifies how to account for deferred tax assets for unrealized losses. The amendment is effective for annual periods beginning on or after 1 January 2017. (20) Disclosure Initiative Amendment to IAS 7 Statement of Cash Flows : The amendment relates to changes in liabilities arising from financing activities and to require a reconciliation of the carrying amount of liabilities at the beginning and end of the period. The amendment is effective for annual periods beginning on or after 1 January 2017. (21) IFRS 15 Revenue from Contracts with Customers (Amendment) The amendment clarifies how to identify a performance obligation in a contract, determine whether an entity is a principal or an agent, and determine whether the revenue from granting a license be recognized at a point in time or over time. The amendment is effective for annual periods beginning on or after January 1, 2018. The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group s financial statements were authorized for issue, the local effective dates are to be determined by FSC. As the Group is still currently determining the potential impact of the standards and interpretations listed under (10) and (12) ~ (21), it is not practicable to estimate their impact on the Group at this point in time. All other standards and interpretations have no material. 4. Summary of significant accounting policies (1) Statement of compliance The consolidated financial statements of the Group for the three-month periods ended 31 March 2016 and have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers ( the Regulations ) and TIFRS as endorsed by the FSC, and IAS 34 Interium Financial Reporting. 18

(2) Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars ( NTD ) unless otherwise stated. (3) Basis of consolidation Preparation principle of consolidated financial statement Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: (a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect its returns When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: (a) the contractual arrangement with the other vote holders of the investee (b) rights arising from other contractual arrangements (c) the Group s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the acquisition date, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full. 19

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. If the Company loses control of a subsidiary, it: (a) derecognizes the assets (including goodwill) and liabilities of the subsidiary; (b) derecognizes the carrying amount of any non-controlling interest; (c) recognizes the fair value of the consideration received; (d) recognizes the fair value of any investment retained; (e) recognizes any surplus or deficit in profit or loss; and (f) reclassifies the parent s share of components previously recognized in other comprehensive income to profit or loss. The consolidated entities are listed as follows: Percentage of ownership (%) 31 December Investor Subsidiary Main businesses 2016 Note The Company Senslinq Inc. Sales of IT products 100% 100% 100% a The Company Sercomm Trading Co. Ltd. Investment holding and 100% 100% 100% international trading The Company Shukuan Investment Ltd. Investment activity 100% 100% 100% a The Company Sercomm France SARL Sales of IT products 100% 100% 100% a The Company Sercomm Deutschland GmbH Sales of IT products 100% 100% 100% a The Company Sercomm Japan Corp. Sales of IT products 100% 100% 100% a The Company Sercomm Russia Limited Liability Company Sales of IT products 100% 100% 100% a Sercomm Trading Co. Ltd. Zealous Investments Ltd. Investment holding and 100% 100% 100% international trading Sercomm Trading Co. Ltd. Smart Trade Inc. Investment holding and 100% 100% 100% international trading 20

Percentage of ownership (%) 31 December Investor Subsidiary Main businesses 2016 Note Zealous Investments Ltd. Sernet Technology (Suzhou) Manufacture of routers, 100% 100% 100% Limited communication products, Wlan products; sales and after-sales service Zealous Investments Ltd Hawxeye Inc. Provide computer learning 40% 40% 40% a technology on video object analysis embedded on IP camera Smart Trade Inc. Dwnet Technology (Suzhou) Manufacture of routers, 100% 100% 100% Limited communication products, Wlan products; sales and after-sales service Sercomm France SARL Sercomm Italia SRL Sales of IT products 100% 100% 100% a Sernet Technology Suzhou Hua-Yi Communications Manufacture of routers, 100% 100% 100% a (Suzhou)Limited Co., Ltd. communication products, Wlan products; R&D center of software; sales and after-sales service Sernet Technology Suzhou Femtel Communications Manufacture of 100% 100% - a (Suzhou) Limited Co., Ltd. communication products; R&D center of software; sales and after-sales service Senslinq Inc. Hawxeye Inc. Provide computer learning 40% 40% 40% a technology on video object analysis embedded on IP camera Suzhou Femtel Nanjing Femtel Communications Sale of communication 100% 100% - a Communications Co., Co., Ltd. products; R&D center of Ltd. software; after-sales service Note a: This is an immaterial subsidiary for which the consolidated financial statements are not reviewed by the company s independent auditors. 21

The financial statements of some of the consolidated subsidiaries listed above were not reviewed by auditors. As of 2016 and, the related assets of the subsidiaries which were unreviewed by auditors amounted to NT$425,584 thousand and NT$5,194,067 thousand, respectively, and the related liabilities amounted to NT$116,177 thousand and NT$3,350,801 thousand, respectively. The comprehensive income of these subsidiaries amounted to NT$(45,734) thousand and NT$43,825 thousand for the three-month periods ended 2016 and, respectively. 4. The same accounting policies have been applied in the Group s consolidated financial statements for the three-month period ended March 31, 2016 as those applied in the Group s consolidated financial statements for the year ended December 31,. For the summary of other significant accoountng policies, please refer to the Group s consolidated financial statements for year ended December 31,. 5. Significant accounting judgements, estimates and assumptions The same significanr accounting judgments, estimates and assumptions have been applied in the Group s consolidated financial statements for the three-month period ended March 31, 2016 as those applied in the Group s consolidated financial statements for the year ended December 31,. For significant accounting judgments, estimates and assumptions, please refer to the Group s consolidated financial statements for the year ended December 31,. 6. Contents of significant accounts (1) Cash and cash equivalents As at 2016 31 December Cash on hand $1,950 $2,188 $2,442 Checking accounts and demand deposits 3,075,142 2,277,528 2,480,334 Time deposits 3,533,073 2,310,389 2,431,110 Cash equivalents-bank s acceptance bill 218,354 774,553 306,876 Total $6,828,519 $5,364,658 $5,220,762 The Cash equivalents is Bank s acceptance bill that have maturity within 3 months. 22

(2) Current financial assets and liabilities at fair value through profit or loss Financial assets at fair value through profit or loss: As at 2016 31 December Held for trading: Derivatives not designated as hedging instruments Forward foreign exchange contracts $928 $5,026 $8,968 Financial liabilities at fair value through profit or loss: As at 2016 31 December Held for trading: Derivatives not designated as hedging instruments Forward foreign exchange contracts $5,760 $3,787 $- (a) The Group entered into forward exchange contracts to sell various forward foreign currencies to hedge exchange rate risk of export proceeds. However, these forward exchange contracts are not accounted for under hedge accounting. (b) The unexpired contracts are as follows: Forward foreign exchange contracts Forward foreign exchange contracts Forward foreign exchange contracts As at 2016 Currency Contract Period Contract Amount Sell EUR/Buy NTD.12.31-2016.06.22 EUR 7,180 thousand Buy USD/Sell RUB 2016.03.10-2016.05.25 USD 510 thousand Buy USD/Sell RMB 2016.08.17-2016.08.05 USD 10,618 thousand 23

As at 31 December Currency Contract Period Contract Amount Forward foreign Sell EUR/Buy NTD.09.30-2016.04.06 EUR 7,770 thousand exchange contracts Forward foreign Buy USD/Sell RUB.12.29-2016.02.29 USD 400 thousand exchange contracts Forward foreign Sell USD/Buy NTD.12.29-2016.02.18 USD 1,500 thousand exchange contracts Forward foreign Buy USD/Sell RMB.08.17-2016.05.05 USD 19,615 thousand exchange contracts As at Currency Contract Period Contract Amount Forward foreign Sell EUR/Buy NTD 2014.12.26-.06.15 EUR 4,231 thousand exchange contracts (c) For the three-month periods ended 2016 and, the Group recognized a gain (loss) of financial assets or liabilities at fair value through profit or (loss) of NT$(11,805) thousand and NT$16,945 thousand, respectively. (d) Financial assets held for trading were not pledged. (3) Non-current available-for-sale financial assets As at 2016 31 December Stocks $47,444 $47,444 $50,884 Valuation adjustments 10,209 12,353 20,747 Net $57,653 $59,797 $71,631 Available-for-sale financial assets were not pledged. 24

(4) Non-current financial assets measured at cost As at 2016 31 December Available-for-sale financial assets Stocks $63,375 $63,375 $10 Less: Accumulated impairment - - - Total $63,375 $63,375 $10 The fair value of the above investments in unlisted entities are not reliably measurable as the variability in the range of reasonable fair value measurements is significant for the instrument and the probabilities of the various estimates within the range cannot be reasonably assessed and used when measuring fair value. Therefore these investments are measured at cost. The financial assets measured at cost were not pledged. (5) Notes receivables As at 2016 31 December Notes receivable arising from operating $1,844,730 $2,497,357 $1,974,573 activities Less: allowance for doubtful debts - - - Total $1,844,730 $2,497,357 $1,974,573 Notes receivables were not pledged. As of 2016, the discounted notes receivable were NT$492,014 thousand, and have been deducted from the balance of notes receivable. 25

(6) Accounts receivable 2016 As at 31 December Accounts receivable $3,091,363 $4,039,833 $3,122,728 Less: allowance for doubtful debts (8,118) (8,855) (7,348) Total $3,083,245 $4,030,978 $3,115,380 Accounts receivable were not pledged. Accounts receivable are generally on 30-270 day terms. The movements in the provision for impairment of accounts receivable are as follows (please refer to Note 12 for credit risk disclosure): Individually impaired Collectively impaired Total As at 1 January 2016 $- $8,855 $8,855 Charge/reversal for the current period - (710) (710) Write off - - - Exchange differences - (27) (27) As at 2016 $- $8,118 $8,118 As at 1 January $- $7,360 $7,360 Charge/reversal for the current period - - - Write off - - - Exchange differences - (12) (12) As at $- $7,348 $7,348 Ageing analysis of accounts receivable that are past due as at the end of the reporting period but not impaired is as follows: Neither past due nor Past due but not impaired As at impaired <=30 days 31~90 days 91~180 days 181~360 days Total 2016 $2,854,049 $189,913 $30,567 $5,310 $3,406 $3,083,245 31 December 3,742,165 263,302 10,921 8,520 6,070 4,030,978 2,625,271 404,719 74,381 678 10,331 3,115,380 26

The Group entered into accounts receivable factoring agreements (without recourse) with several financial institutes in Taiwan. Under the agreements, the Group has surrendered control over the receivable to the factors. The factors had fully paid out the sales proceeds and assumed substantially all risks of collection as receivable were transferred. As of 2016, 31 December and, trade receivables derecognized were as follows: As at 2016 Trade The Factor (Transferee) Interest rate receivables derecognized (USD$ 000) Cash withdrawn (USD$ 000) Unutilized (USD$ 000) Credit line ($ 000) DBS Bank (Taiwan) 1.16~1.24 $41,340 $(36,078) $5,262 USD 72,000 BNP Paribas (Taiwan) 0.71~0.75 3,878 (3,512) 366 EUR 30,000 TaiShin Bank - 165-165 USD 1,000 Total $45,383 $(39,590) $5,793 As at 31 December Trade The Factor (Transferee) Interest rate receivables derecognized (USD$ 000) Cash withdrawn (USD$ 000) Unutilized (USD$ 000) Credit line ($ 000) DBS Bank (Taiwan) 0.96~1.00 $40,704 $(34,051) $6,653 USD 72,000 BNP Paribas (Taiwan) 0.65~0.70 3,641 (3,625) 16 EUR 30,000 TaiShin Bank - 5-5 USD 500 Total $44,350 $(37,676) $6,674 As at Trade The Factor (Transferee) Interest rate receivables derecognized (USD$ 000) Cash withdrawn (USD$ 000) Unutilized (USD$ 000) Credit line ($ 000) DBS Bank (Taiwan) 0.88 $27,787 $(24,206) $3,581 USD 34,200 BNP Paribas (Taiwan) 0.52 8,872 (8,690) 182 EUR 15,000 Total $36,659 $(32,896) $3,763 27

The details of accounts receivable derecognized as follows: The Factor (Transferee) 2016 As at 31 December DBS Bank (Taiwan) $169,874 $219,989 $112,449 BNP Paribas (Taiwan) 11,779 524 5,694 Taishin Bank 5,330 155 - Total $186,983 $220,668 $118,143 (7) Inventories 2016 As at 31 December Raw materials and supplies $1,751,972 $2,014,901 1,844,343 Work in progress 834,967 397,142 581,472 Finished goods 2,444,567 2,956,908 1,747,539 Total $5,031,506 $5,368,951 $4,173,354 The cost of inventories recognized in expenses amounts to NT$7,572,967 thousand and NT$5,483,448 thousand for the three-month periods ended 2016 and, including the write-down of inventories of NT$20,903 thousand and NT$18,012 thousand, respectively. No inventories were pledged. (8) Other financial assets 2016 As at 31 December Trust asset $163,719 $163,219 $161,771 Description of the trust assets, please refer to Note 9. No other financial assets were pledged. 28

(9) Property, plant and equipment Land Buildings Machinery and equipment Research and development equipment Office and other equipment Leased assets Construction in progress Total Cost: As at 1 January 2016 $382,089 $1,399,574 $2,141,447 $548,559 $336,961 $290,341 $2,606 $5,101,577 Additions 50,920 64,707 27,925 19,495 13,695-8,733 185,475 Disposals - - (2,824) - (1,925) - - (4,749) Reclassifications - 853 - - 9,228 - - 10,081 Exchange differences - (17,346) (37,312) (5,406) (1,079) - (51) (61,194) As at 2016 $433,009 $1,447,788 $2,129,236 $562,648 $356,880 $290,341 $11,288 $5,231,190 As at 1 January $382,089 $1,403,089 $1,783,530 $501,596 $312,551 $290,341 $1,744 $4,674,940 Additions - - 44,037 7,986 8,049-1,083 61,155 Disposals - - (14,814) - (286) - - (15,100) Transfers - - 1,727-1,505 - (1,727) 1,505 Exchange differences - (8,178) (14,479) (2,393) (1,290) - (17) (26,357) As at $382,089 $1,394,911 $1,800,001 $507,189 $320,529 $290,341 $1,083 $4,696,143 Depreciation and impairment: As at 1 January 2016 $- $178,120 $968,517 $342,510 $180,416 $51,411 $- $1,720,974 Depreciation - 8,636 70,193 17,628 11,280 1,039-108,776 Disposals - - (2,755) - (1,925) - - (4,680) Reclassifications - 853 - - 9,606 - - 10,459 Exchange differences - (2,875) (18,368) (3,966) (823) - - (26,032) As at 2016 $- $184,734 $1,017,587 $356,172 $198,554 $52,450 $- $1,809,497 As at 1 January $- $145,192 $707,227 $290,415 $163,486 $47,257 $- $1,353,577 Depreciation - 8,443 66,368 14,862 12,389 1,039-103,101 Disposals - - (11,188) - (263) - - (11,451) Transfers - - - - 525 - - 525 Exchange differences - (1,157) (6,622) (1,706) (910) - - (10,395) As at $- $152,478 $755,785 $303,571 $175,227 $48,296 $- $1,435,357 Net carrying amount as at: 2016 $433,009 $1,263,054 $1,111,649 $206,476 $158,326 $237,891 $11,288 $3,421,693 31 December $382,089 $1,221,454 $1,172,930 $206,049 $156,545 $238,930 $2,606 $3,380,603 $382,089 $1,242,433 $1,044,216 $203,618 $145,302 $242,045 $1,083 $3,260,786 The Company rented the Nankang Software Industrial Park office by capital lease, please refer to Note 6.(15). No property, plant and equipment were pledged. 29