Vitafoss International Group Co., Ltd. - Interim / Quarterly Report 2020

Stock Code ： 2939

Kayee International Group Co., Ltd and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30,2020 and 2019 and Independent Auditors’ Report

Address：The Grand Pavilion Commercial Centre, Oleander Way,

802 West Bay Road,P.O. Box 32052, Grand Cayman KY1-1208, Cayman Islands.

Tel：+886-2-2929-5373

-1-

INDEPEDNENT AUDITORS’ Review Report

The Board of Directors and Stockholders Kayee International Group Co., Ltd

Introduction

We have reviewedthe accompanying consolidated balance sheets of Kayee International Group Co., Ltd (the "Company") and subsidiaries (collectively referred to as the “Group”) as of June 30, 2020 and 2019, the related consolidated statements of comprehensive income for the three months ended June 30, 2020 and 2019 and for the six months ended June 30,2020 and 2019, the consolidated statements of changes in equity and cash flows for the six months then ended, and then related notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards no.65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects the consolidated financial position of the Company as of June 30, 2020 and 2019, and its consolidated financial performance for the three months ended June 30, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

-2-

The engagement partners on the reviews resulting in this independent auditors’ review report are Liao Wan Yi and Chang Keng Hsi.

Deloitte & Touche Taipei, Taiwan Republic of China August 6, 2020

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English form the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail.

-3-

Kayee International Group Co., Ltd and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

==> picture [716 x 818] intentionally omitted <==

----- Start of picture text -----

June 30, 2020 December 31, 2019 June 30, 2019
(Reviewed) (Audited) (Reviewed)
Code ASSETS Amount ％ Amount ％ Amount ％
CURRENT ASSETS
1100 Cash and cash equivalents (Note 6) $ 441,958 32 $ 570,907 32 $ 1,236,501 60
1110 Financial assets at fair value through profit or loss
(Note 7 & 27) 21,997 2 - - 9,114 -
1120 Financial assets measured at fair value through other
comprehensive profit and loss (Note 8 & 27) - - - - 1,548 -
1136 Financial assets at amortized cost (Note 9) 117,595 9 530,641 30 339,746 17
1170 Accounts receivable, net (Note 10 & 21) 388,408 28 390,293 22 316,116 15
1200 Other receivables (Note 10 & 22) 75,415 5 42,431 2 4,245 -
1220 Current tax assets 175 - 1,848 - 1,340 -
130X Inventories (Note 11) 83,881 6 91,315 5 32,160 2
1410 Prepayments (Note 12 & 28) 99,000 7 12,338 1 28,136 1
1479 Other current assets (Note 13) 7,846 1 14,956 1 11,261 1
11XX Total current assets 1,236,275 90 1,654,729 93 1,980,167 96
NON-CURRENT ASSETS
1600 Property, plant and equipment (Note 15) 35,991 3 26,765 1 29,284 2
1755 Right-of-use asset(Note 16 & 28) 61,027 4 70,458 4 27,329 1
1780 Intangible assets 1,108 - 1,712 - 2,130 -
1840 Deferred tax assets 15,719 1 12,590 1 15,275 1
1920 Refundable deposits (Note 28) 6,339 1 5,689 - 6,201 -
1990 Other non-current assets 11,646 1 11,957 1 4,572 -
15XX Total non-current assets 131,830 10 129,171 7 84,791 4
1XXX Total $ 1,368,105 100 $ 1,783,900 100 $ 2,064,958 100
C o d e LIABILITIES AND EQUITY
CURRENT LIABILITIES
2130 Contract liabilities (Note 21) $ 10,644 1 $ 3,623 - $ 6,125 -
2170 Accounts payable (Note 17) 130,382 9 151,253 9 126,111 6
2180 Accounts payable to related parties (Note 28) 24,723 2 1,010 - 704 -
2200 Other payables (Note 18 & 28) 78,053 6 95,556 6 545,755 26
2230 Income tax payable 39,019 3 39,516 2 33,325 2
2280 Lease liabilities (Note 16 & 28) 17,728 1 18,957 1 13,190 1
2399 Other current Liabilities 1,047 - 1,784 - 2,046 -
21XX Total current liabilities 301,596 22 311,699 18 727,256 35
NON-CURRENT LIABILITIES
2600 Current tax liabilities 26,158 2 - - - -
2570 Deferred tax liabilities 49 - 79 - 229 -
2580 Lease liabilities (Note 16 & 28) 43,172 3 43,474 2 15,077 1
25XX Total non-current liabilities 69,379 5 43,553 2 15,306 1
2XXX Total liabilities 370,975 27 355,252 20 742,562 36
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF
THE PARENT （ Note 20 ）
3100 Capital stock 457,487 33 472,227 27 472,227 23
3200 Capital surplus 555,622 41 573,524 32 573,524 28
Retained earnings
3310 Appropriated as legal reserve 150,590 11 126,956 7 126,956 6
3320 Appropriated as special reserve 13,230 1 6,888 - 6,888 -
3350 Unappropriated earnings ( 178,333 ) ( 13 ) 246,791 14 133,178 7
3400 Other equity ( 15,482 ) ( 1 ) ( 13,230 ) ( 1 ) ( 6,974 ) ( 1 )
31XX Equity attributable to shareholders of the parent 983,114 72 1,413,156 79 1,305,799 63
36XX NON-CONTROLLING INTERESTS 14,016 1 15,492 1 16,597 1
3XXX Total equity 997,130 73 1,428,648 80 1,322,396 64
Total $ 1,368,105 100 $ 1,783,900 100 $ 2,064,958 100
----- End of picture text -----

The accompanying notes are integral part fo the consolidated financial statements.

-4-

Kayee International Group Co., Ltd and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

==> picture [729 x 50] intentionally omitted <==

----- Start of picture text -----

For the Three Months Ended June 30 For the Six Months Ended June 30
2020 2019 2020 2019
Code Amount ％ Amount ％ Amount ％ Amount ％
OPERATIN REVENUE (Note21)
----- End of picture text -----

4110 Sales 4170 Sales return 4190 Sales discounts and allowances 4000 Total operating revenue 5000 OPERATING COSTS (Note 11, 22 & 28) 5900 GROSS PROFIT OPERATING EXPENSES (Note 22 & 28) 6100 Selling and marketing 6200 General and administrative 6300 Research and development 6450 Expected credit loss (Note 10) ( 6000 Total operating expenses 6500 OTHER OPERATING INCOME AND EXPENSES (Note 22) ( 6900 PROFIT FROM OPERATIONS ( NON-OPERATING INCOME AND EXPENSES 7010 Other Income (Note 22) 7100 Interest Income 7225 Gains on disposals of financial assets 7630 Foreign exchange gains (Note 22) ( 7635 Loss on financial assets at fair value through profit or loss	$ 556,202 102 4,099 1 5,019 1 547,084 100 474,979 87 72,105 13 47,454 9 22,242 4 2,367 - 1,561) - ( 70,502 13 102,458) (18) 100,855) (18) 2,109 - 2,081 - - - 12,397 ) ( 2 ) 9,033 2 (	$ 442,242 102 4,831 1 3,299 1 434,112 100 321,296 74 112,816 26 54,103 13 27,424 6 1,248 - 42) - 82,733 19 - - ( 30,083 7 ( 2,366 - 8,799 2 2,843 1 11,931 3 ( 1,705 ) ( 1 ) (	$ 925,263 101 4,171 - 7,471 1 913,621 100 719,638 79 193,983 21 90,621 10 47,326 5 3,187 1 860 - 141,994 16 102,458) (11) ( 50,469) ( 6) 2,878 - 7,238 1 - - 4,375 ) - 7,906 ) ( 1 ) (	$ 1,070,438 101 6,500 - 7,145 1 1,056,793 100 760,062 72 296,731 28 106,842 10 63,386 6 2,023 1 1,104 - 173,355 17 1,034) - 122,342 11 3,365 - 17,248 2 3,497 - 16,972 2 1,637 ) - (Continued)

-5-

7590 Other losses 7050 Foreign exchange gains (Note 22 & 28) ( 7000 Total non-operating income and expenses 7900 PROFIT BEFORE TAX ( 7950 INCOME TAX EXPENSE (Note 23) 8200 NET INCOME(LOSS) ( OTHER COMPREHENSIVE INCOME (LOSS) 8310 Items that will not be reclassified subsequently to profit or loss: 8316 Equity investments measured at fair value through other comprehensive unrealized profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences arising on translation of foreign operations ( 8300 Other comprehensive income (loss) for the period, net of income tax ( 8500 TOTAL COMPREHENSIVE INCOME FOR THE PERID ( NET INCOME (LOSS) ATTRIBUTABLE TO: 8610 Shareholders of the parent ( 8620 Non-controlling interests ( 8600 (	- - ( 661) - ( 165 - 100,690 ) ( 18 ) 11,435 2 112,125) (20) - - ( 2,604) - ( 2,604) - ( $ 114,729 ) ( 20 ) $ 111,192 ) ( 20 ) 933) - ( $ 112,125 ) ( 20 )	5 ) - 325) - ( 23,904 5 ( 53,987 12 ( 9,316 2 44,671 10 ( 4 ) - 1,969) - ( 1,973) - ( $ 42,698 10 ( $ 46,210 10 ( 1,539) - ( $ 44,671 10 (	- - ( 1,412) - ( 3,577) - 54,046 ) ( 6 ) 20,735 2 74,781) ( 8) - - ( 2,674) - 2,674) - $ 77,455 ) ( 8 ) $ 73,727 ) ( 8 ) 1,054) - $ 74,781 ) ( 8 )	6 ) - 684) - 38,755 4 161,097 15 35,494 3 125,603 12 4 ) - 36 - 32 - $ 125,635 12 $ 123,209 12 2,394 - $ 125,603 12 (Continued)

-6-

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: 8710 Shareholders of the parent ( 8720 Non-controlling interests ( 8700 ( EARNINGS PER SHARE (Note 24) 9710 Basic earnings per share ( 9810 Diluted earnings per share	$ 113,508 ) ( 21 ) 1,221) - ( $ 114,729 ) ( 21 ) $ 2.43 )	$ 44,452 10 ( 1,754) - ( $ 42,698 10 ( $ 0.98 ( $ 0.98	$ 75,979 ) ( 8 ) 1,476) - $ 77,455 ) ( 8 ) $ 1.59 )	$ 123,123 12 2,512 - $ 125,635 12 $ 2.61 $ 2.61

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

-7-

Kayee International Group Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

CODE A1 BALANCE, JANUARY 1, 2019 Appropriation of 2018 earnings B1 Legal Capital Reserve B3 Special Capital Reserve B5 Cash dividend distributed by the Company-$6 per share C11 Capital Surplus to cover losses C15 Dividends from from Capital Surplus L1 Retirement of treasury shares D1 Net profit for the six months ended June 30, 2019 D3 Other comprehensive income for the six months ended June 30, 2019, net of income tax D5 Total comprehensive income for the six months ended June 30, 2019 Z1 BALANCE, JUNE 30, 2019 A1 BALANCE, JANUARY 1, 2020 Appropriation of 2019 earnings B1 Legal Capital Reserve B3 Special Capital Reserve B5 Cash dividend distributed by the Company-$4.5 per share D1 Net loss for the six months ended June 30, 2020 D3 Other comprehensive income (loss) for the six months ended June 30, 2019, net of income tax D5 Total comprehensive income (loss) for the six months ended June 30, 2019 L1 Purchase of Treasury Shares L1 Retirement of treasury shares Z1 BALANCE, JUNE 30, 2020		Capital Stock – Common Stock Shares (In Thousands) Amount (Note 20) Capital Surplus (Note 20) 48,023 $ 480,227 $ 733,967 - - - - - - - - - - - - - - ( 6,659) - - ( 141,668) 800) ( 8,000) ( 12,116) - - - - - - - - - 47,223 $ 472,227 $ 573,524 47,223 $ 472,227 $ 573,524 - - - - - - - - - - - - - - - - - - - - - - - - 1,474) ( 14,740) ( 17,902) 45,749 $ 457,487 $ 555,622		Retained Earnings Legal Capital Reserve Special Capital Reserve Unappropriated Earnings $ 85,694 $ 5,523 $ 405,961 41,262 - ( 41,262 ) - 1,365 ( 1,365 ) - - ( 283,336) 41,262 1,365 ( 325,963) - - 6,659 - - - - - ( 76,688) - - 123,209 - - - - - 123,209 $ 126,956 $ 6,888 $ 133,178 $ 126,956 $ 6,888 $ 246,791 23,634 - ( 23,634 ) - 6,342 ( 6,342 ) - - ( 208,798) 23,634 6,342 ( 238,774) - - ( 73,727 ) - - - - - ( 73,727) - - - - - ( 112,623) $ 150,590 $ 13,230 ( $ 178,333 )	Other Equity (Note 20) Exchange Differences on Translation of the Foreign Operations Equity investments measured at fair value through other comprehensive unrealized profit or loss Treasury Shares (Note 20) ($ 6,888) $ - ($ 96,804) - - - - - - - - - ( - - - ( - - - - - - ( - - 96,804 - - - ( 82) ( 4) - ( ( 82) ( 4) - ( $ 6,970 ) ( $ 4 ) $ - ($ 13,230) $ - $ - - - - - - - - - - ( - - - ( - - - ( ( 2,252) - - ( ( 2,252) - - ( - - ( 145,265) ( - - 145,265 ( $ 15,482 ) $ - $ -	Total Non-controlling Interests (Note 20) $ 1,607,680 $ 14,085 - - - - 283,336) - ( 283,336) - ( - - 141,668) - ( - - 123,209 2,394 86) 118 123,123 2,512 $ 1,305,799 $ 16,597 $ 1,413,156 $ 15,492 - - - - 208,798) - ( 208,798) - ( 73,727 ) ( 1,054 ) ( 2,252) ( 422) ( 75,979) ( 1,476) ( 145,265) - ( - - $ 983,114 $ 14,016	Total Equity $ 1,621,765 - - 283,336) 283,336) - 141,668) - 125,603 32 125,635 $ 1,322,396 $ 1,428,648 - - 208,798) 208,798) 74,781 ) 2,674) 77,455) 145,265) - $ 997,130
	( (	Shares (In Thousands) 48,023 - - - - - - 800) ( - - - 47,223 47,223 - - - - - - - - 1,474) ( 45,749		Legal Capital Reserve $ 85,694 41,262 - - 41,262 - - - - - - $ 126,956 $ 126,956 23,634 - - 23,634 - - - - - $ 150,590

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

-8-

Kayee International Group Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

==> picture [481 x 34] intentionally omitted <==

----- Start of picture text -----

For the Six Months Ended June 30
CODE 2020 2019
----- End of picture text -----

CASH FLOW FROM OPERATING ACTIVITIES A00010 Income (loss) before income tax ( A20010 Adjustments for: A20100 Depreciation expense A20200 Amortization expense A20300 Expected credit loss A20900 Finance costs A21200 Interest income ( A20400 Loss (gain) on financial assets at fair value through profit or loss, net A23100 Gain on disposal of financial assets, net A23500 Impairment loss of prepayments for purchases A23700 Provision for inventory and obsolescence A24100 Net foreign exchange loss (gain) ( A30000 Changes in operating assets and liabilities A31150 Accounts receivable ( A31180 Other receivables ( A31200 Inventories ( A31230 Prepayments ( A31240 Other current assets A32125 Contract liabilities A32150 Accounts payable ( A32160 Accounts payables to related parties A32180 Other payables ( A32230 Other current liabilities ( A33000 Cash generated from operations ( A33100 Interest received A33300 Interest paid ( A33500 Income tax paid AAAA Net cash generated by operating activities (	$ 54,046 ) 15,944 579 860 1,412 7,238 ) ( 7,906 - ( 102,458 72,058 15,342 ) 2,228 ) 35,894 ) 64,388 ) 189,120 ) ( 7,110 7,021 ( 18,220 ) ( 23,713 ( 17,503 ) ( 737) 165,655 ) 10,148 1,412 ) ( 3,440 ( 153,479)	$ 161,097 10,445 549 1,104 684 17,248 ) 1,637 3,497 ) 1,034 10,126 3,789 187,206 6,948 64,647 17,867 ) 8,409 3,371 ) 75,414 ) 1,868 ) 19,905 ) 227 318,732 19,977 684 ) 65,813) 272,212

(Continued)

-9-

For the Six Months Ended June 30

==> picture [491 x 605] intentionally omitted <==

----- Start of picture text -----

CODE 2020 2019
CASH FLOW FROM INVESTING ACTIVITIES
B00010 Acquisition of financial assets measured at fair
value through other comprehensive profit and loss $ - ( $ 1,552 )
B00050 Proceeds from disposal of financial assets at
amortized cost 413,046 249,657
B00100 Acquisition of financial assets at fair value through
profit or loss ( 90,881 ) -
B00200 Proceeds from disposal of financial assets at fair
value through profit or loss 60,978 95,131
B02700 Acquisition of property, plant and equipment (Note
25) ( 13,348 ) ( 2,642 )
B03700 Decrease (increase) in refundable deposits ( 650 ) ( 579 )
B04500 Acquisition of Intangible Assets - ( 342 )
BBBB Net cash used in investing activities 369,145 339,673
CASH FLOWS FROM FINANCING ACTIVITIES
C04020 Repayment of the principal portion of lease
liabilities (Note 25) ( 4,554 ) ( 6,413 )
C04500 Cash Dividends Paid ( 208,798 ) -
C04900 Payments to acquire treasury shares ( 145,265 ) -
CCCC Net cash used in financing activities ( 358,617 ) ( 6,413 )
DDDD EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS 14,002 ( 5,322 )
EEEE NET INCREASE IN CASH AND CASH
EQUIVALENTS ( 128,949 ) 600,150
E00100 CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 570,907 636,351
E00200 CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 441,958 $ 1,236,501
----- End of picture text -----

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

-10-

Kayee International Group Co., Ltd and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) (Reviewed, Not Audited)

1. HISTORY & ORGANIZATION

Kayee International Group Co., Ltd. (the “Company”; the Company and entities within the Company are collectively referred herein as the “Group”) was set up on the British Cayman Islands on May 28, 2015. The establishment is for restructuring the organization by applying to Taiwan Stock Exchange Co., Ltd. for stock listing. The Company was restructured on Aug. 20, 2015 to obtain the equity of Kayee International Holding Co., Ltd. via share exchange. After the reorganization, the company became the holding company of all the merged entities. The company’s stock has been officially listed on the Taiwan Stock Exchange since Jan. in 2018.

The Group is mainly engaged in the trading and manufacture of kitchenware, household goods, electronic and electrical appliances, body care and sports equipment.

The consolidated financial statements are presented in the Company’s functional currency, which is New Taiwan dollars.

2. THE DATE OF AUTHORIZATION OF THE CONSOLIDATED FINANCIAL STATEMENTSAND ITS PROCEDURES

The accompanying consolidated financial statements were approved and authorized for issue by the board of directors on August 6, 2020.

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL

REPORTING STANDARDS

(1) Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers of the Republic of China, and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China ("ROC")

New, Revised or Amended Standards and Interpretations Effective Date Issued by IASB Amendments to IFRS 3 “Definition of a Business” January 1, 2020 Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark January 1, 2020 Reform” Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 Amendment to IFRS 16 “Covid-19 – Related Rent Concessions” June 1, 2020

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies.

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

Effective Date New IFRSs Announced by IASB (Note 1) “Annual improvements to IFRS Standards 2018-2020” January 1, 2022(Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022(Note 3) Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon Applying IFRS 9” promulgation by the IASB Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IFRS 17 “Insurance Contracts”

January 1, 2023(Note 2)

-11-

Effective Date New IFRSs Announced by IASB (Note 1) Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 16 “Property, Plant and Equipment – Proceeds before January 1, 2022(Note 4) Intended Use” Amendments to IAS 37 “onerous Contracts – Cost of Fulfilling a January 1, 2022(Note 5) Contract”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 areapplied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” are applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” are applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS34, “Interim Financial Reporting,” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosures information required in a complete set of annual consolidated financial statements.

(2) Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value.

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
(3) Basis of Consolidation

-12-

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). The consolidated income statement has included the operating profit or loss of the subsidiary in the same period. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Please refer to Note 14, table 4 and table 7 for information relating to the subsidiaries’ details, percent of holding and business projects.

(4) Other Major Accounting Policies

In addition to the following explanations, please refer to the summary statement of major accounting policies for the year ended December 31, 2019 consolidated financial report.

Income Tax

Income tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is , the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The Company has considered the economic implications of COVID-19 on critical accounting estimates and will continue evaluating the impact on its financial position and financial performance as a result of the pandemic. In addition, the same critical accounting judgments and key sources of estimates and uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2019.

6. CASH AND CASH EQUIVALENTS

Cash on hand and revolving funds Demand deposits Cash equivalents Time deposits with maturities of three months or less	June 30, 2020 $ 756 212,289 228,913 $ 441,958	December 31, 2019 $ .496 221,960 348,451 $ 570,907		June 30, 2019
				$ 880 695,039 540,582 $ 1,236,501

The market rates intervals of time deposits with maturities of three months or less afterthe end of the reporting period were as follows:

reporting period were as follows:	reporting period were as follows:	reporting period were as follows:	reporting period were as follows:
June 30, 2020 December 31, 2019 United States Dollars 0.285%~0.55% 1.5%~2.32% New Taiwan Dollars 0.33%~0.41% 0.6% Chinese Yuan - 2.57%~2.85% 7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS June 30, 2020 December 31, 2019 Financial assets-current Mandatorily measured at FVTPL Structured deposits $ - $ -				June 30, 2019
				2.48%~2.7% 0.6% 2.15%~2.77% June 30, 2019
	Financial assets-current Mandatorily measured at FVTPL Structured deposits	June 30, 2020 $ -	December 31, 2019 $ -
				$ 9,114

-13-

Designated to measure fair value through profit or loss Listed stocks - domestic $ 21,997 $ - $ -

The company undertakes 100% principal-guaranteed credit risk-linked time deposits. As of June 30, 2019, the principal amount of structured time deposits that have not yet matured amounted to TWD 9,038 thousand (RMB 2,000 thousand). The information is as follows:

June 30, 2020 December 31, 2019 June 30, 2019 Expiry date - - July 4, 2019 Expected rate of return - - 3.5%

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE

INCOME-CURRENT

June 30, 2020 December 31, 2019 June 30, 2019 Current Investments in Equity Instruments $ - $ - $ 1,548

Investments in Equity Instruments

June 30, 2020 December 31, 2019 June 30, 2019

Current Taishin Financial Holdings Co., Ltd. E Special Shares $ - $ - $ 1,548

The Group invests in equity instruments in accordance with medium and long-term strategic purposes, and expects to make profits through long-term investment. The management believes that if short-term fair value fluctuations of these investments are included in the profit and loss, it is inconsistent with the aforementioned long-term investment plan, so they choose to designate these investments as measured at fair value through other comprehensive gains and losses.

In May 2019, the Group purchased special shares of Taishin Financial Holdings Co., Ltd. at a price of TWD 1,552 thousands, which was designated to be measured at fair value through other comprehensive profit and loss because it was an investment for medium and long-term strategic purposes.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Time deposits with maturities of more than three months	June 30, 2020 $ 117,595	December 31, 2019 $ 530,641	June 30, 2019	June 30, 2019
				$ 339,746

～ The market rates intervals of time deposits with maturities of more than three months were 0.75% 2.45%, 1.30%～2.70% and 0.66%～3.35% on June 30, 2020, December 31, 2019 and June 30, 2019.

-14-

10. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Accounts receivable At amortized cost Gross carrying amount Less`：`Loss allowance Other receivables Receivable from suppliers Tax refund receivable Interest receivable Receivable from Sale of equity instruments Others	June 30, 2020 $ 395,280 6,872 $ 388,408 June 30, 2020 $ 69,987 3,709 1,454 - 265 $ 75,415	December 31, 2019 $ 396,326 6,033 $ 390,293 December 31, 2019 $ - 7,087 4,364 30,902 78 $ 42,431	J	une 30, 2019
			J	$ 321,543 5,427 $ 316,116 une 30, 2019
		$	$	- 1,668 2,574 - 3 $ 4,245

Accounts Receivable

The Group’s payment term of sales of goods is 0 to 90 days. No interest was charged on accounts receivable. In order to minimize credit risk, the management of the Group has designed related internal control procedures for determining the payment limits and payment approval, taking proper action for the recovery of accounts receivable past due. In addition, the Group reviews the recoverable amount of each individual trade debt at the balance sheet date to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all accounts receivables. The expected credit losses on accounts receivables are estimated using a provision matrix by reference to past default experience of the customer and an analysis of the customer’s current financial position, industrial economic situation and the growth of GDP as well as jobless rate. The preparation matrix of the Group classifies whether the customer face financial difficulties first. If the customer has had evidence to show the financial difficulties, the Group shall identify 100% expected impairment losses. If the customer doesn’t have financial difficulties, the Group will further classify the area where the customer is located to evaluate the probability of recovering accounts based on past due days of note receivable and calculate the expected credit loss rate based on the risk of default as the weight.

The Group writes off a note receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of accounts receivable based on the Group’s provision matrix.

-15-

June 30, 2020

(1) North America

Expected credit loss rate Gross carrying amount Loss allowance (lifetime ECL) Amortized costs Other Areas Expected credit loss rate Gross carrying amount Loss allowance (lifetime ECL) Amortized costs	Not Past Due 0.05% $ 239,106 (127) $ 238,979 Not Past Due 0% $ 141,331 - $ 141,331	Past Due 1-30 Days 23.01% $ 1,712 (394) $ 1,318 Past Due 1-30 Days 0% $ 5,025 - $ 5,025	Past due 31-90 days - - - $ - Past due 31-90 days 0% $ 864 - $ 864	Past due 91-180 days 29.39% $ 1,262 (371) $ 891 Past due 91-180 days - $ - - $ -	Past due over 181 days - $ - - $ - Past due over 181 days 100% $ 4,225 (4,225) $ -		Individual identification 100% $ 1,755 (1,755) $ - Individual identification - $ - - $ -		Total
									$ 243,835 (2,647)
									$ 241,188 Total
									$ 151,445 (4,225)
									$ 147,220

(2) Other Areas

December 31, 2019

(1) North America

Expected credit loss rate Gross carrying amount Loss allowance (lifetime ECL) Amortized costs Other Areas Expected credit loss rate Gross carrying amount Loss allowance (lifetime ECL) Amortized costs	Not Past Due 0% $ 280,058 - $ 209,401 Not Past Due 0% $ 87,442 - $ 87,442	Past Due 1-30 Days 0% $ 726 - $ 726 Past Due 1-30 Days 0% $ 19,811 - $ 19,811	Past due 31-90 days - $ - - $ - Past due 31-90 days 0% $ 2,292 - $ 2,392	Past due 91-180 days - $ - - $ - Past due 91-180 days 55% $ 60 (33) $ 27	Past due over 181 days - $ - - $ - Past due over 181 days 100% $ 4,245 (4,245) $ -		Individual identification 100% $ 1,755 (1,755) $ - Individual identification 100% $ - - $ -		Total
									$ 282,538 (1,755)
									$ 280,784 Total
									$ 113,787 (4,278)
									$ 109,509

(2) Other Areas

June 30, 2019

(1) North America

Expected credit loss rate Gross carrying amount Loss allowance (lifetime ECL) Amortized costs	Not Past Due 0% $ 205,544 - $ 205,544	Past Due 1-30 Days 0% $ 72 - $ 72	Past due 31-90 days - $ 108 - $ 108	Past due 91-180 days - $ - - $ -	Past due over 181 days - $ - - $ -	Individual identification 100% $ 1,146 (1,146) $ -	Individual identification 100% $ 1,146 (1,146) $ -		Total
							$		$ 206,870 (1,146)
									$ 205,724

-16-

(2) Other Areas

Expected credit loss rate Gross carrying amount Loss allowance (lifetime ECL) Amortized costs	Not Past Due 0% $ 90,305 - $ 90,305	Past Due 1-30 Days 0% $ 19,181 - $ 19,181	Past due 31-90 days 0% $ 578 - $ 578	Past due 91-180 days 0% $ 328 - $ 328	Past due over 181 days - $ $ -	Individual identification 100% $ 4,281 (4,281) $ -		Total
						$		$ 114,673 (4,281)
								$ 110,392

Movements of the loss allowance for accounts receivable were as follows:

Balance, beginning of period Add: Provision for credit loss Effect of exchange rate changes Balance, end of period		Three Months Ended June 30	Three Months Ended June 30
	(	2020 $ 6,033 860 21) $ 6,872	2019 $ 4,315 1,104 8 $ 5,427

Other receivables

Receivable from suppliers as of 30th June, 2020 is caused by the transaction of KN95 mask which is cancelled due to some quality issues. The amount is coming from partial of the prepayment to the suppliers of KN95 mask and the rest of the prepayment could not be collected has been credited as Impairment of loss of prepayment, please refer to Note 22.

11. INVENTORIES

Merchandise inventory Work in process Raw materials Finished goods	June 30, 2020 $ 57,279 18,313 4,380 3,909 $ 83,881	December 31, 2019	December 31, 2019	June 30, 2019 $ 13,537 7,063 8,970 2,590 $ 32,160	June 30, 2019 $ 13,537 7,063 8,970 2,590 $ 32,160
			$ 57,505 21,192 5,282 7,336 $ 91,315		$ 13,537 7,063 8,970 2,590 $ 32,160

The cost of inventories recognized as cost of goods sold were $474,979 thousand, $321,296 thousand, $719,638 thousand and $760,062 for the three months and the six months ended June 30, 2020 and 2019, respectively.

The allowance of inventory value decline were $71,096 thousand, $8,619 thousand, $72,058 thousand and $10,126 thousand for the three months and six months ended June 30, 2020 and 2019, respectively.

The allowance of inventory value decline from January 1 to June 30, 2020 for the relevant inventory impairment loss of the stock of KN95 masks due to quality issue amounted to $78,582 thousand.

12. PREPAYMENTS

Prepayments		June 30, 2020 $ 99,000		Dec. 31, 2019 $ 12,338		June 30, 2019 $ 28,136

The prepayment is a certain percentage of the purchasing prepaid to suppliers according to the agreed terms.

13. OTHER CURRENT ASSETS

-17-

Prepaid expenses Overpaid VAT Others	June 30, 2020 $ 5,372 2,474 - $ 7,846		Dec. 31, 2019 $ 9,362 5,137 457 $ 14,956		June 30, 2019
					$ 10,177 948 136 $ 11,261

14. SUBSIDIARIES

Subsidiaries listed in the consolidated financial statements

The main structure of the consolidated financial statements is as follows:

==> picture [471 x 46] intentionally omitted <==

----- Start of picture text -----

Shareholding ratio
Name of
investment Location of June 30, Dec. 31, June 30, Functional
company Name of the subsidiary foundation 2020 2019 2019 Main business activities currency
The Kayee International British 100.00% 100.00% 100.00% Reinvestment in holding NTD
----- End of picture text -----

The	Kayee International	British	100.00%	100.00%	100.00%	Reinvestment in holding		NTD
company	Holding Co., Ltd.(Kayee	Virgin				company and runs
	British Virgin Islands)	Islands				international trade business
	(Note 1)
KayeeBritis	Kayee Corp. Ltd.(Kayee	Taiwan	100.00%	100.00%	100.00%	Retail and wholesale		NTD
Virgin Islands	Corp.)					business in Taiwan
	Kayee Investment Holding	Honk Kong	100.00%	100.00%	100.00%	Reinvestment in holding		NTD
	(HK) Co.,Limited					Business
	(Kayee HK)
Kayee HK	TKX Int'l	Mainland	100.00%	100.00%	100.00%	Retail and wholesale		RMB
	Trading Co.,	China				business in Mainland
	Ltd. (TKX)( Note 2)					China
		Mainland	100.00%	100.00%	100.00%	Provides international		RMB
	KE MO House	China				business with labor
	Co., Ltd. (KE MO)					service
	Xin Gengyou	Mainland	100.00%	100.00%	100.00%	R&D and production of	daily	RMB
	Electron (Shenzhen)	China				necessities,	toys,
	CO., LTD (Xin Gengyou)					handcrafts ,gifts,	and
	(Note 3)					decorations
	Ningbo Xin JieKai	Mainland	70.00%	70.00%	70.00%	R&D and production of	daily	RMB
	Electronics	China				necessities, weaving crafts,
	CO., LTD (Xin Jie Kai)					gifts and decorations

Note 1: Aside from reinvestment in holding business, Kayee British Virgin Islands has a branch company in Taiwan for international trading business.
Note 2: The Board of Directors of the company resolved on Dec. 27, 2018 to increase the cash capital of TKX. The effective date for capital increase is Feb 2, 2019. As of December 31, 2019, the amounts of capital increase are 46,237 thousand (1,500 thousand US dollars).
Note 3: The Board of Directors of the company resolved on Dec. 7, 2018 to increase the cash capital of Xin Gengyou amounted to 4,582 thousand (150 thousand US dollars) to offset its losses and decided to conduct dissolution and liquidation of Xin Gengyou at the same time. The effective date for capital increase is Jan 7, 2019. Xin Gengyou remitted the liquidation balance of 2,826 thousand (93 thousand US dollars) to Kayee Investment Holding (HK) Co.,Limited. on March 31, 2020, and completed the cancellation of registration on April 20, 2020.

Diagram of the Group’s investment relation and shareholding ratio as of June 31, 2020.

-18-

==> picture [441 x 253] intentionally omitted <==

----- Start of picture text -----

Kayee International Group Co., Ltd
(Date of foundation ： May 28, 2015)
100%
Kayee International Holding Co., Ltd
(Date of foundation: Apr. 16, 2013)
100%
100%
Kayee Investment Holding (HK) Co., Limite Kayee Corp. Ltd.
(Date of foundation: May 21, 2013) (Date of foundation: Dec. 12, 2012)
100% 100% 100% 70%
Xin Geng You Electron Ningbo Xin Jie Kai Electronics
TKX Int'l Trading Co., Ltd. KE MO House Co., Ltd. (Shenzhen) CO., LTD CO., LTD
(Date of foundation: Jan. 30, (Date of foundation: Dec. (Date of foundation: Feb. 18, (Date of foundation: June 30,
2013) 16, 2013) 2014) 2015)
(Cancellation of
registration:Apr.20, 2020)
----- End of picture text -----

15. PROPERTY, PLANT AND EQUIPEMNT

Cost Balance on January 1,2020 Additions Effect of foreign exchange differences Balance on June 30, 2020 Accumulated depreciation Balance on January 1,2020 Depreciation expenses Effect of foreign exchange differences Balance on June 30, 2020 Balance on June 30, 2020, net Balance on December 31, 2019 and January 1, 2020, net		Machinery and Equipment $ 19,128 275 (520) 18,883 5,287 932 (143) 6,076 $ 12,807 $ 13,841		Transportation Equipment $ 14,680 - (399) 14,281 11,109 715 (302) 11,522 $ 2,759 $ 3,571		Office Equipment $ 3,097 - (64) 3,033 2,044 174 (39) 2,179 $ 854 $ 1,053		Leasehold Improvements $ 15,535 13,384 (358) 25,561 7,235 1,891 (136) 8,990 $ 19,571 $ 8,300		Other Equipment $ - - - - - - - - $ - $ -		Total
												$ 52,440 13,659 (1,341)
												64,758 25,675 3,712 (620)
												28,767 $ 35,991
												$ 26,765

Cost

-19-

Balance on January 1,2019 Additions Disposals Effect of foreign exchange differences Balance on June 30, 2019 Accumulated depreciation Balance on January 1,2019 Depreciation expenses Disposals Effect of foreign exchange differences Balance on June 30, 2019 Balance on June 30, 2019, net	$ 15,820 2,159 - 126 18,105 4,027 914 - 28 4,979 $ 13,136	$ 16,573 - - 157 16,730 10,709 860 - 92 11,661 $ 5,069	$ 3,751 - (115) 31 3,667 2,086 313 (115) 14 2,298 $ 1,369	$ 18,141 - - 151 18,292 7,011 1,597 - 28 8,636 $ 9,656	$ 176 - - 2 178 106 17 - 1 124 $ 54	$ 54,461 2,159 (115) 467 56,972 23,939 3,701 (115) 163 27,688 $ 29,284

There were no indication of impairment for property, plant, and equipment on June 30, 2020, December 31, 2019 and June 30, 2019.

Property, plant and equipment are depreciated on a straight-line basis over the following estimated useful lives:

Machinery and equipment	10 years
Transportation equipment	4-10 years
Office equipment	2-5 years
Leasehold improvements	3-5 years
Other Equipment	5 years

The Group isn’t engaged in collateral or pledge via its property, plant and equipment.

16.LEASE ARRANGEMENTS

(1) Right-of-use assets

)Right-of-use assets
Carrying amounts Buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Buildings Transportation equipment	June 30, 2020 December 31, 2019 June 30, 2019 $ 60,712 $ 69,765 $ 26,259 315 693 1,070 $ 61,027 $ 70,458 $ 27,329 Three Months EndedJune 30 Six Months EndedJune 30 2020 2019 2020 2019 $ 4,665 $ 15,821 $ 5,751 $ 3,210 $ 11,854 $ 6,366 189 189 378 378 $ 5,940 $ 3,399 $ 12,232 $ 6,744					June 30, 2019
				$
			$

	2020 $ 5,751 189 $ 5,940	2019 $ 3,210 189 $ 3,399			2020 $ 4,665 $ 11,854 378 $ 12,232

-20-

Except for additions and recognized depreciation, the Group did not have significant sublease and impairment of right-of-use assets during the six months ended June 30, 2020 and 2019.

(2) Lease liabilities

June 30, 2020 December 31, 2019 Carrying amounts Current $ 17,728 $ 18,957 Non-current $ 43,172 $ 43,474 anges of discount rates for lease liabilities are as follows: June 30, 2020 December 31, 2019 Buildings 2.616%~4.75% 2.616%~4.75% Transportation equipment 2.616% 2.616%	June 30, 2019
	$ 13,190 $ 15,077 June 30, 2019
	2.616%~4.75% 2.616%

Ranges of discount rates for lease liabilities are as follows:

(3) Material lease-in activities and terms

The Group leases buildings for the use of plants and offices with lease terms of 2 to 5 years. The Group does not have purchase options to acquire the leasehold buildings at the end of the lease terms. The Group leases company car with lease terms of 3 years.

(4) Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases		Three Months	EndedJune 30 2019 $ 3,070 $ 22 ( $ 6,039 )		Six Months EndedJune 30	Six Months EndedJune 30	Six Months EndedJune 30
	(	2020 $ 2,287 $ 33 $ 5,226 )	(	(	2020 $ 4,925 $ 51 $ 10,942 )	(	2019 $ 7,158 $ 40 $ 14,293 )

The Group leases certain building which qualifies as short-term leases and office equipment which qualifies low-value assets leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

17. ACCOUNTS PAYABLE

The average credit period for purchase of raw materials and goods for sale is 30 days. No interest was charged on accounts payable. The Group has the financial risk management policy to ensure that all accounts payable are repaid within the credit period agreed beforehand.

-21-

18. OTHER PAYABLES

OTHER PAYABLES
Accrued social security insurance Accrued salary and bonus Accrued professional service fee Accrued commission expense Accrued rent expense Accrued advertisement expenses Dividend payable Others	June 30, 2020 $ 26,007 23,985 15,637 3,565 2,962 935 - 4,962 $ 78,053	Dec.31, 2019 $ 28,062 35,251 11,349 7,824 2,735 727 - 9,608 $ 95,556	June 30, 2019
				$ 32,146 45,674 16,288 9,589 2,633 6,683 425,004 7,738 $ 545,755

19. PLAN FOR RETIREMENT BENEFITS

Defined contribution plans

The Company, Kayee British Virgin Islands, and Kayee HK of the Group don’t have retirement plans for employees. Kayee International Holding Co., Ltd., Taiwan Branch and Kayee Corp. Ltd. adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Group makes monthly contributions to employees’ individual pension accounts at 6% of their monthly salaries and wages.

As for subsidiaries such as TKX, KE MO, XinGengyou, and Xin Jie Kai the retirement plans are according to the regulations of the Shenzhen Municipal Government and the Ningbo Municipal Government of the People's Republic of China. They are also defined contribution pension plans. A certain amount is contributed as pension based on employee’s basic wages.

20. EQUITY

(1) Share Capital

Ordinary Share

Authorized shares (in thousands) Authorized share capital Number of shares issued(in thousands) Share capital issued	June 30, 2020 100,000 $ 1,000,000 45,749 $ 457,487		Dec.31, 2019 100,000 $ 1,000,000 47,223 $ 472,227	June 30, 2019 100,000 $ 1,000,000 47,223 $ 472,227

A holder of issued ordinary shares with par value of NT$10 per share is entitled to vote and to receive dividends.

As of June 30, 2020, the paid-in capital is 457,587 thousand consisting of 45,749 thousand ordinary shares with par value of NT$10 dollars per share.

The repurchase and cancellation of the Group's shares, please refer to note (6) treasury stock.

(2) Capital Surplus

apital Surplus
May be used to offset deficits, distributed as cash dividends, or transferred to share capital(1) Additional paid-in capital	June 30, 2020 $ 555,622 $ 555,622	Dec.31, 2019 $ 573,524 $ 573,524	June 30, 2019
				$ 573,524 $ 573,524

This type of capital surplus may be used to offset a deficit. In addition, in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred

-22-

to share capital limited to a certain percentage of the Company’s paid-in capital.

Detailed movements capital surplus for the six months ended June 30, 2020 and 2019 were as follows:

s:
Balance on Jan. 1, 2020 Treasury shares written down Balance on June 30, 2020 Balance on Jan. 1, 2019 Treasury shares written down Cash Dividend Cover losses Balance on June 30, 2019	Shares issued at a premium $ 573,524 ( 17,902) $ 555,622 $ 727,308 ( 12,116 ) ( 141,668 ) - $ 573,524	Cash capital increase for employee stock options transferred to shares issued at a premium $ - - $ - $ 6,659 - - ( 6,659) $ -		Total
	( (	(	( ( (	$ 573,524 ( 17,902) $ 555,622 $ 733,967 12,116 ) 141,668 ) 6,659) $ 573,524

(3) Retained Earnings and Dividend Policy

The amendments to the Company’s Articles of Incorporation had been approved by the Company’s shareholders in its meeting held on May 29, 2019. Distribution of earnings by way of cash dividends should be approved by supermajority vote by the Company’s Board of Directors and reported to the Company’s shareholders in its meeting.

Under the Company’s Articles of Incorporation, the Board of Directors can use capital surplus to offset accumulated losses and distribute earnings. Before the Board of Directors distribute dividends, a certain amount of earnings or profits from the Company can be distributed as reserve fund. It’s not necessary to have this reserve fund appropriated. It can be reserved without allocation.

The Company is at the stage of growth. The Board of Directors consider all the factors, including but not limited to earnings in each fiscal year of the Company, overall development, financial plan, capital requirements, industry prospect and vision for the future. The Board of Directors propose appropriation of shareholders’ dividends, which would be resolved by the shareholders.

During the period when the Company’s shares are registered in the Emerging Market or officially listed in Republic of China, in distributing earning, the Board of Directors in each fiscal year shall fist

Distribute income tax payable
Offset its losses in previous years
3.Legal capital reserve at 10% of the remaining earnings, until the accumulated legal capital reserve equals the Company’s paid-in capital
Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities of the Republic of China in charge.

If there’s any balance left over, it can be combined with all or part of the accumulated unappropriated earnings over the past years. According to Cayman Islands Company Law and requirements of the public offering company in R.O.C., after considering factors of finance, business and operation, no lower than 10% of the earnings after tax for the period shall be distributed as dividends for the shareholders based on their shareholding ratio. Dividends for the shareholders are allocated in the ways of stock dividends, cash dividends or both, which however cash dividends can’t be lower than 10%. Please refer to Note 22(4) for the remuneration for employees and directors regarding the remuneration policy under the Company’s Articles of Incorporation.

The appropriation for legal capital reserve shall be made until the reserve equals the Company’s

-23-

paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.

The identification and reversal of special reserve are done in accordance with No. 1010012865 Notice and No. 1010047490 Notice from the FSC and “Q&A of the application of identifying special reserve after using IFRSs”.

The appropriations of 2019 and 2018 earnings have been approved by the Company's shareholders in its meeting held on May 28, 2020 and May 29, 2019 respectively. The appropriation and cash dividends per share were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of earnings 2019 2018 $ 23,634 $ 41,262 6,342 1,365 208,798 283,336	Cash Dividends Per Share(NT$)	Cash Dividends Per Share(NT$)
	2019 $ 23,634 6,342 208,798	2019 $ 4.5	2018
			$ 6

The cash dividends of 2019 have been approved by the Company’s Board of Directors on Mar 10, 2020. The cash dividends per share was as follows:

Cash dividends	Appropriation of Earnings $ 208,798	Cash Dividends Per Share(NT$)
		$ 4.5

In addition, the Company's shareholders in its meeting held on May 29, 2019 approved to use capital surplus of 6,659 thousand to make up for losses arising from the cancellation of treasury shares, and approved cash dividends of 141,668 thousand (representing NT$3 per share) by using capital surplus.

(4) Other Equity

Exchange differences on translation of foreign financial statements

Balance ,beginning of year Exchange differences on translation of foreign net assets Balance , end of year	Jan. 1 to June 30,2020 ( $ 13,230 ) ( 2,252) ( $ 15,482 )	Jan. 1 to June 30,2019	Jan. 1 to June 30,2019
	( ( (	( (	$ 6,888 ) 82 $ 6,970 )

Equity investments measured at fair value through other comprehensive unrealized profit or loss

Balance ,beginning of year Current Unrealized loss Balance , end of year Non-controlling Interests Balance, beginning of year Share classified as non-controlling interests Net profit for the year Exchange differences on translation of foreign financial statements Balance, end of year	Jan. 1 to June 30,2020 $ - - $ - Jan. 1 to June 30,2020 $ 15,492 ( 1,054 ) ( 422) $ 14,016	Jan. 1 to June 30,2019	Jan. 1 to June 30,2019
		$ - ( 4) ( $ 4 ) Jan. 1 to June 30,2019
	( (		$ 14,085 2,394 118 $ 16,597

(5) Non-controlling Interests

(6) Treasury Shares

-24-

Reason for recovery No. of shares on Jan. 1, 2020 Increase of the year Decrease of the year No. of shares on June 30, 2020 No. of shares on Jan. 1, 2019 Decrease of the year No. of shares on June 30, 2019	Maintain Company’s credit and shareholders' equity (in thousands)	Maintain Company’s credit and shareholders' equity (in thousands)
	( (	- 1,474 1,474 ) - - 800 800) -

In order to maintain the Company’s credit and shareholders’ equity, the Board of Directors resolved on Feb. 24, 2020 to entrust the securities firm from Feb. 25, 2020 through Apr. 24 to buy back the Company’s ordinary shares limited to 1,900 thousand shares from the Stock Exchange. The price range of the buy-back is 90-140 dollars. If the stock price of the Company is lower than the floor of price range during the timeframe of buy-back, the Company will continue to buy back its shares. The execution was completed on April 24, 2020. The shares and amount of buying back are 823 thousand shares and 81,038 thousand. Treasury shares were cancelled in May 2020.

In order to maintain the Company’s credit and shareholders’ equity, the Board of Directors resolved on Nov. 5, 2018 to entrust the securities firm from Nov. 6, 2018 through Jan. 5, 2019 to buy back the Company’s ordinary shares, 800 thousand shares, from the Stock Exchange. The price range of the buy-back is 100-165 dollars. If the stock price of the Company is lower than the floor of price range during the timeframe of buy-back, the Company will continue to buy back its shares. The execution was completed on Dec. 28, 2018. The shares and amount of buying back are 800 thousand shares and 96,804 thousand. Treasury shares were cancelled in March 2019.

Under the Securities and Exchange Act, the Company shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as the rights to dividends and to vote.

21. REVENUE

(1) Contract balances

Accounts receivable(Note 9) Contract liabilities Revenue from sale of goods		June 30, 2020 $ 388,408 $ 10,644		December 31, 2019 $ 390,293 $ 3,623		June 30, 2019 $ 316,116 $ 6,125		January 1, 2019 $ 504,027 $ 9,496

The changes in the contract liability balances primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment.

Revenue of the reporting period recognized from the beginning contract liability and from the performance obligations satisfied in the previous periods is as follows:

From the beginning balance of contract liability Sale of goods		Three Months Ended June 30	Three Months Ended June 30
		2020 $ 3,623	2019 $ 9,476

(2) Disaggregation of revenue from contracts with customers

-25-

Kitchenware Body care Household goods Electronic and electrical appliances Sport equipment Others			Three Months Ended June 30	Three Months Ended June 30
		2020 $ 407,791 242,979 150,836 103,928 6,965 1,122 $ 913,621		2019 $ 344,625 112,871 367,649 223,518 1,927 6,203 $ 1,056,793

(3) Contracts with Customers not Entirely Fulfilled

The expected timing of recognizing performance obligation not entirely fulfilled yes is as follows:

follows:
Revenue from sale of goods －fulfilled in 2019 －fulfilled in 2020	June 30, 2020 $ - 10,644 $ 10,644	Dec. 31, 2019 $ - 3,623 $ 3,623	June 30, 2019
			$ 6,125 - $ 6,125

22. INCOME FORM CONTINUING OPERATION

Income from continuing operation including:

(1) Depreciation and amortization

Three Months Ended on June 30 2020 2019 Depreciation expenses summarized by function Operating costs $ 3,129 $ 520 Operating expenses 4,778 4,727 $ 7,907 $ 5,247 Amortization expenses summarized by function Operating costs $ 15 $ 6 Operating expenses 272 268 $ 287 $ 274 ) Net other income and expenses Three Months Ended on June 30 2020 2019 Impairment loss of prepayment for purchases ( $ 102,458 ) $ -	Three Months Ended on June 30 2020 2019 Depreciation expenses summarized by function Operating costs $ 3,129 $ 520 Operating expenses 4,778 4,727 $ 7,907 $ 5,247 Amortization expenses summarized by function Operating costs $ 15 $ 6 Operating expenses 272 268 $ 287 $ 274 ) Net other income and expenses Three Months Ended on June 30 2020 2019 Impairment loss of prepayment for purchases ( $ 102,458 ) $ -	Six Months Ended	on June 30 2019 $ 1,050 9,395 $ 10,445 $ 6 543 $ 549 on June 30
		2020

2020 ( $ 102,458 )	2019 $ -	2020 ( $ 102,458 )	2019 ( $ 1,034 )

(2) Net other income and expenses

From January 1 to June 30, 2020 , prepayment is caused by the transaction of KN95 masks which is cancelled due to some quality issues. The loss amounted to 102,458 thousand is coming from partial of the prepayment to the suppliers of KN95 masks which could not be collected by the Company .

(3) Employee benefits expenses

Three Months Ended on June 30 Six Months Ended on June 30

-26-

Short-term employee benefits Post-employment benefits Defined contribution plan Other employee benefits Total employee benefits expenses Aggregated by functions Operating costs Operating expense		2020 $ 36,461 522 1,541 $ 38,524 $ 11,460 27,064 $ 38,524		2019 $ 42,550 511 1,419 $ 44,480 $ 10,010 34,470 $ 44,480		2020 $ 74,541 1,025 3,258 $ 78,824 $ 20,975 57,849 $ 78,824		2019
								$ 99,202 1,041 4,132 $ 104,375 $ 27,969 76,406 $ 104,375

(4) Remuneration for Employees and Directors

Upon the final settlement of the Company’s accounts, if there is surplus profit, the Company shall set aside no less than 1% as compensation to employees and no more than 3% as remuneration for the Directors. However, if the Company has accumulated losses, the Company shall reserve an amount thereof for making up the losses. The employees' compensation referred to in the preceding paragraph may be distributed in the form of shares or in the form of cash, and may be distributed to employees of the Company and its Subsidiaries, whose qualification shall be determined by the Board. The remuneration of employees and directors and supervisors were not estimated because the net loss before tax in January 1 to June 30, 2020.

Remuneration for employees and Directors for Jan.1 to June 30, 2020 and 2019 is estimated respectively:

Expected percentage

Expected percentage
Employees’ remuneration Director’s remuneration Amount Employees’ remuneration Director’s remuneration	April 1 to June 30, 2019 $ 476 $ 952	Jan. 1 to June 30, 2019
		1% 2% April 1 to June 30, 2020 $ 1,270 $ 2,540

If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

Remuneration for employees and Directors for 2019 and 2018 is resolved on Mar. 11, 2019 and Mar. 21, 2018 respectively:

Amount

Employees’ remuneration Director’s remuneration		2019 $ 2,437 $ 4,873		2018 $ 5,219 $ 10,438

There is no significant difference between the aforementioned approved amounts and the amounts charged against earnings of 2019 and 2018, respectively.

The information about the appropriations of the Company’s profit sharing bonus to employees and compensation to directors is available at the Market Observation Post System website.

(5) Other Income

-27-

Indemnity income Royalty income Others	Three Months Ended on June 30 2020 2019 $ - $ 1 - 462 2,109 1,903 $ 2,109 $ 2,366	Three Months Ended on June 30 2020 2019 $ - $ 1 - 462 2,109 1,903 $ 2,109 $ 2,366	Three Months Ended on June 30 2020 2019 $ - $ 1 - 462 2,109 1,903 $ 2,109 $ 2,366	Six Months Ended	Six Months Ended	Six Months Ended	on June 30
		2020 $ - - 2,109 $ 2,109			2020 $ 100 - 2,778 $ 2,878		2019
							$ 58 610 2,697 $ 3,365

(6) Exchange Gains (Loss), net

Three Months Ended on June 30 Six Months Ended on June 30

Total exchange gains Total exchange losses Gains (loss), net		2020 $ 1,043 13,440) $ 12,397 )		2019 $ 28,503 16,572) $ 11,931		2020 $ 24,314 28,689) $ 4,375 )		2019
	( (		(		( (		(	$ 34,905 17,933) $ 16,972

(7) Financial Costs

Three Months Ended on June 30 Six Months Ended on June 30

Interest on lease liabilities Other financial costs		2020 $ 661 - $ 661		2019 $ 325 - $ 325		2020 $ 1,412 - $ 1,412		2019
								$ 682 2 $ 684

23. INCOME TAX FROM CONTINUING OPERATIONS

(1)Income tax expense recognized in profit or loss is mainly as follows:

Current tax Current tax expense recognized Additional income tax on unappropriated earnings Adjustments in prior years Deferred income tax Current tax expense recognized Effect of tax rate changes Income tax expense recognized in profit or loss	Three Months Ended on June 30 2020 2019 $ 14,465 $ 11,497 2,955 325 ( 1,841) 1,738 15,579 13,560 ( 4,144 ) ( 4,244 ) - - $ 11,435 $ 9,316	Three Months Ended on June 30 2020 2019 $ 14,465 $ 11,497 2,955 325 ( 1,841) 1,738 15,579 13,560 ( 4,144 ) ( 4,244 ) - - $ 11,435 $ 9,316	Three Months Ended on June 30 2020 2019 $ 14,465 $ 11,497 2,955 325 ( 1,841) 1,738 15,579 13,560 ( 4,144 ) ( 4,244 ) - - $ 11,435 $ 9,316	Six Months Ended	Six Months Ended	Six Months Ended	on June 30
		2020 $ 14,465 2,955 1,841) 15,579 4,144 ) - $ 11,435			2020 $ 22,944 2,955 1,841) 24,058 3,323 ) - $ 20,735		2019
	( (		(	( (		(	$ 36,049 325 1,738 38,112 5,009 ) 2,391 $ 35,494

Kayee Corp. Ltd. and Kayee International Holding Co., Ltd., Taiwan Branch applied entities subject to the R.O.C. Income Tax Law rate was 20%.

The tax rate in China applicable to TKX Int'l Trading Co., Ltd., Xin Gengyou Electron (Shenzhen) CO., LTD., and Ningbo Xin Jie Kai Electronics CO., LTD. is 25%.

KE MO House Co., Ltd. Ningbo Branchhas been in line with small and profitable enterprises in China was amended and, starting from 2019, the corporate income tax rate was adjusted from 25% to 5%

-28-

The tax rate in Hong Kong applicable to Kayee HK is 16.5%.

The Company and Kayee British Virgin Island (excluding the Taiwan Branch) are exempt from income tax according to the law.

(2) Income Tax examination

The income tax returns of Kayee International Holding Co., Ltd., Taiwan Branch and Kayee Corp. Ltd. through 2018, have been assessed by the tax authorities.

24. EARNINGS PER SHARE

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

Net Income for the Period

Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Net income used in the computation of basic earnings per share ( $ 111,192 ) $ 46,210 ( $ 73,727 ) $ 123,209 Weighted-Average Number of Common Stock Outstanding (In Thousands of Shares) Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Weighted-average number of common stock in computation of basic earnings per share 45,784 47,223 46,370 47,223 Effect of potential dilutive common stock Employee’s compensation Effect of potential dilutive common stock Employee’s compensation 12 28 Weighted-average number of common stock in computation of diluted earnings per share 47,235 47,251	Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Net income used in the computation of basic earnings per share ( $ 111,192 ) $ 46,210 ( $ 73,727 ) $ 123,209 Weighted-Average Number of Common Stock Outstanding (In Thousands of Shares) Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Weighted-average number of common stock in computation of basic earnings per share 45,784 47,223 46,370 47,223 Effect of potential dilutive common stock Employee’s compensation Effect of potential dilutive common stock Employee’s compensation 12 28 Weighted-average number of common stock in computation of diluted earnings per share 47,235 47,251	Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Net income used in the computation of basic earnings per share ( $ 111,192 ) $ 46,210 ( $ 73,727 ) $ 123,209 Weighted-Average Number of Common Stock Outstanding (In Thousands of Shares) Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Weighted-average number of common stock in computation of basic earnings per share 45,784 47,223 46,370 47,223 Effect of potential dilutive common stock Employee’s compensation Effect of potential dilutive common stock Employee’s compensation 12 28 Weighted-average number of common stock in computation of diluted earnings per share 47,235 47,251	Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Net income used in the computation of basic earnings per share ( $ 111,192 ) $ 46,210 ( $ 73,727 ) $ 123,209 Weighted-Average Number of Common Stock Outstanding (In Thousands of Shares) Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Weighted-average number of common stock in computation of basic earnings per share 45,784 47,223 46,370 47,223 Effect of potential dilutive common stock Employee’s compensation Effect of potential dilutive common stock Employee’s compensation 12 28 Weighted-average number of common stock in computation of diluted earnings per share 47,235 47,251	Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Net income used in the computation of basic earnings per share ( $ 111,192 ) $ 46,210 ( $ 73,727 ) $ 123,209 Weighted-Average Number of Common Stock Outstanding (In Thousands of Shares) Three Months Ended on June 30 Six Months Ended on June 30 2020 2019 2020 2019 Weighted-average number of common stock in computation of basic earnings per share 45,784 47,223 46,370 47,223 Effect of potential dilutive common stock Employee’s compensation Effect of potential dilutive common stock Employee’s compensation 12 28 Weighted-average number of common stock in computation of diluted earnings per share 47,235 47,251
		2020 46,370		2019
				47,223 28 47,251

If the Group offered to settle the compensation or bonuses paid to employees in cash or shares, the Group assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

In January 1 to June 30, 2020, the net loss for the current period produced an anti-dilution effect, so the diluted loss per share is not calculated.

25. CASH FLOW INFORMATION

(1) Non-Cash Transactions

The Group conducted the investment and financing activities partly by cash in Jan. 1 to June 30, 2020 and 2019:

2020 and 2019:
Partly cash for purchase ofproperty, plant and equipment Purchase of property, plant and equipment Net changes in prepayment for equipment Payment in cash	Jan. 1 to June 30, 2020 $ 13,659 ( 311) $ 13,348	Jan. 1 to June 30, 2019
	(		$ 2,159 483 $ 2,642

-29-

(2) Reconciliation of liabilities arising from financing activities

Jan. 1 to June 30, 2020

Jan. 1 to June 30, 2020
Lease liabilities Jan. 1 to June 30, 2019 Lease liabilities	Jan. 1, 2020 $ 62,431 Jan. 1, 2019 $ 18,780	( (	Financing Cash Flow $ 4,554 ) Financing Cash Flow $ 6,413 )	Non-cash changes		June 30,2020 $ 60,900 June 30,2020 $ 28,267
				Leases Increase Foreign Exchange Movement $ 4,665 ( $ 1,642 ) Non-cash changes
				Leases Increase $ 15,821	Foreign Exchange Movement $ 79

26.CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

Key management personnel of the Group review the capital structure irregularly. As part of this review, the key management personnel consider the economic environment and business conditions associated with each class of capital. In order to balance the overall capital structure, the Group may adjust the amount of dividends paid to shareholders, the number of new shares issued and the amount of new debt issued.

27. FINANCIAL INSTRUMENTS

(1) Information on fair value-Financial instruments not measured at fair value

The management of the Group thinks that the carrying amount of financial assets and financial liabilities not measured at fair value is close to their fair values.

(2) Information on fair value- Financial instruments measured at fair value on a recurring basis

Level of fair value

June 30, 2020 Financial instruments measured at fair value through profit or loss Domestic listed stocks June 30, 2019 Financial instruments measured at fair value through profit or loss Beneficial certificate of fund Financial assets measured at fair value through other comprehensive profit and loss Equity instrument investment		Level 1 $ 21,997 Level 1 $ - $ 1,548		Level 2 $ - Level 2 $ 9,114 $ -		Level 3 $ - Level 3 $ - $ -		Total
								$ 21,997 Total
								$ 9,114 $ 1,548

There was no transfer between Level 1 and Level 2 for Jan. 1 to June 30 in 2020 and 2019.

-30-

(3) Categories of financial instruments

June 30, 2020 December 31, 2019 June 30, 2019

Financial assets
Amortized cost (Note 1)	$1,026,006	$1,532,874	$1,897,726
Fair value through profit or loss
(FVTPL)	21,997	-	9,114
Financial liabilities
Amortized cost (Note 2)	181,195	183,003	167,666

Note 1: The balances include financial assets measured at amortized cost, which comprise accounts receivable, other receivables (excluding tax refund receivable) and financial assets measured at amortized cost and guarantee deposits paid (excluding premium for lease).
Note 2: The balance includes financial liabilities measured at amortized costs,which comprise accounts payable, accounts payable to related parties and other payables (excluding salaries payable and employee benefits such as bonus and compensation for unused leave).
(4) Financial Risk Management and Policy

The main financial instruments of the Group include accounts receivable, accounts payable and lease liability. The Group’s Corporate Treasury function provides services to the business, coordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. The risks include market risks (including exchange rate risk and interest rate risk), credit risk and liquidity risk.

1. Market Risk

The operating activities of the Group make the Group assume major financial risks, which are foreign currency exchange rate risk and interest rate risk.

The Group doesn’t change the way of managing and measuring the risk exposure related to its market risk of financial instruments.

(1) Foreign exchange risk

Please refer to Note 29 for the carrying amount of monetary assets and monetary liabilities in non-functional currency on the balance sheet date of the Group (including monetary items in non-functional currency written off in the consolidated financial statements.)

Sensitivity Analysis

The Group was mainly exposed to the USD.

The sensitivity analysis of the following table shows that in the three months ended in 2020 and 2019, when the exchange rate of the functional currency against each foreign currency increased by 1%, the exchange loss was generated under the net amount of monetary items of financial assets and liabilities, and the amount of net profit before tax was reduced. When the exchange rate depreciated, it resulted in the same amount of the net profit before tax in the opposite direction. The 1% above is the sensitivity ratio used by the Group internally reporting the exchange rate risk to the major management, and it also represents the management’s assessment of the reasonably probable range of changes in the foreign exchange rate.

ly probable range of changes in	the foreign exchange rate.	the foreign exchange rate.
Losses	Effect ofUSD
	Jan. 1 to June 30, 2020 $ 5,749	Jan. 1 to June 30, 2019
		$ 14,857

-31-

The evaluation foundation of the effect of the profit or loss above mainly comes from the deposit, accounts receivable and balance of accounts payable denominated in USD without cash flow hedge still outstanding on the balance sheets date at the end of the period.

(2) Interest Rate Risk

Carrying amount of financial assets of the Group subject to interest rate exposure on balance sheets date:

Fair value interest rate risk -financial assets -financial liabilities Cash flow interest rate risk -financial assets	June 30, 2020 $ 346,508 60,900 212,289	Dec. 31, 2019 $ 879,092 62,431 221,960	June 30, 2019
			$ 880,328 28,267 695,039

Sensitivity Analysis

The sensitivity analysis below is determined by the interest rate exposure of balance of derivative and non-derivative instruments on the balance sheets date, June 30, 2020, Dec.31 and June 30 in 2019. The rate of change used by the Group in assessment is 25 basis point increase/decrease in the interest rate. This also represents the management’s assessment of reasonably probable range of interest rate.

If the interest rate increases/decreases by 25 basis point, under the circumstances of other variables remaining the same, the net profit before tax of the Group on June 30, 2020 and 2019 would increase/decrease by 265 thousand and 869 thousand respectively, which is mainly because of the risk exposure of the interest rate of the Group’s demand deposits.

(3) Other Price Risk

The Group is exposed to equity price risk arising from financial assets.The Group’s management of risk by holding different portfolios to manage risk.

Sensitivity Analysis

The sensitivity analysis below is conducted by equity price risk on the balance sheets date.

The equity price increases / decreases by 5%. The profit or loss before tax from January 1 to June 30, 2020 will increase or decrease by 1,100 thousand yuan due to changes in the fair value of financial assets measured at fair value through profit or loss.

The equity price increases / decreases by 5%. The profit or loss before tax from January 1 to June 30, 2020 will increase or decrease by 77 thousand yuan due to changes in the fair value of financial assets measured at fair value through other comprehensive profit and loss

2. Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Company. Credit risk is managed separately for business related and financial related exposures. As of the date of balance sheet, the Company’s maximum credit risk exposure is equal to the carrying amount of financial assets.

The Group uses financial information available and transaction records to assess the major clients and continues supervising credit exposure and credit ratings of the counterparties.

The credit risk of the Group mainly lies on its accounts receivable from the top 2 clients. As of June 30, 2020, Dec. 31 and June 30, 2019, the top 2 clients account for 88%, 85% and 86% approximately of the balance of accounts receivable.

-32-

3. Liquidity Risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows.

The Group relies on bank borrowings as a significant source of liquidity.As of June 30, 2020, Dec. 31 and June 30, 2019, the Group’s unsecured financing facilities unused are 533,340 thousand , 540,252 thousand and 559,197 thousand respectively.

The table below is the analysis of non-derivative financial liabilities in remaining contractual maturity during the agreed repayment period of the Group. This is prepared in accordance with the earliest date on which the Group may be required to repay the loan, and based on the undiscounted cash flow of the financial liabilities.

June 30,2020

On demand or less than 1 month	On demand or less than 1 month	1-3 months	3 months-a year	1	year -5 years	More than 5 years	More than 5 years
$ 120,552 1,248 $ 121,800 On demand or less than 1 month		$ 1.3,858 1,534 $ 15,392 1-3 months	$ 46,785 15,736 $ 62,521 3 months-a year	1	$ - 45,710 $ 45,710 year -5 years	$ - - $ - More than 5 years
$ 79,523 2,425 $ 81,948 On demand or less than 1 month		$ 66,828 1,567 $ 68,395 1-3 months	$ 36,652 17,512 $ 54,164 3 months-a year	1	$	$ - - $ - More than 5 years
					$
	$ 515,074 2,538 $ 517,612	$ 26,095 1,628 $ 27,723	$ 51,501 11,107 $ 62,608		$ - 16,038 $ 16,038		$ - - $ -

28.RELATED PARTY TRANSACTIONS

(1)Name and relation of the related party

Name of the related party Relation with the Group Others Shenzhen KE Hotel Co., Ltd. The Chairman is the Compay’s Chairman’s second degree relative Shanghai KE Hotel Co., Ltd. The Chairman is the Compay’s Chairman’s second degree relative Ningbo Xin Kai Meng Electronics Co., Ltd. The Chairman is the Compay’s Chairman’s second degree relative Tsai Hsin-Yu The first degree relative of the Company’s Chairman Tsai Hsin-Ting The first degree relative of the Company’s Chairman Tsai Mo-Tsan The Company’s Chairman Tsai Mao-Fu The second degree relative of the Company’s Chairman Tsai Mao-Bang The second degree relative of the Company’s

-33-

Chairman

Name of the related party Relation with the Group Top Feng Group Substantial related party Ningbo Top Feng International Co., Ltd Ningbo Top Feng International Co., Limited Ningbo Top Feng Houseware Co., Ltd.

(2) The transactions, account balances, income and profit or loss between the Company and its subsidiaries are all written off in consolidation, which is therefore not disclosed in the note. Aside from the disclosure in other notes, the transactions between the Group and other related parties are as follows:
Operating transactions

Purchases

Purchases
Ningbo Xin Kai Meng Electronics Co., Ltd. Other related parties	Three Months Ended on June 30 2020 2019 $ 23,923 $ - 1,401 3,547 $ 25,324 $ 3,547		Six Months Ended		on June 30
		2020 $ 23,923 1,401 $ 25,324		2020 $ 23,923 2,939 $ 26,862	2019
					$ - 9,584 $ 9,584

The transaction prices and payment terms associated with purchases between the Group and related parties are negotiated separately.

Operating expenses

ting expenses
Other related parties	Three Months Ended on June 30 2020 2019 $ 15 $ -			Six Months Ended			on June 30
		2020 $ 15			2020 $ 15		2019 $ 21

Expenses used are mainly the accommodation fees for the related parties. Related transaction prices are payment terms are negotiated separately.

The balance of transactions with related parties from the advance payment on the balance sheets date is as follows:

Other related parties	June 30, 2020 $ -	Dec. 31, 2019 $ -	June 30, 2019 $ 1,159

The balance of transactions with related parties from the guarantee deposits paid on the balance sheets date is as follows:

date is as follows:
Ningbo Xin Kai Meng Electronics Co., Ltd. Other related parties	June 30, 2020 $ 1,778 111 $ 1,889	Dec. 31, 2019 $ 1,828 111 $ 1,939	June 30, 2019
				$ - 111 $ 111

It’s the rent paid for leasing in the office from the related parties owing to operating needs of the Group.

Accounts payable on the balance sheets date-balance from the related parties:

Ningbo Xin Kai Meng Electronics Co., Ltd Top Feng Group	June 30, 2020 $ 23,335 $ 1,388 $ 24,723	Dec. 31, 2019 $ - $ 1,010 $ 1,010	June 30, 2019	June 30, 2019
				$ - $ 704 $ 704

-34-

Balance of other accounts payable to related parties (carried at other payables) on the balance sheets date is as follows:

Other related parties	June 30, 2020 $ -	Dec. 31, 2019 $ 9	June 30, 2019 $ 5

Lease agreement at Balance Sheet date is as follow:

The rent that the Company leases office from Ningbo Xin Kai Meng Electronics Co., Ltd. is reference to local market and pay annually. The rent that the Company leases office from Mr. Tsai Mo-Tsan, Mr. Tsai Mao-Fuand Tsai Mao-Bang is reference to local market and pay quarterly. The rent that the Company leases office from others related parties is reference to local market and pay monthly. The Company does not have purchase options to acquire the leasehold spaces at the end of the lease terms.

lease terms.
Acquired right-of-use asset Tsai Mao-Bang Tsai Mao-Fu Tsai Mo-Tsan Others	Jan. 1 to June 30, 2020 $ 2,562 1,059 1,044 - $ 4,665	Jan. 1 to June 30, 2019
			$ 12,867 - - 2,603 $ 15,470

The right-of-use assets acquired in 2019 include an adjustment of 9,539 thousand for the first time applicable to IFRS 16.

pplicable to IFRS 16.
Lease liabilities Xin Kai Meng Tsai Mao-Bang Others	June 30, 2020 $ 41,455 10,990 2,437 $ 54,882	Dec. 31, 2019 $ 41,633 13,044 1,319 $ 55,996	June 30, 2019
				$ - 18,079 1,965 $ 20,044

Interest expense Xin Kai Meng Tsai Mao-Bang Others		Three Months Ended onJune 30 2020 2019 $ 462 $ - 107 215 25 13 $ 594 $ 228	Three Months Ended onJune 30 2020 2019 $ 462 $ - 107 215 25 13 $ 594 $ 228		Six Months Ended onJune 30	Six Months Ended onJune 30	Six Months Ended onJune 30
		2020 $ 462 107 25 $ 594			2020 $ 954 264 56 $ 1,274		2019
							$ - 455 29 $ 484

(3) Key management remuneration

The total amount of remuneration for the directors and other key management personnel is as follows:

ows:
Short-term employeebenefits Post-employment benefits	Three Months Ended on June 30 2020 2019 $ 4,248 $ 8,878 153 166 $ 4,401 $ 9,044		Six Months Ended		on June 30
		2020 $ 4,248 153 $ 4,401		2020 $ 13,515 320 $ 13,835	2019
					$ 18,192 333 $ 18,525

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS: NONE

30.OTHER EVENTS

Due to the impact of the COVID-19 pandemic, such as delays in the resumption of work by some suppliers and reduced customer operation timeliness, shipments could not be arranged normally and the speed of new product development slowed down for the six months ended June 30, 2020. The KN95 masks order from European in April 2020 switched to China suppliers to Purchase. However, due to differences in product specifications and the orders was

-35-

suspended, resulting loss of 102,458 thousand in prepayment and loss of 78,582 thousand in inventory. The above situation has been gradually improved, and the company expects that operations will gradually return to normal.

Due to the impact of the COVID-19 pandemic, the company has applied the subsidy from the government. As of June 30, 2020, the company has received 1,368 thousand, and is expected to receive a total of 3,104 thousand.

31.SIGNIFICANT EVENTS AFTER THE BALANCE SHEETS DATE

In order to maintain the Company’s credit and shareholders’ equity, the Board of Directors resolved on July 13, 2020 to entrust the securities firm from July 14, 2020 through September 13 to buy back the Company’s ordinary shares, 1,000 thousand shares, from the Stock Exchange. The price range of the buy-back is 90-120 dollars. If the stock price of the Company is lower than the floor of price range during the timeframe of buy-back, the Company will continue to buy back its shares.

32. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN

CURRENCIES

The Group’s significant financial assets and liabilities denominated in foreign currencies aggregated by foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

(In Thousands of New Taiwan Dollars and Foreign Currency)

June 30, 2020

Financial assets Monetary items USD USD Financial liabilities Monetary items USD December 31, 2019 Financial assets Monetary items USD USD Financial liabilities Monetary items USD	-36- Foreign currencies $ 24,638 633 5,869 Foreign currencies $ 41,850 1,487 4,806	Exchange Rate 29.630(USD`：`NTD) 7.0795(USD`：`RMB) 29.630(USD`：`NTD) Exchange Rate 30.0140(USD`：`NTD) 6.9762(USD`：`RMB) 30.0140(USD`：`NTD)	Carrying Amount
			$ 730,024 18,756 173,898 Carrying Amount
			$ 1,256,086 44,631 144,247

June 30, 2019

Foreign currencies Exchange Rate Carrying Amount Financial assets Monetary items USD $ 53,000 31.067(USD ： NTD) $ 1,646,525 USD 1,866 6.8747(USD ： RMB) 57,970 Financial liabilities Monetary items USD 7,043 31.067(USD ： NTD) 218,801 Significant unrealized exchange loss (gain) is as follows: Januanry1 to June 30, 2020 January 1 to June 30, 2019 Unrealized Unrealized Foreign net exchange net exchange currencies Exchange rate gain (loss) Exchange rate gain (loss) USD 1：29.630(USD: NTD) ( $ 6,562 ) 1：31.067(USD: NTD) $ 28,672 USD 1：7.0795(USD: RMB) $ 211 1：6.8747(USD: RMB) $ 94

33. SUPPLEMENTARY DISCLOSURES

(1)Significant transactions and (2) Information on investees：
Financings Provided: table1.
Endorsement/guarantee provided: Please refer to table2.
Marketable Securities Held (excluding investments in subsidiaries and associates): Please refer to table 3.
Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None
Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None
Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None
Total purchases from or sales to related parties amounting to at least nt$100 million or 20% of the paid-in capital: table 5.
Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital:None
Information about the derivative financial instruments transaction: None
Information on investees: Please refer to table 4.
The business relationship between the parent and the subsidiaries and significant transactions between them: Please refer to table 6.
(3) Information on investment in Mainland China
The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received

-37-

as dividends from the investee, and the limitation on investee: Please refer to Table 7.

Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports.
- A.Purchase amount and percentage; payables balances and percentage at the end of the period: table 8.
- B. Sales amount and percentage; receivables balances and percentage at the end of the period: None
- C. The amount of property transactions and its profits and losses: None
- D. Balance for endorsement of notes to guarantee or provide collateral and its purpose: None
- E. The maximum balance, period-end balance, interest rate range and total interest for the current period: None
- F. Transactions that have a significant impact on the current profit or loss or financial status, such as the provision or receipt of labor services, etc.: Table 8.
(4) Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: Table 9.

34. SEGMENT INFORMATION

The Group is mainly engaged in the business of import and export. The reportable segment is the single operating segment.

-38-

Kayee International Group Co., Ltd & Subsidiaries Fi na nc ings P ro vid e d Jan. 1 to June 30, 2020

Table 1

Unit ： NT$ Thousand or US$ Thousand

NO .	Financing Company	Counterparty	Financial statement account	Related Party	Maximum Balance for the Period (Foreign Currencies in Thousands) (Note 2)	Endingbalanc e (Foreign Currencies in Thousands) (Note 2)	Amount Actually Drawn	Interest Rate	Nature for Financing	Transactio n Amounts	Reason for Financing	Allowance for Bad Debt	Coll	ateral	Financing Limits for Each Borrowing Company(No te 1)	Financing Company’s Total Financing Amount Limits(Note 1)	Note
													Item	Value
1	Ka ye e Co rp. LTD.	Ka ye e Inte rnat io na l Ho ld in g Co., Lt d	Ot her rece iva b les	Yes	$4 0,00 0	$4 0,00 0	$ -	0.82 5 %	T he need fo r s ho rt - te rm fi na nc in g	$ -	Ope ra t i ng cap ita l	$ -	-	-	$ 39, 43 8	$ 39, 43 8	No te3

No te 1 : The to ta l a mo u nts fo r Fi na nc i ngs Pro vid ed s ha ll no t e xc eed fo rt y p er ce nt o f t he net wo rt h o f Fi na nc ing Co mp a ny. No te 2 : The ma xi mu m b a la nce for t he pe riod a nd e nd ing ba la nc e re pres e nt t he a mo unt s a pp ro ve d b y t he Bo ard o f D irec to rs . No te 3 : E li mina te d.

-39-

Kayee International Group Co., Ltd & Subsidiaries Endorsement/Guarantee Provided Jan. 1 to June 30, 2020

Table 2

Unit `：` NT$ Thousand or US$ Thousand

No. (Note 1)	Endorsement/ Guarantee provider	Guaranteed	party	Limit on endorsement/guarant ee Amount Provided to Each Guaranteed Party(Note 3)	Maximum balance for the period (Note 4) Ending balance (Note 4) Amount cctual drawn	Amount of endorsement/guarantee collateralized by properties	Ratio of accumulated endorsement/guarantee to net equity per latest financial statements(`％`)	Maximum endorsement/guarantee amount allowable (Note 3)	Guarantee provided by parent company (Note 5)	Guarantee provided by a subsidiary (Note 5)	Guarantee provided to subsidiaries in Mainland China (Note 5)	Note
		Name of company	Nature of relationship (Note 2)
0	Kayee International Group Co., Ltd.	Kayee International Holding Co., Ltd. Kayee Corp. Ltd.	2 2	$983,114 $983,114	$917,193 (US$30,800) $912,604 (US$30,800) $ - 59,260 (US$2,000) 59,260 (US$2,000) -	$ - -	92.83 6.03	$983,114 $983,114	Y Y	- -	- -

Note 1 ： Number in column explained as follows:

(1) 0 represents issuer.
(2)The invested company is numbered sequentially from Arabic numeral 1 according to the company type.

Note 2 ： Nature of relationship between endorsement/guarantee provider and guaranteed is categorized in 7 types below. Just mark the type.

(1)A company with business relation.
(2) A company in which the Company directly and indirectly holds over 50% of the voting shares.
(3)A company directly and indirectly holds over 50% of the voting shares in the Company.
(4)Companies in which the Company holds directly and indirectly 90% or more of the voting shares.
(5)Companies in the same industry or applicators that are mutually protected under contractual requirements owing to the needs to undertake a construction project.
(6)A company that is endorsed/guaranteed by all the contributing shareholders based on their shareholding ratio owing to the joint investment relationship.
(7) Companies in the same industry according to Consumer Protection Act engaged in performance guarantee of the contracts of pre-sales houses with collateral.

Note 3 ： The total amount of endorsement/ guarantee for a single subsidiary that directly and indirectly holds 100% of the voting shares shall not exceed 100% of the Company's net worth of the period.

Note 4 ： The amount of the maximum balance for the period and ending balance is approved by the Board of Directors.

Note 5 ： Y represents guarantee provided by listed parent company, guarantee provided by a subsidiary and guarantee provided to subsidiaries in Mainland China.

-40-

Kayee International Group Co., Ltd & Subsidiaries Marketable Securities Held June 30, 2020

Table 3

==> picture [767 x 97] intentionally omitted <==

----- Start of picture text -----

Holding Company Name [Marketable Securities ] Type and Name (Note1) Relationship with the Company Financial Statement Account (In ThousandsShares/Units ) Carrying Value Mar. 31Percentage of Ownership, 2020 Fair Value (Note 2) Note
Kayee Corp. Ltd. Domestic listed stocks
Tung Kai Technology - Financial assets at fair 1,202 $ 21,997 - $ 21,997
eEngineeing Co., Ltd. value through other
Common Stock comprehensive
income-current
----- End of picture text -----

Note 1 ： The securities referred to in this table refer to stocks, bonds, beneficiary certificates and securities derived from the above items within the scope of IFRS 9 "Financial Instruments". Note 2 ： The fair value is calculated based on the stock closing price on June 30, 2020.

Note 3 ： Information on investment subsidiaries and affiliated companies, please refer to Table 4 and Table 7.

-41-

Kayee International Group Co., Ltd & Subsidiaries Information on investees Jan. 1-June 30, 2020

Table 4 Unit： Expressed in thousands of NTD／share in thousands

==> picture [730 x 177] intentionally omitted <==

----- Start of picture text -----

Initial investment amount Balance as of Dec. 31, 2019 Appropriation of
Investor Investee Net profit Investment dividends of the investee
Company Company Location Main Businesses and Products Mar. 31, Mar. 31, Number of Ownersh Carrying amount (loss) of the investee income (loss) Stock Cash Note
2020 2019 shares ip (%) (Note 1) dividends dividends
Kayee Kayee Tortola, British Virgin Islands Reinvestment inholding and $ 297,182 $ 297,182 50 100 $ 892,695 ( $ 71,962 ) ( $ 71,962 ) $ - $ 361,968 Subsidiary
International International operation of international
Group Holding trading
Co., Ltd. Co., Ltd. business
Kayee Kayee Corp. 8F., No. 59, Sec. 2, Yonghe Operation of retail and 21,121 21,121 1000 100 98,599 ( 10,668 ) ( 10,669 ) - - Sub-subsidiary
International Ltd. Rd., wholesale （ Note 3 ）
Holding Yonghe Dist., New Taipei business in Taiwan
Co., Ltd. City, 234,
Taiwan (R.O.C.)
Kayee 2302-06, 23F Great Eagle Reinvestment in holding 209,312 209,312 50 100 123,310 ( 2,249 ) 8,819 - - Sub-subsidiary
Investment Centre 23 business （ Note 4 ）
Holding (HK) Harbour Road, Wanchai, Hong
Co., Limited Kong
----- End of picture text -----

Note 1: All written off in preparation of the consolidated financial statements.

Note 2: Please refer to table 6 for information on the investment in Mainland China.

Note 3: The difference is the difference between the depreciation and interest expenses of the lease transaction between the parent company and the subsidiary and the rental income of 1 thousand.

Note 4: The differences are realized gains 10,993 thousand, unrealized losses 24 thousand in upstream transactions and realized losses15 thousand, unrealized losses 66 thousand in side-stream transactions.

-42-

Kayee International Group Co., Ltd & Subsidiaries Total Purchases From Or Sales To Related Parties Of At Least NT$100 Million Or 20% Of The Paid-in Capital Jan. 1-June 30, 2020

Table 5

==> picture [720 x 164] intentionally omitted <==

----- Start of picture text -----

Transaction Details Abnormal Transaction Notes/Accounts Payable or Receivable
Nature of
Company Name Related Party Amount(Foreign Note
Relationships Purchases/Sales Currencies in % to Total Payment Terms Unit Price Payment Terms [Ending Balance (Foreign ] % to Total
Thousands) Currencies in Thousands)
Kayee Ningbo Xin Jie Kai Subsidiary Purchases $ 154,230 23% Net 30 days from - - ( $ 3,279 ) 3 Note
International Electronics CO., Associate invoice is 2
Holding LTD. issued
Co., Ltd.
Ningbo Xin Jie Kayee Parent company Sales 154,230 89% Net 30 days from - - 3,279 56 Note
Kai International invoice is 2
Electronics Holding issued
CO., LTD. Co., Ltd.
----- End of picture text -----

Note 1 ： Transaction terms are based on agreements. Note 2 ： E li mi na ted.

Note 3 ： Balances shown here are based on the carrying amount of th e Company.

-43-

Kayee International Group Co., Ltd & Subsidiaries Intercompany relationships and significant intercompany transactions Jan. 1- June 30, 2020

Table 6

Unit ： NTD$ Thousand

==> picture [735 x 238] intentionally omitted <==

----- Start of picture text -----

Transaction Details
No. Relationship
Investee Company Counterparty % of Total Sales or
(Note 1) (Note 2) Financial Statement Accounts Amount (Note 3) Payment Terms (Note 4)
Assets (Note 5)
1 Kayee International Holding Co., Ltd. Kayee International Group Co., Ltd. 2 Other accounts payable $ 62,355 － 5%
Kayee Corp. Ltd. 3 Other accounts receivable 3,913 － -
3 Other accounts payable 45 － -
3 Rental income 222 － -
3 Other income 6,678 － 1%
3 Operating expenses 51 － -
Ningbo Xin Jie Kai Electronics CO., LTD. 3 Other income 7 － -
3 Purchases 154,230 － 17%
3 Accounts payable 3,279 － -
3 Prepayments 11,684 － 1%
KE MO House Co., Ltd. 3 Operating expenses 43,829 － 5%
3 Other accounts payable 7,662 － 1%
2 Kayee Corp. Ltd. Ningbo Xin Jie Kai Electronics CO., LTD. 3 Purchases 2,779 － -
3 Accounts payable 2,014 － -
Other accounts payable 15 － -
Operating expenses 16 － -
3 TKX Int'l Trading Co., Ltd. Ningbo Xin Jie Kai Electronics CO., LTD. 3 Purchases 45 － -
3 Purchases Return 683 － -
3 Accounts payable 33 － -
KE MO House Co., Ltd. 3 Operating expenses 2 － -
----- End of picture text -----

Note 1: Information on transactions between the parent and subsidiaries shall be marked in the column No. respectively. The way of numbering is as follows:

The parent company is 0.
The subsidiaries are numbered sequentially from Arabic numeral 1 according to the company type.

Note 2 ： There are 3 types of nature of relationship. The mark of type is as below:

Transactions from the parent company to the subsidiary.
Transactions from the subsidiary to the parent.
Transactions between subsidiaries.
Note 3 ： All written off in preparation of the consolidated financial statements

Note 4 ： The transaction terms between the parent and subsidiaries are negotiated and calculated separately based on contracts.

Note 5 ： Rounding to integer.

-44-

Kayee International Group Co., Ltd & Subsidiaries Information on investments in Mainland China Jan. 1-Mar. 31, 2020

==> picture [734 x 345] intentionally omitted <==

----- Start of picture text -----

Table 7 Unit ： Expressed in thousands of NTD/ in thousands of USD/in thousands of RMB
Accumulated Remittance of Funds Accumulated
Accumulated
Investee Main Businesses Paid-in Method of Remittance for Outward Remittance for Outward Net Income % Ownership of Direct or Investment Amount as of Carrying Repatriation of
Company and Products capital Investment(Note 3) Investment from Outflow Inflow Investment from the Investee(Loss) of Indirect Gain (Loss) Mar. 31, 2020 Income as of Investment Note
Taiwan as of Taiwan as of Investment (Note 1 &2) (Note 1&2)
Mae. 31, 2020
Jan. 1, 2020 Mar. 31, 2020
TKX Int'l Operation of $ 116,017 Investment in $ - $ - $ - $ - ($ 90) 100% ($ 90) $ 51,317 $ - -
Trading Co., retail (US$3,750) Mainland
Ltd. and wholesale China through
business in the company
Mainland China in the third
area
KE MO House Provides 31,288 Investment in - - - - 1,712 100% 1,712 35,970 - -
Co., international (US$1,040) Mainland
Ltd. business with China through
labor the company
service in the third
area
Xin Electron Gengyou R&D and production Investment in Mainland - - - - ( 3) 100% （ Note 410,945 ） - - Note 6
(Shenzhen) CO., of daily China through
LTD necessities, the company
toys, handcrafts, in the third
gifts, and area
decorations
Ningbo Xin Jie R&D and 34,220 Investment in - - - - ( 3,684) 70% 32,706 - -
Kai production ( RMB$7,000) )Mainland ( 2,459)
Electronics CO., of daily China through （ Note 5 ）
LTD necessities, the company
toys, handcrafts, in the third
gifts, and area
decorations
----- End of picture text -----

(Continued on next page)

-45-

(Continued from previous page)

(Continued from previous page)
Ceilingon investment in Mainland China
Accumulated Outward Remittance for Investment in Mainland China as of Mar. 31,2020	Investment Amount Authorized by Investment Commission, MOEA	Upper Limit on the Amount of Investment Stipulated by Investment Commission,MOEA
NA	NA	NA

Note 1 ： Calculation based on the investee’s financial statements audited by the Company’s certified public accountants during the same period.

Note 2 ： All written off in preparation of the consolidated financial statements.

Note 3 ： The company in the third area is Kayee Investment Holding (HK) Co., Limited.

Note 4 ： The differences are realized gains $10,950 thousand in the up-stream transactions and realized losses $2 thousand in the side-stream transactions.

Note 5 ： The differences are realized gains $43 thousand, unrealized gains $994 thousand in the up-stream transactions and realized losses $13 thousand, unrealized gains 10 thousand in side-stream transactions.

Note 6 ： Xin Gengyou Electron (Shenzhen) Co., Ltd. remitted the investment of 2,826 thousand (93 thousand US dollars) to Kayee Investment Holding (HK) Co., Limited. on March 31, 2020.

-46-

Kayee International Group Co., Ltd & Subsidiaries

Significant transactions with investee companies in mainland china, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses Jan. 1- Jun. 30, 2020

Table 8									Unit`：`NT$ Thousand
Investee Company	Relationship	Transaction type	Amount %		Transaction t	erms	Notes and accounts receivable (payable)		Unrealized gains (losses) Note
				Price	Payment terms	Comparison with Normal Transactions	Ending Balance	Percentage(％)
KE MO House Co., Ltd. Ningbo Xin Jie Kai Electronics CO., LTD	The third-tier subsidiary of the Company The third-tier subsidiary of the Company	Service expense Purchases	$43,829 67% Negotiated according to contract 154,230 23% Negotiated separately		Net 30 days Net 30 days	- -	( $ 7,662 ) ( 3,279 )	8% 3%	$ Note 2 & 3 ( 24) Note 1 & 3

Note 1: The ratio is calculated as the ratio of the purchase amount to related parties to the total purchase amount of the trading company (Subsidiary of the Company- Kayee International Holding Co., Ltd.). Calculate the ratio of receivable (payment) and account balances to the total balance of receivable (payment) and accounts receivables of the trading company (Subsidiary of the Company- Kayee International Holding Co., Ltd.)
Note 2: The ratio is calculated as the ratio of the amount of labor costs to related parties to the amount of labor costs of the trading company (Subsidiary of the Company- Kayee International Holding Co., Ltd.). The balance of other payables is calculated as the ratio of the balance of other payables of the trading company (Subsidiary of the Company- Kayee International Holding Co., Ltd.).

Note 3 ： All written off in preparation of the consolidated financial statements

-47-

Kayee International Group Co., Ltd & Subsidiaries

Information of Major Shareholders

For The Six Months Ended June 30, 2020

Table 9

==> picture [493 x 202] intentionally omitted <==

----- Start of picture text -----

Shares
Name of Major Shareholders Total Shares Owned
Ownership Percentage
(In Thousands)
Mo-Tsan Holding(Samoa) Co., Ltd. 13,744,672 30.04%
CAPITAL SECURITIES CORP. is 3,524,000 7.70%
commissioned to manage LUK FOOK
SECURITIES (HK) LIMITED investment
account
HSBC BANK is trusted Core Pacific - 3,300,000 7.21%
Yamaichi International (H.K.) Limited
Key Shun Holding Limited 3,275,028 7.15%
Key Tuo Holding Limited 2,965,278 6.48%
Key Jie Holding Limited 2,760,072 6.03%
Key Wei Holding Limited 2,609,939 5.70%
----- End of picture text -----

Note1：The main shareholder information in this table is calculated by the Taiwan Depository & Clearing Corporation on the last business day at the end of the quarter, and the total number of ordinary shares and special shares held by the shareholders who have completed the non-physical securities delivery (including treasure shares) is more than 5%. The share capital recorded in the Company’s consolidated financial report and the actual number of non-physical securities delivered may be different or different due to the basis of preparation and calculation.
Note2：If the shareholder transfers the shareholding to the Trust, the trustee will open the trust account to separate the account. As for shareholders who handle the declaration of insider equity holdings of more than 10% of their shares in accordance with the Securities Exchange Act, their shareholdings include their shareholdings plus the shares they have delivered to the trust with the rights to make decisions on trust property. For the registration of shares held by a company insider, refer to the Market Observation Post System website of the Taiwan Stock Exchange.

-48-

AI assistant

Vitafoss International Group Co., Ltd. — Interim / Quarterly Report 2020

52237_rns_2020-11-16_56c37a20-6eec-4993-918a-a2554cefdca4.pdf

Kayee International Group Co., Ltd and Subsidiaries

INDEPEDNENT AUDITORS’ Review Report

Introduction

Scope of Review

Conclusion

Notice to Readers

Kayee International Group Co., Ltd and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

Kayee International Group Co., Ltd and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Kayee International Group Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

Kayee International Group Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Kayee International Group Co., Ltd and Subsidiaries

1. HISTORY & ORGANIZATION

2. THE DATE OF AUTHORIZATION OF THE CONSOLIDATED FINANCIAL STATEMENTSAND ITS PROCEDURES

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL

REPORTING STANDARDS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(4) Other Major Accounting Policies

Income Tax

5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE

INCOME-CURRENT

9. FINANCIAL ASSETS AT AMORTIZED COST

10. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

June 30, 2020

(1) North America

(2) Other Areas

December 31, 2019

(1) North America

(2) Other Areas

June 30, 2019

(1) North America

(2) Other Areas

11. INVENTORIES

12. PREPAYMENTS

13. OTHER CURRENT ASSETS

14. SUBSIDIARIES

Subsidiaries listed in the consolidated financial statements

15. PROPERTY, PLANT AND EQUIPEMNT

16.LEASE ARRANGEMENTS

(2) Lease liabilities

17. ACCOUNTS PAYABLE

18. OTHER PAYABLES

19. PLAN FOR RETIREMENT BENEFITS

Defined contribution plans

20. EQUITY

Ordinary Share

(4) Other Equity

21. REVENUE

22. INCOME FORM CONTINUING OPERATION

(4) Remuneration for Employees and Directors

Expected percentage

Amount

(6) Exchange Gains (Loss), net

23. INCOME TAX FROM CONTINUING OPERATIONS

24. EARNINGS PER SHARE

Net Income for the Period

25. CASH FLOW INFORMATION

26.CAPITAL MANAGEMENT

27. FINANCIAL INSTRUMENTS

(3) Categories of financial instruments

1. Market Risk

Sensitivity Analysis

(2) Interest Rate Risk

Sensitivity Analysis

(3) Other Price Risk

Sensitivity Analysis

2. Credit Risk

3. Liquidity Risk

Vitafoss International Group Co., Ltd. Interim / Quarterly Report 2020

Unit `：` NT$ Thousand or US$ Thousand