1

Contents

Report to Shareholders 2

Introduction to MTI Products and Market Outlook 5

Financial Review 9

Selected Financial Data 9

Consolidated Results of Operations 10

Report of Independent Accountant 13

Consolidated Financial Statements 14

Notes to Consolidated Financial Statements 19

Corporate Directory 70

2

I. Report to Shareholders

Dear Shareholders:

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

Technology Inc. With the economy gradually regaining stability in 2010, global

economic recovery was firm and steady. With the efforts of the Company's entire

workforce, our consolidated operating revenues for the year totaled NT$8.11 billion,

an increase of 27% over 2009. The consolidated operating profit was NT$1.32 billion,

and the gross profit ratio was 16.3%. However, due to our continuing efforts to

develop markets for 4G products in the second half of the year and our acquisition of

an R&D team in Europe, the consolidated net loss in 2010 was NT$158 million, which

amounted to an after-tax net loss of NT$0.38 per share.

Pursuit of Excellence and an Unprecedented Level of Revenue

2010 was a year of strong economic recovery following the global financial crisis of

2009. The Company achieved record-high revenues for 2010 as customer demand

began returning to normal and with the help and hard work of our entire workforce.

Among our products, those that achieved the highest growth rates were from the

mobile communication station product line, including the power amplifier (PA) and

remote radio head (RRH) equipment. These products grew by nearly 90%, making

the product line the source of the largest share of revenue for the Company. The

principal demand of these products was derived from the continuing expansion of

cellular networks by telecom operators in North America, as well as from telecom

carriers in many countries beginning to invest in 4G/LTE mobile broadband

infrastructure equipment of fourth-generation mobile wireless communication

networks. Sales of digital microwave radio equipment, used in cellular backhaul, were

also driven in part by this demand, achieving a growth rate of more than 15%. This

year we will focus on the research and development of a new generation of

microwave IP radios and the expansion of our market share, providing product

solutions and services with more bandwidth and faster speeds.

In the area of satellite communication products, 2010 revenues for low noise

block-downconverters (LNB), satellite TV receivers, and two-way broadband satellite

transceivers (VSAT) were close to 2009 revenues. This year we also expect to launch

and mass-produce a number of new products.

3

Expanding R&D Teams and Rapidly Expanding Global Presence

Construction has started on 4G mobile communication network infrastructures around

the world. The investments in 4G/LTE cellular networks by telecom operators have

been a driving force in the demand for the widespread deployment of remote radio

head (RRH) equipment. Faced with this enormous demand for 4G/LTE, in 2009 the

Company acquired the TelASIC R&D team in the U.S., which not only significantly

enhanced our development capabilities and momentum in RRH product development,

but also helped accelerate our time to market, contributing significantly to the

Company's revenues in 2010. In addition, in order to speed-up the expansion of our

existing product lines and to broaden our customer base, MTI acquired RadioComp

R&D team in Denmark in the second half of 2010. With organizational integration and

the outstanding R&D capabilities available throughout the Company, we were not

only able to improve the applications of our existing FDD LTE core technology, we but

have also built a foundation for venturing into TD-LTE, looking to provide an even

more comprehensive and complete product line and to build momentum for the

Company's future growth.

Enhancing Risk Management and Improving Profitability

Faced with an ever-changing business environment in recent years, with labor

shortages, surging prices of raw materials, and the increasing time and costs of

cultivating R&D and technological capabilities, our operating costs have soared.

Coupled with the weakness of the U.S. dollar and the impact of rising interest rates,

maintaining and improving our gross profit ratio will be a tremendous challenge for this

year. TelASIC and RadioComp were acquired in 2009 and 2010, respectively, based

on the Company's development strategy for the future. Although in the short term the

costs of R&D will increase substantially, which will result in lower profitability, we have

been able to take advantage of the opportunities to collaborate with world-class

systems vendors with our new RRH products in development, thus enabling us to

market our products in Europe. Therefore, the Company's primary objective is to

achieve client certification of our new products as quickly as possible and to speed up

our schedule for volume production and shipments. We hope that the delivery of these

products will result in significant revenues and earnings for the Company so as to

offset the negative impact caused by the general economic conditions.

Looking to the Future

As a global leader in specialized wireless communications technology, MTI will

continue to develop high value-added products in line with market trends and meet

the needs of customers at an accelerated pace. We will strengthen our partnerships

with existing customers and expand our presence on a global scale. Looking toward

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our business endeavors in the Centennial of the Republic, this will be the year that the

Company takes on the challenge of achieving the NT$10 billion revenue mark. We will

continue to uphold our corporate principles of pragmatism, pursuit of perfection, and

attaining long-term viability, and work even harder to rise to the challenges presented

to us.

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

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

thank our board members, supervisors, shareholders, clients, and our partners for

their continuous support, encouragement, contributions, and efforts. Looking to the

future, we will continue to do our best and to uphold the trust and live up to the

expectations of our shareholders.

Sincerely,

Patrick H.Y.Wang Chi-Chia Hsieh Allen Yen

Chairman of the Board Vice Chairman of the Board President and CEO

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II. Overview of Operations

i. Business Scope

(a) Main Business and Operation Ratios (Adapted from our audited

financial reports)

MTI’s main business in 2010 includes Satellite Communication Products and

Telecommunication Products. Satellite Communication Products includes Satellite TV

Receiving Equipment and Very Small Aperture Terminal (VSAT); Telecommunication

Products includes Mobile Base Station, wireless LAN and Worldwide Interoperability for

Microwave Access. In 2010, Satellite Communication Products reached 41% and

Telecommunication Products reached 59% of consolidated revenues, respectively.

(b) Industry Overview

Below we provide analyses of satellite communications systems and equipment and on

terrestrial microwave systems and equipment as well as an overview of their respective

markets:

Satellite Communications Systems and Equipment

With the demand for high-definition television

(HDTV) sets and HDTV programming constantly on

the rise and the rapid growth of regional and

multilingual channels, direct broadcast satellite TV

operators currently offer close to a thousand TV

channels and a substantial number of broadcast

channels. This has undoubtedly created a

significant demand for satellite transponders and

satellite TV receivers. Satellite Direct to Home

services (DTH) have flourished in the U.S., Europe

and Japan, with North America currently positioned as the largest market in the world

(about 60%). The largest satellite DTH operators in this market are Dish Network and

DirecTV. The European market is second only to North America, accounting for about

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27% of the overall market. As of the end of 2010, DirecTV has 19.2 million subscribers,

whereas Dish Network boasts 17.15 million subscribers. The growth of subscribers has

been stable. In contrast, there are marked differences in TV programming among

European countries, and subscriber bases are smaller by comparison. As a result

satellite TV operators and TV content providers are independent from one another,

although in recent years they have begun to emulate their counterparts in North America.

It is expected that in 2012 the London Olympics will be a driving force behind a high level

of priority being given to broadcasts on HD channels, starting with the British

Broadcasting Corporation (BBC). The demand for HD set-top boxes (STB) and the

Ka-band low noise block-downconverters (LNB) will also increase gradually, thus driving

the demand for new equipment to replace older models.

Very Small Aperture Terminal (VSAT)

For Very Small Aperture Terminal (VSAT)

equipment, their main area of applications is to

provide high-speed two-way voice data

communications and internet broadband satellite

services to users in remote locations where there is

no access to cable modem and DSL services.

Currently the major market for VSAT is North

America, which accounts for 70% of market share

globally, followed by the Asia-Pacific region, with

20% market share. HughesNet and ViaSat are the

two largest satellite broadband operators in North America. The combined number of

subscribers of the two companies exceeded 1.1 million in 2010. With additional Ka-band

satellites being launched, the market has been moving from the Ku-band toward the

higher-frequency Ka-band. It is estimated that between 2010 and 2013 the compound

annual growth rate will be more than 20%.

In Asia, Thaicom's IPSTAR still dominates the broadband satellite services market. As of

2010, the cumulative number of subscribers exceeded 200,000, the majority of whom

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reside in Australia and New Zealand. In Europe, several new broadband satellite projects

are under way. These include the Kasat satellite of Eutelsat, Astra2 connect satellite of

SES and Hylas satellite of Avanti. With the impetus provided by projects, it is expected

that Europe will become the world's second largest satellite broadband services market in

2012.

Terrestrial Microwave Communication Systems and Equipment

With the rapid growth in 3G mobile subscribers, strong sales of smartphones and the

advancement of future 4G mobile networks, it can be expected that the global mobile

communications industry will require backhaul equipment that provides even higher

bandwidth in order to accommodate the substantial growth of wireless broadband data

transmission.

Digital microwave radios are currently widely

deployed in mobile communication networks

as Cellular Backhaul equipment. According to

market forecasts, global point-to-point

microwave radios are still showing signs of

steady growth for the next several years, with

IP radios being the fastest growing sector

due to its support for Ethernet interfaces and

ability to carry voice, data, and multimedia

information. IP radios are also more efficient

with its modulation techniques, giving telecom operators more flexibility and reducing

capital investments, thus meeting the requirements for the evolution of high-speed mobile

networks.

Driven by the expansion of capacity in 3.5G networks and the construction of long term

evolution (LTE) networks in the global telecommunications equipment market, it is

expected that the demand will return and be stable in 2011. The estimated growth of

production output is between 5 and 10%, which is significantly better than 2010, which

saw a decline in output of 1 to 5%. In light of the waves of mergers between telecom

equipment manufacturers, the surviving vendors are expected to be allocated more

substantial orders. According to statistics provided by the market research firm Ovum,

~8~

Ericsson remained the industry leader in 2010, followed closely by Huawei. Other

vendors such as Alcatel-Lucent, Cisco and Nokia Siemens are also among the top five,

each having a market share of over 10%. An increasing number of telecom operators

around the world have been actively involved in the implementation of 4G/LTE networks.

According to statistics from Global Mobile Suppliers Association (GSA); as of January

2011, 128 telecom operators in 52 countries have been confirmed to be adopting LTE

technology.

(c) Technology and Research and Development Overview

MTI’s R&D technology and investment are mainly focused on RF (radio frequency) as the

core technology. We are developing the following two product lines in anticipation of the

requirements of our growing business:

Satellite communications systems and equipment:

� Direct broadcast satellite TV receivers

� Small commercial satellite ground stations

Terrestrial microwave communications systems and equipment:

� Point-to-point digital microwave systems

� Broadband wireless access equipment

� Mobile base station power amplifiers

� Radio Frequency Identification (RFID) Systems

� 3G/LTE wireless broadband head end equipment

Our technical expertise ranges from the far-reaching satellite communications systems to

terrestrial microwave communications and transmission equipment for mobile

communication base stations capable of communicating over a distance of dozens of

kilometers. Our expertise also covers the so-called “last mile” wireless broadband terminal

devices and even the “last foot” Radio Frequency Identification (RFID) Systems, covering

a wide spectrum of applications in the field of wireless communications.

~9~

III. Financial Review

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

for the year 2010 and 2009.

Selected Financial Data (consolidated) 2010 2009

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

Income Statement Data:

Net operating revenues 8,112,071 6,378,052

Operating costs (6,793,358) (5,280,282)

Gross profit 1,318,713 1,097,770

Operating expenses (1,504,662) (1,221,336)

Operating income (185,949) (123,566)

Non-operating income (expenses) 69,341 43,067

Income before income tax (116,608) (80,499)

Income tax income (expense) (39,656) 30,201

Minority interest (1,666) (9,626)

Net income (157,930) (59,924)

Earnings Per Share Data:

Net earnings per share (NT$) (1) (0.38) (0.15)

Balance Sheet Data

Current Assists 6,021,055 5,989,301

Investment 351,486 712,696

Fixed Assets 1,146,297 1,089,116

Intangibles 680,953 339,915

Other Assets 224,214 212,592

Total assets 8,424,005 8,343,620

Current liabilities 3,193,819 2,977,431

Long-term liabilities 485,843 -

Other liabilities 239,066 533,295

Stockholders' equity 4,505,277 4,832,894

Total Liabilities and Equities 8,424,005 8,343,620

(1) Based on weighted average outstanding common shares.

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Consolidated Results of Operations

The following discussion should be read in conjunction with the Company's consolidated financial statements, together with

the notes thereto, included elsewhere in this report.

Net Operating Revenue

MTI had a strong operating performance in year 2010. The consolidated

net revenue reached NT$8,112 million. Our satellite communications

sector which includes LNB and VSAT, contributed 41% of total revenue.

Telecommunication contains Mobile (includes RRH and PA) and Radio

sector, contributed 57% of total revenue.

Gross Profit

The consolidated gross profit in 2010 was NT$1,319 million, which was

16% of the total consolidated operating revenue. Compared to 2009, the

consolidated gross profit ratio of net sales decreased by 2 percent.

This gross profit of net sales decreased was due to weakness of US dollars

in H2 of 2010 and different products portfolio.

Sales by Product

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Operating Expenses and Income

Consolidated operating expenses in 2010 were NT$1,505 million. Among

operating expenses, general and administrative expenses accounted for

18%, while R&D and marketing expenses together accounted for 82%.

We spent 22% more in R&D over 2009. This is a reflection of our

endeavor to safeguard our technological advantages and enhance our

market position.

Due to acquisitions of TelAsic in US and RadioComp in Denmark, which

caused increases of our R&D expenses, therefore, the consolidated

operating income in 2010 was loss NT$186 million.

Non-Operating Income and Loss

With regard to consolidated non-operating income from foreign exchange

gain and other income, there was a gain of NT$69 million in 2010.

Cash Flows and Net Cash

MTI ended year 2010 with a strong consolidated balance sheet including

NT$2,414 million of cash and cash equivalents. Cash flow from

operating activities showed a net cash outflow of NT$563 million.

Consolidated net cash position at the end of 2010 decreased to NT$645

million, mainly from losses of operating activities, acquisitions and Capex

investment. The cash on hand and our short-term/ long-term banking

facilities were sufficient to support working capital demand and capital

expenditure.

~12~

Taxation

MTI carried forward deferred income tax assets of NT$181 million as of December 31, 2010. In accordance with the

implementation of Alternative Minimum Tax, there was NT$40 million income tax expenses in 2010 and expected NT$16

million income tax payable in 2010.

Net Income After Tax

MTI’s consolidated net income after tax in 2010 was NT$158 million loss, equivalent to basic earnings per common share

of loss NT$ 0.38, compared to loss NT$ 0.15 per share of last year.

Liquidity and Capital Structure

As of December 31 2010, our total assets were NT$8,424 million and

total liabilities were NT$3,919 million. Total liabilities to total

assets ratio was 47 percent in 2010. Current ratio was 189% in 2010,

reflecting a healthy balance sheet with substantial liquidity.

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REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR10000282

To the Board of Directors and Stockholders of

Microelectronics Technology, Inc.

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

subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, of

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

Taiwan dollars. These financial statements are the responsibility of the Company’s management. Our

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

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

Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those rules

and standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the overall

financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

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

financial position of Microelectronics Technology, Inc. and its subsidiaries as of December 31, 2010 and 2009,

and the results of their operations and their cash flows for the years then ended in conformity with the “Rules

Governing the Preparation of Financial Statements by Securities Issuers” and generally accepted accounting

principles in the Republic of China.

PricewaterhouseCoopers, Taiwan

March 10, 2011

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

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

2010 2009 2010 2009

AMOUNT % AMOUNT % AMOUNT % AMOUNT %

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

~14~

ASSETS LIABILITIES AND STOCKHOLDERS' Current Assets EQUITY Cash and cash equivalents (Note 4(1)) $ 2,335,057 28 $ 2,891,047 35 Current Liabilities Financial assets at fair value through Short-term loans (Note 4(8)) $ 1,287,938 15 $ 998,727 12 profit or loss - current (Note 4(2)) 78,731 1 49,111 1 Financial liabilities at fair value Financial assets carried at cost - through profit or loss - current current (Note 4(5)) - - 80,269 1 (Note 4(9)) 2,478 - 738 - Notes and Accounts receivable, net Accounts payable 1,243,780 15 1,339,034 16 (Note 4(3)) 1,626,979 19 1,624,779 19 Income tax payable (Note 4(16)) 16,087 - 5,610 - Other receivables (Note 4(16)) 86,443 1 76,044 1 Accrued expenses 490,119 6 412,852 5 Inventories, net (Note 4(4)) 1,696,578 20 1,099,385 13 Other payables 98,858 1 87,770 1 Prepayments 95,377 1 47,489 1 Long-term liabilities - current Deferred income tax assets - current portion (Notes 4(10) and 6) - - 75,000 1 (Note 4(16)) 101,890 1 121,177 1 Accrued warranty liabilities 27,670 1 32,373 1 Total current assets 6,021,055 71 5,989,301 72 Other current liabilities 26,889 - 25,327 - Funds and Investments Total current liabilities 3,193,819 38 2,977,431 36 Financial assets carried at cost - Long-term Liabilities non-current (Notes 4(5) and 6) 351,486 4 712,696 8 Long-term loans (Notes 4(10) and 6) 480,645 6 - - Fixed Assets (Notes 4(6) and 6) Long-term leases payable 5,198 - - - Cost Total long-term liabilities 485,843 6 - - Buildings 787,971 9 813,457 10 Other Liabilities Machinery and equipment 2,062,305 25 1,968,193 23 Accrued pension liabilities (Note Transportation equipment 2,740 - 3,447 - 4(15)) 237,590 3 212,270 2 Office equipment 77,893 1 72,477 1 Guarantee deposits received (Notes 4 Leasehold improvements 130,065 2 133,061 2 (5) and 6) 1,476 - 321,025 4 Cost and Revaluation Increment 3,060,974 37 2,990,635 36 Total other liabilities 239,066 3 533,295 6 Less: Accumulated depreciation ( 1,998,585 ) ( 24 ) ( 1,902,285 ) ( 23 ) Total liabilities 3,918,728 47 3,510,726 42 Construction in progress and Stockholders' Equity prepayments for equipment 83,908 1 766 - Parent Company Stockholders' Equity Net fixed assets 1,146,297 14 1,089,116 13 Capital (Note 4(11)) Intangible Assets Common stock 4,129,682 49 4,129,682 50 Goodwill (Note 4(7)) 339,180 4 168,968 2 Capital Surplus (Note 4(12)) Deferred pension costs (Note 4(15)) 3,653 - 3,123 - Paid-in capital in excess of par Other intangible assets (Note 4(7)) 338,120 4 167,824 2 value of common stock 59,451 1 59,451 1 Total intangible assets 680,953 8 339,915 4 Capital reserve from conversion of Other Assets convertible bonds 28,676 - 28,676 - Assets leased to others 36,631 1 23,996 1 Capital reserve from long-term Refundable deposits 5,777 - 5,717 - investments 8,326 - - - Deferred expenses 102,596 1 106,712 1 Retained Earnings (Note 4(13)) Deferred income tax assets - Legal reserve 160,405 2 160,405 2 non-current (Note 4(16)) 79,210 1 76,167 1 Undistributed earnings 87,808 1 245,738 3 Total other assets 224,214 3 212,592 3 Stockholders' Equity Adjustments Cumulative translation adjustments 4,795 - 172,064 2 Unrecognized pension cost (Note 4(15)) ( 15,797 ) - ( 624 ) - Total parent company stockholders' equity 4,463,346 53 4,795,392 58 Minority interest 41,931 - 37,502 - Total stockholders' equity 4,505,277 53 4,832,894 58 Commitments And Contingent Liabilities TOTAL LIABILITIES AND TOTAL ASSETS $ 8,424,005 100 $ 8,343,620 100 STOCKHOLDERS' EQUITY $ 8,424,005 100 $ 8,343,620 100

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

2010 2009 AMOUNT % AMOUNT %

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

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Operating Revenue Sales $ 8,156,652 100 $ 6,382,404 100 Sales returns ( 36,105 ) - ( 4,193 ) - Sales discounts ( 8,476 ) - ( 159 ) - Net Sales 8,112,071 100 6,378,052 100 Operating Costs (Note 4(18)) Cost of goods sold ( 6,793,358 )( 84 ) ( 5,280,282 ) ( 82 )Gross profit 1,318,713 16 1,097,770 18 Operating Expenses (Note 4(18)) Sales and marketing expenses ( 429,724 )( 5 ) ( 356,783 ) ( 6 ) General and administrative expenses ( 269,004 )( 3 ) ( 204,464 ) ( 3 ) Research and development expenses ( 805,934 )( 10 ) ( 660,089 ) ( 10 )Total Operating Expenses ( 1,504,662 )( 18 ) ( 1,221,336 ) ( 19 )Operating loss ( 185,949 )( 2 ) ( 123,566 ) ( 1 )Non-operating Income and Gains Interest income 14,969 - 36,263 1 Gain on disposal of property, plant and equipment - - 1,793 - Gain on disposal of investments 155 - - - Foreign exchange gain, net 20,659 - 11,631 - Gain on valuation of financial assets (Note 4(2)) 3,194 - 2,739 - Gain on valuation of financial liabilities (Note 4(9)) 738 - - - Other income 73,912 1 58,757 1 Total Non-operating Income and Gains 113,627 1 111,183 2 Non-operating Expenses and Losses Interest expense ( 20,479 ) - ( 18,379 ) - Loss on disposal of property, plant and equipment ( 43 ) - - - Loss on disposal of investments (Note 4(5)) - - ( 610 ) - Impairment loss (Note 4(5)) ( 3,369 ) - ( 35,099 ) ( 1 ) Loss on valuation of financial liabilities (Note 4(9)) - - ( 738 ) - Other expenses ( 20,395 ) - ( 13,290 ) - Total Non-operating Expenses and Losses ( 44,286 ) - ( 68,116 ) ( 1 )Loss before income tax ( 116,608 )( 1 ) ( 80,499 ) - Income tax (expense) benefit (Note 4(16)) ( 39,656 )( 1 ) 30,201 1 Consolidated net loss ($ 156,264 )( 2 ) ($ 50,298 ) 1

Attributable to: Equity holders of the parent company ($ 157,930 )( 2 ) ($ 59,924 ) - Minority interest 1,666 - 9,626 1 ($ 156,264 )( 2 ) ($ 50,298 ) 1

Before Tax After Tax Before Tax After Tax Loss per share (Note 4(17)) Basic loss per share (in dollars) Net loss ($ 0.37 )($ 0.38 ) ($ 0.23 )($ 0.15 )

Diluted loss per share (in dollars) Net loss ($ 0.37 )($ 0.38 ) ($ 0.23 )($ 0.15 )

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

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Capital Reserves Retained Earnings

Common stock

Paid-in capital in

excess of par value of common

stock

Capital reserve from conversion of convertible

bonds

Capital reserve from

long-term investments

Legal reserve

Undistributed earnings

Cumulative translation

adjustments Unrecognized pension cost

Minority interest Total

Note: Directors' and supervisors' remuneration amounting to $3,188 and employees' bonus amounting to $22,316 had been included in the Consolidated Statement of Income.

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

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Year 2009

Balance at January 1, 2009 $ 4,084,750 $ 59,451 $ 28,676 $ 1,642 $ 124,982 $ 564,482 $ 224,471 $ - $ 66,443 $ 5,154,897

Appropriation of 2008 earnings (Note)

Legal reserve - - - - 35,423 ( 35,423) - - - -

Cash dividends - - - - - ( 175,644) - - - ( 175,644)

Stock dividends to be distributed 44,932 - - - - ( 44,932) - - - -

Net loss for 2009 - - - - - ( 59,924) - - 9,626 ( 50,298)

Proportionate adjustment due to change in investee's equity - - - ( 1,642) - ( 2,821) - - - ( 4,463)

Translation adjustments of long-term investments - - - - - - ( 52,407) - ( 7,771) ( 60,178)

Proportionate share in adjustment of subsidiaries' unrecognized pension cost - - - - - - - ( 624) - ( 624)

Subsidiaries' purchase of treasury stock - - - - - - - - ( 15,913) ( 15,913)

Minority interest - - - - - - - - ( 14,883) ( 14,883)

Balance at December 31, 2009 $ 4,129,682 $ 59,451 $ 28,676 $ - $ 160,405 $ 245,738 $ 172,064 ( $ 624) $ 37,502 $ 4,832,894

Year 2010

Balance at January 1, 2010 $ 4,129,682 $ 59,451 $ 28,676 $ - $ 160,405 $ 245,738 $ 172,064 ( $ 624) $ 37,502 $ 4,832,894

Net loss for 2010 - - - - - ( 157,930) - - 1,666 ( 156,264)

Proportionate share in adjustment due to change in investee's equity - - - 2,538 - - - - - 2,538

Unrecognized pension cost - - - - - - - ( 13,541) - ( 13,541)

Proportionate share in adjustment of subsidiaries' unrecognized pension cost - - - - - - - ( 1,632) ( 173) ( 1,805)

Proportionate share in adjustment of subsidiaries' share-based payment-employee stock option - - - 5,788 - - - - 293 6,081

Translation adjustments of long-term investments - - - - - - ( 167,269) - - ( 167,269)

Purchase of minority interest - - - - - - - - ( 9,695) ( 9,695)

Subsidiaries' transfer of treasury stock - - - - - - - - 12,338 12,338

Balance at December 31, 2010 $ 4,129,682 $ 59,451 $ 28,676 $ 8,326 $ 160,405 $ 87,808 $ 4,795 ( $ 15,797) $ 41,931 $ 4,505,277

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

2010 2009

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CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net loss ( $ 156,264 ) ( $ 50,298 )

Adjustments to reconcile net loss to net cash (used in) provided by

operating activities

Compensation cost for the employee stock options-subsidiaries 6,081 320

Provision for bad debts (reversal of allowance for doubtful

accounts) 7,067

( 37,277 )

Depreciation 204,442 215,175

Amortization 88,218 84,074

Gain on valuation of financial assets, net ( 3,194 ) ( 2,739 )

(Gain) loss on valuation of financial liabilities, net ( 738 ) 738

Loss (gain) on disposal of property, plant and equipment, net 43 ( 1,793 )

(Gain) loss on disposal of investments ( 155 ) 610

Provision for loss on inventory obsolescence and market price

decline 51,339

25,493

Impaiment loss 3,369 35,099

Foreign currency exchange gain on long-term loans ( 33,105 ) -

Changes in assets and liabilities

Financial assets at fair value through profit or loss ( 30,475 ) 265,452

Notes and accounts receivable ( 24,091 ) 378,350

Other receivables ( 2,843 ) 1,218

Inventories ( 660,485 ) 49,380

Prepayments ( 5,810 ) -

Prepaid expenses and prepayments ( 40,535 ) 689

Other current liabilities ( 1,584 ) -

Deferred income tax assets 14,400 ( 46,444 )

Accounts payable ( 64,604 ) 35,544

Income tax payable 10,656 ( 39,475 )

Accrued expenses 105,635 18,843

Other payables ( 35,774 ) 26,475

Reserve for product warranty ( 4,247 ) ( 4,277 )

Accrued pension expense 11,741 ( 14,853 )

Other current liabilities ( 2,465 ) -

Net cash (used in) provided by operating activities ( 563,378 ) 940,304

(Continued)

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

2010 2009

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

~18~

CASH FLOWS FROM INVESTING ACTIVITIES Decrease (Increase) in financial assets carried at cost - current $ 79,077 ( $ 68,862 ) Decrease in financial assets carried at cost - noncurrent 5,028 17,017 Liquidation dividends from financial assets carried at cost 324 324 Decrease in restricted assets - 6,203 Acquisition of property, plant and equipment ( 244,886 ) ( 87,784 ) Proceeds form disposal of property, plant and equipment 3,532 5,527 Acquisition of intangible assets ( 218,496 ) - (Increase) decrease in refundable deposits ( 319 ) 1,730 Increase in deferred charges ( 47,722 ) ( 47,801 ) Net assets acquired due to TelASIC ( 68,781 ) ( 221,956 ) Net assets acquired due to RadioComp ApS ( 142,647 ) - Net cash used in investing activities ( 634,890 ) ( 395,602 ) CASH FLOWS FROM FINANCING ACTIVITIES Decrease (increase) in short-term loans 296,004 ( 96,095 ) Increase in guarantee deposits received 451 1,013 Proceeds from long-term loans 527,200 - Repayment of long-term loans ( 75,000 ) ( 175,000 ) Obligations under capital leases-non-current ( 349 ) - Purchase of minority interest ( 10,499 ) ( 82,061 ) Payment of cash dividends - ( 175,644 ) Payment of cash dividends-subsidiaries ( 2,003 ) - Payment of employees' bonus - ( 22,316 ) Payment of remuneration to directors and supervisors - ( 3,188 ) Net cash provided by (used in) financing activities 735,804 ( 553,291 ) Effect of change in exchange rates ( 104,758 ) ( 23,769 ) Effect of initial consolidation of a subsidiary 11,232 - Decrease in cash and cash equivalents ( 555,990 ) ( 32,358 ) Cash and cash equivalents at beginning of year 2,891,047 2,923,405 Cash and cash equivalents at end of year $ 2,335,057 $ 2,891,047

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 20,133 $ 21,525

Income tax paid $ 13,345 $ 57,163

Cash paid for the acquisition of assets of TelASIC: Accounts receivable $ - $ 1,055 Property, plant and equipment 17,615 18,993 Goodwill 86,723 70,149 Other intangible assets 186,399 186,399 Less: Cash paid during the previous period ( 221,956 ) - Less: Accrued expense at the end of the year - ( 54,640 ) Net cash paid $ 68,781 $ 221,956

Cash paid for the acquisition of assets of RadioComp ApS: Accounts receivable $ 19,799 $ - Inventories 13,680 - Other current assets 1,791 - Property, plant and equipment 10,214 - Other assets 633 - Goodwill 153,879 - Accounts payable ( 13,773 ) - Accrued expenses ( 37,826 ) - Other liabilities ( 5,750 ) - Net cash paid $ 142,647 $ -

INVESTING ACTIVITIES PARTIALLY PAID BY CASH: Increase in property, plant and equipment $ 296,168 $ 90,824 Less: Payable for equipment at the end of the year ( 79,661 ) ( 28,379 ) Add: Payable for equipment at the beginning of the year 28,379 25,339 Cash paid $ 244,886 $ 87,784

~19~

MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDASRIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010 AND 2009

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

(1) The Company was approved under the "Statute for the Establishment and Administration of

Science-Based Industrial Park" in September 1982 and was incorporated on March 31, 1983 under

the Company Law of the Republic of China (R.O.C.). The Company commenced its operations on

April 29, 1983.

The Company is mainly engaged in the design and manufacture of wireless communication

products and standard products, including microwave products, digital microwave radio

transceivers and systems, VSAT, TVRO/DBS products and microwave components. The Company

also manufactures custom designed products suited to the specific requirements of its customers'

various microwave systems.

As of December 31, 2010, the Company and its subsidiaries had 2,812 employees.

(2) Subsidiaries included in the consolidated financial statements and their changes in 2010 and 2009:

Note 1: Investments planning and consulting.

Primary

Company name Location 2010 2009 business

Sasson International British Virgin Islands 100% 100% Note 1

Holdings Inc.

Global PCS Inc. Hsinchu, Taiwan 90.43% 92.25% Note 2

Millennium Telecom, Inc. Taipei, Taiwan 99.99% 99.99% Note 1

Jupiter Network Corp. British Virgin Islands 100% 100% Notes 1 and 5(1)

Zeus Communications, Delaware, America - 100% Notes 1 and 5(1)

Inc.

Jupiter Technology Wuxi, China 100% 100% Note 3

(Wuxi) Inc.

Welltop Technology British Virgin Islands 100% 100% Notes 1 and 3

Co., Ltd.

EURO-MTI S.A.R.L Luxembourg - - Notes 1 and 5(2)

Optical Microwave California, America - 100% Notes 3 and 5(3)

Network Inc.

MTI Laboratory, Inc. California, America 100.00% 100.00% Note 3

Greast Communication Nanking, China 81.94% 76.70% Note 4

Technology Co., Ltd.

MTI Network, Inc. Delaware, America 100.00% - Notes 2 and 6(1)

RadioComp ApS Denmark 100.00% - Notes 2 and 6(2)

Percentage of direct

ownership

~20~

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

Note 3: Satellite and microwave communication and consulting services.

Note 4: Research, development, design, production, manufacturing and sales of WCDMA technique

and radio frequency sub-system.

Note 5: Decrease in consolidated entities:

(1)Jupiter Network Corp. merged with Zeus communication Inc. on September 30, 2010 (the

merger date), with Jupiter Network Corp. as the surviving entity.

(2)EURO-MTI S.A.R.L has been liquidated over in 2009.

(3)Optical Microwave Network Inc. has been liquidated over in the fourth quarter of 2010.

Note 6: Increase in consolidated entities:

(1)MTI Network, Inc. was incorporated in the third quarter of 2010.

(2)100% holding interest was acquired in the fourth quarter of 2010. (3) Subsidiaries not included in the consolidated financial statements: None. (4) Adjustments for subsidiaries with different balance sheet dates: None. (5) Special operating risks in foreign subsidiaries: None. (6) Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company:

None. (7) Contents of subsidiaries' securities issued by the parent company: None. (8) Information on convertible bonds and common stock issued by subsidiaries:

Sasson International Holdings Inc. increased its cash capital by issuing new common stock amounting to US$4,702 thousand and US$1 million in 2010 and 2009, respectively. MTI Network, Inc. was incorporated by issuing new common stock amounting to US$100 thousand in the third quarter of 2010.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the Company and its subsidiaries (together referred herein as the Group) are prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and accounting principles generally accepted in the Republic of China. The Group’s accounting policies are summarized below: (1) Principles of consolidation

All majority-owned subsidiaries and controlled entities are included in the consolidated financial statements. The Group prepares quarterly consolidated financial statements which include the subsidiaries in which the Company owns more than 50% of voting rights or has effective control. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.

(2) Translation of financial statements of foreign subsidiaries into New Taiwan dollars Assets and liabilities of foreign subsidiaries are translated into New Taiwan dollars at the exchange rates prevailing at the balance sheet date; equity accounts are translated at historical rates, except for beginning retained earnings which is transferred from prior years’s ending retained earnings; and income and expense accounts are translated into New Taiwan dollars at the average rates of exchange prevailing during the year. Translation adjustments are taken directly to a separate component of stockholders’ equity, “cumulative translation adjustment.”

(3) Translation of foreign currency transactions A.The Group maintains its accounts in New Taiwan dollars. Transactions denominated in foreign

currencies are translated into New Taiwan dollars at the spot exchange rates prevailing at the

~21~

transaction dates. B.Monetary assets and liabilities denominated in foreign currencies are translated at the exchange

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

C.When a gain or loss on a non-monetary item is recognized directly in equity, any exchange component of that gain or loss shall be recognized directly in equity. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss shall be recognized in profit or loss. However, non-monetary items that are measured on a historical cost basis are translated using the exchange rate at the date of the transaction.

(4) Classification of current and non-current items A.Assets that meet one of the following criteria are classified as current assets; otherwise they are

classified as non-current assets: (a)Assets arising from operating activities that are expected to be realized or consumed, or are

intended to be sold within the normal operating cycle; (b)Assets held mainly for trading purposes; (c)Assets that are expected to be realized within twelve months from the balance sheet date; (d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to

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

B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: (a)Liabilities arising from operating activities that are expected to be paid off within the normal

operating cycle; (b)Liabilities arising mainly from trading activities; (c)Liabilities that are to be paid off within twelve months from the balance sheet date; (d)Liabilities for which the repayment date cannot be extended unconditionally to more than

twelve months after the balance sheet date.

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

at fair value. Those in the form of equity securities are accounted for using the trade date accounting, while those in the form of debt securities, beneficiary certificates, and derivative instruments are accounted for using settlement date accounting.

B.These financial instruments are subsequently remeasured and stated at fair value, and the gain or loss is recognized in profit or loss. The fair value of listed equity securities, closed-end funds and beneficiary certificates are determined by the closing prices at the balance sheet date. The fair value of open-end funds is determined by the net asset value at the balance sheet date.

C.When a derivative is an ineffective hedging instrument, it is initially recognized at fair value on the date a derivative contract is entered into and is subsequently remeasured at its fair value. If a derivative is a non-option derivative, the fair value initially recognized is zero.

(6) Financial assets carried at cost A.Financial assets carried at cost are initially recognized at fair value plus transaction costs and are

accounted for using trade date accounting. B.Impairment loss is recognized when there is objective evidence that the assets are impaired.

Reversal of the foregoing impairment loss is not allowed.

~22~

(7) Allowance for doubtful accounts Allowance for doubtful accounts is provided according to the evaluation of the collectibility of ending balances of notes and accounts receivable and other receivables.

(8) Inventories The perpetual inventory system is adopted for inventory recognition. Inventories are stated at cost. The cost is determined using the weighted-average method. Fixed manufacturing overhead is allocated on the basis of the normal capacity of the production equipment. At the end of period, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. The calculation of net realizable value is based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.

(9) Property, plant and equipment A.Property, plant and equipment are stated at cost. Depreciation is provided under the straight-line

method based on the assets’ estimated economic service lives. Salvage value of the fully depreciated assets that are still in use is depreciated based on the re-estimated economic service lives.

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

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

(10) Intangible assets A.The excess of acquisition costs over the fair value of identifiable net tangible assets is

recognized as goodwill and is reviewed for impairment testing annually. B.Intangible assets, mainly technology know-how, are amortized on a straight-line basis over 5

years.

(11) Deferred charges Deferred charges, mainly computer software expenditures, are stated at cost and amortized over the estimated life of 3 years using the straight-line method.

(12) Impairment of non-financial assets The Group recognizes impairment loss when there is indication that the recoverable amount of an asset is less than its carrying amount. The recoverable amount is the higher of the fair value less costs to sell and value in use. The fair value less costs to sell is the amount obtainable from the sale of the asset in an arm’s length transaction after deducting any direct incremental disposal costs. The value in use is the present value of estimated future cash flows to be derived from continuing use of the asset and from its disposal at the end of its useful life. When the impairment no longer exists, the impairment loss recognized in prior years shall be recovered.

(13) Reserve for product warranty Under the warranty provisions of its sales contracts, the Group is obligated to correct any deficiencies in its products that occur under normal operation within a certain period after the date of sale. The Group provides a reserve for product warranty based on a certain percentage of the sales value of each product line, taking into account historical experience.

~23~

(14) Retirement plan and net periodic pension cost Under the defined benefit pension plan, net periodic pension costs are recognized in accordance with the actuarial calculations. Net periodic pension costs include service cost, interest cost, expected return on plan assets, and amortization of unrecognized net transition obligation and gains or losses on plan assets. Unrecognized net transition obligation is amortized on a straight-line basis over 12 years.

Under the defined contribution pension plan, net periodic pension costs are recognized as incurred.

(15) Income tax A.Provision for income tax includes deferred income tax resulting from temporary differences,

investment tax credits and loss carryforward. Valuation allowance on deferred tax assets is provided to the extent that it is more likely than not that the tax benefit will not be realized. Over or under provision of prior years’ income tax liabilities is included in current year’s income tax. When a change in the tax laws is enacted, the deferred tax liability or asset is recomputed accordingly in the period of change. The difference between the new amount and the original amount, that is, the effect of changes in the deferred tax liability or asset, is recognized as an adjustment to current income tax expense (benefit).

B.Investment tax credits arising from expenditures incurred on acquisitions of equipment or technology, research and development, employees’ training, and equity investments are recognized in the year the related expenditures are incurred.

C.An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

(16) Share-based payment - employee compensation plan A.The employee stock options granted from January 1, 2004 through December 31, 2007 are

accounted for in accordance with EITF 92-070, EITF 92-071 and EITF 92-072 “Accounting for Employee Stock Options”, as prescribed by the Accounting Research and Development Foundation, R.O.C., dated March 17, 2003. Under the share-based employee compensation plan, compensation cost is recognized using the intrinsic value method and pro forma disclosures of net income and earnings per share are prepared in accordance with the R.O.C. SFAS No. 39, “Accounting for Share-based Payment”.

B.For the grant date of the share-based payment agreements set on or after January 1, 2008, the Company shall measure the services received during the vesting period by reference to the fair value of the equity instruments granted and account for those amounts as payroll expense during that period.

(17) Employees’ bonuses and directors’ and supervisors’ remuneration Effective January 1, 2008, pursuant to EITF 96-052 of the Accounting Research and Development Foundation, R.O.C., dated March 16, 2007, “Accounting for Employees’ Bonuses and Directors’ and Supervisors’ Remuneration”, the costs of employees’ bonuses and directors’ and supervisors’ remuneration are accounted for as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and the amounts can be estimated reasonably. However, if the accrued amounts for employees’ bonuses and directors’ and supervisors’ remuneration is significantly different from the actual distributed amounts resolved by the stockholders at their annual stockholders’ meeting subsequently, the differences shall be recognized as gain or loss in the following year. In addition, according to EITF 97-127 of the Accounting Research and Development Foundation, R.O.C., dated March 31, 2008, “Criteria for Listed Companies in Calculating the Number of Shares of Employees’ Stock Bonus”, the Company calculates the number of shares of employees’ stock bonus based on the closing price of the Company’s common stock at the previous day of the stockholders’ meeting held in the year

~24~

following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.

(18) Revenue and expenses

Revenue is recognized when goods are shipped or installed. Costs and expenses are recognized as

incurred.

(19) Capital expenditures and expenses Costs and expenditures that have future economic benefits are capitalized as assets. Otherwise they are expensed when incurred.

(20) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from those assumptions and estimates.

(21) Settlement date accounting If an entity recognizes financial assets using settlement date accounting, any change in the fair value of the asset to be received during the period between the trade date and the settlement date/balance sheet date is not recognized for assets carried at cost or amortized cost. For financial assets or financial liabilities classified as at fair value through profit or loss, the change in fair value is recognized in profit or loss. For available-for-sale financial assets, the change in fair value is recognized directly in equity.

3. CHANGE IN ACCOUNTING PRINCIPLE

Effective January 1, 2009, the Group adopted the amendments to R.O.C. SFAS No. 10, “Accounting

for Inventories”. As a result of this change in accounting principle, operating cost increased by $21,751,

non-operating loss associated with inventories decreased by $21,751, and Net loss increased by $179

for the year ended December 31, 2009. There was no effect on loss per share.

4. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

2010 2009

Cash on hand 739$ 710$

Checking accounts 41,000 15,763

Savings accounts 840,030 342,378

Time deposits 1,453,288 2,532,196

2,335,057$ 2,891,047$

December 31,

~25~

(2) Financial assets at fair value through profit or loss - current

A.In 2010 and 2009, gain recognized for the changes in fair values of the financial assets at fair

value through profit were $3,194 (which consists of loss on valuation of beneficiary certificates

of $2,717 and gain on valuation of financial derivatives of $5,911) and $2,739 (which consists of

gain on valuation of beneficiary certificates of $10,935 and loss on valuation of financial

derivatives of $8,196), respectively.

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

The purpose of the forward exchange contracts and option contracts is to hedge the change of

exchange rate due to accounts receivable, without adopting hedge accounting.

2010 2009

Financial assets held for trading-beneficiary certificates 64,417$ 45,127$

Fair value adjustment 3,151 2,581

67,568 47,708

Fair value adjustment-financial derivatives 11,163 1,403

78,731$ 49,111$

December 31,

Contract Amount Fair Value Contract Period

Forward exchange contracts USD 4,000 thousand 1,820$ 2010.11.26~2011.01.27

(Sell USD buy NTD)

Forward exchange contracts EUR 3,920 thousand 4,379 2010.10.08~2011.02.24

(Sell EUR buy USD)

Option contracts USD 5,000 thousand 4,964 2010.12.07~2011.02.08

(Sell USD buy NTD)

11,163$

December 31, 2010

Contract Amount Fair value Contract Period

Forward exchange contracts USD 12.2 million 1,344$ 2009.11.12~2010.02.25

( Sell USD buy NTD )

Forward exchange contracts GBP 100 thousand 59 2009.12.15~2010.02.25

( Sell GBP buy USD ) -

1,403$

December 31, 2009

~26~

(3) Notes and accounts receivable, net

(4) Inventories, net

Expense and loss incurred on inventories for the years ended December 31, 2010 and 2009 were as follows:

2010 2009

Notes receivable 880$ 1,701$

Accounts receivable 1,633,119 1,623,479

1,633,999 1,625,180

Allowance for doubtful accounts 7,020)( 401)(

1,626,979$ 1,624,779$

December 31,

Cost Allowance Book value

Raw materials 820,053$ 141,270)($ 678,783$

Work in process 345,043 8,141)( 336,902

Finished goods 726,062 49,223)( 676,839

Inventory in transit 4,054 - 4,054

1,895,212$ 198,634)($ 1,696,578$

Cost Allowance Book value

Raw materials 493,412$ 87,752)($ 405,660$

Work in process 342,936 38,850)( 304,086

Finished goods 426,817 37,958)( 388,859

Inventory in transit 780 - 780

1,263,945$ 164,560)($ 1,099,385$

December 31, 2010

December 31, 2009

2010 2009

Cost of inventories sold 6,734,051$ 5,258,531$

Provision for loss on inventory obsolescence

and market price decline 51,339 25,493

Expenses of inventories used 23,369 20,149

Others 7,968 3,977)(

6,816,727$ 5,300,196$

For the years ended December 31,

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(5) Financial assets carried at cost

A.In the fourth quarter of 2010 and the third quarter of 2009, Taiwan Aerospace Corp. distributed

liquidation dividends. The Company accordingly adjusted long-term investment amount based on its receipt of dividends.

B.Impairment loss of $3,369 was recognized on the shares of the investee – Optical Scientific Inc., which were carried at cost, for the year ended December 31, 2010.

C.Kopin Taiwan Corp. suffered impairment in value, and impairment loss of $35,099 was recognized in the third quarter of year 2009, as the Company assessed the investment value had already been impaired and the possibility for recovery was remote. During the third quarter of 2009, the company disposed its investment in Kopin Taiwan Corp. and recognized a loss on disposal of $530.

D.All shares of Intelligent Epitaxy Technology Inc., Bayspec Inc. and part of the shares of Taicom Capital Ltd. are preferred stocks.

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

Note 1: The investment in EANT represents all of the Class 1 preferred shares issued by EANT.

According to EANT’s Articles of Incorporation, other than the fixed annual dividends

(29% of the par value of the preferred shares), the preferred shareholders are not entitled to

the distribution of earnings for common stockholders. No dividends are paid in the years

when the company has no earnings. The dividends in arrears are paid in subsequent years

when the company has earnings. Preferred shareholders have no claim in respect to the

issuance of new shares by capitalization of additional paid-in capital or retained earnings.

Preferred and common shareholders have equal voting and election rights. The company

may at any time use earnings or proceeds from issuance of new shares to redeem preferred

shares at its par value following the resolution adopted during a common shareholders’

meeting. Starting 2006, the annual dividend rate of preferred shares was changed to 0%.

Ownership

percentage Amount

Ownership

percentage Amount

Current

Short-term money market funds - -$ - 80,269$

Non-current

East Asia Network Taiwan Inc. (EANT) Note 1 -$ Note 1 320,000$

Taicom Capital Inc. 11.43% 231,881 11.43% 254,647

Optical Scientific Inc. 7.94% 60,172 11.00% 73,641

Firetide Inc. 1.67% 29,130 1.98% 31,990

Intelligent Epitaxy Technology, Inc. 2.41% 17,478 2.25% 19,194

Taiwan Aerospace Corp. 0.48% 11,203 0.48% 11,527

NAVII-LP 5.16% 756 5.16% 831

Others Note 2 866 Note 2 866

351,486$ 712,696$

December 31,

2010 2009

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When the company is dissolved or liquidated, preferred and common shareholders have

equal right to the remaining assets, and the board of directors has the authority to decide

whether the dividends in arrears on preferred shares will be paid before distributing the

remaining assets. In addition, effective October 19, 2006 (deferred from January 19, 2006),

the Group has the right to ask East Asia Crossing Inc. (EACI), a shareholder of EANT, to

buy back all the preferred shares held by the Group at the original cost plus the dividends

outstanding. EACI decided to dispose the shares of EANT and started to search for

possible buyers. EACI subsequently entered into an agreement with Connect Holdings

Limited (CHL) to sell the shares of EANT to CHL or a specified third party and to transfer

the associated rights and obligations to CHL. On October 16, 2006, upon the request of the

Group in order to protect its interests, Asia Netcom Corporation Limited (ANC), the

holding company of EACI, issued a written commitment that in the event the regulatory

restriction on the equity investments held by foreign investors is not removed and the

Group cannot exercise its right to sell the preferred shares to CHL, ANC agrees to grant a

zero-interest loan in five installments totaling US$9,700 thousand to the Group during the

period from 2006 to 2010 based on the joint venture agreement. The Group shall pledge

the preferred shares in EANT as the collateral for the loan. (See Note 6 for details.) The

first installment of the loan in the amount of US$9,700 thousand was granted to the Group.

Such preferred stocks have been properly classified in the consolidated financial

statements in accordance with the R.O.C. SFAS No. 34, “Accounting for Financial

Instruments” since January 1, 2008. Certain accounts in the 2008 consolidated financial

statements have also been reclassified following the ARDF 98-072 of the R.O.C.

Accounting Research and Development Foundation, dated February 27, 2009. The Group

sold the preferred shares in the fourth quarter of 2010.

Note 2:As the book values of the shares of Transcom Inc., NAVFII-GP and Applied Wireless

Identifications Group, Inc. held by the Company were minimal, they are presented herein

as “Others”.

~29~

(6) Property, plant and equipment, net

Property, plant and equipment were pledged as security for long-term loans. Please refer Note 6.

(7) Deferred charges

A.To enhance international competitiveness and global market share of broadband wireless products, the Company acquired jointly with its overseas subsidiary - MTI Laboratory Inc. (MTI-Lab.) the tangible, intangible assets and R&D team of TelASIC Communications Inc. (U.S.) (TelASIC) on May 22, 2009. Under the agreement, the Company shall pay a contingent price to TelASIC during the period from the contract date through March 31, 2011, whenever its new business volume reaches a certain amount. When it can be reasonably assured that such contingent event will probably happen and the amount of contingent price can be reasonably estimated, the contingent price should be included in the acquisition cost. As of December 31, 2010, total acquisition cost (inclusive of MTI-Lab.) was US$8,633 thousand, comprising of intangible assets: expertise of US$5,480 thousand and tangible assets: fixed assets of US$518 thousand MTI’s portion and goodwill of US$2,635 thousand that was the excess of the acquisition cost over the acquired net asset value.

B.To improve the Company’s operating performance and pursue its maximum long-term benefits, the Company acquired the intellectual property rights from RadioComp ApS in October, 2010 in the amount of US$6,828 thousand, and acquired indirectly 100% share ownership of RadioComp Aps through its overseas subsidiary-Welltop Technology Co., Ltd. With the acquisition cost of US$5,645 thousand (including the part of its subsidiary), the excess of the acquisition cost over the acquired net asset value of RadioComp ApS amounting to US$5,282 thousand (including the part of its subsidiary) was recognized as goodwill.

C. Goodwill impairment test was conducted in accordance with the R.O.C. SFAS No. 35,

2010 2009

Buildings 787,971$ 813,457$

Machinery and equipment 2,062,305 1,968,193

Transportation equipment 2,740 3,447

Furniture and fixutures 77,893 72,477

Leasehold improvements 130,065 133,061

3,060,974 2,990,635

Accumulated depreciation 1,998,585)( 1,902,285)(

Prepayments for equipment and

construction in progress 83,908 766

1,146,297$ 1,089,116$

December 31,

2010 2009

Cost:

Goodwill - from consolidated $ 98,578 $ 98,819

Goodwill - TelASIC and RadioCorp 240,602 70,149

Other intangible assets 404,895 186,399

744,075 355,367

Accumulated amortization ( 66,775) ( 18,575)

677,300$ 336,792$

December 31,

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“Impairment of Assets”. On December 31, 2010 and 2009, the Company evaluated the recoverable amount of assets used for operations and goodwill based on their value in use. The value in use is the present value of estimated future cash flows to be derived from continuing use of the asset and goodwill and from their disposal at the end of their useful life, which is based on the five-year financial forecast with the discount rate of 19.80% and 18.00%, respectively. The following sets forth the methods and assumptions used to estimate the recoverable amount of assets and goodwill: (a)Estimated operating revenue: it is calculated based on industrial and market information and

the Company’s future operations and sales planning. (b)Estimated operating cost: it is calculated based on the estimated gross profit margin, which is

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

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

The recoverable amount calculated based on the foregoing assumptions is higher than the sum of carrying value of identifiable assets and goodwill on December 31, 2010 and 2009. Therefore, no impairment loss was recognized.

(8) Short-term loans

(9) Financial liabilities at fair value through profit or loss – current

A.In 2010 and 2009, gain and loss recognized for the changes in the fair values of the financial

liabilities at fair value through profit or loss were $738 and $738, respectively. B.The nature and contractual terms of derivatives are as follows:

2010 2009

Materials, L/C loans 960,139$ 694,684$

Pre-export lonas 110,694 124,441

Operating loans 217,105 179,602

1,287,938$ 998,727$

Interest rate per annum 0.81%~2.44% 0.78%~5.10%

December 31,

2010 2009

Fair value adjustment-financial cerivatives 2,478$ 738$

December 31,

~31~

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

export, without adopting hedge accounting.

(10) Long-term loans

Contract amount Fair value Contract period

Forward exchange contracts EUR 1,800 thousand 766$ 2010.11.17~2011.02.17

(Sell EUR buy USD)

Forward exchange contracts USD 4,000 thousand

(Sell USD buy NTD) 1,712 2010.12.28~2011.03.17

2,478$

Contract amount Fair value Contract period

Forward exchange contracts GBP 1 million 738$ 2009.09.29~2010.01.28

(Sell GBP buy USD)

December 31, 2010

December 31, 2009

Interest rate

Bank name and type of loan and repayment term 2009 2008

Mega International

Commerical Bank

Syndicated loan Floating rate-equal annual -$ 75,000$

installments up to October

2010

" Floating rate-equal annual

installments ending April 2013 334,995 -

HSBC Bank (Taiwan)

Limited

Project loan

Floating rate-equal semiannual

installments ending June 2015 145,650 -

Current portion - 75,000)(

480,645$ -$

Interest rate per annum 1.17%~1.37% 2.22%

December 31,

~32~

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

working capital. Under the terms of the loan agreement, the Company is required to maintain

certain annual consolidated financial ratios, including current ratio, liability ratio, and interest

coverage ratio.

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

(11) Common stock

A.Pursuant to the resolution adopted at the special shareholders' meeting held on December 11,

1993, and after obtaining approval from the SFC, the Company issued 2,600,000 units of global

depositary receipts (GDRs) in Europe, Asia and USA, representing 13,000,000 shares of

common stock (Deposited Shares). Total amount received by the Company in relation to these

GDRs on May 24, 1994 was $837,333. The main terms and conditions of the GDRs are as

follows:

(a) Voting

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

shareholders' meeting. A holder or holders together holding at least 51% of the GDRs

outstanding at the relevant record date of the shareholders' meeting may instruct the

Depositary to vote in the same direction in respect of one or more resolutions to be proposed

at the meeting.

(b) Sale and withdrawal of GDRs

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

holders of GDRs commencing three months after the initial issue of GDRs. A holder of GDR

may, provided that the Company has delivered to the custodian physical share certificates in

respect of the Deposited Shares, request the Depositary to sell or cause to be sold on behalf of

such holder the shares represented by such GDRs.

(c)Dividends

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

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

(d) As of December 31, 2010, the Company had 18,335 units of GDRs outstanding.

B.As of December 31, 2010, the Company's authorized share capital was 700 million common

shares (of which 50 million shares are reserved for corporate bonds with subscription right,

stock warrants and special shares with subscription right issued) with a par value of NT$10 (in

dollars) per share. As of December 31, 2010, the total issued and outstanding common shares

were 412,968 thousand shares.

(12) Capital reserves

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

cover accumulated deficit or to increase capital and shall not be used for any other purpose.

However, capital reserve arising from paid-in capital in excess of par value on issuance of

~33~

common stock and donations can be capitalized once a year, provided that the Company has no

accumulated deficit and the amount to be capitalized does not exceed 10% of the paid-in capital.

(13) Retained earnings

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

prior years, shall be set aside as legal reserve until the accumulated reserve equals the total

registered capital of the Company and can be used to offset against accumulated deficit

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

portion of earnings as special reserve and shown as deduction in stockholders’ equity.

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

income, after deducting legal reserve and special reserve, shall be distributed as directors' and

supervisors' remuneration and employees' bonus, respectively, at the time dividends are

declared.

D.As the Company operates in the stable growth stage, the residual dividend policy is adopted

taking into consideration the Company’s funding requirements, future capital expenditures and

long-term financial plans. According to the dividend policy adopted by the Board of Directors,

30% ~ 100% of the Company’s total dividends distributed shall be first appropriated as cash

dividends; the remaining will then be appropriated as stock dividends. The dividends

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

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

the Board of Directors and resolved by the stockholders.

E.The appropriation of 2009 and 2008 earnings has been resolved at the stockholders’ meeting on

June 17, 2010 and June 10, 2009, respectively.

The appropriation of 2009 earnings stated above was in agreement with that proposed by the

Board of Directors on March 18, 2010. The difference between the year 2008 employees’ bonus

of $22,316 and directors’ and supervisors’ remuneration of $3,188 as resolved at the

stockholders’ meeting on June 10, 2009 and employees’ bonus of $22,615 and directors’ and

Amount

Dividends

per share

(in dollars) Amount

Dividends

per share

(in dollars)

Legal reserve -$ 35,422$

Cash dividends - -$ 175,644 0.43$

Stock dividends - - 44,932 0.11

Directors' and supervisors' remuneration - -

Employees' cash bonus - -

Total -$ 255,998$

2009 2008

~34~

supervisors’ remuneration of $3,231 recognized in the 2008 financial statements, totaling $342,

had been adjusted in the statement of income for 2009.

The appropriation of 2008 earnings stated above was in agreement with that proposed by the

Board of Directors on March 10, 2009. Information on the appropriation of the Company’s

employees’ bonus and directors’ and supervisors’ remuneration as resolved by the Board of

Directors and approved by the stockholders will be posted in the “Market Observation Post

System” at the website of the Taiwan Stock Exchange.

F. The Company did not accrue employees’ bonus and directors’ and supervisors’ remuneration for

2010 and 2009 as it incurred losses in that year.

(14) Share-based payment-employee compensation plan

A.As of December 31, 2010, the Company's share-based payment transactions are set forth below:

Note 1: 50% can be exercised after 2 years of grant; 75% can be exercised after 3 years of grant;

100% can be exercised after 4 years of grant.

Note 2: Professional: 25% can be exercised after 3 years of grant; 50% can be exercised after 4

years of grant; 75% can be exercised after 5 years of grant; 100% can be exercised after

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

exercised after 5 years of grant; 75% can be exercised after 6 years of grant; 100% can

be exercised after 7 years of grant.

Note 3: 25% can be exercised after 1 year of grant; 50% can be exercised after 2 years of grant;

75% can be exercised after 3 years of grant; 100% can be exercised after 4 years of grant.

Note 4: 50% can be exercised after 1 year of grant; 100% can be exercised after 2 years of grant.

Type of

arrangement Grant date

Quantity

granted

(In thousands of

shares)

Contract

period

Vesting

conditions

Second Employee stock option 2003.01.07 18,000 6 years Note 1

Third Employee stock option 2007.12.26 17,800 8 years Note 2

Cash Settled-

Incentive Compensation Agreement 2010.10.01 5,000 5.25 years Note 3

Cash Settled-

Incentive Compensation Agreement 2010.12.31 700 5 years Note 4

~35~

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

(a)As of December 31, 2010 and 2009, the exercise price of stock options outstanding was

$16.80 (in dollars) and $13.30~$15.04 (in dollars), respectively, and the remaining contract

period was 5 years and 6 years, respectively.

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

assumption that the compensation cost is accounted for using the fair value method for the

stock options granted before the affectivity of R.O.C. SFAS No. 39, “Accounting for

Share-based Payment”:

No. of

shares

Weighted-

average

exercise price

No. of

shares

Weighted-

average

exercise price

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

Options outstanding at

beginning of year

17,800 $ 16.80 25,586 $ 15.04

Options granted - - - -

Options waived - - - -

Options exercised - - - -

Options revoked - - ( 7,786) -

Options outstanding at

end of year 17,800 16.80

17,800 15.04

Options exercisable at

end of year 2,990 -

December 31, 2010 December 31, 2009

2010 2009

Net loss Net loss stated

in the statement of

157,930)($ 59,924)($

Pro forma net loss operations 195,280)( 97,427)(

Basic loss per

share (LPS) (in dollars)

LPS stated in the

statement of operations

0.38)( 0.15)(

Pro forma LPS 0.47)( 0.24)(

Diluted loss per

share (LPS) (in dollars)

LPS stated in the

statement of operations

0.38)( 0.15)(

Pro forma LPS 0.47)( 0.24)(

For the years ended December 31,

~36~

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

for using the fair value method, their fair value on the grant date is estimated using the

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

of the fair value are as follows:

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

(a)As of December 31, 2010, the exercise price of stock options outstanding was $16.50~$16.8

(in dollars) and the weighted-average remaining vesting period was 5 years.

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

employees are calculated based on the spread between the average closing price of the

Company’s common stock for the 30 successive Taiwan stock trading days before the

exercise date and the exercise price and are paid by cash. Any active employee can receive

the incentive rewards on the vesting date. Their fair value on the grant date is estimated using

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

estimation of the fair value are as follows:

Exercise Expected Fair value

price Expected Expected dividend Risk-free per unit

Type of Grant (in price vesting yield interest (in

arrangement date dollars) volatility period rate rate dollars)

Employee

stock options

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

Employee

stock options

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

No. of

shares

Weighted-

average

exercise price

No. of

shares

Weighted-

average

exercise price

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

Options outstanding at

beginning of year

- $ - - $ -

Options granted 5,700 16.76 - -

Options waived - - - -

Options exercised - - - -

Options revoked - - - -

Options outstanding at

end of year 5,700 16.76 - -

Options exercisable at

end of year - -

December 31, 2010 December 31, 2009

~37~

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

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

D.As of December 31, 2010 and 2009, Global PCS Inc.’s, a subsidiary of the Company,

share-based payment transactions are set forth below:

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

and 100% can be exercised after 4 years of grant.

Exercise Expected Fair value

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

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

Incentive

Compensation

Agreement 2010.10.01 19.00$ 16.80$ 8.84% 3.63 years 0% 0.86% 3.00$

Incentive

Compensation

Agreement 2010.12.31 19.00 16.50 8.69% 3.25 years 0% 0.79% 3.12

2010 2009

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

For the years ended December 31,

2010 2009

Liabilities on cash-settled share-based payment 1,884$ -$

Total intrinsic value where vesting conditions

have been met -$ -$

December 31,

Type of

Quantity

granted Contract Vesting

arrangement Grant date (in thousands) period conditions

Second Employee stock 2009.09.01 1,614 6 years Note

options

Treasury stock transfer 2010.11.25 1,358.39 Vested NA

to employees immedinately

~38~

Details of the employee stock options are set forth below:

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

remaining vesting period of stock options outstanding was 4.67 years. However, since Global

PCS Inc. merged with Microelectronic Technology, Inc., as resolved by the Board of Directors

on November 26, 2010, Global PCS Inc. has stipulated additional regulations on the employee

stock options in case of business merger as follows:

When another company merges with Global PCS Inc., Global PCS Inc. may decide to retrieve

and retire all the stock options that have been issued but have not had the right to be exercised,

and the other company will pay the compensation to the holders of the stock options that were

retired. The compensation amount is calculated based on the cash distributed to the

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

compensations on their own.

F.Employee stock options granted by Global PCS Inc. after January 1, 2008 under the second

share-based employee compensation plan are measured using the intrinsic value method as their

fair value cannot be reliably measured. In accordance with the Jin-Guan-Zheng Letter No.

0960065898 of the Financial Supervisory Commission, Executive Yuan, dated December 12,

2007, intrinsic value is the difference between fair value and exercise price of the company’s

common shares. Expenses incurred arising from share-based payment transactions were $6,081

and $320 for the years ended December 31, 2010 and 2009, respectively. As of December 31,

2010 and 2009, the accumulated capital reserve were $6,041 and $320, respectively.

On November 25, 2010, Global PCS Inc. reissued 1,358,390 shares of treasury stocks bought

back in 2009 to the employees with the price of $15 (in dollars) per share. No expense was

No. of

Weighted-

average

exercise price No. of

Weighted-

average

exercise price

shares (in dollars) shares (in dollars)

Options outstanding at beginning of year 1,614 $ 10 - -

Options granted - - 1,614 $ 10

Distribution of stock dividends /

adjustments for number of shares

granted for one unit for option

- - - -

Options waived - - - -

Options exercised - - - -

Options revoked - - - -

Options outstanding at end of year 1,614 $ 10 1,614 $ 10

Options exercisable at end of year - -

Options approved but not yet issued

at the end of the year - -

December 31, 2010 December 31, 2009

~39~

incurred in 2010 on the share-based payment transactions - treasury stocks reissued to

employees.

(15) Pension expense

A.All of the regular employees of the Company and its subsidiary, Global PCS Inc., are covered

by a non-contributory and funded defined benefit pension plan. Employees are entitled to 2 base

units for each year of service for the first 15 years and 1 base unit for each additional year

thereafter, up to a maximum of 45 units. The benefits provided are based on the length of

service and the average salaries of the last six months prior to retirement. Under the plan, the

Company and its subsidiary, Global PCS Inc., contribute 2% of monthly salaries to an

independent pension fund deposited with the Bank of Taiwan. The net pension cost recognized

under the defined benefit plan for the years ended December 31, 2010 and 2009 was $23,350

and $24,827, respectively. The balance of the retirement fund deposited with Bank of Taiwan

was $118,864 and $126,737 as of December 31, 2010 and 2009, respectively. The pension fund

balance is not reflected in the financial statements. The funded status of the pension plan of the

Company and its subsidiary, Global PCS Inc., are as follows:

(a) Actuarial assumptions - Microelectronics Technology, Inc.

2010 2009

Discount rate 1.75% 2.25%

Future salary increase rate 2.50% 2.50%

Expected rate of return on plan assets 1.75% 2.25%

(b) Actuarial assumptions - Global PCS Inc.

2010 2009

Discount rate 1.75% 2.25%

Future salary increase rate 2.50% 2.50%

Expected rate of return on plan assets 1.75% 2.25%

~40~

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

(d)The Company and its subsidiary, Global PCS Inc., recognized net pension cost based on the

actuarial report. Net pension cost components are as follows:

2010 2009

Benefit obligation

Vested benefit obligation 38,859)($ 34,931)($

Non-vested benefit obligation 316,841)( 273,945)(

Accumulated benefit obligation 355,700)( 308,876)(

Additional benefits based on future salaries 140,593)( 128,111)(

Projected benefit obligation 496,293)( 436,987)(

Plan assets at fair value 118,864 126,737

Funded status 377,429)( 310,250)(

Unrecognized transition obligation 10,388 17,359

Unrecognized prior service cost 6,735)( 8,419)(

Unrecognized net actuarial loss 156,615 94,495

Additional accrued pension liabilities 19,675)( 3,800)(

Next adjustment 754)( 1,655)(

Accrued pension liabilities 237,590)( 212,270)(

Vested benefit 41,484$ 37,629$

Deferred pension costs 3,653$ 3,123$

Unrecognized pension cost 15,797$ 624$

December 31,

2010 2009

Service cost 8,101 9,948

Interest cost 9,832 12,149

Expected return on plan assets 2,852)( 2,801)(

Amortization of unrecognized

net transition obligation 6,971 6,971

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

Unrecognized pension loss 3,885 244

Next adjustment 903)( -

Net periodic pension cost 23,350$ 24,827$

For the years ended December 31,

~41~

B.Effective July 1, 2005, under the new “Labor Pension Act” (the “Act”), the Company and its

subsidiary, Global PCS Inc., set up a defined contribution pension plan. Under the Act, current

employees have the option to participate in the defined contribution pension plan. The Company

and its subsidiary contribute monthly an amount of at least 6% of the employees’ monthly

salaries and wages to the employees’ individual pension accounts at the Bureau of Labor

Insurance. Benefits accrued are portable upon termination of employment. Pensions are paid by

monthly installments or in lump sum based on the accumulated balance of the employees’

individual pension accounts. The net pension costs recognized under the defined contribution

pension plan for the years ended December 31, 2010 and 2009 were $21,656 and $20,862,

respectively.

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

Technology Co., Ltd., are required to participate in a government pension scheme whereby it

shall pay monthly an amount of 20% of the employees’ monthly salaries and wages to the

employees’ individual pension accounts to a government-managed fund. Under the scheme,

retirement benefits of existing and retired employees are to be provided by the

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

monthly contributions. The net pension costs recognized under the defined contribution plan for

the years ended December 31, 2010 and 2009 were $15,848 and $17,184, respectively.

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

RadioComp ApS maintain a 401(k) retirement/savings plan (the Plan) for all employees who are

over the age of 21 and have completed three months of service. Participants may make

voluntary contributions up to the maximum amount allowable by law. Those subsidiaries may

make a discretionary matching contribution equal to the percentage of each participant’s

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

made to the Plan for the years ended December 31, 2010 and 2009.

(16) Income tax

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

2010 2009

Deferred income tax assets – non-current 116,811$ 147,731$

Less: Valuation allowance 14,921)( 26,554)(

101,890$ 121,177$

Deferred income tax assets – non-current 131,950$ 135,177$

Less: Valuation allowance 52,740)( 59,010)(

79,210$ 76,167$

December 31,

~42~

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

deferred income tax assets and liabilities are as follows:

Amount Tax effect Amount Tax effect

Current items:

Temporary dirrerences

Warranty provision 27,670$ 5,178$ 31,539$ 6,098$

Allowance for doubtful accounts 83,829 14,325 76,474 15,295

Provision for invetory loss 229,119 41,477 206,380 36,418

Others 16,039 4,258 2,142 429

65,238 58,240

Investment tax credits 51,573 47,341

Loss carryforwards - 42,150

Less: Valuation allowance 14,921)( 26,554)(

101,890 121,177

Non-current items:

Temporary dirrerences

Loss on idle assets 47,446$ 8,066 47,446$ 9,489

Accrued pension liabilities 217,915 37,045 208,470 41,694

Foreign investment income

accounted for under the

equity method 719,732)( 122,355)( 865,088)( 173,018)(

Others 70,407 16,221 46,985 7,357

61,023)( 114,478)(

Investment tax credits 155,703 198,855

Loss carryforwards 37,270 50,800

Less: Valuation allowance 52,740)( 59,010)(

79,210 76,167

181,100$ 197,344$

December 31, 2010 December 31, 2009

~43~

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

D.The Company is eligible for income tax exemption for a period of four consecutive years due to

an expansion of production equipment through increase in capital. The details are as follows:

E.The Company’s subsidiaries, Jupiter Technology (Wuxi) Inc. and Greast Communication

Technology Co., Ltd., are foreign-invested manufacturing enterprises established in the PRC.

Under the PRC tax regulations, they are exempt from corporate income tax for the first and

second profit-making years and are subject to a 50% reduction of corporate income tax from the

third through fifth profit-making years. Jupiter Technology (Wuxi) Inc. and Greast

Communication Technology Co., Ltd. are eligible for the tax exemption starting from 2006 and

2008, respectively.

F.As of December 31, 2010, the Company’s income tax returns through year 2008 have been

assessed and approved by the Tax Authority. Income tax returns of the Company’s subsidiaries,

Global PCS Inc. and Millennium Telecom, Inc., through year 2008 have been assessed and

approved by the Tax Authority.

2010 2009

Income tax at the statutory tax rate 27,733$ 19,723$

Tax effect of permanent differences 21,892)( 51,107)(

Tax effect of investment tax credits 2,398 66,146)(

Tax effect of loss carryforwards - 42,150

Under provision of prior year's income tax 1,941 6,754

Tax effect of amendments to the tax laws 4,673)( 25,809)(

10% tax on unappropriated earnings 900 9,822

Tax effect of valuation allowance 33,249 34,412

Income tax expense (benefit) 39,656 30,201)(

Add: Net change of deferred income tax assets 14,297)( 42,578

Less: Under provision of prior year's imcome tax 1,941)( 6,754)(

Prepaid and withholding taxes 7,331)( 1,045)(

Net income tax payable 16,087$ 4,578$

Income tax payable 16,087$ 5,610$

Income tax refund receivable -$ 1,032)($

December 31,

Capital increase method Tax-exempt period

Unappropriated earnings and employees'

bonus capitalized in 2001

January 1, 2006~December 31, 2009

Unappropriated earnings and employees'

bonus capitalized in 2002

January 1, 2010~December 31, 2014

~44~

G.As of December 31, 2010, the details of unused investment tax credits and loss carryforwards

are as follows:

H.As of December 31, 2010 and 2009, the Company’s deductible credit account balance for

stockholders’ income tax was $45,115 and $39,368, respectively, and the creditable ratio was

48.15% and 0% (Note) for 2010 and 2009, respectively.

Note: The Company did not appropriate earnings for 2009 as it incurred losses in that year.

I.The undistributed retained earnings as of December 31, 2010 and 2009 have been earned after

1998.

(17) Loss per share

Year of expiration Investment tax credits

2011 51,573$

2012 70,656

2013 85,047

207,276$

Year of expiration Loss carryforwards

2019 37,270$

Weighted-

average

Loss outstanding Loss

before common before

income Net shares income Net

tax loss (in thousands) tax loss

Consolidated net loss 116,608)($ 156,264)($

Basic loss per share:

Net loss 154,839)($ 157,930)($ 412,968 0.37)($ 0.38)($

Weighted-

average

Loss outstanding Loss

before common before

income Net shares income Net

tax loss (in thousands) tax loss

Consolidated net loss 80,499)($ 50,298)($

Basic loss per share:

Net loss 94,549)($ 59,924)($ 412,968 0.23)($ 0.15)($

Amount share (in dollars)

For the year ended December 31, 2010

Loss per

Amount share (in dollars)

For the year ended December 31, 2009

Loss per

~45~

For years 2010 and 2009, as employee stock options issued by the Company had anti-dilutive effect,

they were not included in the calculation of diluted loss per share.

Effective January 1, 2008, as employees’ bonus could be distributed in the form of stock, the

diluted EPS computation shall include those estimated shares that would be increased from

employees’ stock bonus issuance in the calculation of the weighted-average number of common

shares outstanding during the reporting year, taking into account the dilutive effects of stock bonus

on potential common shares; whereas, basic EPS shall be calculated based on the weighted-average

number of common shares outstanding during the reporting year that include the shares of

employees’ stock bonus for the appropriation of prior year earnings, which have already been

resolved at the stockholders’ meeting held in the reporting year. Since capitalization of employees’

bonus no longer belongs to distribution of stock dividends, the calculation of basic EPS and diluted

EPS for all periods presented shall not be adjusted retroactively.

~46~

(18) Personnel, depreciation and amortization expenses

Operating

costs

Operating

expenses

Non-

operating

expenses Total

Operating

costs

Operating

expenses

Non-

operating

expenses Total

Personnel expenses

Salary 473,357$ 394,747$ -$ 868,104$ 392,080$ 367,284$ -$ 759,364$

Labor and health insurance 19,866 24,425 - 44,291 19,957 22,682 - 42,639

Pension 20,603 40,251 - 60,854 21,671 41,202 - 62,873

Others 143,482 57,140 - 200,622 78,782 33,633 - 112,415

Depreciation 153,325 48,231 2,886 204,442 164,612 47,454 3,111 215,177

Amortization 12,483 75,735 - 88,218 31,790 52,282 - 84,072

For the years ended December 31,

2010 2009

~47~

5. RELATED PARTY TRANSACTIONS

(1) Name and relationship of related party

(2) Transaction and balances with related parties

A.Salaries include reqular wages, special reponsibility allowances, pensions, severance pay, etc.

B.Bonus include various bonus and rewards.

C.Service execution fees include trade allowances, dorms and vehicles offering, etc.

D.Earnings distribution represents directors' and supervisors' remuneration and employees' bonus

accrued in current year.

E.The relevant information above will be posted in the Company's annual report. 6. PLEDGED ASSETS

Note: According to the joint venture agreement, the Group provided preferred stocks in East Asia

Network Taiwan as collateral for non-interest bearing loans. Please refer to Note 4(5).

Name of related party Relationship with the Company

Taicom Capital Ltd. (Taicom) Same board chairman

2010 2009

Accrued expenses -$ 188$

Other income - consultant -Taicom -$ 6,648$

Rewards information of main management

2010 2009

Salaries 57,187$ 35,342$

Bonuses 10,676 5,064

Service execution fees 8,793 9,565

Earnings distribution - -

Total 76,656$ 49,971$

For the years ended December 31,

For the years ended December 31,

Assets 2010 2009 Purpose of pledge

Buildings 383,669$ 399,353$ Long-term loans

Long-term investment - 320,000 Note

383,669$ 719,353$

December 31,

~48~

7. COMMITMENTS AND CONTINGENT LIABILITIES (1) The Company leases land under a non-cancelable operating lease agreement. As of December 31,

2010, the future minimum lease payments under this lease are as follows:

(2) On October 21, 2004, the Company’s European agent, FTA, filed a legal claim against the

Company in Luxembourg. The Company has retained attorneys to handle this case. It is not possible

to predict the outcome of this litigation due to ongoing proceedings. However, management

believes that the ongoing lawsuit will not have any significant effect on the Company’s financial

statements.

(3) The Company filed a lawsuit through its appointed attorneys against its client – SR Telecom & Co.

in the fourth quarter of 2009, alleging that said client did not make payments to the Company in

accordance with them contract. The case has entered the judicial proceedings. Further, the Company

has accured the possible loss that may result from the case.

8. SIGNIFICANT CATASTROPHE

None.

9. SUBSEQUENT EVENTS

To integrate the Group’s resources, reduce management costs and enhance profitability, the Company

merged with its subsidiary – Global PCS Inc. in accordance with Article 19 of the Act of Business

Mergers and Acquisitions, “Simple Mergers and Acquisitions”, as resolved by the Board of Directors

on November 26, 2010. The Company is the surviving company and Global PCS Inc. is the dissolved

company. The effective date of the merger was set on January 1, 2011.

Period Rental payable Present value

January 2011~December 2015 77,036$ 63,470$

January 2016~December 2026 169,479 83,779

246,515$ 147,249$

~49~

10. OTHERS (1) Fair value of financial instruments

Book value Market Estimate Book value Market Estimate

Non-derivative financial instruments

Financial assets

Financial assets with fair values equal to book values 4,054,256$ -$ 4,054,256$ 4,597,587$ -$ 4,597,587$

Financial assets at fair value through profit or loss 67,568 67,568 - 47,708 47,708 -

Financial assets carried at cost-noncurrent - - - 80,269 - -

Financial assets carried at cost-current 351,486 - - 712,696 - -

4,473,310$ 5,438,260$

Financial liabilities

Financial liabilities with fair values equal to book values 3,138,258)($ -$ 3,138,258)($ 3,165,018)($ -$ 3,165,018)($

Long-term loans 485,843)( - 485,843)( 75,000)( - 75,000)(

3,624,101)($ 3,240,018)($

Derivative financial instruments

Financial assets

Forward exchange contracts 6,119$ -$ 6,119$ 1,403$ -$ 1,403$

Option contracts 4,964 4,964 - -

11,083$ 1,403$

Financial liabilities

Forward exchange contracts 2,478)($ -$ 2,478)($ 738)($ -$ 738)($

December 31, 2010 December 31, 2009

Fair value Fair value

~50~

The methods and assumptions used to estimate the fair values of the above financial

instruments are summarized below:

A.Financial assets / liabilities with fair value equal to book value: The carrying

amounts of these assets / liabilities approximate fair values due to their short

maturities. This applies to cash and cash equivalents, notes and accounts

receivable, short-term loans, notes and accounts payable.

B.Financial assets at fair value through profit or loss (non-derivative financial

instruments): Instruments classified in this category are mainly investments in

open-ended mutual funds. The fair value is determined by the net asset value at the

balance sheet date.

C.For long-term loans with floating interest rates, fair values are based on their book

value. For long-term loans with fixed interest rates, fair value is estimated based

on the discounted future cash flows. Discount rate is determined based on the

Company’s credit adjusted borrowing rate, which approximate the floating interest

rates.

D.Derivative financial instruments: Fair value is estimated based on the amount

receivable from or payable to the counterparty assuming the contracts are

terminated at the balance sheet date, which includes the contracts’ unrealized gain

or loss.

(2) Information of significant income (loss) on financial instruments and equity items

In 2010 and 2009, the loss or gain recognized from the changes in fair values

determined using the foregoing evaluation techniques amounted to ($6,649) and

$8,934, respectively.

(3) Information on interest rate fluctuation

As of December 31, 2010 and 2009, financial assets that are exposed to fair value

interest rate risk are $1,313,085 and $2,438,766, respectively; financial assets that

are exposed to cash flow interest rate risk are $980,233 and $435,808, respectively;

and financial liabilities that are exposed to cash flow interest rate risk are $1,768,583

and $1,073,727, respectively.

(4) Financial risk management

The Group, in accordance with its policy on the acquisition and disposal of financial

derivatives, has established a risk management program to evaluate and manage the

related risk assessment of individual transactions.

(5) Information on significant financial risk A.Market risk

The Group’s activities involve some functional currencies The information on monetary assets and liabilities denominated in foreign currency whose values would be materially affected by the fluctuations of the foreign exchange rates is as follows:

~51~

(a)Foreign exchange risk

The majority of the sales and purchases of the Group is denominated in U.S. dollars, therefore the fair value of the related assets and liabilities are exposed to foreign exchange rate risk. The Group monitors the fluctuations in foreign exchange rates and adjusts the net positions in each foreign currency, enters into forward contracts, if necessary, to reduce the market rate risk.

(b)Price risk The bond fund investments (Shown in “Financial assets at fair value through profit or loss”) are determined based on the net asset value of open-end funds. The Group evaluates related investment performances on a periodic basis and does not expect to have significant market risk in these financial assets.

B.Credit risk The counterparties of the financial derivatives and beneficiary certificates are reputable financial institutions and the Group so deals with multiple counterparties to diversify the credit risk. The Group believes its exposure to potential default risk is low. The maximum loss to the Group is the book value. The Group has lower significant concentrations of credit risk. It has policies in place to ensure that wholesale sales of products are made to customers with an appropriate credit history. The maximum loss to the Group is the book value of accounts receivable. Loan guarantees provided by the Group are in compliance with the Group’s “Procedures for Provision of Endorsements and Guarantees” and are only provided to affiliated companies which the Group owns directly. As the Group is fully aware of the credit conditions of these related parties, it has not asked for collateral for the loan guarantees provided. In the event that these related parties fail to comply with loan agreements with banks, the maximum loss to the Group is the total amount of loan guarantees as listed above.

C.Liquidity risk The Group has lower significant concentrations of liquidity risk for forward exchange contracts since the exchange rate was known. For financial assets carried at cost, the Group is exposed to a higher liquidity risk since there is no active market. However, the Group has no intention to hold these financial assets for trading and does not expect to sell these financial assets frequently. Therefore, the exposure to liquidity risk would be effectively reduced. The Group also expects no

Foreign Foreign

currency Exchange currency Exchange

Financial assets amount rate amount rate

Monetary items

　USD：NTD 61,859 29.13 54,823 31.99

　EUR：NTD 4,394 38.92 392 46.10

USD：CNY 15,009 6.6227 3,373 6.8282

Financial liabilities

Monetary items

　USD：NTD 63,773 29.13 41,077 31.99

　EUR：NTD 195 38.92 184 46.10

USD：CNY 29,603 6.6227 17,001 6.8282

December 31,

2010 2009

~52~

significant liquidity risk since it has sufficient working capital.

D.Cash flow interest rate risk The Group’s interest rate risk arises from short-term and long-term borrowings issued at variable rates which expose the Group to cash flow interest rate risk.

(6) Merger A.To improve the Company’s operating performance and pursue its maximum

long-term benefits, the Company acquired indirectly 100% share ownership of RadioComp ApS through its overseas subsidiary, Welltop Technology Co., Inc., at a acquisition cost of US$ 4,702 thousand, as resolved by the Board of Directors on October 1, 2010.

B.Effective from October 9, 2010, the income (loss) of RadioComp ApS is included

in the consolidated statement of income of the Company. The pro forma consolidated statements of income of the Company for the years ended December 31, 2010 and 2009 were prepared under the assumption that the income (loss) of RadioComp ApS had been included in the consolidated statements of income of the Company since January 1, 2010 and 2009, respectively. The pro forma consolidated information is disclosed below:

2010 2009

Net sales 8,264,146$ 6,433,097$

Loss before income tax 87,604)( 113,008)(

Net loss 128,926)( 92,433)(

Basic loss per share (in dollars) 0.31)( 0.22)(

For the years ended December 31,

~53~

11. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU

(1) Related information of significant transactions

a. Loans granted during the year ended December 31, 2010: None.

b. Endorsements and guarantees provided by the Company to others as of December 31, 2010:

Ratio of

Limit of Maximum outstanding Outstanding Amount of accumulated guarantee Ceiling of the

Relationship with guarantee guarantee amount guarantee amount guarantee with amount to net asset outstanding guarantees

Guarantor Name the Company for such party during 2010 at Dec. 31, 2010 collateral placed value of the Company for the respective party

Microelectronics

Technology, Inc.

Jupiter Technology

(Wuxi) Inc.

100% owned subsidiary 4,721,241$ 1,057,650$ 1,002,210$ None 21.54% 4,721,241$

" Greast Communication

Technology Co., Ltd.

81.94% owned subsidiary 4,721,241 94,140 45,555 None 0.98% 4,721,241

" MTI Laboratory, Inc. 100% owned subsidiary 4,721,241 1,029 972 None 0.02% 4,721,241

Company being guaranteed

c. Details of marketable securities held as at December 31, 2010:

Relationship of

Type of marketable Marketable the securities issuers General ledger

Investor securities securities with the Company accounts Number of shares Book value Percentage Market value (Note)

Microelectronics

Technology, Inc.

Stock Sasson International Holdings Inc. Wholly-owned subsidiary Long-term equity

investments accounted for

under the equity method

3,920 1,884,170$ 100.00% 1,884,170$

" " Global PCS Inc. Majority-owned subsidiary " 24,589,200 346,332 90.43% 346,332

" " Millennium Telecom, Inc. " " 18,999,994 117,111 99.99% 117,111

" " Taiwan Aerospace Corp. None Financial assets carried at

cost-noncurrent

648,576 11,203 0.48% -

" " Transcom Inc. " " 200,000 866 0.80% -

(Note)：The market value of investments accounted for under the equity method was based on the net asset value of the investee company. Market price of open-end mutual funds is determined based on the

net asset value at the balance sheet date.

December 31, 2010

~54~

d. Acquisition or sale of the same security with the accumulated cost exceeding $100 million or 20% of the Company’s paid-in capital during the year ended December 31, 2010:

Marketable General ledger Number Number Number Selling Book Gain on Number Gain on

Investor securities account of shares Amount of shares Amount of shares price value disposal of shares Amount valuation

Microelectronics

Technology, Inc.

Capital Income

Fund

Financial assets at

fair value through

profit or loss-current

- -$ 12,895,898 199,000$ 12,895,898 199,036$ 199,000$ 36$ - -$ -$

" Fuh-Hwa-

Bond Fund

" - - 16,134,950 223,000 16,134,950 223,049 223,000 49 - - -

" PCA Well

Pool Fund

" - - 11,424,003 148,500 11,424,003 148,563 148,500 63 - - -

" Sasson

International

Holdings Inc.

Long-term equity

investments

accounted for under

the equity method

3,450 2,046,330 470 150,464 - - 312,624

(Note)

- 3,920 1,884,170 -

Note: The book value contains investment loss recognized under equity method and translation adjustments.

Beginning balance Addition Disposal Ending balance

e. Endorsements and guarantees provided during the year ended December 31, 2010: None.

f. Disposal of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2010: None.

g. Purchases from and sales to related parties exceeding $100 million or 20% of the Company’s paid-in capital during the year ended December 31, 2010:

Percentage of Percentage of

Relationship Purchases purchases accounts receivable

Company Counterparty with the Company (sales) Amount (sales) Term Unit price Credit term Balance (payable) Note

Microelectronics

Technology, Inc.

Jupiter Technology

(Wuxi) Inc.

Wholly-owned subsidiary Purchases 1,790,644$ 25% 30 days N/A N/A 421,475)($ 38% -

" Global PCS Inc. Majority-owned subsidiary Sales 3,143,408)( 41% 90 days N/A N/A 444,733 30% -

Differences in transaction terms

Transactions compared to third party transactions Accounts receivable (payable)

~55~

h. Receivables from related parties exceeding $100 million or 20% of the Company’s paid-in capital as at December 31, 2010:

Company Counterparty

Relationship

with the

Company

Accounts

receivable

Other

receivables Total

Turnover

rate Amount

Action adopted

for overdue

accounts

Subsequent

collection

Allowance for doubtful

accounts provided

Microelectronics

Technology, Inc. Global PCS Inc.

Majority-owned

subsidiary 444,733$ 10,119$ 454,852$ 7.50 -$ N/A (Note) -$

Note: The Company merged with Global PCS Inc. in accordance with Article 19 of the Act of Business Mergers and Acquisitions, “Simple Mergers and Acquisitions”,

with the Company as the surviving company and Global PCS Inc. as the dissolved company. The effective date of the merger was set on January 1, 2011.

i. Derivative financial instruments undertaken during the year ended December 31, 2010: Refer to Notes 4(2), 4(10) and 10.

Balance of receivable from related parties Overdue receivables

~56~

(2) Disclosure information of investee company

a.

Net income Net income

Main Number (loss) of the (loss) recognized

Investor Investee Location activities 2010 2009 of shares Percentage Book value investee by the Company Note

Microelectronics

Technology, Inc.

Sasson

International

Holdings Inc.

BVI Investment

planning

and consulting

1,159,643$ 1,009,179$ 3,920 100.00% 1,884,170$ 145,355)($ 145,355)($ Wholly-owned

subsidiary

" Global PCS Inc. Hsinchu,

Taiwan

Communications 229,044 241,499 24,589,200 90.43% 346,332 74,095 67,958 Majority-owned

subsidiary

" Millennium

Telecom Inc.

Taipei,

Taiwan

Investment

planning

and consulting

190,000 190,000 18,999,994 99.99% 117,111 29,811)( 29,811)( "

Sasson

International

Holdings Inc.

Welltop

Technology

Co., Ltd.

BVI " US$7,834,000

(in dollars)

US$3,132,000

(in dollars)

7,834,000 100.00% 196,271 8,549 8,549 Wholly-owned

subsidiary

" Jupiter

Network Corp.

BVI " US$21,071,800

(in dollars)

US$19,149,000

(in dollars)

21,071,800 100.00% 664,042 114,874 114,874)( Wholly-owned

subsidiary (Note 1)

" Zeus

Communications Inc.

Delaware,

USA

" - US$1,922,800

(in dollars)

- - - 11,509)( 11,509)( Wholly-owned

subsidiary (Note 1)

" Greast

Communication

Technology

Co., Ltd.

Nanjing,

China

Communications US$3,970,000

(in dollars)

US$3,970,000

(in dollars)

115,531,850 48.42% 53,654 24,298)( 11,765)( Majority-owned

subsidiary

Welltop

Technology

Co., Ltd.

Optical Microwave

Networks Inc.

California,

USA

" - US$1,417,600

(in dollars)

- - - - - Wholly-owned

subsidiary (Note 2)

" MTI Laboratory,

Inc.

California,

USA

" US$1,500,000

(in dollars)

US$ 500,000

(in dollars)

1,500,000 100.00% 56,694 9,644 9,644 Wholly-owned

subsidiary

" MTI Network, Inc. Delaware,

USA

" US$100,000

(in dollars)

- 100,000 100.00% 774 2,339)( 2,339)( "

" RadioComp ApS Denmark " US$4,702,000

(in dollars)

- 1,527,944 100.00% 137,839 30,500 1,497 "

Jupiter

Network Corp.

Jupiter Technology

(Wuxi) Inc.

Wuxi,

China

" US$21,000,000

(in dollars)

US$19,110,000

(in dollars)

- 100.00% 663,340 126,061)( 114,663)( Wholly-owned

subsidiary (Note 1)

Related information on companies for the year ended December 31, 2010:

Initial investment amount Shares held as at December 31, 2010

December 31,

~57~

Net income Net income

Main Number (loss) of the (loss) recognized

Investor Investee Location activities 2010 2009 of shares Percentage Book value investee by the Company Note

Zeus

Communications

Inc.

Jupiter Technology

(Wuxi) Inc.

Wuxi,

China

" - US$1,890,000

(in dollars)

- - -$ 126,061)($ 11,398)($ Wholly-owned

subsidiary (Note 1)

Jupiter Technology

(Wuxi) Inc.

Greast

Communication

Technology

Co., Ltd.

Nanjing,

China

" CNY

$15,954,000

(in dollars)

CNY

$13,704,000

(in dollars)

79,972,000 33.52% 67,236 24,298)( 8,065)( Majority-owned

subsidiary

Note 1: Jupiter Network Corp. merged with Zeus Communication Inc. on September 30, 2010 (the base date of merger) with Jupiter Network Corp as the surviving entity.

Note 2: Optical Microwave Network Inc. has been liquidated over in the fourth quarter of 2010.

December 31,

Initial investment amount Shares held as at December 31, 2010

b. Loans granted during the year ended December 31, 2010:

Item Value

Sasson International

Holdings Inc.

Millennium

Telecom, Inc.

Other

receivables 321,500$ 291,300$ - b Note Operations -$ Note -$ 753,668$

Note: a. Business transaction.

b. Short-term financing.

Allowance for

bad debts

CollateralLimit on

loans granted

to a single partyCreditor Borrower

General ledger

account

Maximum

outstanding balance

during 2010

Balance at

December

31, 2010 Interest rate

Nature of

loan (Note)

Amount of

transactions

with the

borrower

Reason of

short-term

financing

c. Endorsements and guarantees provided during the year ended December 31, 2010: None.

~58~

d. Marketable securities as at December 31, 2010:

Type of marketable Relationship of the securities Number of Book Ownership Market

Securities held by securities Marketable securities issuers with the Company General ledger accounts shares value (%) value (Note 1)

Sasson International

Holdings Inc.

Stock Welltop Technology Co., Ltd. Wholly-owned

subsidiary

Long-term equity

investments accounted for

under the equity method

7,834,000 196,271$ 100.00% 196,271$

" " Jupiter Network Corp. " " 21,071,800 664,042 100.00% 664,042

(Note 2)

" " Greast Communication Technology Co., Ltd. Investee accounted for

under the equity method

" 115,531,850 53,654 48.42% 53,654

" " Optical Scientific, Networks Inc. None Financial assets carried at

cost-noncurrent

16,623 60,172 7.94% -

" " Taicom Capital Ltd. " " 20,000 231,881 11.43% -

" " NAVF II-GP " " - - 5.10% -

" " NAVF II-LP " " - 756 5.16% -

" " Intelligent Epitaxy Technology, Inc. " " 333,334 17,478 2.41% -

" " Applied Wireless Identification Group, INC. " " 1,877,844 - 0.81% -

" " Firetide Inc. " " 1,333,360 29,130 1.67% -

" " Ishares A50 (2823, HK) " Financial assets at fair

value through profit

or loss-current

470,000 22,437 - 22,437

" " GLAXO SMITHKL INE PLC " " 5,000 5,712 - 5,712

" " Coring Inc. " " 27,000 15,195 - 15,195

" " Google Inc. " " 1,400 24,223 - 24,223

Welltop

Technology

Co., Ltd.

Stock MTI Network, Inc. Wholly-owned

subsidiary

Long-term equity

investments accounted for

under the equity method

100,000 774 100.00% 774

" " RadioComp Aps " " 1,527,944 137,839 100.00% 137,839

" " MTI Laboratory, Inc. " " 1,500,000 56,694 100.00% 56,694

Jupiter Network Corp. " Jupiter Technology (Wuxi) Inc. " " - 663,340 100.00% 663,340

(Note 2)

Jupiter Technology

(Wuxi) Inc.

" Greast Communication Technology Co., Ltd. Investee accounted for

under the equity method

Long-term equity

investments accounted for

under the equity method

79,972,000 67,236 33.52% 67,236

Note 1: The market value of financial assets at fair value trough profit or loss is based on latest quoted fair prices of the accounting period.

The market value of investments accounted for under the equity method is based on the net asset value of the investee company.

Note 2: Jupiter Network Corp. merged with Zeus Communication Inc. on September 30, 2010 (the base date of merger) with Jupiter Network Corp as the surviving entity.

~59~

e. The cumulative buying, selling over $100 million or 20% of the Company's capital stock for the year ended December 31, 2010:

Marketable General ledger Number Number Number Selling Book Loss on Number Gain on

Investor securities account of shares Amount of shares Amount of shares price value disposal of shares Amount valuation

Millennium

Telecom, Inc.

East Asia Network

Taiwan

Financial assets at

fair value through

profit or loss-current

32,000,000 320,000$ - -$ 32,000,000 289,227$ 320,000$ 30,773)($ - -$ -$

Beginning balance Addition Disposal Ending balance

f. Real estate acquired amounting to over $100 million or 20% of the Company's capital stock for the year ended December 31, 2010:

Reason for

Basis or acquisition of

Relationship Original owner who Relationship of Date of the reference properties and

Property Property Date of Transaction Status of with the sold the property to the original owner original used in setting status of Other

acquired by acquired transaction amount payment Counterparty Company the counterparty with the company transaction Amount the price the properties commitments

Jupiter

Technology

(Wuxi) Inc.

The head office

of operating

and R&D-

equipment and

materials

2010.5.28 CNY

$17,305,000

(in dollars)

CNY

$1,505,000

(in dollars)

Shanghai

Xuan Li

Trading Corp.,

Ltd.

None N/A N/A N/A N/A N/A The head office

of operating

and R&D

Note

" the head office

of operating

and R&D-

construction

" CNY

$48,501,000

(in dollars)

CNY

$14,962,000

(in dollars)

Shang Ding

Engineering &

Construction

Co., Ltd.

None N/A N/A N/A N/A N/A " Note

g. Real estate disposed amounting to over $100 million or 20% of the Company's capital stock for the year ended December 31, 2010: None.

h. Purchases and sales transactions with related parties over $100 million or 20% of the Company's capital stock for the year ended December 31, 2010: Refer to Note 11(1) g.

If the counterparty is a related party, information as to the last

transaction of the property is disclosed below:

~60~

j. Information on derivative transactions: None.

i. Receivables from related parties over $100 million or 20% of the Company's capital stock as of December 31, 2010:

Company Counterparty

Relationship

with the

Company

Accounts

receivable

Other

receivables Total

Turnover

rate Amount

Action adopted

for overdue

accounts

Subsequent

collection

Allowance for doubtful

accounts provided

Jupiter Technology

(Wuxi) Inc.

Microelectronic

Technology Inc. Parent company 421,475$ -$ 421,475$ 4.74 -$ N/A -$ -$

Balance of receivable from related parties Overdue receivables

~61~

(3) Disclosure of information on indirect investments in Mainland China

a. Basic information, change in investment balance and profits/losses recognized from the indirect investment:

Investee in Investment

Accumulated

amount of

remittance

to Mainland

China as of

Amount

remitted to

Mainland China

Amount

remitted back

to Taiwan

Accumulated

amount of

remittance to

Mainland

China as of

December

Ownership

held by the

Company

(direct

Investment

income (loss)

recognized by

the Company

for the

year ended

December 31,

2010

Book value

of investments

in Mainland

China as of

December

Accumulated

amount of

investment

income

remitted back

to Taiwan as

of December

Mainland China Main activities Paid-in capital method January 1, 2010 during the year during the year 31, 2010 and indirect) (Note) 31, 2010 31, 2010

Jupiter

Technology

(Wuxi) Inc.

Satellite

communication,

microwave

communication

and consulting

services

US$21,000,000

(in dollars)

Invest in

Mainland

China

through set

up of a new

a company

in third area

US$21,000,000

( in dollars)

-$ -$ US$21,000,000

( in dollars)

100.00% 126,061)($ 663,340$ -$

Greast

Communication

Technology

Co., Ltd.

Design and

manufacture of

W-CDMA and

Base band RF

Sub-system

RMB$23,860,000

( in dollars)

Invest in

Mainland

China

through

activating

a company

in third area

US$3,970,000

( in dollars)

-$ -$ US$3,970,000

( in dollars)

81.94% 19,830)( 120,890 -

Note: Profit (loss) was recognized based on the financial statements audited by the Company's auditors.

2,678,008$

Ceiling of investment in Mainland China

US$24,970,000 US$25,008,000

Ending balance of investment from Taiwan as of Approved investment amount by Ministry of

December 31, 2010 (in dollars) Economic Affairs R.O.C. (in dollars)

~62~

B.Significant transactions with the direct and indirect investments in Mainland China (the amount represents the fiqures prior to eliminating the purchases and sales transactions between the Company and the investee companies in China through its subsidiaries.)

(f)Property transaction: Please refer to Note 5. (g)Loans to subsidiaries in other countries: Please refer to Note 11. (h)Edorsements and quarantees provided by the Company to Mainland China

subsidiaries: Please refer to Notes 5 and 11. (i)Other significant transactions which affect current income or financial

conditions: None.

(a) Purchases

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 2,333,699$ 36 1,967,090$ 43

(b) Sales

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 543,056$ 7 340,659$ 6

(c) Other receivables

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 157,659$ 342 100,335$ 306

(d) Accounts payable

Amount % Amount %

Jupiter Technology (Wuxi) Inc. 479,412$ 43 374,542$ 38

(e) Prepaid expenses

Amount % Amount %

Jupiter Technology (Wuxi) Inc. -$ - 204$ 1

December 31,

2010 2009

December 31,

2010 2009

December 31,

2010 2009

For the years ended December 31,

2010 2009

For the years ended December 31,

2010 2009

~63~

(4) Significant intercompany transactions for the year ended December 31, 2010

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

0 Microelectronics

Technology, Inc.

Global PCS Inc. 1 Sales revenue 3,143,408$ Similar with general transactions 38.75%

0 " " 1 Accounts receivable 444,733 Net 45 days 5.28%

0 " " 1 Other receivables 10,119 Net 45 days 0.12%

0 " " 1 Accounts payable 2,378 Net 30 days 0.03%

0 " " 1 Accrued expenses 201 Net 30 days 0.00%

0 " " 1 Refundable deposits 1,048 Deposits for rental 0.01%

0 " " 1 Rental revenue 4,208 Similar with general transactions 0.05%

0 " " 1 Other non-operating revenue 600 " 0.01%

0 " " 1 Gain of disposal of property,

plant and equipment

62 " 0.00%

0 " Jupiter Technology (Wuxi), Inc. 1 Purchases and manufacturing cost 1,790,644 " 22.03%

0 " " 1 Accounts payable 421,475 Net 30 days 5.00%

0 " " 1 Accrued expenses 61 Net 30 days 0.00%

0 " " 1 Gain of disposal of property,

plant and equipment 224 Similar with general transactions 0.00%

0 " MTI Laboratory, Inc. 1 Purchases and manufacturing cost 172 " 0.00%

0 " " 1 Research and development

expenses

332,817 " 4.10%

0 " " 1 Marketing expenses 10,323 " 0.13%

0 " " 1 Accrued expenses 17,236 " 0.20%

0 " Welltop Technology Co., Ltd. 1 Sales revenue 11,135 " 0.14%

0 " " 1 Accounts receivable 1,133 Net 30 days 0.01%

0 " " 1 Other receivables 32 " 0.00%

0 " Greast Communication Technology

Co., Ltd.

1 Research and development

expenses 2,255 Similar with general transactions 0.03%

0 " RadioComp ApS 1 " 36,515 " 0.43%

~64~

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

1 Global PCS Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing cost 3,143,408$ Similar with general transactions 38.75%

1 " " 2 Accounts payable 444,733 " 5.28%

1 " " 2 Accrued expenses 10,119 Net 45 days 0.12%

1 " " 2 Accounts receivable 2,579 Net 30 days 0.03%

1 " " 2 Refundable deposits 1,048 Similar with general transactions 0.01%

1 " " 2 Rental expenses 4,208 Deposits for rental 0.05%

1 " " 2 General and administrative

expense

662 Similar with general transactions 0.01%

2 Jupiter Technology (Wuxi),

Inc.

Microelectronics Technology, Inc. 2 Sales revenue 1,790,644 " 22.09%

2 " " 2 Accounts receivable 421,536 " 5.00%

2 " " 2 General and administrative

expense

224 " 0.00%

3 MTI Laboratory, Inc. Microelectronics Technology, Inc. 2 Sales revenue 343,312 Similar with general transactions 4.23%

3 " " 2 Accounts receivable 17,236 Net 30 days 0.20%

4 Welltop Technology Co., Ltd. Microelectronics Technology, Inc. 2 Purchases and manufacturing cost 11,135 Similar with general transactions 0.14%

4 " " 2 Accounts payable 1,165 Net 30 days 0.01%

5 Greast Communication

Technology Co., Ltd.

" 2 Sales revenue 2,255 Similar with general transactions 0.03%

6 RadioComp Aps " 2 " 36,515 " 0.45%

7 Sasson International Holdings

Inc.

Jupiter Technology (Wuxi)

Inc.

3 Other receivables 291,300 For operations; to transact

with contract

3.46%

8 Jupiter Technology (Wuxi),

Inc.

Sasson Internatioal Holdings Inc. 3 Short-term loans 291,300 " 3.46%

Transaction

~65~

(5) Significant intercompany transactions for the year ended December 31, 2009

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

0 Microelectronics

Technology, Inc.

Global PCS Inc. 1 Sales revenue 1,627,622$ Similar with general transactions 25.52%

0 " " 1 Purchases and manufacturing cost 60,349 " 0.95%

0 " " 1 Other non-operating expense 416 " 0.01%

0 " " 1 Accounts receivable 393,961 Net 45 days 4.72%

0 " " 1 Other receivables 8,944 Net 45 days 0.11%

0 " " 1 Accounts payable 194 Net 30 days 0.00%

0 " " 1 Accrued expenses 41 Net 30 days 0.00%

0 " " 1 Temporary receipts 89 Similar with general transactions 0.00%

0 " " 1 Refundable deposits 1,048 Deposits for rental 0.01%

0 " " 1 Rental revenue 4,202 Similar with general transactions 0.07%

0 " " 1 Other non-operating expense 1,394 " 0.02%

0 " " 1 Gain of disposal of property,

plant and equipment

34 " 0.00%

0 " Jupiter Technology (Wuxi) Inc. 1 Sales revenue 934 " 0.01%

0 " " 1 Purchases and manufacturing cost 1,627,365 " 25.52%

0 " " 1 Accounts payable 335,805 Net 30 days 4.02%

0 " " 1 Temporary receipts 204 Similar with general

transactions

0.00%

0 " " 1 Accrued expenses 9,488 Net 30 days 0.11%

0 " " 1 Gain of disposal of property,

plant and equipment

2,098 Similar with general transactions 0.03%

0 " MTI Laboratory, Inc. 1 Sales revenue 429 " 0.01%

0 " " 1 Purchases and manufacturing cost 167,224 " 2.62%

0 " " 1 Research and development

expense

202,184 " 3.17%

0 " " 1 Marketing expenses 24,812 " 0.39%

0 " " 1 Rental expense 5,045 " 0.08%

0 " " 1 Other non-operating expense 790 " 0.01%

0 " " 1 Accounts payable 107 Net 30 days 0.00%

0 " " 1 Accrued expenses 393 " 0.00%

0 " " 1 Prepayments 10,599 Similar with general transactions 0.13%

0 " " 1 Other receivables 41 " 0.00%

0 " Welltop Technology Co., Ltd. 1 Sales revenue 24,275 " 0.38%

0 " " 1 Accounts receivable 1,794 Net 30 days 0.02%

0 " " 1 Other receivables 55 " 0.00%

~66~

Note a: The transaction information of the Company and consolidated subsidiaries is noted in column "Number ". The number means: 1.Number 0 represents the Company. 2.The consolidated subsidiaries are in order from number 1. Note b: The relationship with the transaction parties are as follows: 1.The Company to the consolidated subsidiary. 2.The consolidated subsidiary to the Company. 3.The consolidated subsidiary to the consolidated subsidiary. Note c: Ratio of asset/liability is divided by consolidated total assets, and ratio of profit/loss accounts is divided by consolidated sales revenues.

Number

(Note a) Company Name Counterparty

Relationship

(Note b)

General ledger

account Amount Transaction terms

Percentage of consolidated total

operating revenues or total assets

1 Global PCS Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing cost 1,627,622$ Similar with general transactions 25.52%

1 " " 2 Sales revenue 60,765 " 0.95%

1 " " 2 Accounts payable 395,666 " 4.74%

1 " " 2 Accrued expenses 7,239 Net 45 days 0.09%

1 " " 2 Other receivables 199 Net 45 days 0.00%

1 " " 2 Accounts receivable 36 Net 30 days 0.00%

1 " " 2 Temporary receipts 89 Net 30 days 0.00%

1 " " 2 Refundable deposits 1,048 Similar with general transactions 0.01%

1 " " 2 Rental expenses 4,202 Deposits for rental 0.07%

1 " " 2 General and administrative

expense

1,428 Similar with general transactions 0.02%

2 Jupiter Technology (Wuxi) Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing cost 934 " 0.01%

2 " " 2 Sales revenue 1,627,365 " 25.52%

2 " " 2 Accounts receivable 335,805 " 4.02%

1 " " 2 Temporary receipts 204 " 0.00%

2 " " 2 Inventories 9,488 Net 30 days 0.11%

2 " " 2 General and administrative

expense

2,098 Similar with general transactions 0.03%

3 MTI Laboratory, Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing cost 429 Net 30 days 0.01%

3 " " 2 Sales revenue 400,055 Similar with general transactions 6.27%

3 " " 2 Accounts receivable 500 " 0.01%

3 " " 2 Other non-operating expenses 10,640 " 0.13%

4 Welltop Technology Co., Ltd. Microelectronics Technology, Inc. 2 Purchases and manufacturing cost 24,275 " 0.38%

4 " " 2 Accounts payable 1,849 " 0.02%

Transaction

~67~

12. SEGMENT INFORMATION

(1) Sales by class of business

Sat.-com Telecom

Foreign

operation

department

Adjustments

and

eliminations Total

Sales to unaffiliated

customers 3,336,413$ 4,775,658$ -$ -$ 8,112,071$

Inter-segment sales 1,904,412 3,988,686 - 5,893,098)( -

Net operating revenues 5,240,825$ 8,764,344$ -$ 5,893,098)($ 8,112,071$

Operating loss 64,426)($ 81,939)($ 18,549)($ 21,035)($ 185,949)($

Investment income 718

General corporate expenses, net 74,133

Interest expense, net 5,510)(

Loss before income tax 116,608)($

Identifiable assets 2,482,743$ 3,162,599$ 29$ 1,067,145)($ 4,578,226$

Funds and investments 419,054

Long-term investments 3,426,725

Total assets 8,424,005$

Depreciation 56,607$ 147,745$ 90$ -$ 204,442$

Capital expenditures 62,888$ 355,980$ 149,806$ 327,788)($ 244,886$

Sat.-com Telecom

Foreign

operation

department

Adjustments

and

eliminations Total

Sales to unaffiliated

customers 3,391,451$ 2,962,411$ 24,190$ -$ 6,378,052$

Inter-segment sales 1,694,225 2,396,851 - 4,091,076)( -

Net operating revenues 5,085,676$ 5,359,262$ 24,190$ 4,091,076)($ 6,378,052$

Operating loss 83,230$ 241,371)($ 8,341)($ 15,916$ 123,566)($

Investment loss 33,708)(

General corporate expenses, net 58,891

Interest expense, net 17,884

Loss before income tax 80,499)($

Identifiable assets 1,990,980$ 2,833,957$ 120$ 875,352)($ 3,949,705$

Funds and investments 840,673

Long-term investments 3,553,242

Total assets 8,343,620$

Depreciation 82,481$ 132,531$ 165$ -$ 215,177$

Capital expenditures 31,443$ 152,026$ -$ 95,685)($ 87,784$

For the year ended December 31, 2010

For the year ended December 31, 2009

~68~

(2) Sales by geographical origin

(3) Export sales by geographical destination

Asia Others Taiwan Adj & Elim. Consolidated

Sales to unaffiliated

customers 59,542$ 17,624$ 8,034,905$ -$ 8,112,071$

Inter-segment sales 2,358,416 379,826 3,154,856 5,893,098)( -

Net operating revenues 2,417,958$ 397,450$ 11,189,761$ 5,893,098)($ 8,112,071$

Operating loss 161,854)($ 2,824)($ 236)($ 21,035)($ 185,949)($

Investment income 718

General corporate expenses, net 74,133

Interest expense, net 5,510)(

Loss before income tax 116,608)($

Identifiable assets 1,518,182$ 91,477$ 4,035,711$ 1,067,144)($ 4,578,226$

Funds and investments 419,054

Long-term investments 3,426,775

Total assets 8,424,005$

Asia Others Taiwan Adj & Elim. Consolidated

Sales to unaffiliated

customers 142,879$ 24,763$ 6,210,409$ -$ 6,378,051$

Inter-segment sales 2,032,509 403,089 1,655,478 4,091,076)( -

Net operating revenues 2,175,388$ 427,852$ 7,865,887$ 4,091,076)($ 6,378,051$

Operating (loss) profit 8,294$ 5,219$ 152,995)($ 15,916$ 123,566)($

Investment loss 33,708)(

General corporate expenses, net 58,891

Interest expense, net 17,884

Loss before income tax 80,499)($

Identifiable assets 1,417,454$ 26,125$ 3,381,478$ 875,352)($ 3,949,705$

Funds and investments 840,673

Long-term investments 3,553,242

Total assets 8,343,620$

For the year ended December 31, 2010

For the year ended December 31, 2009

2010 2009

America 6,247,437$ 4,573,434$

Asia 464,827 943,905

Europe 1,028,758 677,588

Other areas 181,114 9,483

7,922,136$ 6,204,410$

For the years ended December 31,

~69~

(4) Sales to major customers

Customer name Amount % Department

D customer 3,450,452$ 42 Telecommunication

A customer 1,804,337 22 Satellite communication

Customer name Amount % Department

D customer 1,812,045$ 28 Telecommunication

E customer 1,748,697 27 Satellite communication

For the year ended December 31, 2010

For the year ended December 31, 2009

~70~

Corporate Directory

Directors and Executive Officers

Patrick Wang Chairman of the Board

Chi-Chia Hsieh Vice-Chairman of the Board

Lee Ting Director of the Board

Wayne Chan Director of the Board

Andrew Chu Supervisor

Sue-Fung Wang Supervisor

Allen Yen Director of the Board , President and Chief Executive Officer

Allen Chen Vice President, GM of Radio Division

Shu-Huei Fuong Vice President

Hualin Chi Chief Financial Officer

Location

Headquarter

Microelectronics Technology Inc.

No.1, Innovation Road II

Hsinchu Science Park, Taiwan

Tel: 886-3-577-3335 Fax: 886-3-577-0688

MTI laboratory Inc.

201 Continental Boulevard #300, El Segundo, CA 90245

Tel: 1-310-955-3700 Fax: 1-310-955-3770

Radiocomp MTI

Krakasvej 17, DK-3400 Hillerød, Denmark

Tel: +45-70-23-10-24

Overseas Manufacturing Sites

Jupiter Technology (Wuxi) Co., Ltd.

No.13 Minjiang Rd.

Wuxi State High & New Technology Industry Development Zone,

Jiangsu Province, China

Tel: 86-510-8522-8800 Fax: 86-510-8522-9892