FocalTech - Annual Report 2021 | FinancialReports.eu

FocalTech Systems Co., Ltd.

Financial Statements for the Years Ended December 31, 2021 and 2020

Notice to Readers

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders FocalTech Systems Co., Ltd.

Opinion

We have audited the accompanying balance sheets of FocalTech Systems Co., Ltd. (the “Company”) as of December 31, 2021 and 2020, and the related statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2021and 2020, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s financial statements in the current period are stated as follows:

Sales Revenue

The sales revenue of Integrated Driver Controller is the main indicator of financial and business performance evaluated by investors and the management. It possibly exists the pressure to achieve the financial target, and it might result in the risk of the occurrence of sales revenue. Therefore, the sales revenue of Integrated Driver Controller is listed in the Key Audit Matters of 2021.

Refer to Notes 4,22 for the accounting policy, accounting estimation and disclosure information. Our audit procedures related to the abovementioned Key Audit Matters included the following:
We evaluated the design of internal control related to sales and collection cycle and the implement of the internal control.
We obtained customer ranking list in 2021, and analyze the differences of customers and its sales amount.
We analyzed if the sales quantities, sales revenue and gross margin by products existed material exception.
We sampled purchase orders, shipping documents bills of lading, and collection records in revenue breakdown to ensure the occurrence of sales revenue.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Responsibilities of Corporate Management and Governance Hierarchy For the Financial Statements

Management Level is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management level is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Corporate governance level (including members of the Audit Committee) is responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the years ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Shiow-Ming Shue and Chih-Ming Shao.

Deloitte & Touche Taipei, Taiwan Republic of China February 23, 2022

This is the translation of the financial statements. CPAs do not audit or review on this translation.

FOCALTECH SYSTEMS CO., LTD. BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 4 and 6) Financial assets at fair value through profit or loss -current (Note 4 and 7) Accounts receivables, net (Note 4 , 9 and 30) Inventories (Note 4 and 10) Other financial assets (Note 4 and 8) Other current assets (Note 24 and 30) Total current assets NON-CURRENT ASSETS Financial asset at fair value through profit or loss - non-current (Note 4 and 7 ) Investments accounted for using equity method (Note 4 and 11) Property, plant and equipment (Note 4 and 12) Goodwill (Notes 4 and 13) Other intangible assets (Notes 4 and 14) Deferred income tax assets (Notes 4 and 24) Refundable deposits(Notes 15) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 16) Accounts payables (Note 17 and 30) Other payables (Note 18) Current tax liabilities (Note 4 and 24) Other current liabilities(Note 22 and 30) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 16) Deferred income tax liabilities (Notes 4 and 24) Net defined benefit liabilities - non-current (Notes 4 and 19) Guarantee deposits received(Notes 20) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 , 21 and 26) Share capital Ordinary shares Capital surplus Additional paid-in capital Treasury shares Employee share options Restricted stock for employees Employee share options - expired Total capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity Exchange differences from translating the financial statements of foreign operations Unrealized loss on financial assets at fair value through other comprehensive income Unrealized employee compensation Total other equity Treasury shares Total equity TOTAL		2021	% 21 1 12 11 13 1 59 1 17 5 6 - - 12 41 100 - 12 2 6 1 21 3 - - 19 - 22 43 9 20 - - 5 - 25 - 1 26 27 (1) - (3) (4) - 57 100		2020
		Amount $ 5,073,919 119,218 2,910,667 2,654,159 3,086,830 162,403 14,058,343 284,271 4,050,456 1,197,523 1,237,268 44,181 4,857 2,826,852 9,645,408 $ 23,703,751 $ - 2,824,379 416,425 1,366,072 211,959 4,818,835 786,400 51,584 22,140 4,388,290 10,400 5,259,254 10,078,089 2,162,367 4,737,390 79,917 65,873 1,145,555 34,134 6,062,869 101,230 122,316 6,202,079 6,425,625 (211,648) 169 (813,720) (1,025,199) - 13,625,662 $ 23,703,751			Amount $ 2,455,926 - 1,445,186 1,215,281 170,880 162,403 5,449,676 97,139 4,537,073 15,226 1,237,268 59,498 65,898 145,604 6,157,706 $ 11,607,382 $ 480,000 1,936,299 339,556 108,514 360,915 3,225,284 - 53,213 23,366 482,276 10,400 569,255 3,794,539 2,103,532 4,725,445 69,361 14,903 - 33,933 4,843,642 - - 1,012,301 1,012,301 (125,038) 2,722 - (122,316) (24,316) 7,812,843 $ 11,607,382	%
						21 - 12 11 2 1 47 1 39 - 11 - 1 1 53 100 4 17 3 1 3 28 - 1 - 4 - 5 33 18 41 1 - - - 42 - - 8 8 (1) - - (1) - 67 100

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

This is the translation of the financial statements. CPAs do not audit or review on this translation.

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

REVENUE (Note 4 ,22 and 30) COSTS OF SALES (Notes 4,10,23 and 30) GROSS PROFIT OPERATING EXPENSES (Notes 23,26, 27 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATIONS INCOME NON-OPERATING INCOME AND EXPENSES Finance costs (Note 23) Share of loss of subsidiaries and joint ventures(Note4) Interest income (Note 4) Gain (Loss)n on financial assets and liabilities at fair value through profit or loss (Notes 4) Other gains and losses, net Loss on foreign currency exchange(Note 4) Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 24) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 4 and 19) Income tax related to items that will not be reclassified subsequently to profit or loss (Notes 4 and 24)		2021	% 100 (48) 52 (1) (2) (7) (12) 42 - (4) - 1 2 - (1) 41 (8) 33 - - -		2020
		Amount $ 18,335,785 (8,831,939) 9,503,846 (199,670) (325,796) (1,247,606) (1,773,072) 7,730,774 (8,130) (649,268) 9,364 87,748 373,371 (67,933) (254,848) 7,475,926 (1,362,991) 6,112,935 751 (105) 646			Amount % $ 11,410,350 100 (8,811,546) (77) 2,598,804 23 (186,571) (2) (225,572) (2) (958,867) (8) (1,371,010) (12) 1,227,794 11 (1,892) - (16,072) - 6,297 - (2,484) - (19,784) (1) (17,880) - (51,815) (1) 1,175,979 10 (163,987) (1) 1,011,992 9 359 - (50) - 309 - (Continued)	%

This is the translation of the financial statements. CPAs do not audit or review on this translation.

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2021	2020
Amount $ (89,163) (88,517) $ 6,024,418 $ 30.23 $ 28.62	Amount $ (128,123) (127,814) $ 884,178 $ 3.97 $ 3.73	%
		(1)
		(1) 8

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

(Concluded)

This is the translation of the financial statements. CPAs do not audit or review on this translation.

FOCALTECH SYSTEMS CO., LTD. STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

			Retained Earnings	Other Equity	Total Equity
	Legal Reserve $ - - - - - - - - - - - 101,230 - - - - - - - - - - - - 101,230		Special Reserve $ - - - - - - - - - - - - 122,316 - - - - - - - - - - - 122,316	Exchange Differences from Translating Financial Statement of Foreign Operations Unrealized Gains(losses) on Financial Assets at Fair Value through Other comprehensive income $ 4,057 $ 1,750 - - - - - - (129,095) 972 (129,095) 972 - - - - - - - - (125,038) 2,722 - - - - - - - - (86,610) (2,553) (86,610) (2,553) - - - - - - - - - - - - - - $ (211,648) $ 169
$		$			$ 7,697,478 - (150,000) 1,011,992 (127,814) 884,178 (894,530) 238,879 21,279 15,559 7,812,843 - - (700,000) 6,112,935 (88,517) 6,024,418 66,351 25,892 - (257) 9,390 55,190 331,835 $ 13,625,662

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

This is the translation of the financial statements. CPAs do not audit or review on this translation.

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax from continuing operation Adjustments for: Depreciation expenses Amortization expenses (Gain) loss on financial assets and liabilities at fair value through profit or loss Finance costs Interest income Compensation cost of employee share options Compensation cost of restricted stock to employees Share of loss of subsidiaries and joint ventures Loss on disposal of investments Reversal of write-down of inventories Changes in operating assets and liabilities Increase in financial assets mandatorily classified as at fair value through profit or loss Accountsreceivables Inventories Other current assets Accountspayables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Income tax paid Net cash inflow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Proceeds from the capital reduction of investments accounted for using the equity method Purchase of property, plant and equipment Increase in other financial assets Increase in refundable deposits Interest received Net cash (outflow) inflow from investing activities		2021 $ 7,475,926 18,470 15,317 (87,748) 8,130 (9,364) 27,008 204,457 649,268 183,272 (319,202) (35,330) (1,465,481) (1,119,676) (50,351) 888,080 76,869 (148,964) (475) 5,943,662 (8,122) (45,595) 5,889,945 (85,350) - - (1,200,767) (2,915,950) (2,681,248) 8,037 (6,875,278)		2020
				$ 1,175,979 10,567 15,609 2,484 1,892 (6,297) 12,433 - 16,072 40,928 (131,157) (112,702) (904,632) (467,009) 77,154 1,235,756 148,644 199,706 (353) 1,315,074 (1,686) - 1,313,388 (4,970) 2,847 451,200 (6,385) (170,880) (33,054) 7,760 246,518

(Continued)

This is the translation of the financial statements. CPAs do not audit or review on this translation.

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) Increase in short-term borrowings Increase in long-term borrowings Increase in guarantee deposits received Issuance of restricted stock for employees Cash dividends paid Capital reduction payments to shareholders Proceeds from issuance ordinary shares under employee share options Treasury shares transferred to employees Net cash inflow from financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR		2021 $ (480,000) 786,840 3,906,014 55,190 (700,000) - 9,390 25,892 3,603,326 2,617,993 2,455,926 $ 5,073,919		2020
				$ 480,000 - 364,682 - (150,000) (894,530) 15,559 238,879 54,590 1,614,496 841,430 $ 2,455,926

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

(Concluded)

This is the translation of the financial statements. CPAs do not audit or review on this translation.

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FOCALTECH SYSTEMS CO., LTD.

1. GENERAL INFORMATION

FocalTech Systems Co., Ltd. (“FocalTech” or “the Company”), formerly named as Orise Technology Co., Ltd., was incorporated in the Republic of China (“ROC”) in January 2006 and moved to Hsinchu Science Park in April in the same year. The Company’s shares have been listed on the Taiwan Stock Exchange (“TWSE”) since July 2007. On January 2, 2015, the Company acquired FocalTech Corporation, Ltd. through a share swap and renamed on January 17, 2015. This acquisition was comprehensively considered as a reverse merger, where FocalTech Corporation, Ltd. was treated as the acquirer in the financial statements. The Company mainly engages in the research, development, design, manufacturing, and sales of Human-Machine Interface solutions, such as Display Driver IC, Touch Control IC and so on.

The financial statements are presented in the Company’s functional currency of New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on February 23, 2022.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

The initial application of the amendments to the IFRS 9, IAS 39, IFRS 7, IFRS 4, IFRS 16 (Interest Rate Benchmark Reform-Phase 2 and Covid-19-Related Rent Concessions beyond 30 June 2021) endorsed and issued in to effect by the FSC did not have a significant impact on the Group’s accounting policies.

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2022

New, Revised or Amended Standards and Interpretations Annual Improvements to IFRS Standards 2018–2020 Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IAS 16 “Property, Plant and Equipment-Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts—Cost of Fulfilling a Contract”	Effective Date Announced by IASB
	January 1, 2022(Note 1) January 1, 2022(Note 2) January 1, 2022(Note 3) January 1, 2022(Note 4)

Note 1: The amendments to IFRS 9 will be applied prospectively to modifications or exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the financial statements were authorized for issue, the Company assessed the application of abovementioned standards and interpretations do not have significant impact on the Company’s financial position and financial performance.

c. The IFRSs issued by IASB, but not yet endorsed and issued into effect by the FSC

Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17January 1, 2023 Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or NonJanuary 1, 2023 current” Amendments to IAS 1“Disclosure of Accounting Policies” January 1, 2023(Note 2) Amendments to IAS 8“Definition of Accounting Estimates” January 1, 2023(Note 3) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities January 1, 2023(Note 4) arising from a Single Transaction”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The present Financial Report has been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

b. Basis of preparation

The financial statements have been prepared on the historical cost basis, except for financial instruments measured at fair value and the net defined benefit liabilities recognized in the amount of the present value of defined benefit obligation less the fair value of any plan assets.

The evaluation of fair value could be classified into Level 1 to Level 3 by the observable intensity and importance of related input value:

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

When preparing the parent company only financial statements, the Company accounts for subsidiaries by using the equity method. In order to agree with the of amount of net income, other comprehensive income and equity attributable to shareholders of the parent between the consolidated financial statements and parent company financial statements, the differences of the accounting treatment between the parent company only basis and the consolidated basis are adjusted by the accounts of investments accounted for using equity method, share of profits of subsidiaries and share of other comprehensive income of subsidiaries in the parent company only financial statements.

c. Standards in differentiating current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within twelve months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

1) Assets expected to be realized within 12 months after the reporting period; and
2) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Those not as aforementioned current assets or current liabilities are classified as non-current assets or non-current liabilities.

d. Foreign currencies

In preparing the financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

For the purpose of presenting financial statements, the functional currencies of the Company and the Group entities (including subsidiaries in other countries that use currency different from the currency of the Company) are translated into the presentation currency - New Taiwan dollars as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

e. Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.

f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity (including a structured entity) that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing the control of the subsidiary are accounted for as equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of loss of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further loss, if any.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount (net of amortization or depreciation) before any impairment loss recognized. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

Profit or loss resulting from downstream transactions is eliminated in full in the parent company only financial statements. Profit and loss resulting from upstream transactions and transactions between subsidiaries is recognized only to the extents that are not related to the interests between the Company and subsidiaries.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

g. Property, plant and equipment

Property, plant and equipment are initially measured at cost, and subsequently measured at cost less accumulated depreciation.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

h. Goodwill

Goodwill arising from the acquisition of a business is carried at cost, and subsequently measured at cost less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Company’s cash-generating units or groups of cash-generating units (referred to as cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. If the recoverable amount of the cashgenerating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

i. Intangible assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization. Amortization is recognized on a straightline basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset are recognized in profit or loss.

j. Impairment of property, plant and equipment and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs to.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cashgenerating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

k. Financial instruments

Financial assets and financial liabilities are recognized when the company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

i) Measurement category

The Company’s financial assets include those measured at FVTPL, and at amortized cost.

A. Financial asset at FVTPL

The equity instruments that are not specified as FVTOCI and debt instruments that do not meet the criteria of amortized cost or FVTOCI are mandatorily required to be measured at FVTPL.

Any dividends, interest earned and gain or loss arising from the remeasurement is recognized in profit or loss at fair value. The determination methodology of fair value of financial instruments states in Note 29.

B. Financial assets at amortized cost

Financial assets that meet both two following conditions will subsequently be measured at amortized cost:

(1) The objective of the business model to hold the financial asset is to collect contractual cash flows; and
(2) The cash flows from contractual terms of the financial asset on specified dates are solely matched for payments of principal and interests on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, account receivables at amortized cost, other financial assets, and refundable deposits, are measured at amortized cost, which equals to gross carrying amount determined by the effective interest method, subtracting any impairment loss. Foreign exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Cash equivalents include time deposits with original maturities within 3 months from obtaining date, high liquidation level, readily convertible to a known amount of cash at any time, and low risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

ii) Impairment of financial assets

At the end of each reporting period, the impairment loss is recognized by expected credit loss method for financial assets at amortized cost (including accounts receivables).

The loss allowance for accounts receivables is determined by the expected credit losses over the lifetime. For other financial assets at amortized cost, if the credit risk on the financial instrument has not increased significantly after initial recognition, a loss allowance is determined by the expected credit losses resulting from the possible default events within 12 months after the reporting date. If, on the other hand, there has been a significant increase in credit risk after initial recognition, a loss allowance is determined by the expected credit losses resulting from all possible default events over the expected life of a financial instrument.

Expected credit losses (ECLS) reflect the weighted average of credit losses with the respective risks of default occurring as the weights. 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. In contrast, Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument.

All impairment loss of the financial instruments with a corresponding adjustment to their carrying amount are through an allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.

iii) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

When a financial asset carried at amortized cost is derecognized in its entirety, the difference between the asset’s carrying amount and the consideration is recognized in profit or loss.

2) Equity instruments

Debt and equity instruments issued by the company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the company are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. 3) Financial liabilities

i) Subsequent measurement

All the financial liabilities are measured by amortized cost using the effective interest method.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

ii) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

l. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

m. Revenue recognition

The Company recognizes revenue when customer’s contract obligations are satisfied.

Revenue comes from sales of Human-Machine Interface devices ICs. Revenue is recognized when the ICs start to be shipped or are delivered to the specific locations instructed by customers, at which time the customer has full discretion over the ICs. Revenue and accounts receivables are recognized concurrently.

The Company considers varying contractual terms to estimate sales returns and recognize refund liabilities, which is classified under other payables.

n. Lease

The Company evaluates if the contract belongs to or includes the lease the commencement date.

The Company as a lessee

Except for the leases of low-value asset or short-term leases recognized as expenses on a straight-line basis, the Company recognizes right-of-use assets and lease liabilities for all leases on the balance sheets from the commencement date.

o. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets (assets which are substantially ready for their intended use or sale through a fairly long period) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

p. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost, including current service cost and net interest on the net defined benefit liability (asset,) is recognized as employee benefits expense in the period it occurs. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur and will not be reclassified to profit or loss.

Net defined benefit liability represents the actual deficit in the Company’s defined benefit plan.

q. Share-based payment arrangements

Equity-settled and share-based payment arrangements granted to employees

The fair value at the grant date of the equity-settled and share-based payments is expensed on a straightline basis over the vesting period, based on the Company’s optimal estimate number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options.

The fair value at the grant date of the restricted shares for employees is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in other equity - unearned employee benefits.

When restricted shares for employees are issued, other equity - unearned employee benefits is recognized on the grant date, with a corresponding increase in capital surplus - restricted shares for employees.

At the end of each reporting period, the Group revises its estimate of the number of restricted shares for employees that are expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus - restricted shares for employees.

r. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

The tax on unappropriated earnings according to the Income Tax Law should be accrued in the year when the resolution regarding to the appropriated earnings is made in the shareholder meeting.

Any adjustment of prior years’ tax liability is counted in the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. In addition, a deferred tax liability is not recognized on taxable temporary difference arising from initial recognition of goodwill.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income, in which case, the deferred tax is recognized in other comprehensive income.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent (time deposits with original maturities less than three months)		December 31	December 31	December 31
		2021 $ 625 2,914,254 2,159,040 $ 5,073,919		2020
				$ 381 2,455,545 - $ 2,455,926

This is the translation of the financial statements. CPAs do not audit or review on this translation.

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed ordinary shares Non-Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed preferred shares Private Funds		December 31	December 31	December 31
		2021 $ 119,218 $ 151,801 132,470 $ 284,271		2020
				$ - $ 72,186 24,953 $ 97,139

8. OTHER FINANCIAL ASSETS

Time deposits with original maturities more than three months 9. ACCOUNTS RECEIVABLES, NET		December 31	December 31	December 31
		2021 $ 3,086,830		2020
				$ 170,880

Accountsreceivables		December 31	December 31	December 31
		2021 $ 2,910,667		2020
				$ 1,455,186

The average credit period on sales of goods was 30-120 days. In order to minimize credit risk, management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts. In this regard, management believes the Company’s credit risk was significantly reduced.

The Company recognizes the allowance loss for accounts receivable based on expected credit losses during the duration. The expected credit losses on accounts receivables are estimated by using an allowance matrix which references customer default records, customer’s current financial position, and general economic conditions of the industry. Due to the past experiences, there is no significant difference among the loss patterns of different customer groups. Therefore, the allowance matrix does not further distinguish the customer groups, and only sets the expected credit loss rate based on the overdue days of accounts receivable.

The following table details the loss allowance of accounts receivables based on the Company’s allowance matrix.

December 31, 2021

Expected credit loss rate Gross carrying amount and Amortized cost	Non Past Due 0% $2,684,629		Overdue 1-60 Days 0% $ 226,038	Overdue 61-180 Days 0% $ -	Overdue Over 181 Days 0% $ -		Total
							0% $ 2,910,667

This is the translation of the financial statements. CPAs do not audit or review on this translation.

December 31, 2020

Expected credit loss rate Gross carrying amount and Amortized cost	Non Past Due 0% $1,404,771		Overdue 1-60 Days 0% $ 40,401	Overdue 61-180 Days 0% $ 14	Overdue Over 181 Days 0% $ -		Total
							0% $ 1,445,186

10. INVENTORIES

Finished goods Work in progress Raw materials and supplies		December 31	December 31	December 31
		2021		2020
		$ 861,983 1,301,879 490,297 $ 2,654,159		$ 311,159 812,109 92,013 $ 1,215,281

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2021 and 2020 was $8,831,939 thousand and $8,811,546 thousand, included gain from price recovery of inventory of $319,202 thousand and $131,157 thousand for the years ended December 31, 2021 and 2020, respectively. Above mentioned gains from price recovery of inventory are resulted from sales of slow moving inventory.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

December 31	December 31	December 31
2021		2020
2021 2020 $ 2,500,591 $ 2,974,195 1,543,791 1,562,878 6,074 - $ 4,050,456 $ 4,537,073 Percentage of Ownership as of December 31		2020

2021 100% 100% 9.14%	2020
	100% 100% -

a. The Company and its subsidiary hold 9.14% and 57.31% of the issued share of FocalTech Electronics Co., Ltd.. Since the Company had control over FocalTech Electronics Co., Ltd., it was listed as a subsidiary.

The share of profit or loss and other comprehensive income of these subsidiaries accounted for using the equity method recognized in 2021 and 2020 financial statements were based on the audited subsidiaries’ financial statements of the corresponding periods.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

12. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2021 Additions Disposals Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation Disposals Balance at December 31, 2021 Carrying amounts at December 31, 2021 Cost Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation Disposals Balance at December 31, 2020 Carrying amounts at December 31, 2020	Development Equipment $ 74,551 120,637 ( 5,185) $ 190,003 $ 59,325 18,470 ( 5,185) $ 72,610 $ 117,393 $ 73,167 6,385 ( 5,001) $ 74,551 $ 53,759 10,567 ( 5,001) $ 59,325 $ 15,226	Office Equipment $ 304 - - $ 304 $ 304 - - $ 304 $ - $ 304 - - $ 304 $ 304 - - $ 304 $ -	Leasehold Improve- ments $ 16,878 - - $ 16,878 $ 16,878 - - $ 16,878 $ - $ 16,878 - - $ 16,878 $ 16,878 - - $ 16,878 $ -	Construction inprogress $ - 1,080,130 - $1,080,130 $ - - - $ - $1,080,130 $ - - - $ - $ - - - $ - $ -		Total
						$ 91,733 1,200,767 ( 5,185) $1,287,315 $ 76,507 18,470 ( 5,185) $ 89,792 $1,197,523 $ 90,349 6,385 ( 5,001) $ 91,733 $ 70,941 10,567 ( 5,001) $ 76,507 $ 15,226

Property, plant and equipment were depreciated on a straight-line basis over the estimated useful lives as follows:

Development equipment 4 years Office equipment 4 years Leasehold improvements 1-4 years

Property, plant and equipment were pledged as collateral. Refer to Note 31.

13. GOODWILL

Ending balance	For the Year Ended 2021 $ 1,237,268	For the Year Ended 2021 $ 1,237,268	For the Year Ended 2021 $ 1,237,268	December 31
		2021 $ 1,237,268		2020
				$ 1,237,268

Considering the synergy of integration of LCD driver and touch controller under the industry trend, the reverse merger was triggered by FocalTech Corporation, Ltd. on January 2, 2015, resulting the goodwill of $3,237,268 thousand. In 2018, the impacts of market improper competition and the shortage of wafer supply made the company a serious market share decline, which is expected to influence the market shares and gross margins in the future. Therefore, the recoverable amount from IDC (Integrated Driver Controller) less than the carrying value so the Company recognized the impairment loss of $2,000,000 thousand. In 2019, based on the market growth and market share gain in smartphone market, the Group estimated cash flows from sales of IDC (Integrated Driver Controller), and the recoverable amount exceeded the carrying value. Therefore, the Group did not recognize any impairment on goodwill.

The recoverable amount is calculated by IDC projected net cash flows, discounted at 16.52% and 15.45% for the years ended December 31, 2021 and 2020, under the assumptions of management team judgments and historical experiences with regard to future growth rates and gross margin.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

14. OTHER INTANGIBLE ASSETS

Cost Balance at January 1, 2021 and December 31, 2020 Accumulated amortization Balance at January 1, 2021 Amortization expense Balance at December 31, 2021 Carrying amounts at December 31, 2021 Cost Balance at January 1, 2020 and December 31, 2020 Accumulated amortization Balance at January 1, 2020 Amortization expense Balance at December 31, 2020 Carrying amounts at December 31, 2020	Licenses and Franchises $ 18,657 $ 18,525 132 $ 18,657 $- $ 18,657 $ 18,102 423 $ 18,525 $ 132	Software $ 8,445 $ 8,445 - $ 8,445 $- $ 8,445 $ 8,445 - $ 8,445 $-		Patents $ 76,478 $ 46,712 7,785 $ 54,497 $ 21,981 $ 76,478 $ 38,926 7,786 $ 46,712 $ 29,766	Trademark $ 74,000 $ 44,400 7,400 $ 51,800 $ 22,200 $ 74,000 $ 37,000 7,400 $ 44,400 $ 29,600		Total
							$ 177,580 $ 118,082 15,317 $ 133,399 $ 44,181 $ 177,580 $ 102,473 15,609 $ 118,082 $ 59,498

Other intangible assets were amortized on a straight-line basis over the estimated useful lives as follows:

Licenses and franchises 5 years Software 3 years Patents 9-10 years Trademark 10 years

15. REFUNDABLE DEPOSITS

Capacity guarantee deposits and others		December	December	31
		2021 $ 2,826,852		2020
				$ 145,604

Guarantee deposits mainly consists of cash paid to suppliers to ensure stable foundry capacity.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

16. BORROWINGS

a. Short-term borrowings Unsecured bank loans Annual interest rate b. Long-term borrowings Secured bank loans Annual interest rate		December	December	31
		2021 2020 $ - $ 480,000 - 0.88%~1.06% December 31		2020

		2021 $ 786,840 1.00%		2020
				$ - -

The Company increased the long-term loans to acquire the commercial building. Properties, plants and equipment are pledged as collateral for long-term loans, please refer to Note 31.

17. ACCOUNTS PAYABLES

Accountspayables Accountspayables-related party		December 31	December 31	December 31
		2021 $ 2,292,621 531,758 $ 2,824,379		2020
				$ 1,397,089 539,210 $ 1,936,299

The average credit period on purchases was 30-60 days. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

18. OTHER PAYABLES

Payable for salaries and bonus Payable for labor, health and social insurance Reserve for litigations Payable for professional services and others		December 31	December 31	December 31
		2021		2020
		$ 306,928 12,450 28,645 68,402 $ 416,425		$ 238,059 12,450 32,052 56,995 $ 339,556

19. RETIREMENT BENEFIT

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance

This is the translation of the financial statements. CPAs do not audit or review on this translation.

in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		December 31	December 31	December 31
		2021 $ 40,265 18,125) $ 22,140		2020
	(		(	$ 42,275 18,909) $ 23,366

Movements in net defined benefit liability were as follows:

Balance at January 1, 2021 Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial loss - changes in financial assumptions Actuarial loss - experience adjustments Recognized in other comprehensive income Contributions from the employer Benefits paid Balance at December 31, 2021 Balance at January 1, 2020 Service cost Current service cost Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial loss -demographic assumptions Actuarial loss - changes in financial assumptions Actuarial loss - experience adjustments Recognized in other comprehensive income Contributions from the employer Benefits paid Balance at December 31, 2020	Present Value of the Defined Benefit Obligation $ 42,275 338 338 - 764 ( 1,425) ( 661) - (1,687) $ 40,265 $ 45,235 126 452 578 - 1,436 1,151 ( 2,327) 260 - ( 3,798) $ 42,275	Fair Value of the Plan Assets ($ 18,909) ( 154) ( 154) ( 90 ) - - ( 90) ( 659 ) 1,687 ($ 18,125) ($ 21,157) - ( 215) ( 215) ( 619 ) - - - ( 619) ( 716 ) 3,798 ($ 18,909)	Net Defined Benefit Liability (Asset)
	( ( ( (		$ 23,366 184 184 ( 90 ) 764 ( 1,425) ( 751) ( 659 ) - $ 22,140 $ 24,078 126 237 363 ( 619 ) 1,436 1,151 ( 2,327) ( 359) ( 716 ) - $ 23,366

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic/and foreign/equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	December 31	December 31
	2021 0.65% 4.5%	2020
		0.8% 4.5%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 1% increase 1% decrease		December 31	December 31	December 31
		2021 ($ 1,263) ($ 1,314) ($ 5,348) ($ 4,670)		2020
				($ 1,501) ($ 1,566) ($ 6,441) ($ 5,567)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	December	31
		2021 $ 680 15.2 years		2020
				$ 717 16.1 years

This is the translation of the financial statements. CPAs do not audit or review on this translation.

20. GUARANTEE DEPOSITS RECEIVED

Capacity guarantee deposits and others		December	December	31
		2021 $ 4,388,290		2020
				$ 482,276

Guarantee deposit mainly consists of cash received from customers to ensure they have access to the Company’s specified capacity

21. EQUITY

a. Share capital

Ordinary shares (NT$10 par value per share)

Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31	December 31
		2021 500,000 $ 5,000,000 216,237 $ 2,162,367		2020
				500,000 $ 5,000,000 210,353 $ 2,103,532

The company has redeemed 326 thousand shares of issued restricted stocks for employees during the year ended December 31, 2021. The registration processes have not been completed as of December 31, 2021.

b. Capital surplus

BALANCE, JANUARY 1, 2021 Treasury shares transferred to employees Employee treasury shares vested Treasury shares retired Compensation cost of employee share options Issuance of ordinary shares under employee share options Employee share options expired Issuance of restricted stock for employees BALANCE AT DECEMBER 31, 2021 BALANCE, JANUARY 1, 2020 Capital surplus used to cover accumulated deficits Cash distribution from additional paid-in capital Employee treasury share vested Treasury shares transferred to employees Compensation cost of employee share options Issuance of ordinary shares under employee share options Employee share options expired BALANCE AT DECEMBER 31, 2020		Additional Paid-in Capital (1)		Treasury Shares (1) $ 69,361 1,947 8,861 252 ) - - - - $ 79,917 $ 48,662 - - 19,471 1,228 - - - $ 69,361	Restricted stock for employees (2) ($ 0,00-) (-) (-) (-) (-) (-) - 1,145,555 ($ 1,145,555) ($ 0,00-) (-) (-) (-) (-) (-) (-) ( -) ($-)	Employee Share Options (2) ($0,014,903) (-) ( 8,861 ) (-) 66,351 ( 6,319 ) ( 201 ) ( -) $ 65,873 $0,025,510 (-) (- ( 19,471 ) (-) 21,279 ( 12,016 ) ( 399 ) ($ 14,903)	Employee Share Options -Expired (1) $0,033,933 (-) (-) (-) (-) (-) 201 ( -) ($ 34,134) ($0,033,534) (-) (-) (-) (-) (-) (-) (399) ($ 33,933)	Total
	$ 4,725,556 - - - - 11,945 - - $ 4,737,390 $ 5,063,671 ( 183,307 ) ( 150,000 ) - - - 21,081 - $ 4,725,445		(					($ 4,843,642) 1,947 (-) ( 252 ) 66,351 ($ 0,05,626) - 1,145,555 ($ 6,062,869) ($ 5,145,377) ($ 0,183,307) ($ 0,150,000) (-) (1,228) 21,279 ($ 0,09,065) ( -) ($ 4,843,642)

1) This type of capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or converted to share capital (at a certain percentage of the Company’s capital surplus annually).
2) This type of capital surplus cannot be used for any purposes.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

c. Retained earnings and dividend policy

The amendments to the Company’s Articles of Incorporation had been approved by the Company’s shareholders’ meeting held on June 20, 2019, which stipulate that earnings distribution may be made on a quarterly basis after the close of each quarter.

According to The Company’s amended Articles of Incorporation, when the Company distributed earnings belonging to the first three quarters, it shall first estimate and reserve taxes to be paid, offset its deficits, estimate and reserve employees’ compensation and remuneration to directors. Second, the Company set aside a legal capital reserve at 10% of the remaining earnings and set aside or reverse special reserve in accordance with the laws and regulations. Third any remaining profit along with any undistributed retained earnings at the beginning shall be used by the Company’s board of directors. The board of directors shall propose the distribution of retained earnings after considering operational situations. When the retained earnings are distributed in form of stock, the resolution shall be approved by the shareholders’ meeting. When the retained earnings are distributed in form of cash, the resolution shall be approved by the board of directors.

When the Company has earnings at the end of the year, it shall pay taxes, offset its losses, set aside 10% as legal reserve, then set aside or reverse a special reserve in accordance with relevant laws or regulations. The Board of Directors shall propose a distribution for the remaining earnings, along with the unappropriated retained earnings of previous years. Earnings distribution may be made in the form of shares after an approved resolution made by the shareholders’ meeting. Pursuant to the Company Act, the distributable dividends and bonuses or the legal reserve and the capital reserve (stipulated in Article 241, Paragraph 1 of the Company Act) in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition to a report of such distribution shall be submitted to the shareholders’ meeting.

Before the amendment of the Company’s Articles of Incorporation on shareholders’ meeting on June 20, 2019, the earning distribution is only allowed after yearly closing by the approval of the shareholders’ meeting. The remaining retained earnings and dividends policy are consistent.

On June 20, 2020, the shareholders’ meeting resolved that the Company’s Articles of Incorporation amended on June 20, 2019 shall be revised back to the previous version.

See Note 23(d) for policy stipulated in the Articles of Incorporation regarding to the remuneration for employees and directors.

Considering current and future development plans, investment conditions, capital requirements, and market competition situations and shareholder benefits, the Company would appropriate the dividends to the shareholders not less than 10% of the current year’s earnings. The dividends could be paid in cash or shares. The cash portion should be equal or more than 10% of the total dividends. It is allowed not to distribute any cash dividend if the cash amount per share is less than NT$ 0.5.

Legal reserve should be appropriated from earnings until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

The Company’s shareholders’ meeting was held on June 20, 2020. The resolution was as follows. The Company offset the loss of NT$183,307 thousand from additional paid-in capital and the cash distribution of NT$150,000 thousand, i.e. NT$0.50291032 per share, from additional paid-in capital of share issue premium.

To increase the return on shareholders’ equity, the Company was approved for reduction of capital in the Company’s shareholders’ meeting on June 20, 2020. Company’s share capital was reduced by $899,721 thousand, and estimated to eliminate 89,972 thousand shares of the Company. Each share will be returned by $3 and the ratio of capital reduction is 30%. The reduction of capital was approved by Financial Supervisory Commission on September 2, 2020. The record date of capital reduction was September 8, 2020, and the date of completion of capitalization change registration was on September 14, 2020. The fund of capital reduction was returned to the company’ shareholders on October 28[th] , 2020.

The appropriation of earnings for 2020 was approved by the shareholders’ meeting held on August 19[th] ,2021. The details of distribution are as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share	2020
	$ 101,230
	$ 122,316
	$ 700,000
	$ 3.32

d. Special reserve

Balance, beginning Special reserve appropriated Balance, ending		2021
		$ - 122,316 $ 122,316

e. Treasury shares

Number of shares on January 1, 2020 Decrease during the period Decrease due to capital reduction Number of shares on December 31, 2020 Number of shares on January 1, 2021 Decrease during the period Number of shares on December 31, 2021	Shares (In Thousands)	Shares (In Thousands)
		10,978 (9,681) (519) 778 778 (778) -

The detailed information for other treasury shares transferred to employees programs could be found in Note 26 (b).

The treasury shares held by the company cannot be pledged and no dividend and voting right is attached in accordance with the Regulations of Securities and Exchange Act.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

f. Unearned employee compensation

Balance, beginning Issuance of shares Share-based payment expenses recognized Balance, ending		2021
	( (	$ - 1,145,555 ) 331,835 $ 813,720)

The issuance of employee restricted share plan has been approved by shareholders’ meeting held on June 20, 2020. The board of directors approved to issue 5,749 thousand and 236 thousand shares on April 7, 2021 and July 29, 2021, respectively. Please refer Note 26 (c) for the detailed information.

22. REVENUE

For the Year Ended December 31

IC for Human-Machine Interface Solutions Service revenue Contract balances Contract liabilities (classified as current liabilities) Sales of goods		2021 2020 $ 18,335,785 $ 11,366,680 - 43,670 $ 18,335,785 $ 11,410,350 December 31		2020

		2021 $ 6,951		2020
				$ 106,683

23. NET INCOME

a. Finance costs

Interest on bank loans Interest on deposits Depreciation and amortization Property, plant and equipment Intangible assets An analysis of depreciation and amortization by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	For the Year Ended	December 31
				2020
				$ 814 1,078 $ 1,892 December 31
		2021 $ 18,470 15,319 $ 33,787 $ 8,892 24,892 $ 33,787		2020
				$ 10,567 15,609 $ 26,176 $ 722 25,454 $ 26,176

b. Depreciation and amortization

This is the translation of the financial statements. CPAs do not audit or review on this translation.

c. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans (see Note 19) Share-based payments (see Note 26) Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 27,358 184 231,465 1,132,215 $ 1,391,222 $ 224,807 1,166,415 $ 1,391,222		2020
				$ 25,596 363 12,433 833,872 $ 872,264 $ 94,586 777,678 $ 872,264

d. The remuneration to employees and directors

The Company stipulates to distribute employees’ compensation and remuneration to directors at the rates no less than 1% and no higher than 1.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration to directors. The accrued employees’ compensation and remuneration to directors for the years ended December 31, 2021 and 2020 are as follows:

Employees’ compensation Remuneration of directors	For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2021 $ 316,730 $ 30,000		2020
				$ 123,450 $ 7,214

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

The board of directors resolved the remuneration of employees and directors for 2021 and 2020 had been approved by the Board of Directors of the Company, as illustrated below:

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2021	2020
February23,2022 $ 316,730 $ 30,000	February4,2021
		$ 123,450 $ 7,214

There is no difference between the actual amount of remuneration to employees and directors resolved and the amount of remuneration to employees and directors accounted for in 2021 and 2020 financial statements.

Information on the employees’ compensation and remuneration to directors resolved by the Company’s board of directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

24. INCOME TAXES

a. Income tax expense recognized in profit or loss

Current tax In respect of the current year Deferred tax In respect of the current year Adjustments for prior years Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $1,303,684 59,307 - 59,307 $1,362,991		2020
				$ 108,514 54,139 1,334 55,473 $ 163,987

A reconciliation of accounting profit and income tax expense is as follows:

Income before tax from continuing operations Income tax expense calculated at the statutory rate and the effective tax rate Nondeductible expenses in determining taxable income Tax effect of earnings to be distributed by subsidiaries Tax exemption Unrecognized temporary differences Adjustments for prior years’ tax Tax effects from investment tax credit rate less than 30% Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2021 $ 7,475,926 $1,046,630 - 429 (37,877) 89,897 - 263,912 $1,362,991		2020
				$1,175,979 $ 164,637 5,730 21,734 - (29,448) 1,334 - $ 163,987

The company’s research and development expenditure is expected to offset the corporate income tax by 30%, so the effective tax rate is 14% after considering the deduction effect.

b. Current tax assets and liabilities

Current tax assets( recorded as other current assets) Tax refund receivable c. Recognized in other comprehensive income Deferred tax Remeasurement of defined benefit plans	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
				2020
		2021 $ 105		2020
				$ 50

This is the translation of the financial statements. CPAs do not audit or review on this translation.

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows: 2021

Deferred tax assets Temporary differences Obsolete of inventory Others Deferred tax liabilities Temporary differences Intangible assets Investment income recognized from foreign investees 2020	Beginning Balance $ 71,336 ( 5,438) $ 65,898 $ 8,232 44,981 $ 53,213	Recognized in Profit or Loss ($ 60,557) ( 379) ($ 60,936) ($ 2,058) 429 ($ 1,629)	Recognized in Other Comprehensive Income $ - ( 105) ($ 105) $ - - $ -		Ending Balance
					$ 10,779 ( 5,922) $ 4,857 $ 6,174 45,410 $ 51,584

Deferred tax assets Temporary differences Obsolete of inventory Others Loss carryforwards Deferred tax liabilities Temporary differences Intangible assets Investment income recognized from foreign investees	Beginning Balance $ 89,699 623 90,322 11,423 $ 101,745 $ 10,290 23,247 $ 33,537	Recognized in Profit or Loss ($ 18,363) ( 6,011) ( 24,374) ( 11,423) ($ 35,797) ($ 2,058) 21,734 $ 19,676	Recognized in Other Comprehensive Income $ - ( 50) ( 50) - ($ 50) $ - - $ -		Ending Balance
					$ 71,336 ( 5,438) 65,898 - $ 65,898 $ 8,232 44,981 $ 53,213

e. The aggregate amount of temporary difference associated with investments for which deferred tax liabilities have not been recognized

As of December 31, 2021 and 2020, the taxable temporary differences associated with investment in subsidiaries for which no deferred tax liabilities have been recognized were $1,770,810 thousand and $2,480,872 thousand, respectively.

f. Income tax assessments

The Company’s tax returns until 2019 have been assessed by the tax authorities.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

25. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31
		2021 $ 30.23 $ 28.62	2020
			$ 3.97 $ 3.73

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

For the Year Ended 2021 Earnings used in the computation of basic earnings per share $ 6,112,935 Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares):	For the Year Ended	For the Year Ended	December 31
			2020
			$ 1,011,992

Weighted average number of ordinary shares used in the computation of diluted earnings per share Effect of potentially dilutive ordinary shares: Treasury shares transferred to employees Employee stock options (share) Restricted stock for employees(share) The remuneration to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2021 202,208 8,157 475 785 1,984 213,609		2020
				254,897 14,592 569 - 1,322 271,380

26. SHARE-BASED PAYMENT ARRANGEMENTS

The company did not have stock option plan issued for employees and share buyback program for the years ended December 31, 2021 and 2020.

a. Employee stock option plan

Information about vested options of 2021 and 2020 are as following:

Employee Stock Option Plan 2006 2015	December 31,2021 Range of exercise price(NT$) Weighted-average remaining contractual life (years) $5.37~36.17 0.11~1.27 15.6 3.67	December 31,2020	December 31,2020
	Range of exercise price(NT$) $5.37~36.17 15.6	Range of exercise price(NT$) $5.46~36.8 15.9	Weighted-average remaining contractual life (years)
			1.1~2.27 4.67

Information about outstanding options in 2021 and 2020 is as following:

2021

Employee stock Option Plan 2006 2015	BeginningBalance Quantity of Options Weighted-average Exercise Price (NT$) 398,199 $ 26.65 397,500 15.90	Options exercised Quantity of Options Weighted-average Exercise Price (NT$) ( 199,800) $ 33.04 (176,500) 15.78	Options expired Quantity of Options Weighted-average Exercise Price (NT$) - $ - ( 12,000) 15.9	EndingBalance	EndingBalance
	Quantity of Options 398,199 397,500	Quantity of Options ( 199,800) (176,500)	Quantity of Options - ( 12,000)	Quantity of Options 198,399 209,000	Weighted-average Exercise Price (NT$)
					$ 19.86 15.60

This is the translation of the financial statements. CPAs do not audit or review on this translation.

2020

Employee stock Option Plan 2006 2015	BeginningBalance Quantity of Options Weighted-average Exercise Price (NT$) 805,599 $ 23.49 677,500 12.20	Options exercised Quantity of Options Weighted-average Exercise Price (NT$) ( 407,400) $ 29.68 (242,000) 14.33	Options expired Quantity of Options Weighted-average Exercise Price (NT$) - $ - ( 38,000) 13.56	EndingBalance	EndingBalance
	Quantity of Options 805,599 677,500	Quantity of Options ( 407,400) (242,000)	Quantity of Options - ( 38,000)	Quantity of Options	Weighted-average Exercise Price (NT$) $ 26.65 15.90
				398,199 397,500

As of December 31, 2021, the valid and outstanding employee stock option plans are as following:

Plan 2006 employee stock option plan 2015 employee stock option plan	Number of Options 12,600,000 2,800,000	Valid Period 10 years 10 years	VestingTerms
			(1) A certain percentages of the options defined in the plan are vested and exercisable after the first anniversary, or (2) according to the achievement level of the performance target defined in advance. (1) A certain percentage of the options defined in the plan are vested and exercisable after the second anniversary.

For the subsequent changes in the Company’s ordinary share capital, such as issuance of shares in cash, from earnings and capital surplus, consolidation, spin-off, share split, and issuance of global depositary receipts, and decrease in ordinary shares which is not resulted from treasury share retired, the exercise price and the conversion ratio would be considered to adjust accordingly based on the plans.

b. Treasury shares transferred to employees

Information about treasury shares transferred to employees as follows:

Items The 4th Shares Buy Back Program The 5th Shares Buy Back Program	The date of board of directors approved 2018/7/26 2018/8/23	Buyback shares (In thousand share) 8,000 7,689	Transferred shares (In thousand share) 7,952 7,206	Adjustment due to capital reduction (In thousand share) ( 46 ) ( 473 )	Retired Shares (In thousand share) ( 2 ) ( 10 )	Transferred price (in dollar)
						$ 33.69 (Adjusted) 32.93 (Adjusted)

Information about Shares Buy Back Programs transferred is as follows:

The 4th Shares BuyBack Program Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe(NT$) 2020/03/20 7,848 $ 3.30 2021/04/07 104 181.40 Total 7,952	The 4th Shares BuyBack Program Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe(NT$) 2020/03/20 7,848 $ 3.30 2021/04/07 104 181.40 Total 7,952	The 5th Shares BuyBack Program	The 5th Shares BuyBack Program	The 5th Shares BuyBack Program
Employee subscription base date 2020/03/20 2021/04/07 Total		Employee subscription base date 2019/05/07 2019/11/08 2020/03/20 2020/11/06 2021/04/07 2021/07/29 Total	Shares transferred (In Thousands) 4,651 60 1,399 434 572 90 7,206	The fair value of the right to subscribe(NT$)
	7,848 $ 3.30 104 181.40 7,952			$ - - 3.70 1.90 181.20 242.20

This is the translation of the financial statements. CPAs do not audit or review on this translation.

The limitations and rights on the unvested shares were as follows:

1) The employees cannot sell, pledge, transfer, donate, or dispose these shares.
2) The Company and the employees should enter into a trust agreement with a trust and custodian institution and authorize the institution to exercise the shareholders’ rights including but not limited to attendance, proposing, speaking and voting in the shareholder meetings.
3) The unvested shares are entitled to receive cash and/or share dividends and the derivatives.

If an employee fails to meet the vesting conditions, the trust institution would dispose the unvested shares and return proceeds to the employee no more than the original purchase price.

c. Restricted stock for employees

The Company’s shareholders’ meeting resolved to issue restricted stocks for employees up to 6,000 thousand shares on June 20, 2020, and the issued price is NT$10 per share. The restricted stocks plan was approved by Financial Supervisory Commission on August 12, 2020. The information of the issued resolved by board of directors is as follow:

Grant date 2021/04/07 2021/07/29	Fair value per share (in dollar) $ 205 265	Actual shares of issued (in thousand)
		5,749 236

After the employees were granted restricted stock, the employees will be vested in the stocks if they fulfill both service period and performance condition. The vesting condition are as follows:

a. Upon service for two years. the shares vested in 50% to employees.
b. Upon service for three years. the shares vested in 25% to employees.
c. Upon service for four years. the shares vested in 25% to employees.

The constraints of restricted stock are as follows:

a. Employees are restricted to dispose, pledged, transferred, and give to others the granted shares until they are vested.
b. The rights of restricted stock are the same as ordinary share including attendance, propose, speak, voting right and so on.
c. Stock dividends and cash dividends yielding from restricted stock will be distributed to employees in the current year, and will not be restricted.
d. National employee should transfer the granted shares to trustee appointed by the Company immediately. Before they are vested, the restricted should be kept in trustee. Non-national employee’ granted share should be kept by bank appointed by the Company.

The Company will buy back the restricted shares at issued price and write off the shares if employees do not fulfill the vesting condition.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Compensation cost of aforementioned share-based payments for the years ended December 31, 2021 and 2020 was as follows:

Shares buyback programs Restricted stock for employees Adjustment account: Capital surplus - employee stock options Other equity - unearned employee compensation	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 27,008 204,457 $ 231,465 $ 27,008 204,457 $ 231,465	2020 $ 12,433 - $ 12,433 $ 12,433 - $ 12,433

27. OPERATING LEASE ARRANGEMENTS

The Company as a lessee

The Company has lease contracts for office, plant and some office equipment, which would be expired before December 2022. Above mentioned lease contracts are short-term lease agreement, and the Company applies practical expedients so the Company does not recognize right-of-use assets and lease liabilities. The committed payments for the short-term leases were $12,471 thousand and $9,140 thousand as of December 31, 2021 and 2020.

The lease payments recognized in profit or loss for the current period was as follows:

Lease payment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 23,011		2020
				$ 22,726

28. CAPITAL MANAGEMENT

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

To define the strategy of the Company’s capital structure, the Company first sets its target market share according to the industry scale, the growth of the industry and the product roadmap. Based on the projected market position, the Company plans the research and development investment and capital expenditure. Furthermore, the Company calculates working capitals and cash demands based on the long-term development plan considering the industry characteristics to build up the overall operating model. Finally, the Company evaluates not only the possible contribution margin, operating profit ratio and cash flows according to the product competitiveness but also risk factors such as the fluctuation of the business circle and the life circle of the product to decide the suitable capital structure. The management reviews capital structures periodically and considers the possible costs and risks of different capital structures. Generally, the Company adopted prudent capital management strategy.

The Company was not restricted to other external capital requirements.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

29. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

The management believes the carrying amounts of financial assets and financial liabilities not measured of fair value approximate their fair values or cannot be reliably measured.

b. Fair value of financial instruments that are measured at fair value on a recurring basis
1.) Fair value hierarchy

December 31, 2021

Financial asset at FVTPL Listed preferred shares Private funds Total December 31, 2020 Financial asset at FVTPL Listed preferred shares Private funds Total		Level 1 $ 271,019 - $ 271,019 Level 1 $ 72,186 - $ 72,186		Level 2 $ - - $- Level 2 $ - - $-		Level 3 $ - 132,470 $ 132,470 Level 3 $ - 24,953 $ 24,953		Total $ 271,019 132,470 $ 403,489 Total $ 72,186 24,953 $ 97,139

There were no transfers between Level 1 and Level 2 in 2021 and 2020.

2) Reconciliation of financial instruments measured by Level 3 fair value

	For the Year Ended in December 31	For the Year Ended in December 31	For the Year Ended in December 31	For the Year Ended in December 31
		2021		2020
Financial assets at FVTPL
Balance, beginning of year	$	24,953	$	16,918
Purchases		100,554		10,000
Disposals	(	181 )		-
Recognized in profit or loss(other income or loss)		7,144	(	1,965)
Balance, end of year	$	132,470	$	24,953

3) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

The unlisted equity investment is measured by the market approach, which decides fair value by referring to the recent financing activities of investees or the market transaction prices and status of the similar companies. The Company had carefully evaluated and selected the suitable evaluation method, but the use of different evaluation models or fair values may result in different evaluation results.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

c. Categories of financial instruments

Financial assets Fair value through profit or loss (FVTPL) Mandatorily at FVTPL Amortized cost (Note 1) Financial liabilities Amortized cost (Note 2)	December 31	December 31
	2021 $ 403,489 13,898,268 8,415,934	2020
		$ 97,139 4,217,596 3,238,131

1) The amounts include financial instruments measured at amortized cost, which comprise cash and cash equivalents, accounts receivables, other financial assets and refundable deposits.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, accounts payables, other payables, long-term borrowings, and guaranteed deposits received.
d. Financial risk management objectives and policies

The Company’s major financial instruments include cash and cash equivalents, accounts receivable, other financial assets, financial assets at FVTPL, accounts and other payables. The Company’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The board of directors is solely responsible for established and monitored the framework of risk management of the Company, the board of directors authorized the chairman develop and monitored the risk management policy of the Company with the operation center of the Group, and regularly reported the situation to the board of directors.

The Company’s financial risk management policies are developed for identifying and analyzing the financial risks to the Company, evaluating the impacts of the financial risks, and executing the financialrisk aversion policies. The financial risk management is periodically reviewed to reflect changes to the market and the operations. Through the internal controls, such as training and setting up managing requirements and procedures, the Company is engaged in developing a disciplined and constructive control environment, in order to have all employees understand own responsibilities.

The Company’s board of directors monitors the management on managing the compliance to the financial risk management policies and procedures and reviews the appropriateness of risk management structure. To assist the board of directors, the internal auditors perform period and exceptional reviews on the controls and procedures of financial risk management and report the result of reviews to the board of directors.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

1) Market risk

The major financial risks from the Company’s operation were foreign currency exchange risk referred to i) and interest rate risk referred to ii).

i) Foreign currency risk

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities which were not in the same functional currency with the Company at the end of the reporting period are shown in Note 33.

Sensitivity analysis

The Company was mainly exposed to the U.S. dollar.

The following table details the Company’s sensitivity to a 5% appreciate and depreciate in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation value at the end of the reporting period for a 5% change in foreign currency rates. A positive number in below table indicates an increase in pre-tax profit or equity associated with a 5% depreciation of the New Taiwan Dollar against the U.S. dollar.

Profit or loss/ equity		USD Impact	USD Impact	USD Impact
		For the Year Ended December 31
		2021 $308,819(i)		2020
				$ 67,415(i)

(i) This was mainly attributable to the outstanding balances of USD deposits, accounts receivables, accounts payables, other payables, other current assets, refundable deposits, and other current liability.

ii) Interest rate risk

The Company was exposed to interest risk primarily related to its investments in fixed-rate time deposits, other financial assets and floating-rate demand deposits. The time deposits were at fixed interest rates, and other financial assets were at fixed rates or with guaranteed minimal interest rates and carried at amortized costs. Therefore, changes in interest rates would not affect future cash flows.

The carrying amount of the Company’s financial assets exposed to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets		December 31	December 31	December 31
		2021 $ 5,245,870 $ 786,840 $ 2,910,927		2020
				$ 170,880 $ 480,000 $ 2,454,853

This is the translation of the financial statements. CPAs do not audit or review on this translation.

Sensitivity analysis

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for non-derivative instruments at the end of the reporting period. A 25 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/lower and the Company hold all variables constantly, the Company’s post-tax profit for the years ended December 31, 2021and 2020 would decrease/increase by 7,277 thousand and $6,137 thousand, respectively.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation from the carrying amounts of the financial assets as recognized in the balance sheets.

The Company’s concentration of credit risk was related to the five largest clients of accounts receivables. Ongoing credit evaluation is performed on the financial condition of accounts receivables.

As of December 31, 2021, the Company’s five largest customers took 67% of total accounts receivables, the remaining transactions with a large number of unrelated customers, thus, no significant concentration of credit risk was observed.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining adequate cash and cash equivalents to fund its operations and mitigate the impacts of fluctuations in cash flows. In addition, bank loans are a significant resource of liquidity for the Company.

Liquidity and interest risk rate tables for non-derivative financial liabilities

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments, including principal and interest.

December 31, 2021

December 31, 2021
Non-interest bearing Fixed interest rate liabilities December 31, 2020 Non-interest bearing Fixed interest rate liabilities	On Demand or Less than 1 Year $ 3,240,590 214 $ 3,240,804 On Demand or Less than 1 Year $ 2,275,649 480,206 $ 2,755,855	1-5 Years $ 4,388,290 155,832 $ 4,544,122 1-5 Years $ 482,276 - $ 482,276	More than 5 Years
			$ - 631,008 $ 631,008 More than 5 Years
			$ - - $ -

This is the translation of the financial statements. CPAs do not audit or review on this translation.

30. TRANSACTIONS WITH RELATED PARTIES

Except for information disclosed elsewhere in the other notes, details of transactions between the Company and other related parties are disclosed below.

a. Related party name and category

Related Party Name FocalTech Systems, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd.	Related Party Category
	Subsidiary Subsidiary Subsidiary Subsidiary

b. Sales of goods

Line Item Sales	Related Party Category/Name Subsidiaries	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
			2021 $ -		2020
					$ 43,670

The Company provided research and development and manufacturing management services and charged for revenues according to contracts.

c. Purchases of goods

Line Item Purchase	Related Party Category/Name Subsidiaries	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
			2021 $ 38,340		2020
					$ 46,550

Purchases were made by the Company at market prices and conditions similar with the non-related parties.

d. Payables to related parties

Line Item Accountspayables	Related Party Category/Name Subsidiaries FocalTech Electronics, Ltd. Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
			2021 $ 515,551 16,207 $ 531,758		2020
					$ 518,851 20,359 $ 539,210

The outstanding accounts payables to related parties are unpledged.

e. Prepayments (accounted for other current assets)

Line Item Related Party Category/Name Subsidiaries Prepayments FocalTech Smart Sensors, Ltd. Advances (accounted for other current liabilities) Line Item Related Party Category/Name Subsidiaries Advances FocalTech Systems, Ltd.	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
				2020
		2021 $ 198,797		2020
				$ 247,263

f. Advances (accounted for other current liabilities)

The Company accounted for service revenue from related parties in advance.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

g. Compensation of key management personnel

Long-term employee benefits Short-term employee benefits Post-employment benefits Share-based payments	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021		2020
		$ 3,145 81,536 488 33,657 $ 118,826		$ 15,450 40,107 459 2,689 $ 58,705

31. PLEDGED ASSETS

The following assets were provided as collateral for bank loans:

Properties, plants and equipment –Construction in progress	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021		2020
		$ 1,071,400		$ -

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACTUAL COMMITMENTS

NOVATEK MICROELECTRONICS CORP. (“NOVATEK”) filed five patent infringement actions with Intellectual Property and Commercial Court on August 9, 2021, asking the court to prohibit the Company from manufacturing, offering for sale, selling, utilizing or importing, for the aforementioned purposes, products infringing on such patents and asking for indemnification for any losses. The litigations are still in the preliminary stages of the Intellectual Property and Commercial Court, and the result could not be inferred. The Company does not expect any material operations and financial impact of the Company resulting from this case.

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the group entities and the exchange rates between foreign currencies and respective functional currencies were disclosed.

The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2021

Financial assets Monetary items USD Non-Monetary items USD Financial liabilities Monetary items USD	Foreign Currencies (thousand) $ 491,587 146,331 268,452	Exchange Rate 27.68 (USD:NTD) 27.68 (USD:NTD) 27.68 (USD:NTD)	NT$ (thousand)
			$ 13,607,140 4,050,456 7,430,763

This is the translation of the financial statements. CPAs do not audit or review on this translation.

December 31, 2020

December 31, 2020
Financial assets Monetary items USD Non-Monetary items USD Financial liabilities Monetary items USD	Foreign Currencies (thousand) $ 144,584 159,307 97,242	Exchange Rate 28.48 (USD:NTD) 28.48 (USD:NTD) 28.48 (USD:NTD)	NT$ (thousand)
			$ 4,117,740 4,573,073 2,769,444

34. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others: See Table 1 attached;
2) Endorsements/guarantees provided: See Table 2 attached;
3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): See Table 3 attached;
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paidin capital (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: See Table 4 attached;
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (None)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (None)
9) Trading in derivative instruments (None)
b. Names, locations, and related information of investees over which the Company exercises significant influence (excluding information on investment in mainland China): See Table 5 attached;
c. Information on investments in mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 6 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in Mainland China on financial reports (None)
d. Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder (None)

This is the translation of the financial statements. CPAs do not audit or review on this translation.

TABLE 1

FocalTech Systems Co., Ltd.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2021

(Amounts in Thousands; Currency denomination in NTD or in foreign currencies)

No (Note 1)	Financing Company	Counterparty	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 4)	Ending Balance (Note 4)	Amount Actually Drawn (Note 4)	Interest Rate	Nature for Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 2)	Note
													Item	Value
1	FocalTech Systems, Ltd.	FocalTech Systems Co., Ltd.	Other receivables	Yes	$ 1,660,800 (USD 60,000)	$ 1,660,800 (USD 60,000)	$ -	-	The need for short- term financing	$ -	Operating capital	$ -	-	$ -	$ 2,382,050	$ 2,382,050	Note 3

Note 1: The parent company and its subsidiaries are coded as follows:

1) The parent company is coded "0".
2) The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2: The lending limits:

1) The total amount available for lending purpose shall not exceed 20% of the net worth of the Company.
2) The lending limits for any borrowers are set forth as below:
A. The total amount for lending to a company having a business relationship with the company shall not exceed the total transaction amount between the parties during the period of twelve months prior to the time of lending (the transaction amount shall mean the sales or purchasing amount between the parties, whichever is higher), and shall not exceed 20% of the net worth of the financing company or 30% of the net worth of the counterparty, whichever is lower.
B. The total amount for lending to a company in need of funds for a short-term period shall not exceed 20% of the net worth of the financing company. The lending limits for any borrower shall not exceed 10% of the net worth of the creditor or 30% of the net worth of the borrower, whichever is lower.
3) For financing needs between offshore subsidiaries whose voting shares are 100% owned, directly or indirectly, by the Company, or financing needs to the Company by offshore subsidiaries whose voting shares are 100% owned, directly or indirectly, by the Company, the total amount for such fund-lending shall not be subject to the limit of 100% of the net worth of the creditor
4) Where the Company’s financial reports are prepared in accordance with the International Financial Reporting Standards, “net worth” in the Procedures means the equity attributable to shareholders of the parent in the balance sheet.
Note 3: The balances have been eliminated on consolidation.

Note 4: Using the exchange rate of 1 USD: 27.68 NTD as of December 31, 2021.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

TABLE 2

FocalTech Systems Co., Ltd.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2021

(Amount in thousand; Currency denomination in NTD or in foreign currencies)

No. (Note1)	Endorsement/ Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party (Note 2)	Maximum Balance for the Period (Note 5)	Ending Balance	Amount Actually Drawn	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Equity per Latest Financial Statements(%)	Maximum Endorsement/ Guarantee Amount Allowable (Note 2)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries in Mainland China	Note
		Name	Nature of Relationship
0 0 0 0 0 0	FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd.	FocalTech Systems, Ltd. FocalTech Electronics, Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Smart Sensors, Ltd.	The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company.	$ 6,812,831 6,812,831 6,812,831 6,812,831 6,812,831 6,812,831	$ 1,245,600 ( USD 45,000 ) 1,262,326 ( USD 45,604 ) 1,577,760 ( USD 57,000 ) 1,909,920 ( USD 69,000 ) 196,800 96,880 ( USD 3,500 )	$ 1,245,600 ( USD 45,000 ) 1,262,326 ( USD 45,604 ) 1,577,760 ( USD 57,000 ) 1,909,920 ( USD 69,000 ) 96,800 96,880 ( USD 3,500 )	$ - - 14,815 85,841 - -	$ - - - - - -	9.14% 9.26% 11.58% 14.02% 0.71% 0.71%	$ 6,812,831 6,812,831 6,812,831 6,812,831 6,812,831 6,812,831	Y Y Y Y Y Y	N N N N N N	N N Y Y N N	(Note 3) (Note 3) (Note 3 and 6) (Note 3 and 6) (Note 4 and 5) (Note 4)

Note 1: Number should be input in the remark column for intercompany transactions. Here illustrate how to assign numbers to transaction

1) 0 for parent company.
2) Subsidiaries are given a number in sequence starting with No. 1.

Note 2: Limits on Endorsement/ Guarantee Amount

1) The ceilings on the amount of endorsements/guarantees due to business transaction are as below:
2) The total amount of endorsements/guarantees and the amount of endorsements/guarantees for any single entity shall not exceed 50% of the net worth of the Company.
3) The total amount of endorsements/guarantees between the Company owns directly or indirectly 100% voting shares shall not exceed 100% of the net worth of the Company.
4) The total amount of endorsement/guarantee provided by the Company or by the Company and its subsidiaries shall not exceed 50% of the net worth of the Company. The total amount of the endorsement/guarantee provided by the Company and the subsidiaries to any individual entity shall not exceed 50% of the net worth of the Company.
5) The net worth referred to above are based on the latest reviewed financial statements. Where the Company’s financial reports are prepared in accordance with the International Financial Reporting Standards, “net worth” in the Procedures means the equity attributable to shareholders of the parent in the balance sheet.
Note 3: FocalTech Systems Co., Ltd. provided USD 45,000 thousand of endorsements/guarantees for FocalTech Electronics Ltd., FocalTech Systems, Ltd., Hefei PineTech Electronics Co., Ltd. and FocalTech Electronics (Shenzhen) Co., Ltd. for the purchases, the amount actually drawn during the period is NT$0, NT$0, NT$0, and NT$ 31,607 thousand respectively.

Note 4: FocalTech Systems Co., Ltd. provided USD 3,500 thousand of endorsements/guarantees for FocalTech Smart Sensors Ltd. and FocalTech Smart Sensors Co., Ltd. for the purchases, the amount actually drawn during the period is NT$ 0. Note 5: FocalTech Systems Co., Ltd. provided NT$ 100,000 thousand of endorsements/guarantees for FocalTech Smart Sensors Co., Ltd..

Note 6: FocalTech Systems Co., Ltd. provided USD 5,000 thousand of endorsements/guarantees for Hefei PineTech Electronics Co., Ltd. and FocalTech Electronics (Shenzhen) Co., Ltd. for the purchases, the amount actually drawn during the period is NT$ 0. Note 7: Using the exchange rate of 1 USD: 27.68 NTD and 1 RMB: 4.3415 NTD as of December 31, 2021.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

TABLE 3

FocalTech Systems Co., Ltd.

MARKETABLE SECURITIES HELD DECEMBER 31, 2021 (Amount in thousand; Currency denomination in NTD)

Held Company Name		Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31,2021	December 31,2021		Note
					Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value
FocalTech Systems Co., Ltd.		Stock Common stock of Wisdom Marine Lines Co., Ltd. (CAYMAN) Series B Preferred Stock of Fubon Financial Holding Co., Ltd. Series A Preferred Stock of WT Microelectronics Co., Ltd. Privately Offered Fund CDIB Capital Healthcare Ventures II Limited Partnership CDIB Capital Growth Partners L.P. CDIB-Innolux Limited Partnership Cathay Private Equity Smart Tech Limited Partnership	- - - - - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non current `〃` Financial assets at fair value through profit or loss - non current `〃` `〃` `〃`	1,461,000 170,000 2,882,000 - - - -	NT$ 119,218 NT$ 10,727 NT$ 141,074 NT$ 12,581 NT$ 32,820 NT$ 12,211 NT$ 74,858	0.20 0.03 2.13 0.96 0.66 4.37 35.71	NT$ 119,218 NT$ 10,727 NT$ 141,074 NT$ 12,581 NT$ 32,820 NT$ 12,211 NT$ 74,858	- - - - - - -

Note 1: The percentage of ownership is calculated by preferred shares the Company owned divided by outstanding preferred shares.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

TABLE 4

FocalTech Systems Co., Ltd.

ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2021

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

Company Name	Types of Property	Date of the Event	Transaction Amount	Status of payment	Counterparty	Relationship		Information on prior transaction if the counterpartyis a relatedparty	Information on prior transaction if the counterpartyis a relatedparty	Information on prior transaction if the counterpartyis a relatedparty	Basis or reference used in setting the price	Purpose of acquisition and utilization	Other Terms
							Owner	Relationship with the company	Date of transfer	Amount
FocalTech Systems Co., Ltd.	Commercial building	May 28, 2021	$1,071,400	Based on the terms in the contract	MADISON ASSET MANAGEMENT CORP.	-	Not applicable	Not applicable	Not applicable	Not applicable	Market price and real estate assessment report	Office building for own-use	None

Note 1: Fill in the column the “Basis or reference used in setting the price” if an appraisal report issued by a professional appraiser shall be obtained.
Note 2: Pain-in capital means the shares that the Company issued and fully paid. In the case of the company whose shares have no par value or a par value other than NT$10, the term “20% of the company’s paid-in capital” used herein shall be calculated based on the equity attributable to shareholders of the parent in the balance sheet.
Note 3: “Date of the Event” used herein means, the contract date, the payment date, the transaction date, the title transfer date, the date of relevant board resolutions or other dates in which the transaction parties and the transaction amount can be ascertained (whichever is earlier).

This is the translation of the financial statements. CPAs do not audit or review on this translation.

TABLE 5

FocalTech Systems Co., Ltd.

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) (Note 1) FOR THE YEAR ENDED DECEMBER 31, 2021

(Amount in thousand; Currency denomination in NTD or in foreign currencies)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as of December 31,2021	Balance as of December 31,2021	Balance as of December 31,2021	Net Income (Losses) of the Investee (Note 4)	Share of Profits/Losses of Investee (Note 4)	Note
				December 31,2021 (Note 2)	December 31,2020 (Note 3)	Shares	Percentage of Ownership	Carrying Value (Note 2)
FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics Co., Ltd. FocalTech Smart Sensors, Ltd. FocalTech Corporation, Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. Vitrio Technology Corporation FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd. FocalTech Electronics Co., Ltd.	Cayman Islands Cayman Islands Cayman Islands Taiwan Cayman Islands Taiwan U.S.A Cayman Islands Taiwan	Investment activity Investment activity Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Investment activity Import and export of integrated circuits	NT$ 7,059,264 NT$ 2,768 (USD 100 ) NT$ 85,350 NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 2,831,466 (USD 102,293 ) NT$ 646,330 (USD 23,350 ) NT$ 20,000	NT$ 7,059,264 NT$ 2,848 (USD 100 ) NT$ - NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 2,913,300 (USD 102,293 ) NT$ 665,010 (USD 23,350 ) NT$ 20,000	5,491,200 2 3,000,000 142,000 18,813,050 17,417,000 100 2 2,000,000	100% 100% 9.14% 50.00% 57.31% 100% 100% 100% 100%	NT$ 2,500,591 (USD 90,339 ) NT$ 1,543,791 (USD 55,773 ) NT$ 6,074 (USD 219 ) NT$ - NT$ 38,091 (USD 1,376 ) (NT$ 289,349 ) NT$ 2,312,135 (USD 83,531 ) NT$ 2,382,050 (USD 86,057 ) NT$ 110,304 (USD 3,985 )	(NT$ 660,388 ) (USD 23,578) NT$ 15,502 USD 553 (NT$ 47,944 ) (USD 1,712 ) (NT$ 3,341 ) (NT$ 47,944 ) (USD 1,712 ) (NT$ 87,310 ) (NT$ 653,934 ) (USD 23,347 ) (NT$ 654,693 ) (USD 23,374 ) (NT$ 29,260 ) (USD 1,045 )	(NT$ 660,388 ) (USD 23,578) NT$ 15,502 USD 553 (NT$ 4,382 ) (USD 156 ) NT$ - (NT$ 27,477 ) (USD 981 ) (NT$ 87,310 ) (NT$ 653,934 ) (USD 23,347 ) (NT$ 654,693 ) (USD 23,374 ) (NT$ 29,260 ) (USD 1,045 )	Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note 1: Please refer to the table 6 for the information on investment in Mainland China. Note 2: Using the exchange rate of 1 USD: 27.68 NTD as of December 31, 2021. Note 3: Using the exchange rate of 1 USD: 28.48 NTD as of December 31, 2020. Note 4: Using the average exchange rate of 1 USD: 28.009 NTD for the year ended December 31, 2021.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

TABLE 6

FocalTech Systems Co., Ltd.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021

(Amount in thousand; Currency denomination in NTD or in foreign currencies)

Investee company	Main businesses and products	Total amount of paid-in capital (Note 1)	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021 (Note 1)	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2021 (Note 1)	Net income (loss) of investee company (Note 2)	Percentage of ownership	Investment income (loss) recognized (Note 2)	Carrying amount as of December 31, 2021 (Note 1)	Accumulated inward remittance of earnings as of December 31, 2021	Note
					Outflow	Inflow
FocalTech Electronics (Shanghai) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co., Ltd.	Sales support and post-sales service for affiliates’ IC products Research, development, manufacturing and sale of integrated circuits Design and research of integrated circuits Research, development and sale of integrated circuits	NT$ 55,360 (USD 2,000) NT$ 63,664 (USD 2,300) NT$ 1,024,164 (USD 37,000) NT$ 130,245 (RMB 30,000)	(Note 3 and 4) (Note 3) (Note 4) (Note 4)	NT$ 27,680 (USD 1,000) NT$ 27,680 (USD 1,000) - -	$ - - - -	$ - - - -	NT$ 27,680 (USD 1,000) NT$ 27,680 (USD 1,000) - -	(NT$ 6,034) (USD 215) NT$ 199,146 (USD 7,110) (NT$ 236,158) (USD 8,432) NT$ 13,371 (USD 477)	100% 100% 100% 100%	(NT$ 6,034) (USD 215) NT$ 199,146 (USD 7,110) (NT$ 236,158) (USD 8,432) NT$ 13,371 (USD 477)	NT$ 29,525 (USD 1,067) NT$ 257,102 (USD 9,288) NT$ 1,199,837 (USD 43,347) NT$ 229,356 (USD 8,286)	$ - - - -	- - - -

Accumulated Investment in Mainland China as of December 31,2021	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
$55,360 (USD2,000)	$1,673,730 (USD60,467)	$8,175,396

Note 1: Using the exchange rate of 1 USD: 27.68 NTD and 1 RMB :4.3415 NTD as of December 31, 2021. Note 2: Using the average exchange rate of 1 USD: 28.009 NTD and 1 RMB :4.3417 NTD for the year ended December 31, 2021. Note 3: Indirect investment in Mainland China through a holding company established in other countries. Note 4: The investment is through the foreign subsidiaries, has not been remitted from Taiwan.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

FocalTech Systems Co., Ltd.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item
Major Accounting Items in Assets, Liabilities and Equity
Major accounting items in assets, liabilities and equity
Statement of cash and cash equivalents
Statement of other financial assets
Statement ofaccountsreceivables, net
Statement of inventories
Statement of changes in property, plant and equipment
Statement of changes in accumulated depreciation of property, plant and
equipment
Statement of changes in intangible assets
Statement of deferred tax assets
Statement of changes in investments accounted for using equity method
Statement of long-term loans
Statement ofaccountspayables
Major accounting items in profit or loss
Statement of revenues
Statement of operating costs
Statement of operating expenses
Statement of employee benefit, depreciation and amortization by function

**Statements Index **

1
2
3
4
Note 12
Note 12
Note 14
Note 24
5
6
7
8
9
10
11

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 1

FocalTech Systems Co., Ltd.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Petty cash and cash on hand Cash in banks Checking accounts and current accounts Foreign currency current accounts Cash equivalents Time Deposits	Description Including EUR 3 thousand @31.32, HKD 23 thousand @3.549, RMB 47 thousand @4.3415, JPY 530 thousand @0.2405 ,USD 3 thousand @27.68 and NTD 40 thousand Including USD 96,120 thousand @27.68 ,JPY 1,001 thousand @0.2405, RMB 49 thousand @4.3415 and EUR 1 thousand @31.32 Which would be expired before March 30, 2022, interest rates at 0.20%-0.25%, including USA 78,000 thousand @27.68		Amount
			$ 625 253,154 2,661,100 2,914,254 2,159,040 $ 5,073,919

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 2

FocalTech Systems Co., Ltd.

STATEMENT OF OTHER FINANCIAL ASSETS DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Description Time deposits with original maturities more than three months Including USD 111,000 thousand`；` Expiration date 2022.05.16~2022.06.30 Note 1: Using the exchange rate of 1 USD: 27.68 NTD as of December 31, 2021.	Rate 0.35%-0.48%		Amount
			$ 3,086,830

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 3

FocalTech Systems Co., Ltd.

STATEMENT OF ACCOUNTS RECEIVABLES, NET DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Client A Client B Client C Client D Client E Client F Client G Others (Note) Less: Allowance for doubtful accounts		Amount
		$ 661,219 446,304 391,985 268,586 176,691 152,733 150,934 662,215 2,910,667 - $ 2,910,667

Note: The amount of each individual client included in others does not exceed 5% of the account balance.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 4

FocalTech Systems Co., Ltd.

STATEMENT OF INVENTORIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Finished goods Work in process Raw materials	Amount	Amount	Amount
	Book value $ 861,983 1,301,879 490,297 $2,654,159	Net Realizable Value
			$1,731,732 2,088,344 787,560 $4,607,636

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 5

FocalTech Systems Co., Ltd.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Balance, January 1, 2021 Shares (Inthousand) Percentage of Ownership(%) Amount 5,491 100 $2,974,195 2 shares 100 1,562,878 - - - 142 50 - $4,537,073	Balance, January 1, 2021 Shares (Inthousand) Percentage of Ownership(%) Amount 5,491 100 $2,974,195 2 shares 100 1,562,878 - - - 142 50 - $4,537,073	Additions in	Balance, December 31, 2021 Shares (Inthousand) Percentage of Ownership(%) Amount 5,491 100 $2,500,591 2 shares 100 1,543,791 3,000 9.14 6,074 142 50 - $4,050,456	Balance, December 31, 2021 Shares (Inthousand) Percentage of Ownership(%) Amount 5,491 100 $2,500,591 2 shares 100 1,543,791 3,000 9.14 6,074 142 50 - $4,050,456	Note
Shares (Inthousand) 5,491 2 shares - 142	Percentage of Ownership(%) 100 100 - 50	Shares (Inthousand) - - 3,000 -	Shares (Inthousand) 5,491 2 shares 3,000 142	Percentage of Ownership(%) 100 100 9.14 50
					Note1 - Note2 -

Note 1 : Other adjustment is compensation cost of employee share options, NT$166,721 thousand and the non-subscription of the new shares of the subsidiary, the difference recorded as an adjustment to increase the investments,NT$72,917 thousand. Note 2 : Other adjustment is due to the non-subscription of the new shares of the subsidiary, the difference recorded as an adjustment to decrease the investments,NT$73,174 thousand.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 6

FocalTech Systems Co., Ltd.

STATEMENT OF LONG-TREM LOANS DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Type Secured bank loans Mega Bank Chang Hwa Bank Total		Balance, End of Year $ 500,000 286,840 $ 786,840	Contract Period 2021/09/24~ 2031/09/24 2021/09/24~ 2036/09/24	Range of Interest Rates(%) 1.00% 1.00%	Collateral
					Land and buildings pledged as collateral Land and buildings pledged as collateral

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 7

FocalTech Systems Co., Ltd.

STATEMENT OF ACCOUNTS PAYABLES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Accountspayables-related party FocalTech Electronics, Ltd. Others(Note) Accountspayables-others Vendor A Vendor B Vendor C Vendor D Vendor E Vendor F Vendor G Others (Note)		Amount
		$ 515,551 16,207 531,758 $ 472,284 430,634 390,275 267,573 249,259 183,960 175,356 123,280 2,292,621 $2,824,379

Note: The amount of each individual vendor included in others does not exceed 5% of the account balance.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 8

FocalTech Systems Co., Ltd.

STATEMENT OF REVENUES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Net sales IC for Human-Machine Interface Solutions Less: Sales discounts Sales returns	Quantity (inthousand units) 266,984		Amount
			$ 18,500,418 103,078 61,555 $ 18,335,785

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 9

FocalTech Systems Co., Ltd.

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Raw materials, beginning of year Raw materials purchased Transferred to expenses Raw materials balance, end of year Raw materials used Manufacturing expenses Manufacturing cost Work in process, beginning of year Transferred to expenses and others Work in process, end of year Cost of finished goods Finished goods, beginning of year Finished goods purchased Transferred to expenses and others Finished goods, end of year Operating costs		Amount
		$ 92,013 7,746,074 ( 2,599) ( 490,297) 7,345,191 2,540,292 9,885,483 812,019 ( 59,682) (1,301,879) 9,336,031 311,159 51,170 ( 4,438) ( 861,983) $ 8,831,939

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 10

FocalTech Systems Co., Ltd.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item	Selling Expenses	Selling Expenses	General and Administrative Expenses	General and Administrative Expenses	Research and Development Expenses $ 752,830 50 - 22,208 121,977 86,720 75,146 - 17,217 - 21,034 150,424 $1,247,606
Payroll Rent expense Freight Insurance fees Mask expense Test boards Consumables Welfare Professional service fees Management fees of the Science Park Administration Miscellaneous fees Others (Note)		$ 162,632 - 15,654 4,903 - - - - ( 3,491) - 351 19,621 $ 199,670		$ 157,478 22,961 74 17,120 - - - 18,500 22,034 28,043 26,106 33,480 $ 325,796

Note: Expected credit loss is included and the amount of each item in others does not exceed 5% of the account balance.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

STATEMENT 11

FocalTech Systems Co., Ltd.

STATEMENT OF EMPLOYEE BENEFIT, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

Employee benefits Salary and bonus Labor and health insurance Pension Board compensation Others Depreciation Amortization		2021		Total $ 1,245,771 50,915 27,542 36,741 30,253 $ 1,391,222 $ 18,470 $ 15,317		2020
	Classified as Operating Costs $ 209,572 7,200 5,538 - 2,497 $ 224,807 $ 8,892 $ -	Classified as Operating Expenses $ 1,036,199 43,715 22,004 36,741 27,756 $ 1,166,415 $ 9,578 $ 15,317			Classified as Operating Costs $ 79,898 7,200 5,170 - 2,318 $ 94,586 $ 722 $ -	Classified as Operating Expenses $ 688,695 33,656 20,789 14,230 20,308 $ 777,678 $ 9,845 $ 15,609		Total
								$ 768,593 40,856 25,959 14,230 22,626 $ 872,264 $ 10,567 $ 15,609

Note 1: The Company’s average employees totaled to 423 and 392 as of December 31, 2021 and 2020, respectively, including 6 and 7 non-employee directors, respectively.

Note 2: Listed Company at Taiwan Stock Exchange and over-the-counter company at Taipei Exchange should disclose additional information below:
a. The average amount of employee benefits for the years ended December 31, 2021 and 2020 was NT$3,248 thousand and NT$2,229 thousand, respectively. (“Total employee benefit - Total board compensation”/ “Total employee headcount - Total non-employee director headcount”)
b. The average amount of salary and bonus for the years ended December 31, 2021 and 2020 was NT$2,987 thousand and NT$1,996 thousand, respectively. (Total salary and bonus/ “Total employee headcount - Total non-employee director headcount”)
c. The average salary and bonus increased by 50% year over year.
- (“Average salary and bonus in current year - Average salary and bonus in previous year”/Average salary and bonus in previous year)
d. The Company did not have supervisors for the years ended December 31, 2021 and 2020. Therefore, there was no compensation to the supervisors.
e. The compensation paid to board of directors and the executive officers is based on their contribution and market trends. It is reviewed by the Compensation Committee. The compensation paid to the employees is based on their contribution and market trends.

This is the translation of the financial statements. CPAs do not audit or review on this translation.

AI assistant

FocalTech — Annual Report 2021

52342_rns_2021-12-29_62466a22-653f-45a9-87df-2920bcd38c38.pdf

FocalTech Systems Co., Ltd.

Notice to Readers

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Sales Revenue

Responsibilities of Corporate Management and Governance Hierarchy For the Financial Statements

Auditors’ Responsibilities for the Audit of the Financial Statements

FOCALTECH SYSTEMS CO., LTD. BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Par Value)

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021AND 2020 (In Thousands of New Taiwan Dollars)

FOCALTECH SYSTEMS CO., LTD.

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

e. Inventories

g. Property, plant and equipment

k. Financial instruments

1) Financial assets

i) Measurement category

B. Financial assets at amortized cost

ii) Impairment of financial assets

iii) Derecognition of financial assets

2) Equity instruments

The Company as a lessee

p. Employee benefits

2) Retirement benefits

1) Current tax

2) Deferred tax

3) Current and deferred tax for the year

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. OTHER FINANCIAL ASSETS

December 31, 2020

10. INVENTORIES

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

12. PROPERTY, PLANT AND EQUIPMENT

13. GOODWILL

14. OTHER INTANGIBLE ASSETS

15. REFUNDABLE DEPOSITS

16. BORROWINGS

17. ACCOUNTS PAYABLES

18. OTHER PAYABLES

19. RETIREMENT BENEFIT

a. Defined contribution plans

b. Defined benefit plans

20. GUARANTEE DEPOSITS RECEIVED

21. EQUITY

b. Capital surplus

f. Unearned employee compensation

22. REVENUE

For the Year Ended December 31

23. NET INCOME

c. Employee benefits expense

24. INCOME TAXES

b. Current tax assets and liabilities

d. Deferred tax assets and liabilities

25. EARNINGS PER SHARE

26. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee stock option plan

2021

27. OPERATING LEASE ARRANGEMENTS

The Company as a lessee

28. CAPITAL MANAGEMENT

29. FINANCIAL INSTRUMENTS

c. Categories of financial instruments

1) Market risk

Sensitivity analysis

FocalTech Annual Report 2021