Stock Code: 3545 Published on April 30, 2021

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FocalTech Systems Co., Ltd. 2020 Annual Report

Prepared by FocalTech Systems Co., Ltd. This annual report is available at http://mops.twse.com.tw The company discloses annual report information at http://www.focaltech-electronics.com/

1. Spokesperson, Deputy Spokesperson

Name of Spokesperson: James Liao Title: CFO Tel No.: (886)3-6661660 E-mail: [email protected]

Name of Deputy Spokesperson: Peter Hsieh Title: Investor Relationship Deputy Manager Tel No. : (886)3-6661660 E-mail: [email protected]

2. Address and Tel Number of Headquarters, Branches and Plant

Headquarters: 4F and 6F, No. 6, Dusing First Road, Hsinchu Science Park, Taiwan Tel No.: (886)3-6661660

3. Appointment of a professional shareholder services agent: Handling stock transfer and shareholders' regular meeting affairs

Name: Agent Division, CTBC Bank Address: 5F, No. 83, Sec. 1, Chongqing S. Rd., Zhongzheng District, Taipei City Tel: (886)2-66365566 Website: www.ctbcbank.com

4. CPA for recent financial reports

Name of CPA: Lilac Shue, Chih-Ming Shao Name of Office: Deloitte & Touche Address: 20F, No. 100, Songren Rd., Xinyi District, Taipei City Tel: (886)2-27259988 Website: www.deloitte.com.tw

5. Website of Overseas Securities Exchange Office & the way to inquire into information of securities: None

6. Company Website: http://www.focaltech-electronics.com/

FocalTech Systems Co., Ltd. 2020 Annual Report

	FocalTech Systems Co., Ltd. 2020 Annual Report Contents
I.	LETTER TO SHAREHOLDERS ................................................................................................ 1
II.	COMPANY PROFILE .................................................................................................................. 3
1.	ANINTRODUCTION TOFOCALTECH................................................................................................. 3
2.	MILESTONES....................................................................................................................................... 3
III.CORPORATE GOVERNANCE ................................................................................................... 5
1.	ORGANIZATION.................................................................................................................................. 5
2.	PROFILES OFDIRECTORS, SUPERVISORS, PRESIDENT, EXECUTIVEVICEPRESIDENT, DEPUTY
	EXECUTIVEVICEPRESIDENT, DIVISIONHEADS,ANDBRANCHHEADS................................................ 7
3.	IMPLEMENTATION OFCORPORATEGOVERNANCE.............................................................................. 21
4.	DISCLOSURE OF THECPAS’FEE....................................................................................................... 49
5.	CHANGES OFCPA: NONE.................................................................................................................. 50
6.	INFORMATION REGARDING TO THE CHAIRMAN,PRESIDENT,CHIEF FINANCIAL OR ACCOUNTING
	MANAGER OF THECOMPANY HOLDING POSITION IN THE BUSINESS UNDER THE COMMISSIONEDCPA
	FIRM OR ITS AFFILIATES IN1YEAR: NONE.......................................................................................... 50
7.	THE CHANGE OF THE SHARE HOLDING STATUS AND THE SHARE PLEDGED INFORMATION OF
	DIRECTORS,SUPERVISORS,MANAGERIAL OFFICERS AND THE SHAREHOLDERS HOLDING MORE THAN
	10%OF THE SHARES IN THE MOST RECENT YEAR TO THE DATE THIS REPORT WAS PRINTED............... 50
8.	INFORMATION ON SHAREHOLDERS AMONG THE TOP10BY PROPORTION OF SHAREHOLDING WHO ARE
	RELATED PARTIES TO ONE ANOTHER,SPOUSE OR KINDRED WITHIN THE2ND DEGREE OF KINSHIP...... 53
9.	QUANTITY OF SHAREHOLDINGS OF THE SAME INVESTEE BY THECOMPANY ANDDIRECTORS,
	SUPERVISORS, MANAGIALOFFICER,AND DIRECT OR INDIRECT SUBSIDIARIES IN PROPORTION TO THE
	COMBINED HOLDINGS OF ALL,AND COMBINED TO CALCULATE THE PROPORTION OF OVERALL
	SHAREHOLDING................................................................................................................................. 54
IV. CAPITAL OVERVIEW .............................................................................................................. 55
1.	CAPITAL ANDSHARES....................................................................................................................... 55

ISSUANCE OF CORPORATE BONDS: NONE ........................................................................................... 62 3. PREFERRED SHARES: NONE ................................................................................................................ 62 4. ISSUANCE OF OVERSEAS DEPOSITARY SHARES: NONE ........................................................................ 62 5. STATUS OF EMPLOYEE STOCK OPTION PLAN ....................................................................................... 62 6. STATUS OF EMPLOYEE RESTRICTED STOCK SHALL INCLUDE THE FOLLOWING: .................................... 65 7. STATUS OF NEW SHARE ISSUANCE IN CONNECTION WITH MERGERS AND ACQUISITIONS: NONE. ......... 68 8. FUNDING PLANS AND IMPLEMENTATION: N/A. ................................................................................... 68 V. OPERATIONAL HIGHLIGHTS ............................................................................................. 69 1. BUSINESS ACTIVITIES ........................................................................................................................ 69 2. MARKET, PRODUCTION, AND SALES OUTLOOK .............................................................................. 83 3. INFORMATION OF EMPLOYEES .......................................................................................................... 91 4. INFORMATION ON ENVIRONMENTAL PROTECTION EXPENDITURES ................................................ 92 5. LABOR RELATIONS ............................................................................................................................ 92 6. MATERIAL CONTRACTS ： ............................................................................................................... 94 VI. FINANCIAL STATUS ............................................................................................................... 95 1. CONDENSED BALANCE SHEETS, STATEMENTS OF COMPREHENSIVE INCOME, AND CPA AUDIT OPINIONS FOR THE LATEST FIVE YEARS ........................................................................................... 95 2. FINANCIAL ANALYSIS FOR THE LATEST FIVE YEARS ....................................................................... 99 3. AUDIT COMMITTEE’ REVIEW REPORT ON THE FINANCIAL STATEMENT OF THE MOST RECENT YEAR ................................................................................................................................................ 103 4. THE FINANCIAL REPORTS OF THE COMPANY FOR THE MOST RECENT YEARS HAVE BEEN AUDITED BY CPA.: PLEASE REFER TO ATTACHMENT 1. ................................................................................ 104 5. THE INDIVIDUAL FINANCIAL REPORTS OF THE COMPANY FOR THE MOST RECENT YEARS HAVE BEEN AUDITED BY CPA.: PLEASE REFER TO ATTACHMENT 2. .................................................................... 104 6. IN THE CASE OF ANY INSOLVENCY OF THE COMPANY AND ITS AFFILIATES IN THE MOST RECENT YEAR AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT, THE EFFECTS ON THE FINANCIAL POSITION OF THE COMPANY SHALL BE LISTED: NONE. ............................................... 104

VII. REVIEW OF FINANCIAL POSITION, FINANCIAL CONDITIONS, AND RISK

MATTERS .................................................................................................................................. 105 1. FINANCIAL POSITION ..................................................................................................................... 105 2. FINANCIAL CONDITIONS ............................................................................................................... 106 3. CASH FLOW .................................................................................................................................... 106 4. IMPACT OF MAJOR CAPITAL EXPENDITURES ON FINANCIAL OPERATIONS IN THE MOST RECENT YEAR ............................................................................................................................................... 107 5. POLICY FOR THE MOST RECENT FISCAL YEAR ON INVESTMENT IN OTHER COMPANIES, MAIN REASONS FOR PROFITS/LOSSES RESULTING THEREFROM, PLANS FOR IMPROVEMENT, AND INVESTMENT PLANS FOR THE COMING FISCAL YEAR: .................................................................. 107 6. RISK ANALYSIS FOR THE MOST RECENT FISCAL YEAR AS WELL AS THE CURRENT FISCAL YEAR UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT ...................................................... 107 7. OTHER IMPORTANT MATTERS: NONE. .......................................................................................... 111 VIII. SPECIAL DISCLOSURE ....................................................................................................... 112 1. INFORMATION REGARDING THE COMPANY’S AFFILIATES ............................................................. 112 2. PRIVATE PLACEMENT OF SECURITIES IN THE MOST RECENT YEAR AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT: NOT APPLICABLE ........................................................... 115 3. SUBSIDIARIES’ HOLDING OR DISPOSAL OF THE COMPANY’S SHARES IN THE MOST RECENT YEAR AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT: NOT APPLICABLE .................. 115 4. OTHER NECESSARY SUPPLEMENTARY NOTES: NONE ..................................................................... 115 IX. ANY MATTER IN THE MOST RECENT YEAR AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT WHICH HAS A SIGNIFICANT IMPACT ON SHAREHOLDERS' EQUITY OR SECURITIES PRICES AS STIPULATED IN SUBPARAGRAPH 2 OF PARAGRAPH 2 OF ARTICLE 36 OF THE SECURITIES AND EXCHANGE ACT: NONE................................................................... 115 ATTACHMENT 1 ............................................................................................................................ 116 ATTACHMENT 2 ............................................................................................................................ 171

I. Letter to Shareholders

The Year of the COVID-19 Outbreak is the Year of Rebirth for FocalTech.

In 2020, the outbreak of the COVID-19 epidemic caused a huge number of infections and deaths around the world, and no country was able to escape from it. As a result, face-to-face business activities have been greatly minimized due to the border controls implemented in various countries. In addition, traditional classes have been suspended, leading to the popularization of learning from home. To avoid direct contact with other people when buying everyday necessities, more people prefer to use online shopping. The way people live has undergone substantial changes in 2020, creating new business models and different consumer demands. Fortunately, FocalTech’s perseverance in technology development and advanced deployment strategies in production plans have coincided with such market changes and demand increase. It allows the company to make significant progress in the development of human-machine interface applications, including mobile phones, tablets, notebooks, and wearable products. As a result, in 2020, we have stopped the losses in the past three consecutive years and achieved a record high in terms of revenue.

According to the statistics conducted by the Canalys, global smartphone shipments in 2020 amounted to 1.26 billion units, which is not only a decrease of 7% compared to the 1.36 billion units in 2019, but also a decline in three consecutive years. However, due to iteration in technology, the percentage of full in-cell panels used in smartphones has gradually increased from about 15% in 2017 to nearly 60% in 2020, making the overall market of "Integrated Driver and Controller (IDC), also known as TDDI (Touch and Display Driver Integration)" to expand continuously. This implies that FocalTech has accurately predicted the market trend and continued to strengthen its technological capability and to engage in long-term R&D, leading to the upgrade of the panel industry.

In 2018, FocalTech faced a serious shortage in foundry capacity, making it more aware of the importance of production planning. Starting from 2019, FocalTech continued to expand its foundry partners, working together to optimize its manufacturing processes and yields. In 2020, the production capacity was effectively increased to provide high-quality products that meet the needs of customers. The shipments of IDC in 2020 exceeded 200 million units, showing a substantial increase compared with 2019, and a market share growth to more than 30%.

Moreover, due to the short foundry capacity and huge demand, the price of IDC began to rise notably in the fourth quarter of 2020, benefiting FocalTech's gross margin. The gross margin of FocalTech in 2020 reached 24.85%, an increase of 3.09 percentage compared with 2019. Such increase in gross margin raised the annual net income of FocalTech to NT$ 983 million, setting a new record. Based on the weighted average outstanding shares, the earnings per share was NT$ 3.97.

In addition to the breakthrough in the IDC market, FocalTech also made great achievements in the area of the AMOLED panel field. After many years of development in touch controller ICs, more than 20

million chips have been shipped in 2020 to several well-known mobile phone brands, showing a growth of several multiples compared with 2019. In terms of capacitive fingerprint sensor, FocalTech started the mass production in 2020, reaching a shipment level of tens of millions.

Overall, in the promotion of human-machine interface products, FocalTech is able to offer the convenient one-stop service to its customers, which is a unique advantage among the industry. For example, the combination sales of capacitive fingerprint products and IDC will help the integration in system implementation, providing more value-added products and services to customers. Furthermore, since FocalTech has strong technical teams in both Taiwan and China, it is able to provide immediate supports to customers during the tough epidemic period in 2020, accelerating the introduction of products to rapidly gain the market share.

To maintain its leading position in human-machine interface development for mobile devices around the world, FocalTech continues to increase its R&D investment and has achieved great results. The R&D expenditure in 2020 reached NT$ 1.636 billion, an increase of more than 5% compared with 2019, accounting for 11.86% of the annual revenue. In 2020, FocalTech has filed 93 patent applications, an increase of nearly 20% compared with 2019, and has received 63 patent approvals, a substantial increase of 70% compared with 2019. FocalTech insists on realizing the value of innovation and R&D through pragmatic actions.

In terms of product and technology development strategy, FocalTech continues to cultivate the IDC market. In response to the advent of the 5G era, the display panels of mobile devices must have low latency and high frame rate requirements. The products with 90Hz and 120Hz high refresh rates developed by FocalTech have started mass production in 2020 and have been well accepted by the market. In addition, after nearly three years of development in the automotive field, in-cell touch panels have recently begun to increase their penetration rate with the rising of electric vehicles. Side fingerprint solution has also been developed for capacitive fingerprint recognition products, meeting customers' design requirements for full-screen mobile phones. Furthermore, breakthroughs have also been made in the field of optical fingerprint technology to start small-scale trial production.

Looking into 2021, although the challenges of the COVID-19 epidemic and the U.S.-China trade war are still present, and the shortage in foundry capacity is unable to be solved in the short term, the steady and pragmatic operation policy of FocalTech will enable IDC products to grow continuously. In addition, the development of AMOLED related ICs and fingerprint recognition technologies will start to yield positive results, boosting FocalTech's operation to a new level. More importantly, FocalTech will adhere to the core values of leading provider for human-machine interface solutions, keep developing technologies as well as intellectual property rights, maintain the leading position in the industry, and continue to create maximum value for shareholders, to thank all shareholders for their long-term trust and support.

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Chairman and President: Genda Hu

II. Company Profile

1. An Introduction to FocalTech

Founded in January 2006, the Company – which was formerly known as Orise Technology Co., Ltd. – was renamed as FocalTech Systems Co., Ltd. on January 27, 2015. The Company is mainly engaged in the development and sales of Human-Machine Interface (HMI) solutions such as display drivers, touchscreens, and fingerprint recognition, with branch offices and customer support centers established in Taiwan, China, the United States, and South Korea.

FocalTech is dedicated to the development of HMI solutions to provide competitive chips for various electronic products, including capacitive touch IC, display driver chips, and fingerprint recognition chips. Additionally, the Company has established a solid foundation in the technical fields of IP & image processing algorithms; digital and analog signal processing; and power saving. Even more, FocalTech’s self-developed Super In-cell technology – unlike traditional, separated touch and display drivers solutions that require multiple ICs ICachieves only a single Integrated Driver Controller (IDC) to drive the Touch and Display Integration Panel. This simplifies what was a complex supply chain, and reduces electronic components required. This allows less complicated panel modules, thus saving production cost and providing better solutions for customers.

FocalTech observes a “customer-focused” code of conduct, and this has led to the formation of a tightly-knit sales and technical service network. Through this, we aim to provide timely and professional localized technical support services to customers at home and abroad, with the solid technical support to back up the billions of smart devices using FocalTech’s technology solutions worldwide.

2. Milestones

2006	Companyfounded.
	Issued 90,000,000 common shares to Sunplus Technology Co., Ltd. at a premium of NT$12.22 per share to acquire the operations, assets, and liabilities of its business department for driver and controller chips used in flat display panels.
	Obtained ISO-9001 certification.
	Public offeringapproved.
2007	Listed on the Taiwan Stock Exchange,under stock code 3545.
2008	Obtained ISO-14001 certification.
	Obtained OHSAS-18001 certification.
2009	Ranked in “Top 5000 - The Largest Corporations in Taiwan” by China Credit Information Service, Ltd.; ranked 19thin the IC design industry and ranked 48thin net revenue amongbusinesses in Hsinchu Science Park.
2014	Introduced GF all-ITO single-layer multi-point structure solution to reduce screen production difficulties,thus significantlyimprovingmassproductionyields.
	Completed color space conversion function by integrating LCD driver IC, establishingaprofessional color managementplatform for smartphones.
	Self-developed triple image compression technologyfor use in systemplatforms.

2015	Merged and conducted share-swap with FocalTech Corporation, Ltd. Companyrenamed as FocalTech Systems Co. Ltd.
	Supplied for the world’s first a-Si HD,in-cell based touchpanel mobilephone.
	Launched the world’s first single-chip solution to support multi-touch and multi-force touch.
2016	Supplied for the world’s first low temperature poly-silicon (LTPS) FHD IDC based panel smartphone.
	Launched the industry’s first WQHD LTPS Driver IC, meeting the high refresh rate demands of VR devices.
	Delivered over 400 million Touch ICs annually, becoming the world’s largest Touch IC supplier.
2017	Launched the world’s first IDC solution to support a-Si panels designed with reducedphotomask layers,which successfullyentered massproduction.
	Launched FHD LTPS In-cell single-chipsolution for COFproduction.
	Honored as the recipient of the Diamond Supplier Award by Tianma Microelectronics Co.,Ltd.
2018	Successfullydeveloped a touch solution for foldablephones.
	Product FT8201 was granted the 13~~th~~“China Chip” Outstanding Technological and Innovative Product Award.
	Out-cell touchproducts successfully passed AEC-Q100qualification.
	Successfullydeveloped in-smartphone bloodpressure monitoringtechnology.
2019	AMOLED display touch products were certified by Samsung Display Co., Ltd., which then went into mass production and were successfully delivered accordingly.
	AMOLED IDC wearables were approved by customers and introduced to other first-tier brand customers.
	Successfully developed ultra-narrow bezel technology for 2-in-1 touch and display solutions byMUX 6 in FHDpanels and Dual Gate in HDpanels.
	Realized an ultra-thin optical fingerprint solution for 5G smartphones.
2020	Successfullydeveloped a side-mounted capacitive fingerprint solution.
	High frame rate solutions went into mass production and were successfully delivered accordingly.
	IDC went into massproduction in the automotive market.
	Annual revenue reached a new record high.

III. Corporate Governance

1. Organization

(1) Organizational Structure

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Shareholders' Meeting
Audit committee
Remuneration
Board of Directors
Committee
Auditing Office
Chairman
President's &
Chairman's Offices
Quality Research and Finance and Human Resources
Production Sales Marketing Engineering
Assurance Development Accounting & Administrative
Department Department Department Department
Department Department Department Department
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(2) Business of major departments

(2)Business	of major departments
Department	Major Business
President's & Chairman's Offices	1. Implements, coordinates, and sets the Company’s operational goals, and directs and supervises the proper functioning of all departments. 2. Handles corporate legal affairs and business contract/agreement issues.
Auditing Office	Establishes the Company’s internal control system, conducts audits of various operating cycles, and provides analysis and recommendations.
Quality Assurance	Manages the Company’s quality control system, performs quality control, assists in handling customer complaints,and conductsprevention and rectification ofqualitydefects.
Production	Manages quality, yield, and reliability for mass production, outsourced production scheduling, outsourcingaffairs,andproduction-relatedprocurement and warehousing.
Business	Handlesproduct sales and customer service,and maintains customer relationships.
Marketing	Handles market planning and analysis and collects market information to facilitate the planning, analysis and launch of newproducts.
Engineering	Assists in firmware and software design, development, validation of products, and introduction of product applications for customers duringthepost-production stage.
Research and Development	Handles design, development, and improvement of products in the pre-production stage.
Finance and Accounting	Handles accounting, tax reporting, capital management, external statements, investor relations, and shareholders’ meetings.
Human Resources & Administrative	Formulates and implements administrative rules and regulations related to general affairs and human resources.

2. Profiles of Directors, Supervisors, President, Executive Vice President, Deputy Executive Vice President, Division Heads, and Branch Heads

(1) Directors and Supervisors

1. Profiles of Directors and Supervisors

April 26, 2021; Unit: share; %

Title	Nationality or place of registration	Name	Gender	Election Date (Note 1)	Term of Office	Initial Election Date	Shares at Election	Shares at Election	Current shareholding	Current shareholding	Current shareholding held by spouse & minor children	Current shareholding held by spouse & minor children	Shareholding held through nominees	Shareholding held through nominees	Principal work experience and academic qualifications	Position(s) held concurrently in the company and/or in any other company	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Remark (Note 3)
							Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding			Title	Name	Relation
Chairman	U.S.A.	Genda Hu	Male	June 20, 2020	3 years	Jan. 5, 2015	2,105,841	0.70	1,232,138	0.57	455,072	0.21	4,158,691	1.92	Ph.D. in Electrical Engineering, Princeton University, IEEE Fellow, Worked at American IBM, PMC-Sierra,Cypress, Vice President of R & D and Marketing Department of TSMC, Head of ERSO in ITRI, Secretariat of Taiwan Semiconductor Industry Association	President, CEO of FocalTech Systems Co., Ltd. / CEO, Director, President, Secretary, Chairman, Chairman, President of FocalTech Corporation, Ltd./ CEO, Director, President, Secretary of FocalTech Systems, Inc./ CEO, Director, President, Secretary, Chairman of FocalTech Systems, Ltd./ Director of FocalTech Electronics, Ltd./ Chairman of FocalTech Electronics Co., Ltd./ Executive Director, President, CEO of FocalTech Systems (Shenzhen) Co., Ltd./ Executive Director, President of FocalTech Electronics (Shenzhen) Co., Ltd./ Executive Director, President of FocalTech Electronics (Shanghai) Co., Ltd./ Executive Director, President of FocalTech Electronics (Shanghai) Co., Ltd. Beijing Branch	`－`	`－`	`－`	No suitable candidate has been appointed to the position of president of the Company. The Company has assigned a number of executive vice presidents to assist in the management of the Company. The Board of Directors includes four independent directors, who constitute half of the Board. Two of these directors are employees or managerial officers. Therefore, the Chairman and the President are the same person, which does not affect the operations or decision making of the Company.
Director	Taiwan	James Liao	Male	June 20, 2020	3 years	June 10, 2015	900,974	0.30	673,528	0.31	`－`	`－`	`－`	`－`	MBA of NTU Financial Manager of MediaTek	CFO of FocalTech Systems Co., Ltd./ Director of FocalTech Electronics Co., Ltd./ Director of Hefei PineTech Electronics Co., Ltd./ Chairman and CEO of FocalTech Smart Sensors Co., Ltd./ FocalTech Smart Sensors, Ltd.: Director/ Supervisor of Vitrio Technology Corporation	`－`	`－`	`－`
Director	U.S.A.	GWAA LLC		June 20, 2020	3 years	June 10, 2015	5,940,047	1.98	4,158,691	1.92	`－`	`－`	`－`	`－`	`－`	FocalTech Smart Sensors,Ltd.: Director	`－`	`－`	`－`

Title	Nationality or place of registration	Name	Gender	Election Date (Note 1)	Term of Office	Initial Election Date	Shares at Election	Shares at Election	Current shareholding	Current shareholding	Current shareholding held by spouse & minor children	Current shareholding held by spouse & minor children	Shareholding held through nominees	Shareholding held through nominees	Principal work experience and academic qualifications	Position(s) held concurrently in the company and/or in any other company	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship
							Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding			Title	Name	Relation
	Taiwan	GWAA LLC Representative: Han-Ping Shieh	Male				`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Ph.D., Department of Electrical and Computer Engineering, Carnegie Mellon University, USA/ IEEE/OSA/SID fellow/ Vice-President of University System of Taiwan / Vice President of National Chiao Tung University/ Dean of College of Electrical and Computer Engineering, National Chiao Tung University/ Chairman of Society for Information Display/ Professor of DI+DOP, National Chiao Tung University/ Researcher of Research Center, American IBM T J Watson	Lifetime Chair Professor of National Chiao Tung University/ Independent Director of Young Optics Inc. Outside Director of Silicon Motion Technology Corporation/ Independent Director of Key Ware Electronics Co., Ltd.	`－`	`－`	`－`
Director	U.S.A.	GWAA LLC		June 20, 2020	3 years	June 20, 2020	5,940,047	1.98	4,158,691	1.92	`－`	`－`	`－`	`－`	`－`	FocalTech Smart Sensors,Ltd.: Director	`－`	`－`	`－`
	Taiwan	GWAA LLC Representative: Chenming Hu	Male				`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Ph.D. in Electrical Engineering, University of California, Berkeley/ Chairman of Celestry Design Technologies Inc/ CTO of TSMC	Director of Inphi Inc. (IPHI)/ Director of Ambarella, Inc. (AMBA)/ Director of ACM Research, Inc (ACMR)/ Adjunct Professor of University of California, Berkeley/ Professor of National Chiao TungUniversity	`－`	`－`	`－`
Director	Taiwan	Sense Investment and Consulting Inc.(Note 4)		June 20, 2020	3 years	June 20, 2020	50,000	0.02	`－`	`－`	`－`	`－`	`－`	`－`	`－`		`－`	`－`	`－`
	Taiwan	Sense Investment and Consulting Inc. Representative: George Chang	Male				`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	MBA Master from USC/ Bachelor of Accounting, UC/ Yuanta Investment Senior Vice President/ Director of Taiwan Citi Global Securities	CFO of Egis	`－`	`－`	`－`
Independent Director	Taiwan	Chintay Shih	Male	June 20, 2020	3 years	Jan. 5, 2015	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Ph.D. in Electrical Engineering, Princeton University/ Chairman of the III/ Dean of the Industrial Technology Research Institute/ Dean, School of Science and Technology Management, National Tsinghua University/ Chairman of Asia Pacific Intellectual	Independent Director of Vanguard International Semiconductor Corporation/ Independent Director of Sercomm Corporation/ Supervisor of TEN Incubation Corporation	`－`	`－`	`－`

Title	Nationality or place of registration	Name	Gender	Election Date (Note 1)	Term of Office	Initial Election Date	Shares at Election	Shares at Election	Current shareholding	Current shareholding	Current shareholding held by spouse & minor children	Current shareholding held by spouse & minor children	Shareholding held through nominees	Shareholding held through nominees	Principal work experience and academic qualifications	Position(s) held concurrently in the company and/or in any other company	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship
							Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding			Title	Name	Relation
															Property Association/ Chairman of Monte Jade science & Technology Association of Taiwan/ Chairman of Chinese Institute of Engineers/ Chairman of Taiwan Semiconductor Industry Association/ Managing Director of Taiwan Electrical and Electronic Manufacturers' Association/ Chairman of Chinese Society for Management of Technology/ Chairman of Service Science Society of Taiwan/ CEO of Sun Yun-Suan Foundation/ Professor, School of Science and Technology Management, National Tsinghua University/
Independent Director	Taiwan	Chan-Jane Lin	Female	June 20, 2020	3 years	Jan. 5, 2015	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	PhD in Accounting, University of Maryland/ Acting Dean and Deputy Dean, School of Management, National Taiwan University/ Director of Department of Accounting, National Taiwan University/ Director of School of Professional Education and Continuing Studies, National Taiwan University	Professor, Department of Accounting, National Taiwan University/ Independent Director of Advantech Co., Ltd./ Supervisor of Securities and Futures Investors Protection Center	`－`	`－`	`－`
Independent Director	Taiwan	Chang Xu	Male	June 20, 2020	3 years	June 20, 2020	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	PhD in Industrial Engineering, Purdue University, USA/ Master of Machinery of New York Institute of Technology/ Independent Director of Weihan Industrial Co., Ltd./ Director of Shuz Tung Machinery Industrial Co., Ltd./ Vice Director of MIRL, ITRI/ Director of Center for Measurement Standards, ITRI/ Managing Supervisor of Electronics Testing Center,Taiwan	Supervisor of Mirle Co., Ltd./ Director of Sanlien Technology Foundation/ Managing Director of Chinese Metrology Society/ Consultant of Center for Measurement Standards, ITRI	`－`	`－`	`－`
Independent Director	Taiwan	Xuhui Xu	Male	June 20, 2020	3 years	June 20, 2020	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Exeutives Program, Graduate School of	Chairman of Taiwan Air Cargo Contracting	`－`	`－`	`－`

Title	Nationality or place of registration	Name	Gender	Election Date (Note 1)	Term of Office	Initial Election Date	Shares at Election	Shares at Election	Current shareholding	Current shareholding	Current shareholding held by spouse & minor children	Current shareholding held by spouse & minor children	Shareholding held through nominees	Shareholding held through nominees	Principal work experience and academic qualifications	Position(s) held concurrently in the company and/or in any other company	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Other officer, directors or supervisors with a spousal or other 2nd degree of kinship	Remark (Note 3)
							Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding			Title	Name	Relation
															Business Administration, NCCU/ Master of Business Administration, Tulane University Business School/ Chairman of Taiwan Air Cargo Contracting Co., Ltd./ Director of T3EX Global Holdings Corp./ Director of GGA Corp./ Supervisor of Central Taiwan Science Park Logistics Co., Ltd./ Supervisor of Worldwide GSA/ Independent Director of Sanfar PropertyLimited	Co., Ltd./ Director of T3EX Global Holdings Corp./ Supervisor of Central Taiwan Science Park Logistics Co., Ltd./ Supervisor of Worldwide GSA/ Independent Director of Sanfar Property Limited

Note 1: The Company approved Re-election of the 7th Directors at the shareholders' meeting held on June 20, 2020. The term of office of the new directors is from June 20, 2020 to June 19, 2023. Note 2: Since June 21, 2012, the Audit Committee has been responsible for the supervisory duties stipulated in the relevant laws and regulations. Note 3: Where the chairman and the president or person of an equivalent post (the highest-level manager) are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness of, necessity of, and the measures adopted in response thereto.

Note 4: Sense Investment and Consulting Inc. sold out the shares on April 19,2021, so it is no longer a director of the company on April 26, 2021.

(1)Major Shareholders of Corporate Shareholders

March 31, 2021

	March 31,202	March 31,202
Corporate shareholder Name	Major Shareholders of Corporate Shareholders
	Name	Rate of shareholding
GWAA LLC	Genda J. Hu	100%

2. Information on Directors and Supervisors in professional expertise and independence

				April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1	April 26,2021 Status of independence(Note ) Number of public companies where the person holds the title as independen t director 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2        0           0            2          0            0             2             1             0             1
	Have more than 5 years of
	experience and professional			Status of independence(Note )
	qualifications
	An	A judge,	Have work
	instructor	public	experience
	or higher	prosecutor,	in the area
	in a	attorney,	of
	department	certified	commerce,
	of	public	law,
	commerce,	accountant,	finance, or
Conditions	law,	or other	accounting													Number of
	finance,	professiona	, or													public
	accounting	l or	otherwise													companies
	, or other	technical	necessary													where the
	academic	specialist	for the													person
	department	who has	business of										1	1	1	holds the

	related to	passed a	the	1	2	3	4	5	6	7	8	9	0	1	2	title as

	the	national	company.													independen
Name	business	examinatio														t director
	needs of	n and been
	the	awarded a
	company	certificate
	in a public	in a
	or private	profession
	junior	necessary
	college,	for the
	college, or	business of
	university.	the
		company.
Genda Hu																0
James Liao																0
GWAA LLCRepresentative: Han-Ping Shieh																2
GWAA LLC Representative: ChenmingHu																0
Sense Investment and Consulting In c.Representative: George Chang(Note 1)																0
ChintayShih																2
Chan-Jane Lin																1
ChangXu																0
Xuhui Xu																1

Note1: Sense Investment and Consulting Inc. sold out the shares on April 19,2021, so it is no longer a director of the company on April 26, 2021. Note2: Check “  ” the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

(1) Not an employee of the Company or any of its affiliates.

(2) Not a director or supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds five percent or more of the total number of issued shares of the Company, or that ranks among the top five in shareholdings, or designates its representative to serve as a director or supervisor of the company under Article 27(1) or (2) of the Company Act. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(6) Not a director, supervisor or employee of other company such that a majority of the company’s director seats or voting shares are controlled by the same person. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(7) The chairperson, president, or a person holding an equivalent position of the Company is not a director (or governor), supervisor, or employee of other company or institution, or are spouses. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(8) Not a director (or governor), supervisor, manager, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. (Not applicable in cases where the specified company or institution holds at least twenty percent but not exceeding fifty percent of the total number of issued shares of the Company, and the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(9) Not a professional individual who, or an owner, partner, director (or governor), supervisor, or manager of a sole proprietorship, partnership, company, or institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation not exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Not a person to whom any conditions defined in Article 30 of the Company Act apply.
(12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

(2) Information of President, Executive Vice President, Deputy Executive Vice President, Division Heads, and Branch Heads

April 26, 2021; Unit: share; %

Title (Note 1)	Nationality	Name	Gender	Election (Appoint ment) Date	Shareholding	Shareholding	Shareholding held by spouse & minor children	Shareholding held by spouse & minor children	Shareholding held through nominees	Shareholding held through nominees	Principal work experience and academic qualifications (note 2)	Position(s) held concurrently in the company and/or in any other company	Manager with a spousal or other 2nd degree of kinship	Manager with a spousal or other 2nd degree of kinship	Manager with a spousal or other 2nd degree of kinship	Remark (Note 3)
					Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding			Position	Name	Relation-ship
CEO and President	U.S.A.	Genda Hu	Male	Jan. 5, 2015	1,232,138	0.57	455,072	0.21	4,158,691	1.92	Ph.D. in Electrical Engineering, Princeton University, IEEE Fellow Worked at American IBM, PMC-Sierra,Cypress Vice President of R & D and Marketing Department of TSMC, Head of ERSO in ITRI, Secretariat of Taiwan Semiconductor Industry Association	CEO, Director, President, Secretary, Chairman, Chairman, President of FocalTech Corporation, Ltd./ CEO, Director, President, Secretary of FocalTech Systems, Inc./ CEO, Director, President, Secretary, Chairman of FocalTech Systems, Ltd./ Director of FocalTech Electronics, Ltd./ Chairman of FocalTech Electronics Co., Ltd./ Executive Director, President, CEO of FocalTech Systems (Shenzhen) Co., Ltd./ Executive Director, President of FocalTech Electronics (Shenzhen) Co., Ltd./ Executive Director, President of FocalTech Electronics (Shanghai) Co., Ltd./ Executive Director, President of FocalTech Electronics (Shanghai) Co., Ltd. Beijing Branch	`－`	`－`	`－`	No suitable candidate has been appointed to the position of president of the Company. The Company has assigned a number of executive vice presidents to assist in the management of the Company. The Board of Directors includes four independent directors, who constitute half of the Board. Two of these directors are employees or managerial officers. Therefore, the Chairman and the President are the same person, which does not affect the operations or decision making of the Company.
Executive Vice President	Taiwan	Jui-Cheng Hsu	Male	Feb. 1, 2021	140,205	0.06	`－`	`－`	`－`	`－`	Master of Electrical Engineering, NTHU Manager of Sunplus Technology Co., Ltd./ Deputy Executive Vice President of Sunshine Sports Tech Co.,Ltd.	FocalTech Smart Sensors, Ltd.: Director (Designated representative of FocalTech Systems Co., Ltd. ) Director of Vitrio Technology Corporation	`－`	`－`	`－`
Executive Vice President	China	Ching-Kai Chang	Male	Jan. 5, 2015	`－`	`－`	`－`	`－`	282,365	0.13	Master of Microelectronics and Solid State Electronics, Peking University	Executive vice president of FocalTech Electronics (Shenzhen) Co., Ltd./ FocalTech Smart Sensors, Ltd.: Director(Designated representative of FocalTech Electronics Co.,Ltd.)	`－`	`－`	`－`
Executive Vice President	China	Wei-Ching Hou	Male	Apr. 16, 2015	`－`	`－`	`－`	`－`	303,528	0.14	Bachelor of Radio Technology, Chongqing University/ Manager of iSolution Technologies Ltd. (Shenzhen)	Executive vice president of FocalTech Electronics (Shenzhen) Co., Ltd./ Chairman and President of Hefei PineTech Electronics Co.,Ltd.	`－`	`－`	`－`
Executive Vice President	China	Hsiao-Hsu Tu	Male	Apr. 11, 2016	`－`	`－`	`－`	`－`	494,058	0.234	Master, School of Computer Science & Technology, Huazhong University of Science and Technology/ Deputy Technical Manager of MediaTek Inc. (Shenzhen)	Executive vice president of FocalTech Electronics (Shenzhen) Co., Ltd./	`－`	`－`	`－`
Executive Vice President	Taiwan	He-Nien Yang	Male	May 15, 2017	149,298	0.07	`－`	`－`	`－`	`－`	Institute of Communications Engineering, National Chiao Tung University/ R&D Engineer of VIA	None	`－`	`－`	`－`

Title (Note 1)	Nationality	Name	Gender	Election (Appoint ment) Date	Shareholding	Shareholding	Shareholding held by spouse & minor children	Shareholding held by spouse & minor children	Shareholding held through nominees	Shareholding held through nominees	Principal work experience and academic qualifications (note 2)	Position(s) held concurrently in the company and/or in any other company	Manager with a spousal or other 2nd degree of kinship	Manager with a spousal or other 2nd degree of kinship	Manager with a spousal or other 2nd degree of kinship
					Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding			Position	Name	Relation-ship
											Technologies, Inc./ R&D Engineer of Novatek Microelectronics Corp./ Director of Sunshine Sports Tech Co.,Ltd.
Executive Vice President	Taiwan	Sung-Tsan Chiang	Male	Oct. 8, 2020	64,000	0.03	`－`	`－`	`－`	`－`	Master of Material Science , NTHU President of Socle Technology Corp. Director of ANPEC ELECTRONICS CORPORATION Director of AOS Alpha & Omega Semiconductor	None	`－`	`－`	`－`
Executive Vice President	Taiwan	Pei-Tzu Wu	Male	Aug. 1, 2018	154,514	0.07	`－`	`－`	`－`	`－`	Master, Institute of Mining, Metallurgy and Materials Science, National Cheng Kung University/ EMBA of National Chiao Tung University/ Deputy Executive Vice President of Cheertek Inc./ Deputy Executive Vice President of ILITEK/ Senior Manager of TSMC/ Executive vice presidents of Generalplus Technology Inc.	President of Ou Sheng Technology Company/ Executive Director of Pei Feng Management and Consulting Company/ President of Chengxin Care Association/ Consultant of Venture and Innovation Program, National Chiao Tung University FocalTech Smart Sensors, Ltd.: Director (Designated representative of GWAA LLC) Director of Vitrio Technology Corporation	`－`	`－`	`－`
Business Executive Vice President	China	Ching-Suo Wang		Jan. 5, 2015	`－`	`－`	`－`	`－`	168,919	0.08	Santa Clara University, EMBA/ Business Deputy Executive Vice President, China Area, Cypress Semiconductor Corporation	Business Executive Vice President of FocalTech Electronics (Shenzhen) Co., Ltd./	`－`	`－`	`－`
			Male

Business Executive Vice President	China	Lien-Kuo Wang	Male	Apr. 1, 2017	`－`	`－`	`－`	`－`	161,018	0.07	Business Administration, International Business School, Peking	Business Executive Vice President of FocalTech Electronics (Shenzhen) Co., Ltd./ Director and Executive vice president of Hefei PineTech Electronics Co.,Ltd.	`－`	`－`	`－`
Business Assistant Executive Vice President	China	Te-Chih Kung	Male	Mar. 18, 2019	`－`	`－`	`－`	`－`	148,620	0.07	Beijing Institute of Finance and Commerce Management/ Sales Director of Mobile semi/ Senior Sales Manager, Huabei Area, Chipnuts TechnologyInc.	Business Assistant Executive Vice President of FocalTech Systems (Shenzhen) Co., Ltd.	`－`	`－`	`－`
Senior Deputy Executive Vice President	Taiwan	Ching-Hsing Chang	Male	Feb. 8, 2021	100,000	0.05	`－`	`－`	`－`	`－`	Bachelor of Department of Electronic Engineering, Southern Taiwan University/ Senior Business Manager of Solomon Technology Corporation	None
Deputy Executive Vice President	Taiwan	Chun-Fu Wang	Male	Sep. 1, 2014	98,202	0.05	21,207	0.01	`－`	`－`	Master of Electrical Engineering, NTHU Senior Director of HannStar® Display Corporation	None	`－`	`－`	`－`
Deputy Executive	Taiwan	Po-Sheng Shih	Male	Jan. 16, 2021	59,104	0.03	`－`	`－`	`－`	`－`	Ph. D. in Electronics Engineering,National	None	`－`	`－`	`－`

Title (Note 1)	Nationality	Name	Gender	Election (Appoint ment) Date	Shareholding	Shareholding	Shareholding held by spouse & minor children	Shareholding held by spouse & minor children	Shareholding held through nominees	Shareholding held through nominees	Principal work experience and academic qualifications (note 2)	Position(s) held concurrently in the company and/or in any other company	Manager with a spousal or other 2nd degree of kinship	Manager with a spousal or other 2nd degree of kinship	Manager with a spousal or other 2nd degree of kinship
					Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding			Position	Name	Relation-ship
Vice President											Chiao Tung University/ Director of HannStar® Display Corporation/ Director of Innolux Corporation/ Executive vice president of CNTouch Inc.
Deputy Executive Vice President	Taiwan	Cheng-Tao Chuang	Male	Dec. 13, 2017	83,712	0.04	`－`	`－`	`－`	`－`	Master, Institute of Environmental Engineering, National San Ya-sen University/ Mater, EMBA, National Chiao Tung University/ Deputy Manager of AUO/ Plant Manager of Innolux Corporation/ Direcotor of Japan Display Inc. Deputy Director, Display TechnologyCenter,ITRI	None	`－`	`－`	`－`
Corporate governance officer	Taiwan	Li-Hsin Yang	Male	Nov. 6, 2020	65,505	0.03	805	`－`	`－`	`－`	Ph. D in Institute of Human Resource Management, NSYSU/ President, Taiwan VTRON/ President, Arima Display Corporation/ Executive vice president of Operations, CPT Technology Co., Ltd. (Fuzhou); Director and President of Chunghwa Picture Tubes,Ltd.	None	`－`	`－`	`－`
CFO	Taiwan	James Liao	Male	Jan. 5, 2015	673,528	0.31	`－`	`－`	`－`	`－`	MBA of NTU Financial Manager of MediaTek	Director of FocalTech Electronics Co., Ltd./ Director of Hefei PineTech Electronics Co., Ltd./ Chairman and CEO of FocalTech Smart Sensors Co., Ltd./ FocalTech Smart Sensors, Ltd.: Director/ Supervisor of Vitrio TechnologyCorporation	`－`	`－`	`－`

Note 1: Information on the president, executive vice president, deputy executive vice president, department and branch heads, and anyone whose position is equivalent to that of a president, executive vice president, or deputy executive vice president shall also be disclosed regardless of titles.

Note 2: As for experience relevant to the current position, the title and responsibilities for work experience at a certified public accounting firm or an affiliated company preceding the current position shall be specified.

Note 3: Where the chairman and the president or person of an equivalent post (the highest-level manager) are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness of, necessity of, and the measures adopted in response thereto

(3) Remuneration paid during the most recent year to directors, supervisors, president and executive vice presidents

1.Remuneration to general directors and independent directors

2020; Unit: NT$ thousand; thousand shares; %

Title	Name	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	Remuneration to Directors	The sum of A, B, C and D in proportion to net profit after tax	The sum of A, B, C and D in proportion to net profit after tax	Remuneration to the capacityas	Remuneration to the capacityas	Remuneration to the capacityas	Remuneration to the capacityas	employees	employees	employees	employees	The sum of A, B, C, D, E, F and G in proportion to net profit after tax	The sum of A, B, C, D, E, F and G in proportion to net profit after tax	Remuner- ation received from an invested company other than the company’s subsidiary or parent company
		Remuneration (A)		Pension(B)		Remuneration to directors (C) (Note 1)		Professional fees(D)				Salaries, bonus and special disbursement(E)		Pension (F)		Remuneration to employees (G) (note 2)
		The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company		All companies mentioned in the financial statements		The Company	All companies mentioned in the financial statements
																Cash	Stock	Cash	Stock
Chairman	Genda Hu	`－`	`－`	`－`	`－`	`－`	`－`	90	90	0.01%	0.01%	10,320	11,617	`－`	`－`	1,262	`－`	1,262	`－`	1.15%	1.28%	None
General Director	James Liao	`－`	`－`	`－`	`－`	`－`	`－`	90	90	0.01%	0.01%	8,719	8,719	108	108	802	`－`	802	`－`	0.96%	0.96%	None
General Director	GWAA LLC	960	960	`－`	`－`	909	909	90	90	0.19%	0.19%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.19%	0.19%	None
	Designated representative: Han-PingShieh
General Director	Maxbase Holdings Limited	352	352	`－`	`－`	314	314	20	20	0.07%	0.07%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.07%	0.07%	None
	Representative: Yen Shen
Independent Director	Chintay Shih	960	960	`－`	`－`	1,387	1,387	120	120	0.24%	0.24%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.24%	0.24%	None
Independent Director	Chan-Jane Lin	960	960	`－`	`－`	1,387	1,387	150	150	0.25%	0.25%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.25%	0.25%	None
Independent Director	Linshan Lee	453	453	`－`	`－`	631	631	50	50	0.11%	0.11%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.11%	0.11%	None
Independent Director	Nengmou Tu	453	453	`－`	`－`	513	513	50	50	0.10%	0.10%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.10%	0.10%	None
General Director	GWAA LLC	509	509	`－`	`－`	458	458	30	30	0.10%	0.10%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.10%	0.10%	None
	Designated Representative: ChenmingHu
General Director	Sense Investment and ConsultingInc.	509	509	`－`	`－`	482	482	40	40	0.10%	0.10%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.10%	0.10%
	Designated Representative: George Chang
Independent Director	Xuhui Xu	509	509	`－`	`－`	579	579	60	60	0.11%	0.11%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.11%	0.11%
Independent Director	Chang Xu	509	509	`－`	`－`	555	555	50	50	0.11%	0.11%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.11%	0.11%
1. Specify the policy, system, standard and structure for remuneration of independent directors, and the relationship between the remuneration amount and their respo nsibilities, risks, and time commitments: The remuneration of the Company’s independent directors is determined in accordance with the Rules for Setting Director Remuneration, as approved by the Board of Directors. The remuneration is divided into three pa rts: Remuneration, business execution expenses, and compensation. Remuneration and business execution expenses are paid in accorda nce with the Rules formulated; compensation is paid in accordance with the Articles of Incorporation, and is based on the eva luation results of each director’s performance. The duties of independent directors are to assist the Board of Directors in performing and supervising the quality and integrity of the Company’s accounting, auditing, financial reporting processes, and inter nal control systems. The Company’s independent directors discuss Company proposals appropriately based on the virtue of their dutie s and expertise. Their remuneration is directly related to their meeting attendance status, training status, and performance evaluation. 2. Except as disclosed in the table above,remuneration received bythe Company’s directors for services rendered to al l companies included in the financial statements(e.g.,as consultants to non-employees)in the lastyear: None.

Specify the policy, system, standard and structure for remuneration of independent directors, and the relationship between the remuneration amount and their respo nsibilities, risks, and time commitments: The remuneration of the Company’s independent directors is determined in accordance with the Rules for Setting Director Remuneration, as approved by the Board of Directors. The remuneration is divided into three pa rts: Remuneration, business execution expenses, and compensation. Remuneration and business execution expenses are paid in accorda nce with the Rules formulated; compensation is paid in accordance with the Articles of Incorporation, and is based on the eva luation results of each director’s performance. The duties of independent directors are to assist the Board of Directors in performing and supervising the quality and integrity of the Company’s accounting, auditing, financial reporting processes, and inter nal control systems. The Company’s independent directors discuss Company proposals appropriately based on the virtue of their dutie s and expertise. Their remuneration is directly related to their meeting attendance status, training status, and performance evaluation. 2. Except as disclosed in the table above, remuneration received by the Company’s directors for services rendered to al l companies included in the financial statements (e.g., as consultants to non-employees) in the last year: None.

Notes 1 and 2: On February 4, 2021, the Board of Directors approved the distribution of employee compensation and director compensation for 2020 in the amounts of NT$123,450,000 and NT$7,214,000, respectively, all in cash.

Supervisor remuneration: Since June 21, 2012, the Audit Committee has been responsible for the supervisory duties stipulated in the relevant laws and regulations.

3. President’s and Executive Vice Presidents’ Remuneration

2020; Unit: NT$ thousand; thousand shares; %

Title	Name	Salaries (A)	Salaries (A)	Pension(B)	Pension(B)	Bonus and special disbursement (C)	Bonus and special disbursement (C)	Remuneration to the employees (D) (Note 1)	Remuneration to the employees (D) (Note 1)	Remuneration to the employees (D) (Note 1)	Remuneration to the employees (D) (Note 1)	The sum of A, B, C and D in proportion to net profit after tax (%)	The sum of A, B, C and D in proportion to net profit after tax (%)	Remuneration received from an invested company other than the company’s subsidiary or parent company
		The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company		All companies mentioned in the financial statements		The Company	All companies mentioned in the financial statements
								Cash	Stock	Cash	Stock
CEO and President	Genda Hu	5,842	7,139	-	-	4,568	4,568	1,262	-	1,262	-	1.15%	1.28%	None
CFO	James Liao	5,204	5,204	108	108	3,606	3,606	802	-	802	-	0.96%	0.96%	None
Executive Vice President	Chien-kuo Wang(Note3)	4,109	4,109	108	108	631	631	710	-	710	-	0.55%	0.55%	None
Executive Vice President	Pei-Tzu Wu	4,680	4,680	108	108	990	990	769	-	769	-	0.65%	0.65%	None
Executive Vice President	He-Nien Yang	4,844	4,844	108	108	2,889	2,889	684	-	684	-	0.84%	0.84%	None
Executive Vice President	Sung-Tsan Chiang(Note 2)	1,200	1,200	27	27	809	809	600	-	600	-	0.26%	0.26%	None
Executive Vice President	Hsiao-Hsu Tu	-	5,035	-	-	-	-	-	-	-	-	-	0.76%	None
Executive Vice President	Ching-Kai Chang	-	4,343	-	-	-	-	-	-	-	-	-	0.56%	None
Executive Vice President	Wei-Ching Hou	-	3,364	-	-	-	-	-	-	-	-	-	0.57%	None

Note 1: On February 4, 2021, the Board of Directors approved the distribution of employee compensation and director compensation for 2020 in the amount of NT$123,450 thousand and NT$7,214 thousand respectively, all in cash.

Note 2 : Took office October 8, 2020.

Note 3 : Date discharged: February 8,2021.

4. Remuneration paid to each of its top five management personnel for the company listed on the TWSE or the TPEx

2020; Unit: NT$ thousand; thousand shares; %

Title	Name	Salaries (A)	Salaries (A)	Pension(B)	Pension(B)	Bonus and special disbursement (C)	Bonus and special disbursement (C)	Remuneration to the employees (D) (Note 1)	Remuneration to the employees (D) (Note 1)	Remuneration to the employees (D) (Note 1)	Remuneration to the employees (D) (Note 1)	The sum of A, B, C and D in proportion to net profit after tax (%)	The sum of A, B, C and D in proportion to net profit after tax (%)	Remuneration received from an invested company other than the company’s subsidiary or parent company
		The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company	All companies mentioned in the financial statements	The Company		All companies mentioned in the financial statements		The Company	All companies mentioned in the financial statements
								Cash	Stock	Cash	Stock
CEO and President	Genda Hu	5,842	7,139	-	-	4,568	4,568	1,262	-	1,262	-	1.15%	1.28%	None
CFO	James Liao	5,204	5,204	108	108	3,606	3,606	802	-	802	-	0.96%	0.96%	None
Executive Vice President	He-Nien Yang	4,844	4,844	108	108	2,889	2,889	684	-	684	-	0.84%	0.84%	None
Executive Vice President	Hsiao-Hsu Tu	-	5,035	-	-	-	-	-	-	-	-	-	0.76%	None
Executive Vice President	Pei-Tzu Wu	4,680	4,680	108	108	990	990	769	-	769	-	0.65%	0.65%	None

Note 1: On February 4, 2021, the Board of Directors approved the distribution of employee compensation for 2020 in the amounts of NT$123,450 thousand , all in cash

Names of and distribution to managerial officers distributing employee compensation On February 4, 2021, the Board of Directors approved the distribution of employee compensation for 2020 in the amount of NT$123,450 thousand, all in cash.

2020; Unit: NT$ thousand; %

	Title	Name	Stock	Cash	Total	Proportion of total to net profit after tax (%)
Managerial personnel	CEO and President	Genda Hu	-	4,976	4,976	0.49%
	Executive Vice President	Sung-Tsan Chiang
	Executive Vice President	Ching-Kai Chang
	Executive Vice President	Wei-Ching Hou
	Executive Vice President	Hsiao-Hsu Tu
	Executive Vice President	He-Nien Yang
	Executive Vice President	Chien-kuo Wang
	Executive Vice President	Pei-Tzu Wu
	Business Executive Vice President	Ching-Suo Wang
	Business Executive Vice President	Lien-Kuo Wang
	Business Assistant Executive Vice President	Te-Chih Kung
	Deputy Executive Vice President	Chun-Fu Wang
	Deputy Executive Vice President	Po-Sheng Shih
	Deputy Executive Vice President	Cheng-Tao Chuang
	Corporate governance officer	Li-Hsin Yang
	CFO	James Liao

(4) Separate comparison and description of total remuneration, as a proportion of net profit stated in the parent company only financial reports or individual financial reports, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, supervisors, presidents, and executive vice presidents, and analysis and description of remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure.

The proportion of net profit stated in the parent company only financial reports or individual financial reports, as paid by the Company and by each other company included in the

consolidated financial statements during the past 2 fiscal years to directors, supervisors, presidents, and executive vice presidents:

Item	2020	2020	2019	2019
	Individual remuneration %	Consolidated remuneration %	Individual remuneration %	Consolidated remuneration %
Director remuneration(Note 1)	3.50%	3.63%	-13.52%	-13.98%
Supervisor remuneration(Note 2)	`－`	`－`	`－`	`－`
Presidents/executive vice presidents remuneration(Note 3)	4.41%	6.43%	-24.27%	-33.26%

Note 1: Includes remuneration received by directors who are also Company employees. Note 2: Since June 21, 2012, the Audit Committee has been responsible for the supervisory duties stipulated in the relevant laws and regulations.

Note 3: Includes remuneration received by presidents/executive vice presidents who are also Company directors

Remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure

The policy and standard for director remuneration distribution are based on the Company’s Articles of Incorporation, and the remuneration, business execution expenses and compensation are calculated in accordance with the Company’s Rules for Setting Director Remuneration. Director compensation is adjusted according to the results of their performance evaluations, including “Participation in Company Operations” and “Election and Continuing Education of Directors”. In addition to the policy and standard for manager remuneration (which are based on industry standards), performance evaluations include profitability and capability in building long-term Company growth, such as new products, new technologies, team building, etc.; the amount of remuneration distributed is positively correlated to respective operational performance. Director and manager remuneration are evaluated by the Remuneration Committee and recommended to the Board of Directors. The Company also takes into account the growth of the industry, the Company’s expansion policy, and cash flow in the coming years when granting remuneration to the aforementioned personnel, so that the Company has sufficient funds to meet the uncertainty of operational risks.

2020

3. Implementation of Corporate Governance

(1) The function of the Board

A total of 7 (A) board meetings were held in the past year. Director attendance is as follows:

					2020
Title	Name	Actual number of attendance (B)	Attend through proxy	Attendance rate (B/A)(%)	Remarks
Chairman	Genda Hu	7	0	100%	Re-election Date re-elected: June 20, 2020
Director	James Liao	7	0	100%
Director	GWAA LLC Designated Representative: Han-PingShieh	7	0	100%
Director	GWAA LLC Designated Representative: ChenmingHu	3	1	75%	Date newly assumed: June 20, 2020
Director	Sense Investment and Consulting Inc. Designated Representative: George Chang	4	0	100%
Director	Maxbase Holdings Limited Representative: Yen Chen	2	0	67%	Date discharged: May 12, 2020
Independent Director	ChintayShih	6	1	86%	Re-election Date re-elected: June 20,2020
Independent Director	Chan-Jane Lin	7	0	100%
Independent Director	ChangXu	3	1	75%	Date newly assumed: June 20, 2020
Independent Director	Xuhui Xu	4	0	100%
Independent Director	Linshan Lee	2	1	67%	Date discharged: June 20, 2020
Independent Director	Nengmou Tu	3	0	100%
Other matters to be noted: 1. If any of the following is applied to the operation of the Board, specify the date and the session, the content of the motions, the opinions of all Independent Directors, and how the Company handled the opinions of the Independent Directors: (1) Items listed in Article 14-3 of the Securities and Exchange Act: The Company has set up an Audit Committee; refer to the Securities and Exchange Act Article 14-5 matters listed in Audit Committee Operations (1). (2) Except for the aforementioned matters, the resolutions reached by the Board of Directors with the objections or reservations of the independent directors documented or declared in writing: None 2. Situations where the directors have personal interest conflicts to the proposal and are required to recuse themselves: Directors recused themselves from participating in the discussion and voting on their remuneration, bonuses, transfer of treasury stock, and Company credit lines of subsidiaries that are not one hundred percent owned by them. 3. Implementation status of Evaluation of the Board of Directors: Refer to table (1)-1 for details. 4. The objective for fortifying the function of the Board in the current period and the most recent period (e.g. the establishment of the Auditing Committee, and the upgrade of transparency in information) and the evaluation of the state of accomplishment:

Title	Name	Actual number of attendance (B)	Attend through proxy	Attendance rate (B/A)(%)	Remarks
(1) Four of the nine directors of the Company are independent directors, accounting for 44% of all directors. The Board of Directors has authorized the establishment of an Audit Committee and a Remuneration Committee, both of which are composed of independent directors. (2) During the year, a corporate governance officer was established as the top corporate governance manager, in order to assist the Board in fulfillingits functional objectives.

(1)-1 Implementation status of Evaluation of the Board of Directors

Evaluation Cycle	Evaluation Period	Evaluation Scope	Evaluation Method	Evaluation items
Annually	Jan. 1, 2020 - Dec. 31, 2020	Members of the Board of Directors, functional committees, and individual directors	Internal self-evaluation by the Board of Directors and functional committees; self-evaluation by individual directors	(1) Board of Directors performance evaluations: Participation in the Company’s operations; improvement of the quality of board decisions, board composition, and structure; election and continuing education of directors; and internal controls. (2) Board members’ performance self-evaluations: Alignment with the Company’s goals and missions; awareness of the duties of a director; participation in the Company’s operations; management of internal relationships and communications; directors’ professionalism and continuing education; and internal controls. (3) Audit Committee performance evaluations: Participation in the Company’s operations; awareness of audit committee duties; improvement of quality in audit committee decisions; makeup of the audit committee and election of its members; and internal controls. (4) Remuneration Committee performance evaluations: Participation in the Company’s operations; awareness of Remuneration Committee duties; improvement of quality in Remuneration Committee decisions; makeup of the Remuneration Committee and election of its members;and internal controls.

(2) The function of Audit Committee

A total of 4 (A) Audit Committee meetings were held in the past year. The attendance of independent directors is as follows:

2020

					2020	2020
Title	Name	Actual number of attendance (B)	Attend through proxy	Attendance rate (%) (B/A)(Note )	Remarks
Independent Director	Chintay Shih	3	1	75%	Re-election Date of Re-election : June 20, 2020
Independent Director	Chan-Jane Lin	4	0	100%
Independent Director	Chang Xu	2	0	100%	Date newly assumed: June 20, 2020
Independent Director	Xuhui Xu	2	0	100%
Independent Director	Linshan Lee	1	1	50%	Date discharged: June 20, 2020
Independent Director	Nengmou Tu	2	0	100%
Other matters to be noted: 1. Annual highlights of the Company’s Audit Committee: (1) The purpose of the Audit Committee is to assist the Board of Directors in upholding quality and integrity in overseeing the Company’s implementation of accounting, auditing, financial reporting processes, and financial controls. The Committee’s primary purpose is to oversee the following matters: (1) The Company’s financial statements is presented properly. (2) The hiring (dismissal), independence, and performance of the CPAs (certified public accountants). (3) Effective implementation of the Company’s internal controls. (4) The Company’s compliance with relevant laws and regulations. (5) Management of the Company’s existing and potential risks. (2) The Company’s Audit Committee consists of all independent directors, and at least one meeting is held every quarter. (3) The CPAs explain the impact of the audit status, revision of Statement of Financial Accounting Standards (SFAS), and internal control issues on the Company to independent directors on a no less than quarterly basis at the Audit Committee meeting. (4) In addition to sending audit reports to independent directors for review on a regular basis, the audit unit communicates with independent directors and provides explanation to them on a no less than quarterly basis at the Audit Committee meeting. 2. For the operation of the Audit Committee in any of the following circumstances, please specify the date, term, the contents of the proposals, the resolution of the Audit Committee, and the process of the opinions proposed by the Audit Committee: (1)The content ofthe particularsinscribedin Article14-5 ofthe Securities andExchangeAct: Board Meeting Proposal and Subsequent Handling Securities and Exchange Act Article 14-5 matters Resolutions not approved by the Audit Committee but approved by at least 2/3 of all directors The 16th Board 1. 2019 Financial Statement. V 2. Evaluation of CPAs’ reappointment and independence. V
Board Meeting	Proposal and Subsequent Handling				Securities and Exchange Act Article 14-5 matters	Resolutions not approved by the Audit Committee but approved by at least 2/3 of all directors
The 16th	1. 2019 Financial Statement.				V
Board	2. Evaluation of CPAs’ reappointment and independence.				V

Meeting of	3. 2019 Statement of Internal Control.	V
the 6th Term Feb 7, 2020	Audit Committee resolution: Approved (as proposed) by all Audit Committee members who
	attended the meeting.
	Company handling of Audit Committee opinion: Approved (as proposed) by all directors who
	attended the meeting.
	1.2020 Q1 FinancialStatement.

The 18th	2.Theloanof fundsfromsubsidiaries to the Company.	V
Bd
oar	Audit Committee resolution: Approved (as proposed) by all Audit Committee members who
Meeting of
	attended the meeting.
the 6th Term
	Company handling of Audit Committee opinion: Approved (as proposed) by all directors who
May 8, 2020
	attended the meeting.

	1. 2020Q2 Financial Statement.	V
	2. 2020 Audit Fee.	V
Th 2d
e n	3. Company endorsement and guarantee of its subsidiaries’
Board		V
	credit facilities with Company.
Meeting of
	Audit Committee resolution: Approved (as proposed) by all Audit Committee members who
the 7th Term
	attended the meeting.
Aug 7, 2020
	Company handling of Audit Committee opinion: Approved (as proposed) by all directors who

	attended the meeting.
	1. The Company’s endorsement and guarantee of its
		V
	subsidiaries’ Companycredit lines.

The 4th Board	2. The Company’s endorsement and guarantee of wafer
		V
Meeting of	procurement for its subsidiaries.

the 7th Term	Audit Committee resolution: Approved (as proposed) by all Audit Committee members who
Nov 6, 2020	attended the meeting.
	Company handling of Audit Committee opinion: Approved (as proposed) by all directors who
	attended the meeting.
	1. 2020 Financial Statement.	V
	2. Evaluation of CPAs’ reappointment and independence.	V
The 5th Board
	3. 2020 Statement of Internal Control.	V
Meeting of
	Audit Committee resolution: Approved (as proposed) by all Audit Committee members who
the 7th Term
	attended the meeting.
Feb 4 2021
,	Company handling of Audit Committee opinion: Approved (as proposed) by all directors who

	attended themeeting.

communication with the Chief Internal Auditor ispositive. Date of meeting Communication item Feb. 7, 2020 1. Report on 2019Q4 internal control deficiencies 2. Report on 2019Statement of Internal Control May8,2020 Report on 2020Q1 internal control deficiencies Aug. 7,2020 Report on 2020Q2 internal control deficiencies Nov. 6, 2020 1. Report on 2020Q3 internal control deficiencies 2. 2021 Audit Plan	communication with the Chief Internal Auditor ispositive. Date of meeting Communication item Feb. 7, 2020 1. Report on 2019Q4 internal control deficiencies 2. Report on 2019Statement of Internal Control May8,2020 Report on 2020Q1 internal control deficiencies Aug. 7,2020 Report on 2020Q2 internal control deficiencies Nov. 6, 2020 1. Report on 2020Q3 internal control deficiencies 2. 2021 Audit Plan
Date of meeting	Communication item	Opinion of indendent director
	1. Report on 2019Q4 internal control deficiencies	Agree and no objection
Feb 7 2020
. ,	2. Report on 2019Statement of Internal Control	Agree and no objection

May8,2020	Report on 2020Q1 internal control deficiencies	Agree and no objection
Aug. 7,2020	Report on 2020Q2 internal control deficiencies	Agree and no objection
	1. Report on 2020Q3 internal control deficiencies
6 2020		Agree and no objection
Nov. ,	2. 2021 Audit Plan

(2) CPAs attend the Audit Committee meeting on a quarterly basis to report on auditing status and legally-mandated matters of note. Members of the Audit Committee may communicate with the CPAs at any time if they have any questions about financial and business conditions, and may direct the Company’s relevant units to conduct reviews and improvements.

Date of meeting	Communication item	Opinion of indendent director
Feb. 7,2020	Discussion of important issues	Agree and no objection
May8,2020	Discussion of important issues	Agree and no objection
Aug. 7,2020	Discussion of important issues	Agree and no objection
	1. Discussion of important issues
Nov. 6, 2020		Agree and no objection
	2. Discussion of keyexamination findings

(3) Status of Corporate Governance as required for company, and any nonconformity to the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies and reasons thereof

	Implementation Status	Implementation Status	Implementation Status	Deviation from the
				Corporate
				Governance
				Best-Practice
Items for evaluation
	Yes	No	Summary	Principles for the

				TWSE/GTSM
				Listed Companies
				and reasons
1. Has the Company established			The Company has set up Corporate Governance Best
and disclosed its corporate			Practice Principles, which are disclosed on both the
governance practices based			Company’s website and the Market Observation Post System
on the Corporate Governance			(MOPS) in accordance with the requirements.	None
Best Practice Principles for
TWSE/GTSM Listed
Companies?
2. Equity structure and
shareholders’ equity
(1) Has the Company instituted			(1) The Company has assigned dedicated staff and set up
an internal procedure for			an e-mail address to properly handle shareholders’
handling suggestions,			suggestions, questions, and disputes.
questions, disputes of the
shareholders and legal
actions, and comply with the
procedure properly?

(2) Has the Company kept track			(2) The Company keeps track of the shareholding status of
on the major shareholders			directors, managerial officers and major shareholders
roster of the Company and			holding 10% or more of the shares.
the parties controlling these
shareholders?
				None


(3) Has the Company	 		(3) The Company has established a risk control mechanism
established and implemented			by formulating various management rules and
the risk control mechanism			regulations for transactions with affiliated companies.
and firewall between the
corporate headquarters and
the affiliates?

(4) Has the company adopted			(4) To maintain the fairness of transactions in the security
internal rules prohibiting			exchange market, the Company has established the
company insiders from			Operation Procedures for Internal Material Information
trading securities using			Disclosure and Prevention of Insider Trading, in
information not disclosed to			accordance with the competent authorities’ relevant
the market?			regulations.

			Implementation Status	Deviation from the
				Corporate
				Governance
				Best-Practice
Items for evaluation
	Yes	No	Summary	Principles for the

				TWSE/GTSM
				Listed Companies
				and reasons
3. Composition and			(1) Article 20 of the Company’s Corporate Governance
Responsibilities of the Board			Best Practice Principles (Required Competence of the
of Directors			Board of Directors as a Whole) stipulates that the
(1) Has the Board established a			election of the Board of Directors takes into account the
diversity policy for the			knowledge, skills, qualities, and gender equality
composition of its members			required to perform their duties. The current Board
and implemented it			consists of 9 members:
accordingly?			1. There is one female director, accounting for 11.11%
			of all directors, and eight male directors, accounting
			for 88.89% of all directors.
			2. 22% of the directors are employees of the
			Company, and 44.44% are independent directors.
			Of the four independent directors, two have 6 years
			of service, with the other two being newly
			appointed this year. Of the nine directors, three are	None
			over 70 years old, three are 60-69 years old, and the
			other three are 40-50 years old.
			3. In addition to the Taiwanese directors, there are two
			American directors, who have brought
			multinational culture to the team.
			4. The Board is composed of members with
			industrial and academic backgrounds. Four of the
			members are from the Department of Electrical
			Engineering, Princeton University; Department of
			Electrical Engineering and Computer Sciences,
			University of California, Berkeley; Department of
			Electrical and Computer Engineering, Carnegie
			Mellon University; and the University of Southern
			California MBA program, respectively. One
			member comes from the Department of Business
			Administration, National Taiwan University.
			5. The independent directors possess professional
			backgrounds, skills, and industry experience. Two
			of the directors are from the Department of
			Electrical Engineering, Princeton University, and
			the School of Industrial Engineering, Purdue
			University, respectively. The other two directors are
			from the Accounting program at the University of
			Maryland, and the Business Administration
			program at Freeman School of Business, Tulane
			University.
			6. The diversity policy of the Board of Directors is
			summarized below and is disclosed on the
			Company’s website:

				Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status			Deviation from the
											Corporate
											Governance
											Best-Practice
Items for evaluation
	Yes	No				Summary					Principles for the

											TWSE/GTSM
											Listed Companies
											and reasons
			Core for diversification	Gd	Business	Leadership and	Industrial	International	Crisis	Financial
			Name of Director	ener	manage- ment	Decision- making	knowledge	market view	manag- ement	Accounting
			Genda Hu	Male	v	v	v	v	v
			James Liao	Male	v	v	v	v	v	v
			GWAALLC Designated	Male	v	v	v	v	v
			Representative: Han-PingShieh
			GWAALLC Designated
			Representative: ChenmingHu	Male	v	v	v	v	v
			Sense
			Investment and
			Consulting Inc.	Male	v	v	v	v	v	v
			Representative:								No other functional
			George Chang
			Chintay Shih	Male	v	v	v	v	v		committees have
			Chan-Jane Lin	Female	v	v	v	v	v	v	currently been
			Chang Xu	Male	v	v	v	v	v		established
			Xuhui Xu	Male	v	v	v	v	v
			7. It is estimated that				the number of female board				None
			members will be increased to one-fourth in the
			future.

(2) Further to the establishment	
			(2) The Company has the Remuneration Committee and
of the Remuneration
			the Audit Committee in accordance with the law, and
Committee and the Auditing
			has not established any other functional committees.
Committee, has the Company

voluntarily established other

functional committees?





(3) Has the Company	
established a methodology			(3) The Company conducts annual self-evaluation of the
			Board’s performance in accordance with the Board of								None
for evaluating the
			Directors Rules for Self-evaluation and Peer Evaluation.
performance of its Board of
			In addition, performance self-evaluation questionnaires
Directors, performed
			are given to all members of the Board of Directors each
evaluations on an annual
			year. Refer to (1)-1 Board of Directors’ Evaluation
basis, submitted the results of
			under III. Corporate Governance Operations for the
the performance evaluation to
			sections evaluated:
the Board, and used such as a
			The 2020 Annual Self-evaluation Questionnaire
reference for individual
			consisted of 41 questions in five major sections. Each
director remuneration and
			director evaluated the Board’s overall operation
renomination?
			performance based on the 41 questions in the

			questionnaire, on a scale of 5 to 1. Evaluation results

			were all excellent (grade 4) or above.

			The results of the performance evaluations from

			Directors’ Participation in the Company’s Operations,

			Elections, and Continuing Education are positively

			correlated with director compensation.

			Implementation Status	Implementation Status	Implementation Status	Deviation from the
						Corporate Governance Best-Practice
Items for evaluation
	Yes	No	Summary			Principles for the

						TWSE/GTSM Listed Companies and reasons

(4) Has the Company evaluated			(4) The Company evaluates the independence of the
the independence of the			appointed CPAs on an annual basis, in accordance with
commissioned certified			Article 29 of the Corporate Governance Best Practice
public accountants regularly?			Principles. The evaluation results were reported to the
			Audit Committee and the Board of Directors on
			February 4, 2021. In addition, the Board of Directors
			formulated the evaluations for CPAs’ independence (as
			listed in the table below) with reference to Article 47 of
			the Certified Public Accountant Act and the evaluations
			stated in No. 10, “Integrity, Objectivity and
			Independence”, from the Bulletin on Norms for
			Certified Public Accountant Professional Ethics in the
			Republic of China, and completed the Report on
			Independence Evaluation for Certified Public
			Accountants Lilac Shue and Chih-Ming Shao, the
			Deloitte & Touche CPAs appointed by the Company.
			After referring to the Statement of Certified Public
			Accountant Independence issued by the CPAs, the
			results were approved by all Directors in attendance at
			the meeting.

			Standards for Evaluating CPAs’ Independence and
			Competence
					Compliance
			Point of evaluation	Result	with CPA
					Independence
			1. CPA is employed by the Company to
			perform regular work receives a fixed salary	No	Yes
			or serves as a director or supervisor.
			2. CPA who once served as a director,
			supervisor, managerial officer, or officer of
			the Company has significant influence on	No	Yes
			the certification of documents/statements
			and has been dismissed for less than 2years.
			3. The accounting firm and the Company are
				No	Yes
			affiliates.

			4. CPA and Company responsible
			person/managerial officer are spouses, or
				No	Yes
			relatives within the second degree of

			kinship.
			5. CPA, their spouse, or minor children
			has/have an investment or benefit-sharing	No	Yes
			relationshipwith the Company.
			6. CPA, their spouse, or minor child has/have
				No	Yes
			fund lendingwith the Company.

			7. CPA has been continuously appointed to
				No	Yes
			provide certification services for 7years.

			8. The Company does not acquire the
			Statement of Independence issued by the	No	Yes
			CPA annually.
			9. CPA has not been subject to disciplinary
			action by the competent authorities and the	No	Yes
			CPA Associations R.O.C. (Taiwan), or under

			Implementation Status			Deviation from the
						Corporate
						Governance
						Best-Practice
Items for evaluation
	Yes	No	Summary			Principles for the

						TWSE/GTSM
						Listed Companies
						and reasons
			Article 37-3 of the Securities and Exchange
			Act.
			10. The quality and timeliness of audit and tax
				No	Yes
			services do not meet the requirements.

			11. The Company has been subject to litigation
			or correction by the competent authorities	No	Yes
			for financial reporting.
			12. The accounting firm’s size and reputation
			were significantly damaged in the year under	Yes	No (Note)
			review.
			13. Poor interaction between the CPA,
			management level, governance units, and the	No	Yes
			Chief Internal Auditor.

			Note: The cooperating CPAs and the audit service team led
			by them are unrelated to the recent news of the
			accounting firm; the matter does not affect the
			competence of the CPAs.

	Implementation Status	Implementation Status	Implementation Status	Deviation from the
				Corporate
				Governance
				Best-Practice
Items for evaluation
	Yes	No	Summary	Principles for the

				TWSE/GTSM
				Listed Companies
				and reasons
4. Does the TWSE/GTSM			(1) On November 6, 2020, the Company’s Board of
Listed Company have an			Directors approved to appoint Mr. Yang Li-hsin,
appropriate and appropriate			Chairman’s Office Special Assistant, as the Corporate
number of corporate			Governance Senior Officer. He meets the eligibility
governance personnel, and			criteria from the Establishment of Board of Directors by
has the Company designated a			TWSE/GTSM Listed Companies and the Board’s
Corporate Governance Senior			Exercise of Powers in that he has more than three years
Officer to deal with corporate			of relevant work experience; is responsible for corporate
governance related affairs			governance-related matters on a part-time basis; and
(including, but not limited to,			convenes a governance group to assist directors and
providing directors and			independent directors in complying with laws and
supervisors with information			regulations. This group includes the Board of Directors’
required for the execution of			Secretary; Finance and Accounting Department;
their duties; assisting			Auditing Department; Legal Affairs Department; and
directors and supervisors in			Investor Relations Department. All of these have at least
complying with the laws and			three years of experience in the management of finance,
regulations; conducting board			stock affairs, or business affairs of public companies.
meeting and shareholders’			Their primary duties include, but are not limited to:
meeting related matters; and			1. Proposing and implementing CSR policies, systems,
preparing the minutes for			and related management guidelines and specific
board meetings and			promotion plans, and for reporting on such to the
shareholders’ meeting in			Board of Directors annually.
accordance with the law,			2. Implementing, coordinating, and planning ethical
etc.)?			corporate policy promotion and relevant trainings, to
			ensure the effectiveness of implementation.	None
			3. Assisting the Board of Directors and management in
			examining and evaluating the effectiveness of ethical
			corporate management practices, regularly assessing
			compliance with business processes, and reporting
			annually to the Board of Directors.
			4. Providing directors, independent directors, and
			functional committees with information required for
			the execution of their duties; amending corporate
			governance regulations; and assisting directors in
			complying with laws and regulations.
			5. Conducting board meetings and shareholders’
			meetings in accordance with the Corporate
			Governance Best Practice Principles and corporate
			governance regulations.
			6. Pre-registering the date of shareholders’ meetings;
			preparing notices, manuals, and minutes of meetings
			within the statutory period; and registering changes in
			the Articles of Incorporation and re-election of
			directors in accordance with laws and regulations.
			7. Maintaining investor relations, and establishing
			communications with institutional investors and
			general shareholders, in order to ensure that investors
			receive adequate information and that shareholder
			rights are well-protected.

			Implementation Status	Deviation from the
				Corporate
				Governance
				Best-Practice
Items for evaluation
	Yes	No	Summary	Principles for the

				TWSE/GTSM
				Listed Companies
				and reasons

			(2) In 2021, the 2020 business development status was
			reported to the Board of Directors as follows:
			1. The Company ranked Top 20% in 2019 Corporate
			Governance Evaluation held by Taiwan Stock
			Exchange (TWSE) and expected to maintain Top
			20% in 2020.
			2. Added the new position of Corporate Governance
			Senior Officer.
			3. Attendance rates for 2020 Board Meetings reached
			92%.
			4. Conducted awareness-raising sessions for employees
			and specific personnel on insider trading, protection
			of intellectual property rights and trade secrets, code
			of ethics, and the whistleblowing system.
			5. Completed the signing of Integrity Commitment
			Letter by senior executives.


5. Has the Company established			(1) In pursuit of sustainable development, the Company has
a communications channel			appointed a spokesman and an acting spokesman, and
and established a designated			has established a designated stakeholder zone on its
zone on its website for			website. Stakeholders may contact the Company at any
stakeholders (including, but			time by phone, letter, fax, or email with the information
not limited to, shareholders,			listed on the Company’s website, in order to meet their
employees, customers, and			needs and concerns, as well as to serve as a reference
suppliers), and has the			and basis for the Company’s CSR and operations &
Company properly responded			development plans in the future.
to all CSR issues such			(2) Stakeholders include investors, employees, customers,
stakeholders are concerned			and suppliers, with each having dedicated
with?			communication channels in addition to phone, postal	None
			mail, and email.
			(3) After receiving information, internal staff transfer it to
			the responsible departments for coordination as
			circumstances require. Together with relevant
			departments, they communicate, discuss, settle, and
			respond accordingly to solve the risks and opportunities
			of the Company’s situation, and further enhance its
			competitiveness. All of the above are regulated in the
			Consultation and Communication Management
			Procedures.

6. Has the Company appointed a	
			The Company has appointed a professional shareholder
professional shareholder
			services agent (the Transfer Agency Department of CTBC	None
services agent to deal with
			Bank Co., Ltd.) to deal with shareholder affairs.
shareholder affairs?

7. Disclosures	
(1)Has the Company			(1)The Companyhas established a website

	Implementation Status	Implementation Status	Implementation Status	Deviation from the
				Corporate
				Governance
				Best-Practice
Items for evaluation
	Yes	No	Summary	Principles for the

				TWSE/GTSM
				Listed Companies
				and reasons
established a website for the			(http://www.focaltech-electronics.com/) that is
disclosure of Company’s			maintained by a dedicated unit. In addition to the
financial and business, and			collation and disclosure of corporate information, the Unit
corporate governance?			also regularly discloses the Company’s financial- and
			business-related information.

				None
(2) Has the Company adopted
other means of disclosures			(2) The Company has established a website in both English
(e.g., the installation of a			and Chinese, and has appointed a spokesman and an
website in English language,			acting spokesman in accordance with their duties, who
appointment of designated			are responsible for disclosing the Company’s
persons for the gathering and			information to the public and on the Company’s website.
disclosure of information, the
proper implementation of the
spokesman system, and the
minutes of the investor
conference on record posted
on the website)?

(3) Does the Company announce			(3) The Annual Financial Report 2019 was announced within	The Company’s
and report the annual			three months after March 31, 2020. Financial reports for	financial report was
financial report within two			the first, second, and third quarters of 2020, as well as	announced and
months after the end of the			monthly operating conditions, were all announced and	reported within the
fiscal year? Does the			reported within the statutory period.	statutory
Company announce and				three-month period;
report the first, second, and				reports were not
third quarter financial reports				made earlier within
and the monthly operating				two months.
conditions well in advance of
the required deadlines?
8. Is there any other important			(1) Implementation of employee rights and benefits, and
information to facilitate a			employee care: Refer to “V. Industrial Relations” within
better understanding of the			Chapter 5. Operations Overview of this annual report.
Company’s corporate			(2) Investor relations, supplier relations, and stakeholder
governance practices			rights: The Company discloses its financial, business,
(including, but not limited to,			and corporate governance information on its website at
employee rights and benefits,			all times, providing open and transparent information for
employee care, investor			free access by general employees, investors, suppliers,
relations, supplier relations,			and stakeholders.	None
stakeholder rights, status of			(3) Status of directors’ continuing education: As shown in
directors’ and supervisors’			the table below.
continuing education,			(4) Implementation of risk management policies and risk
implementation of risk			assessment criteria: Refer to “VI. Analysis and
management policies and risk			Evaluation of Risk Matters for the Most Recent Fiscal
assessment criteria,			Year and Up to the Publication Date of the Annual
implementation of customer			Report” within Chapter 7. Review and Analysis of
relatedpolicies,andpurchase			Financial Conditions,Performance,and Risk Matters of

	Implementation Status	Implementation Status	Implementation Status	Deviation from the
	Yes			Corporate
				Governance
				Best-Practice
Items for evaluation
		No	Summary	Principles for the

				TWSE/GTSM
				Listed Companies
				and reasons
of liability insurance for			this annual report.
directors and supervisors by			(5) Implementation of customer policy: We have established
the Company)?			a dedicated customer service unit and an application
			engineering unit, to provide timely and optimal service
			to our customers.
			(6) Directors and Officers Liability Insurance: Liability
			insurance has been taken out for directors and managers.
9. State of corrective action taken for responding to the results of the corporate governance assessment announced by Taiwan
Stock Exchange Corporation in the Corporate Governance Center the most recent fiscal year, and the priority for
improvement on issues pending further corrective action and related measures.
(1) Improvements made:
The position of Corporate Governance Senior Officer was established and appointed in 2020.
(2) Future enhancements:
The Company intends to advance the appointment of an external professional body to 2021, in order to evaluate the
Board of Directors and functional committees in accordance with the Rules for Self-evaluation or Peer Evaluation of the
Board of Directors.

Further Studying Status of Directors in 2020:

Title	Name	Date of Advanced study	Organized by	Course Name	Number of Hours
Director	Genda Hu	Oct. 28, 2020	Securities & Futures Institute	Approaching Employee and Director Remunerations in Terms of Securities and Exchange Act Amended Article 14	3
		Nov. 3, 2020	Securities & Futures Institute	Examining Directors and Supervisors’ Legal Risks and Responses from the Perspective of Major Corporate Fraud Cases	3
Director	James Liao J	uly 21, 2020	Accounting Research and Development Foundation	Policy Analysis and Internal Control Practices for “Assisting Companies to Improve their Financial Report Self-preparation Capacity”	6
		Nov. 11, 2020	Accounting Research and Development Foundation	Application of “Commercial Arbitration” to Businesses, and Analysis of Legal Liability	3
		Nov. 25, 2020	Accounting Research and Development Foundation	Tracing “Funding Flows” in Fraudulent Financial Reporting, and Discussion of Legal Liability Case Examples	3

Corporate Director Representative	Han-Ping Shieh	July 20, 2020	Accounting Research and Development Foundation	Labor Law Compliance Practices and COVID-19 Outbreak Case Studies	6
Corporate Director Representative	Chenming Hu	Oct. 7, 2020	Accounting Research and Development Foundation	Amendment Highlights and Common Deficiencies in the Preparation of IFRS Financial Reporting-Related Regulations	3
		Oct. 13, 2020	Accounting Research and Development Foundation	Common Corporate Governance Failures and Related Laws	3
Corporate Director Representative	George Chang	Aug. 12, 2020	Taiwan Corporate Governance Association	Trends in Digital Technology, Artificial Intelligence, and Risk Management	3
		Oct. 27, 2020	Taiwan Corporate Governance Association	ESG Development Trends and Socially Responsible Investment (SRI)	3
		Nov. 11, 2020	Taiwan Corporate Governance Association	Viewing Corporate Directors and Supervisors’ Legal Liabilities from the Perspective of Intellectual PropertyRights	3
		Nov. 26, 2020	Taiwan Academy of Bankingand Finance	Corporate Mergers and Acquisitions and Legal Risks	3
Independent Director	Chan-Jane Lin	Feb. 18, 2020	Taiwan Corporate Governance Association	Impact Investing: Do Well by DoingGood	1
		July 14, 2020	Securities & Futures Institute	How to Innovate KPIs and Performance Management in the Digital EconomyEra	3
		Aug. 7, 2020	Taiwan Corporate Governance Association	Key Technologies and Market Applications for5Gand IoT	3
		Dec. 2, 2020	Taiwan Corporate Governance Association	The 16th Corporate Governance Summit: Corporate Governance Moving Forward - Corporate Governance Blueprint 3.0; Blueprint Planning and Practice for Sustainable Development; Independent Directors and Competition for Management Authority	3
Independent Director	Chintay Shih	July 30, 2020	Securities & Futures Institute	The Impact of COVID-19 on the Global Economy	3
		Sep. 29, 2020	Taiwan Corporate Governance Association	Current Status of Director and Supervisor Liability Insurance and Sharing of Recent Case Studies	1.5
		Sep. 29, 2020	Taiwan Corporate Governance Association	Competition for Management Authorityand Case Studies	1.5
Independent Director	Chang Xu	Oct. 15, 2020	Securities & Futures Institute	Analysis of Director and Supervisor Related-Party Transactions andCaseStudies	3
		Oct. 15, 2020	Securities & Futures Institute	New Forms of Corporate Governance and Exercise of	3

				Powers to be Followed by Boards of Directors
Independent Director	Xuhui Xu	Oct. 13, 2020	Accounting Research and Development Foundation	Common Corporate Governance Failures and Related Laws	3
		Nov. 3, 2020	Accounting Research and Development Foundation	Compliance-based Audit Practices for Corporate Shareholders’ Meetings	3

(4) The operation of the Remuneration Committee

1. Information on the members of the Remuneration Committee

March 31, 2021

		Have more than 5 years of experience and	Have more than 5 years of experience and	Have more than 5 years of experience and
		professional qualifications			Status of independence(Note )

		An instructor or	A judge, public	Have work											Number of
		higher in a	prosecutor,	experience											public
		department of	attorney, certified	in the area											companies
		commerce, law,	public	of											where the
		finance,	accountant, or	commerce,											members of
	Conditions	accounting, or	other	law,											the
		other academic	professional or	finance, or											Remuneration
By identity		department	technical	accounting,											Committee	Remark
		related to the business needs	specialist who has passed a	or otherwise	1	2	3	4	5	6	7	8	9	10	are also the members of
		of the company	national	necessary											the
	Name	in a public or	examination and	for the											remuneration
		private junior	been awarded a	business of											committees
		college, college,	certificate in a	the											of these
		or university.	profession	company.											companies
			necessary for the
			business of the
			company.
Independent
	Chintay Shih														2
Director

Independent	Chan-Jane
															1
Director	Lin

Independent	Chun-Hao
															2
Committee	Lai

Note: Respective member who meet the following qualifications 2 years before assumption of office and at the time of assumption office shall put a “  ” in the appropriate space.

(1) Not an employee of the Company or its affiliated companies.
(2) Not a director or supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of issued shares of the Company or ranking in the top ten in holdings.
(4) Not a manager in preceding subparagraph (1) or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding subparagraph (2) and (3).
(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of issued shares of the Company, or that ranks among the top five in shareholdings, or designates its representative to serve as a director or supervisor of the Company under Article 27(1) or (2) of the Company Act. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(6) Not a director, supervisor or employee of other company such that a majority of the Company’s director seats or voting shares are controlled by the same person. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with

the laws of the country of the parent or subsidiary.)

(7) The chairpman, president, or a person holding an equivalent position of the Company is not a director (or governor), supervisor, or employee of other company or institution, or are spouses. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(8) Not a director (or governor), supervisor, manager, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. (Not applicable in cases where the specified company or institution holds at least twenty percent but not exceeding fifty percent of the total number of issued shares of the Company, and the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(9) Not a professional individual who, or an owner, partner, director (or governor), supervisor, or manager of a sole proprietorship, partnership, company, or institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation not exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations
(10)Those who are not subject to any of the conditions listed in Article 30 of the Company Act.
Information on Operations of Remuneration Committee
(1) The Remuneration Committee of the Company is consisted of 3 members.
(2) Term of office of the current members: The Company’s Remuneration Committee was re-elected on August 7, 2020 for the period from August 7, 2020 to June 20, 2023. A total of 2 (A) Remuneration Committee meetings were held in the past year. The qualifications of the committee members and the attendance are as follows:

					2020	2020
			Actual number of	Attend through	Attendance rate
Title		Name				Remarks
			attendance(B)	proxy	(B/A) (%)

Convener		ChintayShih	1	1	50%	Re-election
						Date re-elected: Aug. 7,
Committee		Chan-Jane Lin	2	0	100%
						2020

						Date discharged: June 20,
Committee		Linshan Lee	2	0	100%
						2020

						Date newly assumed: Aug.
Committee		Chun-Hao Lai	0	0	--
						7,2020

Other notes:
1. Where the B		oard may not take or revise the advice of the Remuneration			Committee, specify the date and the session of
the Board,		the content of the motion, the resolution of the Board, and			the response to the opinions of the Company
towards the advice of the Remuneration Committee (if the resolution of the Board suggested better position of
remuneration than the advice of the Remuneration Committee, specify the reasons and the variations): None
2. Where members of the Remuneration Committee may have adverse opinions or qualified opinions in their resolutions on
	record or in written declaration: None
	Remuneration
		Proposal and Subsequent Handling
	Committee

		1. Evaluation of 2019 Manager Remuneration
		2. 2020 Manager Remuneration system
		3. Formulation of operationprocedures for employees to subscribe to treasurystock
	7thsession of
		4. List of employees subscribingto treasurystock
	4thterm of the
		5. Manager bonuses
	Board
		Remuneration Committee resolution: Approved (as proposed) by all committee members who attended the meeting.
	Mar. 20, 2020

		Company handling of Remuneration Committee opinion: Approved (as proposed) by all directors who attended the meeting.

		Actual number of	Attend through	Attendance rate
Title	Name				Remarks
		attendance(B)	proxy	(B/A) (%)

	Establishment of Rules for Retirement and Dismissal of Managers
8thsession of
	Remuneration Committee resolution: Approved (as proposed) by all committee members who attended the meeting.
4thterm of the
Board
	Company handling of Remuneration Committee opinion: Approved (as proposed) by all directors who attended the meeting.
May 8, 2020

(5) Differences Between the Implementation of CSR and the CSR Best Practice Principles for TWSE/GTSM Listed Companies and Reasons Thereof

	Implementation Status	Implementation Status	Implementation Status	Deviations
				from
				"Corporate
				Social
				Responsibility
Items for evaluation				Best Practice
	Yes	No	Summary
				Principles for

				TWSE/GTSM
				Listed
				Companies”
				and reasons
1. Does the Company conduct risk			The Company performs a comprehensive risk assessment
assessment on environmental, social,			annually, which involves operational, environmental, and
and corporate governance issues related			corporate governance issues. The 2020 Risk Assessment
to the Company’s operations, and has			was reported to the Board of Directors on February 7,
the Company established risk			2020 and the Risk Assessment 2021 was completed in
management policies or strategies?			February 2021, with the Corporate Governance Team
			leading the identification work and developing
			improvement plans. The management unit has taken
			necessary improvement measures; risks identified include:
			1. Environment: Environmental Protection Issues
			Suppliers are required to comply with the Management
			Regulations for Environmental Banned Substances and
			obtain ISO 140001 Environmental Management System
			Certification. These criteria are included in the annual
			supplier evaluations; if they fail to meet the requirements,
			guidance is provided for improvement.

			2. Society: Employee Safety Issues
			As a non-manufacturing IC design company, the

			Company pays attention to the physical and mental health

			of its employees. In addition to regular fire prevention
				None
			inspections/fire drills, workplace inspections, and other

			hardware safety checks, the Company also holds activities

			every year to increase employee interaction and cohesion.



			3. Corporate Governance: Issues Regarding
			Implementation of Internal Control System (risks
			identified in 2021-Productivity, Talents, Quality, etc.)
			The group discusses corresponding measures, such as
			wafer strategy meetings, quality meetings, etc., which are
			implemented or strengthened by management units.
			The Auditing Department formulates audit plans annually
			based on risk assessments to ensure that there are no
			major deficiencies in the Internal Control System and
			perform control point checks during regular audit
			processes.
			The Corporate Governance Team was established with the
			approval of the Board of Directors. The Team consists of
			the Board of Directors’ Executive Secretary, Finance and
			Accounting Department, Auditing Department, Legal
			Affairs Department, and Investor Relations Unit, all of
			whom have at least three years of relevant work
			experience inpublic companies.

	Implementation Status	Implementation Status	Implementation Status	Deviations
				from
				"Corporate
				Social
				Responsibility
Items for evaluation				Best Practice
	Yes	No	Summary
				Principles for

				TWSE/GTSM
				Listed
				Companies”
				and reasons
2. Has the Company established a			The Company’s Corporate Governance Team is
designated (part-time) body for the			responsible for corporate governance, CSR, ethical
advocacy of corporate social			corporate management, and other related matters. Its
responsibility headed by a senior			duties are as described above for the operations of
				None
executive at the authorization of the			corporate governance, in addition to reporting the CSR

Board, and report to the Board on the			Program and its implementation status to the Board of

performance of corporate social			Directors on a regular basis.
responsibility?

3. Environmental Issues			(1) In accordance with the law and the premise of
(1) Has the Company established an			sustainable development, the Company has
appropriate environmental			established environmental management systems and
management system in accordance			policies. In addition, the Company has dedicated
with its industrial characteristics?			environmental safety personnel to plan, supervise, and	None
			implement environmental systems; select
			environmentally responsible suppliers; use recycled
			materials; reduce pollutant emissions; establish proper
			disposal methods for waste materials; and provide
			customers with products that are free of toxic
			substances. The Company has been granted ISO
			14001 International Certification.

(2) Has the Company made effort to			(2) As a fabless IC design company, the Company’s
enhance the efficient use of all			business activities have low impact on the
resources and used regenerated			environment.
materials to mitigate the impact on the			In 2020:
environment?			(1) Obtained SONY GP Certification.	Response
			(2) Completed cleaning the HVAC ducts in the	measures to
			Company’s building to improve air-conditioning	address
			energy efficiency.	climate
			(3) Arranged centralized offices for plant planners to	change
			enhance energy efficiency.	impacts have
			(4) Completed all regular environmental monitoring	yet to be
			and awareness-raising activities.	discussed

(3) Has the Company assessed the			(3) As an IC design company, the Company has no
potential current and future risks and			manufacturing plant, and thus current and future	None
opportunities from climate change for			climate change impacts on the Company are
the Company, and has the Company			relatively low. As a result, these response measures
taken measures to address			have not yet been discussed.
climate-related issues?

	
(4) Has the Company compiled statistics			(4) The Company’s statistics on greenhouse gas
ongreenhousegas emissions,water			emissions,water consumption,and total volume of

			Implementation Status	Implementation Status	Implementation Status	Deviations
						from
						"Corporate
						Social
						Responsibility
Items for evaluation						Best Practice
	Yes	No	Summary
						Principles for

						TWSE/GTSM
						Listed
						Companies”
						and reasons
consumption, and total volume of			waste materials over the past two years are as
waste materials for the past two years,			follows:
and has the Company formulated			Statistical Item	2019	2020
policies for energy conservation and				871 tons	1,115 tons
carbon reduction, greenhouse gas			Greenhouse Gas Emissions
reduction, water use reduction, and			Cabon Emissions Per Capita
other waste management?				2.49 tons	2.82 tons
				7,607 degrees	8,470 degrees
			Water Consumption

			Total Volume of Recycled Materials
				1.24 tons	1.53 tons


			The Company’s policies on energy conservation and
			carbon reduction, greenhouse gas reduction, and water
			use reduction are as follows:
			1. To regulate energy conservation and carbon,
			greenhouse gas reduction measures for the Company,
			including installing water-saving facilities, reducing
			environmental burdens, continuing to promote
			digital signing procedures, reducing paper
			consumption, installing blinds and curtains to reduce
			solar radiation heat transmission into the office,
			reducing the amount of electricity used for air
			conditioning, and ensuring that basic lighting
			matches illumination level standards and
			requirements with the use of appropriate
			energy-efficient daylight lighting.
			2. To formulate the energy conservation and carbon
			reduction targets such that the increment in the
			carbon emissions per capita should be less than 10%,
			since the factory and office areas are integrated.
			3. To formulate a water conservation management plan
			and enhance water resource efficiency, including
			raising employees’ water conservation awareness,
			and continuing to adjust both the water supply valves
			(50% of water supply valves have been closed), and
			adjusting the office air-conditioning temperature to
			27 degrees in order to save water used in
			air-conditioning.
4. Social issues
(1) Has the Company established related			(1) The Company complies with labor-related laws and
management policy and procedure in			regulations, and establishes work rules to protect
accordance with applicable legal rules			employees’ rights and benefits.
and international conventions on human
rights?

	Implementation Status	Implementation Status	Implementation Status	Deviations
				from
				"Corporate
				Social
				Responsibility
Items for evaluation				Best Practice
	Yes	No	Summary
				Principles for

				TWSE/GTSM
				Listed
				Companies”
				and reasons
(2) Has the Company established and			(2) Compensation for the Company’s new employees is
implemented reasonable employee			certified in accordance with the Employee
benefit measures (including			Compensation Criteria Guidelines, and employee
compensation, leave, and other			promotion is handled annually in accordance with the
benefits), and are operational			Employee Promotion Management Guidelines. In
performance and results appropriately			addition to leave granted in accordance with the
reflected in employee compensation?			Labor Standards Act, the Company’s leave policy
			allows an additional 7 days of flexible leave per year
			for employees. Based on the employee’s rank, years
			of service, contributions, and Company operating
			performance, the Company grants employees various
			types of benefits and compensation packages, which	None
			are paid out in accordance with regulations.

(3) Has the Company provided a safe and			(3) The Company provides a safe and healthy working
health work environment for the			environment for its employees. The Company
employees, and provided education on			appoints professional licensed industrial plant
labor safety and health regularly?			nursing personnel and employs occupational
			physicians to provide employees with regular
			psychological, medical, health consultation services,
			and annual health checks that are better than those
			required by law. In addition, the Company has also
			established a dedicated team and personnel in
			accordance with the law to manage environmental
			safety and health management related matters. This
			team conducts regular workplace inspections to
			ensure the safety of employees, the environment, and
			equipment. The Company has achieved ISO45001
			Certification – an international standard for
			environmental and occupational health and safety
			management.

(4) Has the Company established the	 		(4) The Company provides a variety of education and
training program for the effective			training programs, and internal and external
planning of career development for the			professional education and training, to enhance
employees?			employees’ career skills. Additionally, the Company
			also encourages employees to assess their own
			interests, skills, values and goals, and communicate
			their career intentions to their managerial officers, so
			as to formulate their future career plans.

(5) Does the Company comply with laws,			(5) All of the Company’s customers are corporate
regulations, and international standards			businesses; their information – including transaction
when managing customer health and			prices and terms – is deemed to constitute a Company
safety, customer privacy, and marketing			trade secret. Thus, all of this information is managed

	Implementation Status	Implementation Status	Implementation Status	Deviations
				from
				"Corporate
				Social
				Responsibility
Items for evaluation				Best Practice
	Yes	No	Summary
				Principles for

				TWSE/GTSM
				Listed
				Companies”
				and reasons
and labeling of products and services?			via computer information security & permissions.
Has the Company established a policy			The Auditing Department conducts annual audits on
and complaint procedure to protect			information security, and signs a Client
consumer rights?			Confidentiality Agreement based on the level of	None
			technical and commercial secrets discussed during
			product development. Our products are marketed in
			accordance with laws and regulations, as well as
			international standards (ISO 9001, ISO 14001, ISO
			45001).

(6) Has the Company established a supplier			(6) The Company has established 40 regulations for
management policy that requires			suppliers to comply with in accordance with
suppliers to comply with regulations on			manufacturing processes, such as the Production
environmental protection, occupational			Control Regulations, the Outsourcing Factory
safety and health, and labor rights			Management Regulations for the selection of new
issues? Has the Company established an			suppliers and regular audits, and the Management
implementation method for such?			Regulations for Environmental Banned Substances.
			Before a supplier is selected, the Company first
			ascertains the supplier’s compliance with
			environmental protection, occupational safety and
			health, and labor rights via QSA and QPA
			questionnaires and on-site examinations. The
			Company then selects qualified suppliers after a
			comprehensive evaluation.
5. Does the Company refer to			The Company has not compiled a CSR report yet.	No CSR
internationally standards/guidelines in				report has
the preparation of its reports, such as				been
CSR reports, that disclose non-financial				compiled yet
information? Has the Company obtained
a third-party verification or assurance
opinion on previously-disclosed
reports?
6. If the Company has formulated its own CSR Best Practice Principles in accordance with the CSR Best Practice Principles
for TWSE/GTSM Listed Companies, specify the differences between its implementation and the Principles formulated:
The Company has not formulated its own CSR Best Practice Principles, but a CSR plan that has been implemented after
submission to the Board of Directors for approval. Also, the CSR plan implementation status is reported to the Board of
Directors on a regular basis. Other related issues, such as sustainable development, environmental protection, and employee
rights and benefits, are implemented in accordance with the Company’s internal systems and regulations. The CSR plan and
its implementation status are disclosed on the Company’s website.
7. Other important information for understanding the Company’s CSR operations: In 2020, the Company became involved in
social welfare activities, including supporting the Taiwan Fund for Children and Families in Hsinchu County for the
campaign named “Foster Care: It Can’t Happen Without You!” to collect winter quilts and Christmas gifts for
underprivileged families.

(6) Differences Between Implementation of Ethical Corporate Management and Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, Including Reasons For Such

For Such
	Implementation Status			Deviations
				from
				"Ethical
				Corporate
				Management
Items for evaluation				Best Practice
	Yes	No	Summary
				Principles for

				TWSE/GTSM
				Listed
				Companies"
				and reasons
1. Establishment of ethical corporate
management policies and programs
(1) Has the Company established an ethical			(1) The Company’s Board of Directors approved the
corporate management policy that has			Code of Business Conduct and Ethics on October
been approved by the Board of			26, 2018. The Company’s policies and practices on
Directors, and clearly stated the ethical			ethical corporate management are clearly stated on
corporate management policy and			the Company’s website and in external customer
practices, as well as the commitment of			and supplier documents. Internally, the Company
the Board of Directors and the top			provides training to new employees annually, holds
management to actively implementing			meetings from time to time to promote integrity and
the management in the Articles of			ethical conduct, and has adopted a whistleblowing
Incorporation and external documents?			system to demonstrate the commitment of the Board
			of Directors and management to actively
			implementing the ethical corporate management
			policy.

(2) Has the Company established a			(2) The Company has established an Internal Control
mechanism to assess unethical conduct			System, Internal Audit System, Whistleblowing
risks? Does that Company regularly			System, Employee Grievance System, and Code of
analyze and evaluate the business			Business Conduct and Ethics to prevent unethical
activities within its scope of business			conduct. Furthermore, the Company completed
				None
that have a higher risk of unethical			signing of the Integrity Commitment Letter by senior

conduct? Has the Company accordingly			executives in 2020.
formulated a plan to prevent unethical
conduct, covering at a minimum the
preventive measures for the acts
mentioned in Article 7-2 of the Ethical
Corporate Management Best Practice
Principles for TWSE/GTSM Listed
Companies?

(3) Whether the Company has stipulated the			(3) The Company has established the Code of Business
operating procedures, conduct			Conduct and Ethics and the Whistleblowing System
guidelines, disciplinary actions against			to provide clear guidelines and operation procedures
violations as well as grievance system in			for the conduct of directors, managerial officers,
the plan to prevent unethical conducts,			employees, appointees, and persons having
implemented the execution thereof, and			substantial control over the Company, and to help
regularly reviewed and revised the			Company customers, suppliers, external parties, and
aforementioned plan?			other stakeholders be more aware of the Company’s
			ethical standards. As for confirmed cases of unethical
			conduct, disciplinary measures are taken against the
			violators;if necessary,legal action is also taken.

	Implementation Status	Implementation Status	Implementation Status	Deviations
				from
				"Ethical
				Corporate
				Management
Items for evaluation				Best Practice
	Yes	No	Summary
				Principles for

				TWSE/GTSM
				Listed
				Companies"
				and reasons
			Also, relevant departments are then instructed to
			review the Internal Control System and operation
			procedures.


2. The Materialization of Ethical
Management			(1) The Company conducts credit checks before entering
(1) Has the Company evaluated the record			into transactions with important customers and credit
on ethical practices of its counterparties,			trading, in order to avoid dealing with those who
and has specified the clause of business			have a history of unethical conduct. Moreover, the
ethic in the agreements binding the			Company signs honesty and integrity clauses with
Company and its counterparties?			some customers or suppliers, and requires both
			parties to conduct business based on the principles of
			honesty and integrity.

(2) Has the Company established a			(2) The Company’s Board of Directors approved the
dedicated unit under the Board of			Code of Business Conduct and Ethics on October 26,
Directors to promote ethical corporate			2018. The Corporate Governance Team, which is
management, and to report to the Board			part of the Board of Directors, is responsible for the
of Directors on a regular basis (at least			establishment and promotion of ethical corporate
once a year) regarding ethical corporate			management policy. The Team’s duties are as
management policies and plans, in order			described above for the operations of corporate
to prevent unethical conduct and to			governance operations, and such operations are
monitor their implementation?			reported to the Board of Directors on an annual
			basis. The implementation status for 2020 was
				None
			reported to the Board of Directors on February 4,

			2021.

(3) Has the Company mapped out the	 		(3) The Company has established a Whistleblowing
policy for the avoidance of the conflict			System and employee grievance procedures to
of interest and has provided suitable			provide appropriate channels for those who have the
channels for such purpose, and properly			need to file a complaint and with specific reasons for
pursued the policy?			any illegal, abusive, or improper conduct related to
			official duties.

(4) Has the Company established an			(4) The Company has established an accounting system
effective accounting system and internal			for accounting personnel to follow in the execution
control system for the implementation of			of their duties. In addition, the Company has
ethical corporate management? Has the			established an internal control system in accordance
internal auditing unit prepared an audit			with laws and regulations along with actual operating
plan based on the assessment results for			circumstances. The Company also conducts
unethical conduct risks, and checked			audit-related work, and reports the results to Audit
compliance with the unethical conduct			Committee and the Board of Directors on a regular
prevention plan accordingly, or			basis.
appointed a CPA to conduct the audit?

	Implementation Status	Implementation Status	Implementation Status	Deviations
				from
				"Ethical
				Corporate
				Management
Items for evaluation				Best Practice
	Yes	No	Summary
				Principles for

				TWSE/GTSM
				Listed
				Companies"
				and reasons

(5) Has the Company organized internal			(5) The training of new employees includes the
and external training on ethical			promotion of industrial business conduct and ethics.
management?			Each year, regular training sessions are held for
			specific employees to enable them to clearly
			understand the Company’s ethical corporate
			managementphilosophyand standards.
3. The reporting system of the Company in
action
(1) Has the Company established a			(1) The Company has established a Whistleblowing
reporting and reward system and the			System with a dedicated mailbox, in addition to a
channels for facilitating the report on			complaint filing channel on the Company’s website.
unethical practices, and has appointed			All reported matters are managed by the Chief
designated personnel to handle the			Auditor in order to protect the confidentiality of
subject of reporting?			whistleblowers.

(2) Has the Company created a standard			(2) The Company has established a Whistleblowing
operating procedure (SOP) for the			System to manage reported matters, and all related	None
investigation of reported matters,			documents and information are considered
follow-up measures to be taken after the			confidential; all employees involved in the handling
completion of the investigation, and			of these matters are responsible for maintaining
relevant confidentiality mechanisms?			complete confidentiality.

(3) Has the Company taken protection			(3) The Company has a Whistleblowing System in place
measures to protect the informant from			and is responsible for the protection of the
improper treatment after reporting on			confidentiality of whistleblowers, in order to prevent
unethical practices?			them from being subjected to improper treatment as
			a result of whistleblowing.
4. Enhancing Information Disclosure
(1) Has the Company disclosed the content			(1) The Company has disclosed the Code of Business
of Ethical Corporate Management Best			Conduct and Ethics on the Company website, where	None
Practice Principles and the result at its			implementation plans and results are regularly
official website and MOPS?			disclosed.
5. If the Company has established performance of good-faith management best practice principles based on “Ethical Corporate
Management Best Practice Principles for TWSE/GTSM Listed Companies”, please describe any discrepancy between the
principles and their implementation: None
6. Other vital information that helps to understand the practice of ethical management of the Company (e.g., the review and
amendment to the Ethical Corporate Management Best Practice Principles of the Company): None

(7) If the Company has formulated a code of corporate governance and related regulations, the inquiry method shall be disclosed: The Company has formulated Corporate Governance Best Practice Principles and related regulations, which are publicly disclosed on the Company’s website (http://www.focaltech-electronics.com/) to regulate the ethical conduct of the Company’s directors, supervisors, and all subordinate personnel.
(8) Other important information to enhance the understanding of the Company’s corporate governance implementation: None.

(9) Implementation Status of Internal Control System

Internal Control System Statement

FocalTech Systems Co., Ltd. Internal Control System Statement

Date: February 4, 2021

With regard to the 2020 internal control system, the Company declares the following based on the self-evaluation findings:

The Company is fully aware that establishing, implementing, and maintaining an internal control system are the responsibility of its Board of Directors and managerial officers. The Company has established such a system to provide reasonable assurance for attaining the aims of the effectiveness and efficiency of business operations (including profits, performance, safeguarding of asset security, etc.); reliability, timeliness, transparency of reporting; and compliance with the governing laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system provides assurance to the aforementioned aims only to a reasonable extent. Moreover, due to changes of environments and circumstances, the effectiveness of an internal control system may change accordingly. Nevertheless, the internal control system of the Company is equipped with a self-monitoring mechanism, and the Company takes corrective actions as soon as any fault is identified.
The Company determines the design and operating effectiveness of its internal control system in accordance with the determining factors provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the “Regulations”). The internal control system determining factors specified in the Regulations divide an internal control system into five elements based on its management: 1. Control Environment, 2. Risk Assessment, 3. Control Operations, 4. Information and Communications, and 5. Monitoring. Each element further contains several items. Refer to the Regulations for the aforementioned items.
The Company has adopted the aforementioned internal control system determining factors to examine the design and operating effectiveness of its internal control system.
Based on the findings of the evaluation mentioned in the preceding paragraph, the Company deems that the internal control system as of December 31, 2020 (including supervision and management of subsidiaries), which encompass internal controls for knowledge of the accomplishment degree of operating effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with the governing laws and regulations, are effectively designed and implemented, and reasonably assure accomplishment of the abovementioned aims.
This Statement constitutes the main content of the Company’s annual report and prospectus, and will be made public. Any wrongful act pertaining to falsification or concealment involving the above public declaration will be subjected to legal liabilities under Articles 20, 32, 171, and 174 of, and other regulations relating to, the Securities and Exchange Act.
This Statement was approved by the Board Meeting of the Company held on February 4, 2021, where none of the nine attending directors expressed dissenting opinions, and all consented to the content of this Statement.

FocalTech Systems Co., Ltd.

Chairman: Genda Hu Signature/Stamp President: Genda Hu Signature/stamp

If a CPA is appointed to review the internal control system, the review report shall be disclosed: N/A.
(10) If there has been any legal penalty against the Company or its internal personnel, or any disciplinary penalty by the Company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year preceding the annual report publication date, where the result of such penalty may have a material effect on shareholder equity or securities prices, the penalty, the main shortcomings, and conditions for improvement shall be disclosed in the annual report: None.
(11) Major resolutions of the Shareholders’ Meeting and the Board in the most recent year to the date this report was printed
Important Resolutions of the Board of Directors

Date	Important Resolutions
	Approved the 2019Financial Statement.
	Approved the amount of director and employee compensation for 2019, and its
Feb. 7, 2020	distribution method and recipients.
	Approved election of the 7th term Board of Directors.
	Convened the Company’s 2020 Annual General Shareholders’ Meeting.
	Approved the 2020Q1 Financial Statement.
	Approved the 2019 Loss Make-upProposal.
	Approved the distribution of cash dividends out of capital reserve.
May 8, 2020
	Approved the cash capital reduction.

	Approved update to the proposals for the 2020 Annual General Shareholders’
	Meeting.
June 20,2020	Elected the Chairman of the Board of Directors.
	Approved the 2020Q2 Financial Statement.
	Approved authorization of the Chairman to determine the Record Date of capital
Aug. 7, 2020
	reduction.

	Approved appointment of the Remuneration Committee.
Nov. 6,2020	Approved the 2020Q3 Financial Statement.
	Approved the 2020 Financial Statement.
	Approved the amount of director and employee compensation for 2020, and its
Feb. 4, 2021
	distribution method and recipients.

	Convened the Company’s 2021 Annual General Shareholders’ Meeting.

2. Important Resolutions of Shareholders’ Meeting and Implementation Status

Date	Important Resolutions and Implementation Status Thereof
	1. Recognition of 2019 Business Report and Financial Statement. Implementation Status: Resolution was adopted. 2. Recognition of 2019 Loss Make-up Proposal. Implementation Status: Resolution was adopted. 3. Approval of amendment to the Articles of Incorporation. Implementation Status: Resolution was adopted and implemented. The change registration was completed on July 3, 2020. 4. Approval for issuance of new restricted employee shares. Implementation Status: Resolution was adopted and implemented, and was approved by the Financial Supervisory Commission on August 12, 2020. 5. Approval for distribution of cash dividends out of capital reserve. Implementation Status: July 20, 2020 was set as the Record Date, and August 14, 2020 was set as the Ex-dividend Date; cash distribution of approximately NT$0.50291032 per share has been completed. 6. Approval for cash capital reduction. Implementation Status: September 8, 2020 was set as the Record Date of Capital Reduction, and the new shares began trading on October 26, 2020. A return of NT$3 per share to the capital reduction shareholders was completed on October 28, 2020. 7. Re-election of the 7thterm Board of Directors. Implementation Status: Re-election was completed, and the director change registration was completed on July 3, 2020. 8. Dismissal of the non-compete clause for directors and their representatives. Implementation Status: Resolution was adopted.
June 20, 2020

(12) Adverse opinion from directors or supervisor over important resolution of the Board in the most recent year until the day the Annual Report was printed with records or written declaration, and the contents of such opinion: None
(13) In the most recent year to the date this report was printed, the information on the resignation and discharge to Chairman, President, chief accountant, chief financial officer, chief internal auditor, corporate governance officer and R&D officer : None

4. Disclosure of the CPAs’ fee

(1) Fee information

1. Disclosure of the CPA's Fee Range

AccountingFirm	AccountingFirm	Names of CPAs	Names of CPAs	Names of CPAs	Duration of Audit	Duration of Audit	Remarks	Remarks
Deloitte & Touche		Lilac Shue	Chih-Ming Shao		Jan. 1, Jan. 1, 2020 to Dec. 31,2020		－
Unit: NT$thousand
Fee items Fee Range				Audit fee		Non- Audit fee		Total
1	Less than 2,000,000					
2	2,000,000(inclusive) `～`4,000,000
3	4,000,000(inclusive) `～`6,000,000							

4	6,000,000(inclusive) `～`8,000,000
5	8,000,000(inclusive) `～`10,000,000
6	Over 10,000,000(inclusive)

Non-audit Fees Paid to CPAs, the CPAs’ Firm and Their Affiliates by the Company for 2020

Unit: NT$ thousand

Accounting Firm	Names of CPAs	Auditing Fee	Non-Auditing fee	Non-Auditing fee	Non-Auditing fee	Non-Auditing fee	Non-Auditing fee	Period Covered by CPA’s Audit	Rem arks
			System design	Corporate registration	Human resources	Other (note)	Subtotal
Deloitte & Touche	Lilac Shue	4,750	0	0	0	417	417	Jan. 1, 2020 to Dec. 31, 2020	－
	Chih-Ming Shao

Note: Non-audit fees – During the audit period, NT$287,000 for CPAs, NT$30,000 for obsolete-inventory review fee, NT$50,000 for payroll information checklist, and NT$50,000 for capital increase checklist of subsidiaries were paid on behalf of the Company.

(2) If there is a change in the accounting firm, and the audit fees paid for the fiscal year in which the change took place are lower than those paid for the fiscal year immediately preceding the change, the amount and percentage of and reason for the reduction in audit fees shall be disclosed: N/A.
(3) When the audit fees paid for the current fiscal year are lower than those paid for the immediately preceding fiscal year by 10% or more, the amount and percentage of and reason for the reduction in audit fees shall be disclosed: N/A.

5. Changes of CPA: None

6. Information regarding to the chairman, president, chief financial or accounting manager of the Company holding position in the business under the commissioned CPA firm or its affiliates in 1 year: None

7. The change of the share holding status and the share pledged information of directors, supervisors, managerial officers and the shareholders holding more than 10% of the shares in the most recent year to the date this report was printed.

(1) Changes in shareholdings:

Unit: Share

				Unit: Share	Unit: Share
Title	Name	2020		As of April 26,2021
		Increase (decrease) in No. of Shares(Note 3)	Increase (decrease) in No. of Pledged Shares	Increase (decrease) in No. of Shares	Increase (decrease) in No. of Pledged Shares
Director, CEO and President	Genda Hu	1,133,397 (1,426,361)	`－`	328,261	`－`
Director	GWAALLC Representative: Han-Ping Shieh	`－` (1,781,356)	`－`	`－`	`－`

Title	Name	2020	2020	As of April 26,2021	As of April 26,2021
		Increase (decrease) in No. of Shares(Note 3)	Increase (decrease) in No. of Pledged Shares	Increase (decrease) in No. of Shares	Increase (decrease) in No. of Pledged Shares
Director	GWAALLC Representative: ChenmingHu	`－`	`－`	`－`	`－`
Director and CFO	James Liao	322,500 (446,951)	`－`	167,005 (70,000)	`－`
Independent Director	Chang Xu (Date assumed: Jun. 20,2020)	`－`	`－`	`－`	`－`
Independent Director	Xuhui Xu (Date assumed: Jun. 20,2020)	`－`	`－`	`－`	`－`
Independent Director	Chan-Jane Lin	`－`	`－`	`－`	`－`
Independent Director	Chintay Shih	`－`	`－`	`－`	`－`
Executive Vice President	Ching-Kai Chang	88,000 (48,135)	`－`	170,000	`－`
Executive Vice President	Wei-Ching Hou	160,000 (221,968)	`－`	108,000 (18,004)	`－`
Business Executive Vice President	Lien-Kuo Wang	72,000 (89,167)	`－`	56,000 (69,815)	`－`
Business Executive Vice President	Ching-Suo Wang	40,000 (291,148)	`－`	40,000 (3,000)	`－`
Executive Vice President	Hsiao-Hsu Tu	180,000 (206,942)	`－`	120,000 (18,000)	`－`
Executive Vice President	He-Nien Yang	270,000 (270,109)	`－`	148,004 (19,000)	`－`
Executive Vice President	Pei-Tzu Wu	190,000 (163,992)	`－`	98,506	`－`
Business Assistant Executive Vice President	Te-Chih Kung	64,000 (135,821)	`－`	42,000 (19,803)	`－`
Executive Vice President	Sung-Tsan Chiang (Date assumed: Oct. 8, 2020)	100,000 (100,000)	`－`	64,000	`－`
Executive Vice President	Jui-Cheng Hsu (Date discharged: Sep. 30, 2020; Date assumed: Feb. 1, 2021)	232,500 (120,000)	`－`	85,003	`－`
Deputy Executive Vice President	Chun-Fu Wang	115,000 (108,084)	`－`	35,202 (39,916)	`－`
Deputy Executive Vice President	Cheng-Tao Chuang	131,000 (131,792)	`－`	103,504 (69,000)	`－`

Title	Name	2020	2020	As of April 26,2021	As of April 26,2021
		Increase (decrease) in No. of Shares(Note 3)	Increase (decrease) in No. of Pledged Shares	Increase (decrease) in No. of Shares	Increase (decrease) in No. of Pledged Shares
Deputy Executive Vice President	Po-Sheng Shih (Date discharged: Sep. 30, 2020; Date assumed: Jan. 16, 2021)	117,000 (207,000)	`－`	46,602	`－`
Senior Deputy Executive Vice President	Ching-Hsing Chang (Date discharged: Jan. 24, 2020; Date assumed: Feb. 8,2021)	`－`	`－`	100,000	`－`
Corporate governance officer	Li-Hsin Yang (Date assumed: Nov. 6,2020)	`－`	`－`	65,503	`－`
Shareholders holding more than 10% of the shares	Egis Technology Inc. (Date assumed: Nov. 6, 2020; Date discharged: Apr. 19,2021)	48,516,000 (14,549,425	`－`	`－` (33,966,575)	`－`
Director	Sense Investment and Consulting Inc.Representative: George Chang (Date assumed: Jun. 20, 2020; Date discharged: Apr. 19,2021)	`－` (14,995)	`－`	`－` (35,005)	`－`
Director	CTBC Bank Trusteeship for Jifu Holding Group (shares) Investment AccountRepresentative: Yen Shen (Date discharged: Jun. 20,2020)	`－` (4,126,703)	`－`	`－`	`－`
Independent Director	Neng-Mou Tu (Date discharged: Jun. 20,2020)	`－`	`－`	`－`	`－`
Independent Director	Lin-Shan Li (Date discharged: Jun. 20,2020)	`－`	`－`	`－`	`－`
Executive Vice President	Chien-kuo Wang (Date discharged: Feb. 8, 2021)	170,000 (121,985)	`－`	`－`	`－`
Deputy Executive Vice President	Cheng-Yi Hsieh (Date discharged: Sep.30, 2021; Date assumed: Jun. 16, 2021; Date discharged: Mar. 3,2021)	119,750 (117,064)	`－`	`－`	`－`

Note 1: Since June 21, 2012, the Audit Committee has been responsible for the duties of a supervisor as stipulated in the laws and regulations.

Note 2: The shareholding changes are disclosed from the date of assumption of duty until the date of discharge. Note 3: It was approved for reduction of capital in the Company’s shareholders’ meeting on June 20, 2020.

Company’s share capital was eliminated 89,972,074 shares. The ratio of capital reduction was 29.98892%. The capital reduction was completed on October 26, 2020. Therefore, the number of shares has changed significantlyin 2020.

(2) Information on any transfer of equity interests by a director, supervisor, managerial officer, shareholder related party with a stake of more than 10 percent (where the counterparty in any such transfer of equity interests is a related party):

transferor	Reasons for Transaction	Transactio n date	transferee	Relation of Transferor and Transferee	Number of Shares	Transfer prices
Genda Hu	Gift	Jun.19,20 20	Wen-Min Shen	Spouse	650,000	30.35

(3) Information on any pledge of equity interests by a director, supervisor, managerial officer, shareholder related party with a stake of more than 10 percent (where the counterparty in any such pledge of equity interests is a related party): None.

8. Information on shareholders among the top 10 by proportion of shareholding who are related parties to one another, spouse or kindred within the 2nd degree of kinship

			April 26,2021;Unit: share;%	April 26,2021;Unit: share;%	April 26,2021;Unit: share;%	April 26,2021;Unit: share;%	April 26,2021;Unit: share;%	April 26,2021;Unit: share;%	April 26,2021;Unit: share;%
Name	Own shareholdings		Shares Held by Spouse & minor children		Shareholdings under the title of a third party		If there are related parties, spouses, kindred within the 2nd degree of kinship among the top 10 shareholders, give the names and affiliations of such shareholders		Note
	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Name	Relation
Acer Incorporated Responsible Person`：`Jun-Sheng Chen	7,537,688	3.48	`－`	`－`	`－`	`－`	`－`	`－`	`－`
CTBC Bank has been entrusted with the custody of a collective investment account for the transfer, subscription, and allotment of marketable securities for FocalTech Electronics, Ltd.'s Mainland China employees issued by FocalTech Systems Co., Ltd.	6,734,632	3.11	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Ling-Chuan Ting	5,840,000	2.70	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Employee shareholding trust asset account of FocalTech Systems Co., Ltd. under CTBC Bank	5,641,503	2.61	`－`	`－`	`－`	`－`	`－`	`－`	`－`
GWAALLC Responsible Person`：`Genda Hu	4,158,691	1.92	`－`	`－`	`－`	`－`	`－`	`－`	`－`
	1,232,138	0.57	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Labor Pension Fund	3,708,000	1.71	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Standard Chartered Bank (Taiwan) Limited as custodian of Credit Suisse Securities Limited	3,400,807	1.57	`－`	`－`	`－`	`－`	`－`	`－`	`－`

Name	Own shareholdings	Own shareholdings	Shares Held by Spouse & minor children	Shares Held by Spouse & minor children	Shareholdings under the title of a third party	Shareholdings under the title of a third party	If there are related parties, spouses, kindred within the 2nd degree of kinship among the top 10 shareholders, give the names and affiliations of such shareholders	If there are related parties, spouses, kindred within the 2nd degree of kinship among the top 10 shareholders, give the names and affiliations of such shareholders	Note
	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Name	Relation
Morgan Standley Co. International PLC	2,851,981	1.32	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Investment Account of JP Morgan Chase Bank Taipei Branch	2,768,303	1.28	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Labor Insurance Fund	2,424,000	1.12	`－`	`－`	`－`	`－`	`－`	`－`	`－`

Note: Calculation of shareholding ratio refers to calculation of the ratio of shares held in own name, spouse’s name, minor children’s name(s), or names of third party.

9. Quantity of shareholdings of the same investee by the Company and Directors, Supervisors, Managial Officer, and direct or indirect subsidiaries in proportion to the combined holdings of all, and combined to calculate the proportion of overall shareholding.

Dec. 31, 2020; Unit:Shares; %

Investee	Investment made by the Company	Investment made by the Company	Investment made by directors, supervisors, managerial official and direct or indirect subsidiaries	Investment made by directors, supervisors, managerial official and direct or indirect subsidiaries	Combined investment	Combined investment
	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding	Number of Shares	Rate of share- holding
FocalTech Corporation, Ltd.	5,491,200	100	`－`	`－`	5,491,200	100
FocalTech Electronics,Ltd.	2	100	`－`	`－`	2	100
FocalTech Systems,Inc.	`－`	`－`	100	100	100	100
FocalTech Systems,Ltd.	`－`	`－`	2	100	2	100
FocalTech Electronics Co.,Ltd.	`－`	`－`	2,000,000	100	2,000,000	100
FocalTech Electronics(Shanghai)Co.,Ltd.	`－`	`－`	Note	100	Note	100
FocalTech Electronics(Shenzhen)Co.,Ltd.	`－`	`－`	Note	100	Note	100
FocalTech Systems(Shenzhen)Co.,Ltd.	`－`	`－`	Note	100	Note	100
FocalTech Smart Sensors Co.,Ltd.	`－`	`－`	12,179,708	69.93	12,179,708	69.93
Hefei PineTech Electronics Co.,Ltd.	`－`	`－`	Note	100	Note	100
FocalTech Smart Sensors,Ltd.	`－`	`－`	19,593,050	69.93	19,593,050	69.93
Vitrio TechnologyCorporation	142,000	50	`－`	`－`	142,000	50

Note: The Company is a limited liability company, so there are no numbers for issued shares.

IV. Capital Overview

1. Capital and Shares

(1) Sources of Capital Stock

1. Formation process of Capital Stock

April 30, 2021; Unit: Thousand share; NT$ thousand

						April 30,2021;Unit: Thousand share;NT$thousand	April 30,2021;Unit: Thousand share;NT$thousand	April 30,2021;Unit: Thousand share;NT$thousand
Period	Price at issuance	Authorized shares capital		Paid in capital		Remarks
		Number of Shares	Amount	Number of Shares	Amount	Sources of Capital Stock	Property other than cash is paid by subscribers	Other
Mar. 2019	12.2~ 17.24	500,000	5,000,000	298,743	2,987,432	Common share transfer from employee stock options: 1,025 thousand	`－`	Mar. 15, 2019- Zhu-shang-tzu No.1080007161
May 2019	12.2~ 17.24	500,000	5,000,000	298,792	2,987,924	common share transfer from employee stock options: 492 thousand	`－`	May 22, 2019- Zhu-shang-tzu No.1080014570
Aug. 2019	12.2~ 13.68	500,000	5,000,000	299,439	2,994,394	common share transfer from employee stock options: 6,470 thousand	`－`	Aug. 23, 2019- Zhu-shang-tzu No.1080024643
Dec. 2019	12.2	500,000	5,000,000	299,486	2,994,857	common share transfer from employee stock options: 463 thousand	`－`	Dec. 2, 2019- Zhu-shang-tzu No.1080034877
Feb. 2020	12.2~ 17.24	500,000	5,000,000	299,676	2,996,759	common share transfer from employee stock options: 1,903 thousand	`－`	Feb. 25, 2020- Zhu-shang-tzu No.1090005750
May 2020	4.2~ 28.3	500,000	5,000,000	299,907	2,999,069	common share transfer from employee stock options: 2,310 thousand	`－`	May 27, 2020- Zhu-shang-tzu No.1090014602
Aug. 2020	12.2~ 24.51	500,000	5,000,000	299,995	2,999,949	common share transfer from employee stock options: 880 thousand	`－`	Aug. 19, 2020- Zhu-shang-tzu No.1090023661
Sep. 2020	10	500,000	5,000,000	210,023	2,100,228	Cash reduction common share : 899,721 thousand	`－`	Sep. 14, 2020- Zhu-shang-tzu No.1090026694
Nov. 2020	12.2~ 24.51	500,000	5,000,000	210,046	2,100,456	common share transfer from employee stock options: 228 thousand	`－`	Nov. 24, 2020- Zhu-shang-tzu No.1090033305
Mar. 2021	15.9~ 36.8	500,000	5,000,000	210,353	2,103,532	common share transfer from employee stock options: 3,076 thousand	`－`	Mar. 3, 2021- Zhu-shang-tzu No.1100005620
Apr. 2021	10	500,000	5,000,000	216,102	2,161,022	issue restricted stocks for employees: 57,490 thousand	`－`	May. 3, 2021- Zhu-shang-tzu No.1100012259
May. 2021	15.9~ 36.8	500,000	5,000,000	216,277	2,162,769	common share transfer from employee stock options: 1,747 thousand	`－`	The employee stock options have been exercised in 2021Q1, but the change registration have not been completed . It is expected to be completed in May, 2021.

Period	Price at issuance	Authorized shares capital	Authorized shares capital	Paid in capital	Paid in capital	Remarks	Remarks	Remarks
		Number of Shares	Amount	Number of Shares	Amount	Sources of Capital Stock	Property other than cash is paid by subscribers	Other
Aug. 2021	15.9~ 36.8	500,000	5,000,000	216,344	2,163,443	common share transfer from employee stock options:674 thousand	`－`	The employee stock options have been exercised in April, 2021, but the change registration have not been completed . It is expected to be completed in August,2021.

Type of Stock

2.Type of Stock
	April 30,2021;Unit: shares
Type of Stock	Authorized shares capital			Remarks
	Outstandingshares	Unissued stock	Total
common shares	216,344,342	283,655,658	500,000,000	Listed shares

(2) Composition of Shareholders

April 26, 2021; Unit: shares

Composition of Shareholders Quantity	Government Apparatus	Financial Institution	Other Juridical person	Individual	Foreign Institution and Foreigner	Total
Number ofpersons	`－`	9	197	48,136	147	48,489
Shareholding (Shares)	`－`	7,278,384	31,829,629	126,051,061	51,185,268	216,344,342
Ratio of Shareholding (%)	`－`%	3.36%	14.72%	58.26%	23.66%	100.00%

Note: The above information is summarized from the shareholders' register on the latest transfer suspension date prior to the publication date of the annual report.

(3) Shareholding Distribution Status

1. Common Share Distribution Status

Shareholding Distribution Status 1. Common Share Distribution Status	Shareholding Distribution Status 1. Common Share Distribution Status	Shareholding Distribution Status 1. Common Share Distribution Status	Shareholding Distribution Status 1. Common Share Distribution Status
April 26,2021;Unit: shares
Holding share classification	No. of Shareholders	Shareholding	Ratio of Shareholding
1 to 999	16,563	2,467,989	1.14%
1,000 to 5,000	28,404	49,673,289	22.96%
5,001 to 10,000	1,886	14,518,154	6.71%
10,001 to 15,000	517	6,644,860	3.07%
15,001 to 20,000	299	5,552,510	2.57%
20,001 to 30,000	282	7,185,150	3.32%
30,001 to 50,000	202	7,871,877	3.64%
50,001 to 100,000	161	11,438,625	5.29%
100,001 to 200,000	77	11,307,013	5.23%

Holding share classification	No. of Shareholders	Shareholding	Ratio of Shareholding
200,001 to 400,000	39	11,260,191	5.2%
400,001 to 600,000	20	9,791,542	4.53%
600,001 to 800,000	11	7,660,249	3.54%
800,001 to 1,000,000	5	4,478,649	2.07%
1,000,001 and above	23	66,464,244	30.73%
Total	84,489	216,344,342	100.00%

Note: The above information is summarized from the shareholders' register on the latest transfer suspension date prior to the publication date of the annual report.

2. Preferred Share Distribution Status: N/A.

(4) List of Major Shareholders

If there are fewer than ten shareholders with a stake of five percent or greater, the names of shareholders, their numbers of shares, and the stake held by each shareholder ranking in the top ten in terms of shareholding percentage shall be listed:

If there are fewer than ten shareholders with a stake of five percent or greater, the names of shareholders, their numbers of shares, and the stake held by each shareholder ranking in the top ten in terms of shareholding percentage shall be listed:	If there are fewer than ten shareholders with a stake of five percent or greater, the names of shareholders, their numbers of shares, and the stake held by each shareholder ranking in the top ten in terms of shareholding percentage shall be listed:	If there are fewer than ten shareholders with a stake of five percent or greater, the names of shareholders, their numbers of shares, and the stake held by each shareholder ranking in the top ten in terms of shareholding percentage shall be listed:
April 26,2021;Unit: shares
Shares Name of major shareholder	Shareholding	Ratio of Shareholding
Acer Incorporated	7,537,688	3.48%
CTBC Bank is entrusted with the custody of the securities collective investment account issued by FocalTech Systems Co., Ltd. to the Mainland China employees of FocalTech Systems (Cayman) Co., Ltd. for the transfer, subscription and allotment	6,734,632	3.11%
Ling-Chuan Ting	5,840,000	2.70%
Employee shareholding trust asset account of FocalTech Systems Co.,Ltd. under CTBC Bank	5,641,503	2.61%
GWAA LLC	4,158,691	1.92%
Labor Pension Fund	3,708,000	1.71%
Standard Chartered Bank (Taiwan) Limited as custodian of Credit Suisse Securities Limited	3,400,807	1.57%
Morgan StandleyCo. International PLC	2,851,981	1.32%
Investment Account of JP Morgan Chase Bank Taipei Branch	2,768,303	1.28%
Labor Insurance Fund	2,424,000	1.12%

(5) Information on market price, net value, earnings and dividends per share in the most two year

	Unit: NT$;Thousand shares	Unit: NT$;Thousand shares	Unit: NT$;Thousand shares	Unit: NT$;Thousand shares
	Item/Year	2019	2020	As of April 30, 2021(Note 5)
Market Price Per Share	The Highest	27.3	102	247.5
	The Lowest	19.55	22.45	79.2

	Item/Year	Item/Year	2019	2020	As of April 30, 2021(Note 5)
	Average		23.28	38.64	135.01
Net Value Per Share	Before distribution		26.66	37.28	41.3
	After distribution		26.14	(Note 1)	`－`
Earnings per share	Weighted average shares		276,714	254,897	199,649
	Earningsper share(Note 7)		-0.63	3.97	4.24
Dividend Per Share	Cash dividends		0.50291032 (Note6)	(Note 1)	`－`
	Stock dividend distribution	Retained Shares Distribution	`－`	`－`	`－`
		Capital reserve Shares Distribution	`－`	`－`	`－`
	Retained Dividends		`－`	`－`	`－`
Return on Investment Analysis	Price-to-Earnings Ratio(Note 2)		-36.95	9.73	`－`
	Price-to-Dividend Ratio(Note 3)		46.29	(Note 1)	`－`
	Cash Dividend Yield Rate(Note 4)		2.16%	(Note 1)	`－`

Note 1: To be finalized upon the resolution of the shareholders’ meeting. Note 2: Price-to-Earnings Ratio = Average Share Price of the Year / Earnings per Share Note 3: Price-to-Dividend Ratio = Average Share Price of the Year / Cash Dividend per Share Note 4: Cash Dividend Yield Rate = Cash Dividend per Share / Average Share Price of the Year Note 5: Net value per share and earnings per share are based on the information reviewed by CPAs for the most recent quarter ended before the publication date of the annual report. The remaining columns show the information for the current year ended before the publication date of the annual report. Note 6: The distribution of cash dividends out of capital reserve. Note 7: The Company has not made any stock dividend distribution that is subject to retroactive adjustment.

(6) Dividend Policy and Implementation Status
Dividend policy as regulated in the Articles of Incorporation

In accordance with the Company’s Articles of Incorporation for earnings distribution, if the Company reports a profit at the end of the fiscal year, after paying taxes in accordance with the law, the Company shall make up for the accumulated deficit from previous years, then set aside 10% of such earnings as legal reserve, and set aside or reverse a special reserve as required by laws and regulations. If there is any remaining balance, the Board of Directors shall prepare a proposal for earnings distribution together with the unappropriated retained earnings.The proposal shall be submitted to the shareholders’ meeting for resolution, and the amount shall then be distributed to the recipients.

The Company’s dividend policy is to distribute not less than 10% of the annual earnings as dividends to shareholders in accordance with the Company’s current and future development plans, taking into account the investment environment, capital requirements, domestic and international competition, and the interests of shareholders. Dividends may be distributed to shareholders in cash or in shares, with cash dividends of not less than 10% of the total dividends. However, cash dividends of less than NT$0.50 per share may not be paid

Status of the proposed dividend distribution at this shareholders’ meeting

The Company’s proposal for 2020 annual earnings distribution was resolved by the board meeting on April 28, 2021. The board meeting proposed distribution of the 2020 annual earnings in the amount of NT$700,000thousand in cash dividends to shareholders, with each share to be distributed in the amount of NT$3.32 based on the outstanding shares on March 31,2021. After the resolution of the shareholders’ meeting this year, the Chairman is authorized to set another Record Date.

(7) Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders' meeting: There is no stock dividend distribution proposed at this shareholders’ meeting, and thus this is not applicable.
(8) Employee, director and supervisor compensation
The percentage or scope of employee, director, and supervisor compensation in the Articles of Incorporation

In accordance with the Company’s Articles of Incorporation, if the Company makes profits in the fiscal year, the Company shall set aside not less than 1% of the Company’s annual profits as employee compensation, which shall be distributed in shares or cash by resolution of the Board of Directors, to employees of the Company’s subsidiaries who meet certain criteria that are authorized by the Board of Directors. In addition, the Company shall set aside not more than 1.5% of the Company’s annual profits as director compensation by the resolution of the Board of Directors. The compensation to employees and directors shall be reported to the shareholders’ meeting. However, the Company shall first reserve an amount to make up for the accumulated deficit beforehand (if any), then only allocate the compensation to employees and directors based on the aforementioned percentage.

Basis for estimating the employee, director, and supervisor compensation amount, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy (if any) between the actual distributed amount and the estimated figure, for the current period:

The Company allocates no less than 1% and no more than 1.5% of the pretax income before deducting the amount of employee and director compensation, as employee and director compensation respectively for the fiscal year. In 2020, the net income attributable to owners of the Company is NT$1,011,992,036. It is proposed to allocate 9.4% and 0.6% of the Company’s profit for employee and director compensation, amounting to NT$123,450,390 and NT$7,213,921, respectively, all in cash. If there is any discrepancy between the estimated figure and the actual distributed amount approved by the Board of Directors, it will be recorded as profit or loss in the following fiscal year.

Differences between the proposal for 2020 approved by the Board of Directors and actual distribution of employee bonus, director and supervisor compensation for the previous fiscal year, and the recognized employee bonus and director and supervisor compensation, reasons and the handling thereof:

Unit: NT$

		Unit: NT$
Item	Earning distribution of 2019	Earning distribution of 2020
	Actual number of distributions	Proposed distribution approved by the board of directors
Remuneration of Directors and Supervisors	`－`	7,213,921
Remuneration of employee`－`cash	`－`	123,450,390
Remuneration of employee`－`shares	`－`	`－`
Percentage of Employee Compensation Distributed in Shares as Proportion of the Total Individual or Individual Financial Reports’ After-tax Net Income and the Total Employee Compensation for the Period	`－`	`－`
Discrepancy between recognized and estimated figures,and reasons and handlingthereof	None	None

(9) Repurchase of Company shares

1 Repurchase of the shares by the Company (exercised)

Apr. 30, 2021

					Apr. 30,2021
Term of Repurchase	First	Second	Third	Fourth	Fifth
Purpose of Repurchase	Transfer shares to employees	Transfer shares to employees	Transfer shares to employees	Transfer shares to employees	Transfer shares to employees
Period of Repurchase	Sep. 3, 2015 to Nov. 2, 2015	Apr. 29, 2016 to June 28, 2016	May 15, 2017 to July 14, 2017	July 27, 2018 to Sep. 26, 2018	Aug. 24, 2018 to Oct. 23, 2018
Price Range of the Shares to Be Repurchased	NT$17.01 to NT$35.13 per share. However, the Company will continue to execute share repurchases when the Company’s share price falls below the price range lower limit in place for share repurchases.	NT$19.67 to NT$42.94 per share. However, the Company will continue to execute share repurchases when the Company’s share price falls below the price range lower limit in place for share repurchases.	NT$21.98 to NT$56.79 per share. However, the Company will continue to execute share repurchases when the Company’s share price falls below the price range lower limit in place for share repurchases.	NT$17.68 to NT$39.65 per share. However, the Company will continue to execute share repurchases when the Company’s share price falls below the price range lower limit in place for share repurchases.	NT$17.22 to NT$37.26 per share. However, the Company will continue to execute share repurchases when the Company’s share price falls below the price range lower limit in place for share repurchases.
Type(s) and Numbers of Shares Repurchased	Common share: 0 share	Common share: 5,000,000 shares	Common share: 6,808,000 shares	Common share: 8,000,000 shares	Common share: 7,689,000 shares
Monetary Amount of Shares Repurchased	NT$0	NT$132,625,675	NT$245,812,665	NT$192,810,452	NT$192,095,557
Ratio of Shares Repurchased to Shares Planned to be Repurchased(%)	0.00%	100.00%	85.10%	100.00%	96.11%
Number of Shares Canceled and Transferred	Common share: 0 share	Common share: 5,000,000 shares	Common share: 6,808,000 shares	Common share: 7,997,683 shares	Common share: 7,591,742shares
Cumulative Number of Shares Held by the Company	Common share: 0 shares	Common share: 0 shares	Common share: 0 shares	Common share: 2,317 shares	Common share: 99,575 shares
Proportion of Company’s Cumulative Number of Shares Held to Total Shares Issued(%)	0.00%	0.00%	0.00%	0.00%	0.05%

2 Repurchase of the shares by the Company (still under execution): None

2. Issuance of corporate bonds: None

3. Preferred shares: None

4. Issuance of overseas depositary shares: None

5. Status of employee stock option plan

(1) Status of employee share warrants issued by the Company that have not yet matured


Type of Employee Share Warrants Issued	Share warrants from former FocalTech employees by inheritance(Note 1)		Fourth (Period) Issuance
Date of Effective Registration from the Competent Authority	Oct. 27, 2014		July 6, 2015
Issue(Execution)Date	Oct. 27,2014		Sep. 2,2015
Number of Units Issued	11,697,976		2,800,000
Proportion of Subscribable Shares to Total Issued Shares	5.41%		1.29%
Subscription Period	April 29, 2010 to June 24,2023		September 2, 2015 to September 2,2025
Exercise Method	New Common Share		New Common Share
Duration and Percentage in which Subscription is Restricted	(1) From the beginning of the vesting period to the end of one-year service period, employees receive 25% share warrants. For every six months thereafter, they receive 12.5% share warrants. (2) The share warrants are exercised in accordance with theirperformance status.		Duration 2 years 3 years 4 years	Percentage of Exercisable Shareholdi ng 50% 75% 100%
Number of Shares that Have Been Obtained Through Exercise of Subscription Rights	8,773,977		1,562,750
Amount of Shares Subscribed	NT$136,488,000		NT$19,981,000
Number of Unsubscribed Shares	264,599		289,000
Subscription Price Per Share of Unsubscribed Shares	NT$5.46~NT$36.8		NT$15.9
Proporation of Unsubscribed Shares to Total Issued Shares(%)	0.12%		0.13%
Effect on Shareholders’ Equity	There is no significant effect on share dilution for existing common shareholders.	There is no significant effect on share dilution for existing common shareholders.

Note 1: Regarding share warrants from the former FocalTech employees by inheritance, in accordance with the merger agreement, the number of subscribable shares for each FocalTech share warrant is adjusted to the original number multiplied by the 4.8 conversion ratio, and the subscription price per share (rounding to two decimal places) is adjusted to the original subscription price divided by the 4.8 conversion ratio.

(2) Names and subscription status of managerial officers who have obtained employee share warrants and of the top ten employees in terms of the number of shares to which they have subscription rights through employee share warrants acquired, cumulative as of annual report publication date

1. Managerial officers who have obtained employee share warrants

April.26, 2021; Unit: NT$, shares

								April.26,2021;Unit: NT$,shares	April.26,2021;Unit: NT$,shares	April.26,2021;Unit: NT$,shares	April.26,2021;Unit: NT$,shares
Title	Name	Number of Subscribable Shares Acquired	Percentage of Subscribable Shares Acquired to Total Issued Shares	Exercised				Not exercised
				Number of Subscribable Shares	Price of Subscribable Shares	Amount of Subscriba ble Shares	Percentage of Subscribable Shares to Total Issued Shares	Number of Subscribable Shares	Price of Subscribable Shares	Amount of Subscribab le Shares	Percentage of Subscribable Shares to Total Issued Shares
CEO and President	Genda Hu	1,940,000	0.90%	1,678,000	NT$1.63~ NT$15.90	17,087 ,000	0.78%	238,000	NT$5.46~ NT$22.42	3,878,000	0.11%
Executive Vice President	He-Nien Yang
Executive Vice President	Jui-Cheng Hsu(Note1)
Executive Vice President	Ching-Kai Chang
Executive Vice President	Wei-Ching Hou
Executive Vice President	Hsiao-Hsu Tu
Business Assistant Executive Vice President	Lien-Kuo Wang
Business Assistant Executive Vice President	Te-Chih Kung
Deputy Executive Vice President	Ching-Hsing Chang (Note2)
Deputy Executive Vice President	Chun-Fu Wang
Deputy Executive Vice President	Po-Sheng Shih(Note3)
Deputy Executive Vice President	Cheng-Yi Hsieh (Note 4)
CFO	James Liao

Note 1: Resigned and transferred to the affiliate on Sep. 30, 2020. Returned on Feb. 1, 2021.

Note 2: Resigned on Jan. 24, 2020, and returned on Feb 8,2021. Note 3: Resigned and transferred to the affiliate on Sep. 30, 2020. Returned on Jan. 16, 2021.

Note 4: Resigned and transferred to the affiliate on Sep. 30, 2020. Returned on Jan. 16, 2021.Resigned on Mar. 3, 2021.

Names of the ten employees holding employee subscription warrants authorizing purchase of the most shares

April 26, 2021; Unit: NT$, shares

								April 26,2021;Unit: NT$,shares	April 26,2021;Unit: NT$,shares	April 26,2021;Unit: NT$,shares	April 26,2021;Unit: NT$,shares
Title	Name	Number of Subscribable Shares Acquired	Proportation of Subscribable Shares Acquired to Total Issued Shares	Exercised				Not exercised
				Number of Subscribable Shares	Price of Subscribable Shares	Amount of Subscribable Shares	Proportation of Subscribable Shares to Total Issued Shares	Number of Subscribable Shares	Price of Subscribable Shares	Amount of Subscribable Shares	Proportation of Subscribable Shares to Total Issued Shares
Senior Manager	Chuan Ting	1,342,292	0.62%	1,211,292	NT$1.75~ NT$36.8	20,238,000	0.56%	131,000	NT$15.9~ NT$36.8	3,272,000	0.06%
Vice General Supervisor	Chin-Cheng Tien
General Supervisor	Ta-Chun Wu
Senior Manager	Hua Lee
Senior Tech. Manager	Chen-Wei Lee
Manager	Shen Lee
Senior Manager(Note1)	Chun-Yu Chiu
Vice Director	Kuan-Hua Liao
General Supervisor	Hsin-Hsi Chiang
Senior Manager	Wen-Yung Lung

Note1: Resigned on Apr 1, 2021

6. Status of employee restricted stock shall include the following:

(1) Status of new restricted employee shares issued by the Company that are not yet mature:

Apr. 26,2021	Apr. 26,2021
Type of New Restricted Employee Shares Issued	Third(period)Issuance
Date of Effective Registration from the Competent Authority	August 12, 2020
Issue Date	April 20,2021
Number of New Restricted Employee Shares Issued	5,749,000 shares
Issue Price	NT$10per share
Proportion of New Restricted Employee Shares Issued to Total Issued Shares	2.66%
Vesting Conditions of New Restricted Employee Shares	The proportion of shares subject to the vesting conditions (namely, that employees are still in service, have served in good faith, and have not violated the Company’s labor contract, work regulations, or the Company’s employee management regulations), after the end of each of the following vesting periods from the date of new restricted employee share allotment, are as follows: 2 years of service after share allotment: 50% of the number of allotted shares. 3 years of service after share allotment: 25% of the number of allotted shares. 4 years of service after share allotment: 25% of the number of allotted shares.
Restricted Rights of New Restricted Employee Shares	1. Prior to the fulfillment of the vesting conditions set forth in the preceding Article, employees shall not sell, pledge, transfer, give to others, create, or otherwise dispose of the new restricted employee shares allotted under this Regulation. 2. The rights to attend, propose, speak, vote, and elect at shareholders’ meetings of new restricted employee shares issued under this Regulation shall be the same as those of the Company’s issued common shares until the vesting conditions set forth in the preceding Article are met, and shall be exercised in accordance with the Trust Deed or other custodian methods as otherwise determined bythe Company.

	3. Before the new restricted employee shares issued under this Regulation meet the vesting conditions set forth in the preceding Article, the allotment of shares (including dividends of common shares and reserve transferred to capital increase) and dividends (including cash dividends and cash allotment of capital reserves) derived from such new shares will not be subject to the same restrictions as the new restricted employee shares issued in the year. 4. If the new restricted employee shares are issued to an employee who is an ROC national, the employee shall deliver the shares to a trustee institution designated by the Company for safekeeping immediately after being granted, and shall continue to deliver the shares to the trustee institution for safekeeping until the fulfillment of the vesting conditions, unless otherwise specified in this Regulation. If the granted employee is a national of another country, the granted shares shall be held in trust of the Company appointed for thatpurpose.
Custody Status of New Restricted Employee Shares	All shares are held in trust
Measures to be Taken when Employees Have Not Met the Vesting Conditions After Being Granted or SubscribingNew Shares	The shares allotted were bought back by the Company at the original issue price and were canceled.
Number of New Restricted Employee Shares that Have Been Redeemed or Bought Back	0
Number of New Restricted Employee Shares Regarding Which the Restrictions on Rights Have Been Released	0
Number of New Restricted Employee Shares Regarding Which the Restrictions on Rights Have Not Been Released	5,749,000 shares
Proportion of New Restricted Employee Shares Regarding Which the Restrictions on Rights Have Not Been Released to the Total Issued Shares(%)	2.66%
Effect on Shareholders’ Equity	There is no significant effect on share dilution for existingcommon shareholders.

(2) Names and acquisition status of managerial officers who have acquired new restricted employee shares, and of the top ten employees in terms of the number of new restricted employee shares acquired, cumulative as of the publication date of the annual report:

April 26, 2021

									April 26,2021	April 26,2021	April 26,2021	April 26,2021
	Job Title (Note 1)	Name	Number of New Restricted Employee Shares Acquired	Proportion of New Restricted Employee Shares Acquired to Total Issued Shares (Note 4)	Restrictions on Rights Released(Note 2)				Restrictions on Rights Not Released(Note 2)
					Number of Shares in which the Restrictions on Rights Have Been Released	Issue Price	Issue Amount	Proportion of Shares in which the Restrictions on Rights Have Been Released to the Total Issued Shares (Note 4)	Number of Shares in which the Restrictions on Rights Have Not Been Released	Issue Price	Issue Amount	Proportion of Shares in which the Restrictions on Rights Have Not Been Released to the Total Issued Shares (Note 4)
Managerial Officers	CEO and President	Genda Hu	1,320,000	0.61%	`－`	`－`	`－`	`－`	1,320,000	NTD10	13,200,000	0.61%
	CFO	James Liao
	Executive Vice President	Wei-Ching Hou
	Executive Vice President	He-Nien Yang
	Executive Vice President	Jui-Cheng Hsu
	Executive Vice President	Sung-Tsan Chiang
	Executive Vice President	Pei-Tzu Wu
	Executive Vice President	Hsiao-Hsu Tu
	Business Executive Vice President	Ching-Suo Wang
	Business Assistant Executive Vice President	Lien-Kuo Wang
	Business Assistant Executive Vice President	Te-Chih Kung
	Senior Deputy Executive Vice President	Ching-Hsing Chang
	Deputy Executive Vice President	Cheng-Tao Chuang
	Deputy Executive Vice President	Po-Sheng Shih
	Corporate governance officer	Li-Hsin Yang

Employees	Senior General Supervisor	Yun-Hua Wang	540,000	0.25%	`－`	`－`	`－`	`－`	540,000	NTD10	5,400,000	0.25%
	General Supervisor	Da-Chun Wu
	Senior Manager	Wen-Jun Zhang
	Director	Wei-Quan Zhang
	Director	Ming-Yu Chen
	Deputy Executive Vice President	Jun-Qin Huang
	Director	Wei-Zhang Huang
	Vice General Supervisor	Jun-Qiao Liu
	General Supervisor	Guo Liu
	Director	Hong-Ren Jian

7. Status of new share issuance in connection with mergers and acquisitions: None.

8. Funding plans and implementation: N/A.

V. Operational Highlights

1. Business activities

(1). Scope of business
Major businesses

The development and sales of display driver, touch, and fingerprint recognition human-machine interface solutions, including the design, manufacturing, consulting and services of the software and hardware required by the aforementioned solutions.

Proportion of operation （ 2020 ） : 100% from human-machine interface application ICs
Current products (services) of the company
(1). Integrated driver controller (IDC)
(2). TFT-LCD panel driver IC
(3). Capacitive touch IC
(4). Fingerprint recognition IC and module
(5). AMOLED panel driver IC
(6). Automotive and industrial control IC
New products or technologies to be developed by the company
(1). Integrated driver controller (IDC)
A. IDC products that support C-phy interface
B. Develop COG ultra-narrow bezel products
C. High frame rate applies IDC technology
D. IDC IC development that supports active stylus
E. IDC product development for notebook computer panel applications
(2). TFT-LCD panel driver IC
A. Development of IC for special-purpose panels (such as digital cameras and other special-purpose electronic products)
B. Special driver IC for transparent display panels
(3). Capacitive touch IC
A. Development of TFT panel capacitive active stylus technology
B. Development of TFT panel ultra-fine tip passive stylus IC
C. Development of AMOLED panel touch technology with multi-finger and high touch reporting rate
D. Development of the finger and stylus touch integration technology for flexible panel
(4). Fingerprint recognition IC and module
A. High-sensitivity optical fingerprint recognition IC and corresponding optical collimator and lens
B. Optical fingerprint recognition algorithm
C. Development of ultra-thin optical fingerprint technology
D. Research and development of ultra-narrow side-mounted capacitive fingerprint recognition technology
E. Curved and narrow side-mounted capacitive fingerprint recognition IC
F. Active capacitive fingerprint recognition IC (MOC)
(5) . AMOLED panel driver IC
A. FHD + RAM display driver IC for mobile phones

  - B. Wearable and low-power consumption Integrated Driver controller (IDC)

  - C. Development of high-efficiency demura data processing technology

  - D. Development of driver IC technology for foldable ultra-high-resolution 4K panel

(6). Automotive and industrial control ICs
- A. Development and promotion of IDC ICs for cars
- B. Highly reliable circuit architecture
- C. Development of ICs that support the cascaded architecture for large-size automotive panel applications
(7). Human-machine interface module for notebook computer
- A.Development of touchpad technology that integrates touch and fingerprint recognition
(8). Physiological monitoring technology
- A. Development of PPG heartbeat and arrhythmia detection algorithm
- B. Development of non-binding blood pressure measurement technology
(2). Industry Overview
Current status of human-machine interface related industries

With the advancement of communication technology, human-machine interface technology and applications will continue to expand, bringing more added value. Currently, 5G technology is ready and getting popular, which will generate substantial growth for applications such as portable mobile devices (Mobile Internet), automobiles (IoT), and industrial controls (IoT).

According to the research report of Research And Markets, since 5G technology started to gain popularity in 2020 and promoted the transformation of the digital society, it is estimated that the global 5G market will rise to US$ 251 billion in 2025, and the compound annual growth rate (CAGR) from 2020 to 2025 will reach as high as 97%. After the popularization of 5G technology, it will provide larger and faster communication bandwidth for portable mobile devices and IoT (Internet of Things) applications, offering more business opportunities for the industry.

Based on the current market demand for portable mobile devices, it is estimated the first wave of 5G devices in 2020 came from the replacement of 4G. The market size of smartphones is about US$ 11.3 billion, and that of tablets is US$ 860 million. From the perspective of the demand for IoT, currently, the development of the IoV (Internet of Vehicles) is relatively fast. Since IoV services are provided by mobile communication access modules, the faster the transmission of data, the greater the demand of consumers in in-vehicle display and human-machine interface.

(1) Current status of the portable mobile device panel driver IC and touch IC industries:

Portable mobile devices include mobile phones, laptops, tablets, etc., among which smartphone is the majority. Due to the advancement of the aforementioned industries, the growth of smartphone panels has been significantly promoted. Furthermore, the requirements for panels are different from those in the past; they are incorporated not just for making call, but brining new functions for multimedia. In addition, the development of mobile phone displays has been directed towards large screen size and high resolution. To enhance user experience for

consumers, the technical specifications of products are improved continuously, adding fuel to the supply chain to open up new business opportunities.

Consumers continue to expect mobile phones display to be larger, thinner, and bezel-free. Therefore, full-screen mobile phones have become the current trend. However, the requirement for full-screen display has reduced the frame design space for mobile phones, allowing integrated IC to become the mainstream. The integration of in-cell panels can enhance the added value of products, provide complete product solutions to brand customers, and help simplify the complex supply chain of traditional mobile phone assembly. Therefore, the IDC IC integrated with touch IC and display driver is quickly accepted by the TFT panel supply chain. With the maturity of the technology, TFT panel yield as well as production capacity is promoted to benefit the panel price, accelerating the penetration rate of IDC.

The foundry capacity of IDC was adequate in 2020. To achieve higher screen-to-body ratio and increase the screen frame rate, mobile phone manufacturers adopted the IDC solution. Therefore, the annual shipment volume in 2020 was close to 700 million units. It is expected that the annual shipment volume in 2021 will reach as high as 770 million units.

Figure 5-1: Global shipment volume of smartphones that adopt IDC from 2018 to 2021

==> picture [391 x 162] intentionally omitted <==

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IDC shipment volume (M units)
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Source: Prepared by FocalTech in February 2021

In addition to TFT in-cell display technology, AMOLED is also one of the main display technologies that are adopted by smartphones and recognized by the industry. In terms of the technological development of AMOLED panel manufacturers, the current shipments are mostly based on rigid AMOLED. However, with international big companies, such as Samsung and Apple, starting to use flexible AMOLED panels in high-end models (i.e., model S and Note series for Samsung), the majority of new production capacity of AMOLED panel manufacturers is switched to flexible display. From the perspective of panel resolution, the panel resolution of major mobile phone brands currently on the market is FHD+, with only a few flagship models have panel resolution of WQHD+. In addition, many brand manufacturers have begun to promote

foldable AMOLED mobile phones.

As the in-cell technology is still immature, the touch function of AMOLED panels is based mainly on on-cell technology, which is further divided into on-cell technology for rigid panels and on-cell technology for flexible panels. With the increase of AMOLED's market share in mobile phone panels, on-cell technology has become the largest touch technology besides TFT in-cell technology.

According to the report of Omdia Touch Panel Market Tracker, TFT in-cell touch panels accounted for 50.7% of the overall smartphone market in 2020, while AMOLED on-cell touch panels accounted for 33.9% of the overall smartphone market. The percentage of traditional out-cell capacitive touch display was reduced to less than 15%.

Figure 5-2: Percentage of various touch screen technologies adopted by mobile phone display

==> picture [346 x 81] intentionally omitted <==

Source ： Omdia Touch Panel Market Tracker report (Q3 of 2020)

In addition to smartphones, touch and display-related technologies have gradually expanded to the automotive industry. In 2020, impacted by the COVID-19 epidemic, the shipment of automotive panels was dropped sharply from a positive growth estimate to a double-digit decline, returning to the level in 2016. However, as the epidemic eases, the shipment is expected to recover gradually.

Figure 5-3: Automotive display panel shipment forecast

==> picture [391 x 225] intentionally omitted <==

Source ： Omdia Touch Panel Market Tracker report (Q3 of 2020)

A car will be equipped with multiple display screens; therefore, the growth of automotive display panels will be higher than that of other car body parts. It can be seen from Figure 5-4 that, regardless of the tile-type or one-piece display, the display screens in cars will become bigger or increase, and the growth of the required driver and touch IC will be multiplied. Furthermore, automotive ICs will pay more attention to safety, and the development as well as implementation time is longer, suggesting that the development difficulty is greater than that of general consumer products.

Figure 5-4: Type of automotive display

==> picture [339 x 248] intentionally omitted <==

As for devices such as tablets, notebooks, and wearables, human-machine interface will also be added in the future to provide better user experience for consumers. A highly integrated IDC solution or a more power-saving AMOLED integration solution can make the module architecture lighter and thinner, which helps to control the cost of the module, further accelerating the introduction and adoption of more devices.

(2) Fingerprint recognition IC industry:

Biometric identification are mainly used in consumer electronics (smartphones, notebook computers, wearable devices, smart cards, smart homes, etc.), industry (automotive, office access, medical, retail, finance, etc.), homeland security (government, security, military departments, etc.) and other devices. With the popularization of mobile Internet applications and the rapid growth of 5G in 2020 as well as the coming of the electronic transaction era, the risk of using traditional password authentication is increasing. The application of biometric authentication can effectively solve the security problem. Therefore, related technologies have been developed rapidly in recent years. ABI Research predicts that the total output value of the global biometrics market will exceed US$ 10 billion in 2021.

Biometric authentication is mainly based on fingerprint recognition technology, which has been developed rapidly since its adoption by Apple’s iPhone 5S, making fingerprint unlocking the standard feature of smartphones. After mobile payments such as Apple Pay, Google Pay and Mi Pay were launched, the importance of fingerprint recognition IC that can enhance the security of mobile payments has been highlighted.

Fingerprint recognition technology can be divided into optical, capacitive and ultrasonic types. Since capacitive-type fingerprint recognition are well developed, products based on such technology have the largest number of shipments. The technology is mainly used in mobile phones with TFT panels. However, after 2018, mobile phone displays have entered the full-screen era due to the increasing screen-to-body ratio, making the traditional "Home button + capacitive" fingerprint recognition unable to meet the needs. For this reason, optical-type and ultrasonic-type fingerprint recognition technologies have been developed, which are mainly used for in-display fingerprint mobile phones. Compared with ultrasonic fingerprint recognition, optical in-display fingerprint recognition has cost advantage. Moreover, the technology is well developed, allowing it to surpass ultrasonic-type fingerprint recognition in terms of applications. Currently, optical in-display fingerprint recognition has been commercially used by mobile phone brand manufacturers. The application of optical fingerprint recognition to smartphones is only feasible when combined with OLED display. So far, there is no in-display fingerprint recognition available for TFT LCD panel.

(3) Industry for physiological monitoring products:

The impact of the COVID-19 outbreak has boosted the demand for medical equipment. Epidemic-prevention materials, rapid screening reagents, medical equipment for disease diagnosis, such as thermometers, physiological monitoring devices, epidemic-prevention robots, and remote health monitoring devices, have all gained tremendous attention. To ensure the safety of public health and epidemic prevention, medical services may be carried out in the form of distance diagnosis, telemedicine, and in-home medical treatment. This will increase the demand for personalized medical equipment and services, making manufacturers to produce small volume and customized products. On top of that, more and more people prefer to work from home, and people are aware of the importance for health monitoring, which is expected to promote the growth of wearable, portable or in-home physiological monitoring devices.

Correlation between upstream, middle-stream and downstream of the industry IC industry chain can be divided into ：
A ： Upstream: IC design （ design house ）
B ： Middle-stream: Mask and wafer production (foundry/IDM)
C ： Downstream: Bumping, wire bonding, testing and package

The IC industrial structure is consisted of design, manufacturing (process),

gold bumping, testing and package. IC design companies do not have their own production equipment. Therefore, their wafer fabrication is conducted by professional wafer foundries and the followed by processes including gold bumping, wire bonding, packaging, and complete IC functional tests after preliminary inspection based on the types of products. The package of driver ICs is different from regular ICs. In the past, most of the driver ICs for small and medium-sized panels were carried out based on the COG approach. In recent years, due to the increasing popularity of the full-screen display, the driver ICs for some panels have been carried out based on the COF approach.

3. Market trend of Company’s products

(1) Portable mobile device panel driver IC and touch IC:

Although the displays of smartphones in 2020 were equally shared by AMOLED, TFT a-si, and TFT LTPS panels, with the increasing production capacity of AMOLED, some intermediate-level models have begun to use AMOLED panels, which may gradually suppress the growth of LTPS LCD panels in the future. In response to the threat of AMOLED, TFT panel manufacturers will continue to increase the frame rate or adopt the LTPS Mux6 technology to make TFT panels more competitive comparing with AMOLED.

According to the data shown in Figure 5-5, although the growth of AMOLED panel shipment for mobile phone was limited in 2020, there will be substantial growth in the future.

Figure 5-5: Estimated shipments of OLED panels for mobile phones

==> picture [324 x 214] intentionally omitted <==

Source ： Omdia Touch Panel Market Tracker report (Q3 of 2020)

In the long run, with the increasing of AMOLED production capacity and the improvement of yield panel manufacturers in China, AMOLED will gradually take over the market share of TFT LCD. AMOLED has several advantages including compact, light weight, self-emitting display (without the need of backlight), high color saturation, wide viewing angle, high contrast, fast response time, low energy consumption, and the possibility to realize flexible display, many of which are difficult to achieve with TFT LCD panels.

Therefore, it is expected that after 2023, AMOLED will keep pace with TFT panels. For this reason, the development of AMOLED driver and touch screen related technologies as well as products will become particularly important and urgent.

Although the display panels for tablets and notebooks have not been significantly shifted from TFT LCD to AMOLED, the epidemic has increased the demand for working from home or learning from home. As a result, stylus will become a standard feature for panels in the future.

The power-saving requirement to driver ICs or IDC used in the aforementioned handheld mobile devices is increasing gradually. As a result, the production will be evolved towards low power consumption. For this reason, process miniaturization will be adopted to reduce IC power consumption, forcing IC suppliers to consider 12-inch wafers so that more advanced processes for wafer fabrication (i.e., 55-nm and 40-nm processes) will be developed.

(2) Fingerprint recognition IC:

As far as technology is concerned, even though the evaluation of FRR (False Rejection Rate) and FAR (False Acceptance Rate) showed promising results in 3D face recognition, the current 3D structured light face recognition module still requires the use of IRGS Camera+DOT Projector, resulting in higher costs. If there is room for cost reduction in the future, 3D face recognition can only have the chance to compete with the fingerprint recognition market. Moreover, due to the COVID-19 epidemic, people are wearing masks in many occasions, which further affects the performance of face recognition. Therefore, fingerprint recognition technology will continue to dominant the biometric recognition market with its advantages of stable performance, rapid response, lower cost, and mature technology.

In the future, fingerprint recognition technology will develop towards side-mounted capacitive fingerprint solution and optical in-display fingerprint solution. The side-mounted capacitive fingerprint solution is low in cost, but the required algorithm is more difficult, where as the in-display fingerprint solution is easy to operate, adaptable to various environment, conforming with the traditional operation habits of users, and compatible with flexible/rigid OLED display, continuing to win the favor of high-end mobile phones.

(3) Physiological monitoring products:

Medtronic, a major international medical equipment manufacturer, is most active in the research and development of new medical equipment. It is a global leader in medical care for treating diabetic patients and offering cardiovascular monitoring solutions. In 2020, the Food and Drug Administration, MOHW (Ministry of Health and Welfare) approved the medical equipment application for Apple's "ECG App" and "Arrhythmia Notification App", allowing complicated ECG measurement to be performed in everyday life. Apple’s App can also measure blood oxygen concentration. However, the measurement

is limited to general fitness and health purposes and cannot be used for medical purposes. The mobile devices of Samsung, Huawei, and Fibit are capable of measuring blood oxygen as well. Nevertheless, there is currently no smart watch with blood oxygen measurement that can pass the U.S. Food and Drug Administration (FDA) medical certification. Google has completed the acquisition of Fitbit in January 2021, implying that Google’s smart wearable device will compete with that of Apple and Samsung in the future.

Currently, smart wearable or portable non-invasive health monitoring sensors can be used to measure temperature, heartbeat, blood oxygen, and other vital statistics. They can also provide services for remote drug management, which will be beneficial for monitoring insulin use in diabetic patients.

4. Product Competition

(1) Portable mobile device panel driver IC and touch IC:

For smartphone application, there are two types of TFT panels, namely a-Si and LTPS. Currently, both of them have adopted the in-cell solution of IDC. HD (1280x720) a-Si and FHD (1920x1080) LTPS are the two major panel specifications. FocalTech is one of the earliest companies to develop the IDC technology, and its products cover various resolutions including HD, FHD and QHD for both a-Si and LTPS panels. The major competitors in this field include Synopsys, Novatek, Himax Technologies, and Ilitek.

In addition to smartphone application, FocalTech's IDC solution for TFT in-cell tablet is currently in the leading position in terms of technology. Since FocalTech has exclusive technologies and substantial production capacity as well as experience, it continues to widen the gap with its competitors, becoming one of the most important suppliers for the market in 2020. It is expected that the shipments will continue to grow in 2021. Moreover, FocalTech also incorporated the active stylus function into tablets to continue its leading position in this application.

For AMOLED panels, currently, Samsung has the largest shipment. Its leading position in terms of shipment is expected remain before 2021, accounting for more than 80% of the total AMOLED panel shipments around the world. FocalTech has taken the initiative to engage in the development of AMOLED driver IC, expecting to join the supply chain of Korean manufacturers which was mainly relied STMicroelectronics. For touch IC, FocalTech is one of the few manufacturers around the world who are capable of mass-producing on-cell touch ICs. FocalTech has entered into the Korean supply chain, which will definitely benefit the company's revenue and profitability.

Besides smartphones and tablets, FocalTech also applied the display driver IC, touch IC and other human-machine interface solutions to wearable, and automotive devices. In addition to achieving compact and light-weight structure demanded by the market, it also

helps to control the overall panel module costs, meeting the expected prices of the market.

(2) Fingerprint recognition IC:

Since 2018, fingerprint recognition IC manufacturers have been intensively investing in technology R&D, resulting in the successful development of the in-display fingerprint recognition technology. Currently, major suppliers of capacitive fingerprint recognition sensors include FocalTech, FPC, Goodix, and EgisTec, while the major supplier of ultrasonic in-display fingerprint recognition sensor is Qualcomm. The in-display optical fingerprint recognition technology is dominated by manufacturers such as Goodix, EgisTec, and Silead. Although Synopsys has launched optical fingerprint recognition product before, the research and development focus currently has been shifted to other products.

FocalTech also actively engaged in the development of optical in-display fingerprint recognition IC, optical devices and algorithms. In addition to the current mainstream lens technology, FocalTech also invested in the development of ultra-thin optical in-display fingerprint recognition technology, providing solutions for full-screen display and competing in the market of fingerprint recognition.

(3) Physiological monitoring products:

In 2019, a biomedical technology company in Israel, Biobeat, announced that it will provide household-use blood pressure, heart rate, oxygenation patches and watches to home use, medical institutions and long-term caring centers. The equipment has obtained the 510K input permit from the Food and Drug Administration (FDA) of the United States, hoping to provide solutions for the remote monitoring of the patient's life signs and the cloud health care. The Freescan (cuffless sphygmomanometer) developed by Maisense Taiwan can directly measure blood pressure through pulse reading technology, allowing users to easily manage blood pressure data. The device has been launched to the European market. Although the product mentioned above has made technological breakthroughs, there are still many challenges in terms of usage and price that need to be overcome, preventing it to become a hot-selling product in the market. Since 2017, FocalTech has started to develop physiological monitoring products mobile phones, and has collaborated with National Taiwan University Hospital to jointly develop quick screening software for Arrhythmia. The quick screening software was submitted to the Ministry of Health and Welfare for registration and approval in 2020. In the future, FocalTech will collaborate with National Taiwan University Hospital to carry out a large-scale community screening by using this software, which will be the pioneer to achieve early discovery of heat disease in Taiwan. In addition, the development of a mini-wireless cuffless heart rate and blood pressure monitoring module with medical-grade accuracy will begin this year, which will allow users to measure their physiological data anytime, making blood pressure measurement simple and easy.

(3). Technology and R&D status

Most-recent-year R&D expenses calculated up to the date of release of this annual report

(3). Technology and R&D status 1. Most-recent-year R&D expenses calculated up to the date of release of this annual report	(3). Technology and R&D status 1. Most-recent-year R&D expenses calculated up to the date of release of this annual report	(3). Technology and R&D status 1. Most-recent-year R&D expenses calculated up to the date of release of this annual report	(3). Technology and R&D status 1. Most-recent-year R&D expenses calculated up to the date of release of this annual report
Unit: NT$thousand Item 2019 2020 Q1 of 2021 R&D expenses(A) 1,551,946 1,636,018 476,900 Net operating revenue(B) 9,160,261 13,800,348 4,349,854 (A)/(B) 16.94% 11.85% 10.96%
Item	2019	2020	Q1 of 2021
R&D expenses(A)	1,551,946	1,636,018	476,900
Net operating revenue(B)	9,160,261	13,800,348	4,349,854
(A)/(B)	16.94%	11.85%	10.96%

Successfully developed technologies or products

After years of effort in R&D and insistence on the idea to deliver innovative and leading technological services to customers, FocalTech has gradually established a number of technological achievements that lead in the industry. These achievements are summarized in the following table ：

(1).TFT-LCD driver IC `：`

(1).TFT-LCD driver IC`：`
R&D items orproducts	Applications
Dynamic Contrast Ratio (DCR)	TV`，`Monitor`，`Mobilephone
Dynamic Gamma Control (DGC)	TV`，`Monitor`，`Mobilephone
Black Frame Insertion (BFI)	TV`，`Monitor`，`Mobilephone
Generation III Overdriving(OD)	TV`，`Monitor`，`Mobilephone
Color Tracking	TV`，`Monitor`，`Mobilephone
Tcon supporting120Hz FHD	TV
170MHz LVDS interface	TV`，`Monitor
MIPI-DSI interface	Mobilephone,Tablet PC
MDDI interface	Mobilephone
eDP interface	Tablet PC`，`NB
C-PHY interface	Mobilephone
Dynamic backlight control	Mobilephone
12-bit color depthprocessing	Mobilephone
Ambient light sensor control	Mobilephone
Automatic adaptivepower system	Mobile`，`NB
Multi-channel source driver	Monitor`，`NB
Cascade source driver	UMPC`，`Digital Photo Frame`，` Tablet PC`，`NB
Adaptive Image Enhancement(AIE)	NB,Tablet PC,Mobile Phone
CleverColor	Mobile Phone,NB,Tablet PC
White Adjustment(WA)	Mobile Phone,Tablet PC

(2). Capacitive touch IC `：`

(2). Capacitive touch IC`：`
R&D items orproducts	Applications
Double area Trangle Pattern	Mobilephone
Single Layer Sensor for Mutual-cap`（`SLM`）`	Mobilephone`，`Tablet

R&D items orproducts	Applications
Single Chipfor 15.6 inchpanel	Mobilephone`，`Tablet`，`NB
One Glass solution`（`OGS`）`	Mobilephone`，`Tablet`，`NB
Oncell touch	Mobilephone`，`Tablet
Wake-upGesture`（`WG`）`	Mobilephone`，`Tablet
Single Layer Sensor on cell	Mobilephone`，`Tablet
Integrated Driver Control`（`IDC`）`	Mobilephone
Auto-Celebration	Mobilephone`，`Tablet`，`NB
Full-Screen Common-mode Scanning	Mobilephone`，`Tablet`，`NB
Frame Touch	Mobilephone
ProximitySensing	Mobilephone
Narrow Board Sensor	Mobilephone`，`Tablet
All ITO Sensor Pattern	Mobilephone
Force Engine	Mobilephone
Two Pressure Touch Detect	Mobilephone
Waterproof system	Mobilephone`，`Tablet`，`NB
High ReportingRate Detection	AMOLED mobilephone

(3) Integrated touch and display driver IC ：

R&D items orproducts	Applications
A-Si Dual Gate COG/COF HD IC solution	Mobilephone
A-Si Single Gate COG HD IC solution	Mobilephone
LTPS MUX 1:6 FHD COG/COF IDC IC solution	Mobile phone
LTPS MUX 1:3 FHD COG/COF IDC IC solution	Mobile phone
A-Si Cascade IDC IC solution	Tablet
A-Si Automotive IDC IC solution	Automotive
LTPS Automotive IDC IC solution	Automotive
LTPS NB IDC IC solution	NB
AMOLED Wearable IDC IC solution	Wearable
High Frame Rate Solution	Mobilephone

(4).Fingerprint recognition IC `：`

(4).Fingerprint recognition IC`：`
R&D items orproducts	Applications
Coating type of capacitive fingerprint recognition IC	Mobile phone
Ceramic covered or, glass covered capacitive fingerprint recognition IC	Mobile phone
Active narrow side-mounted capacitive (including flat and curved surface) fingerprint recognition IC	Mobile phone
Active capacitive fingerprint recognition IC `（`MOC`）`	Notebook
Optical in-displayfingerprint recognition IC	Mobilephone
Development of lens,collimator optics and	Mobilephone

R&D items orproducts	Applications
algorithms

(5). AMOLED driver IC `：`

(5). AMOLED driver IC`：`
R&D items orproducts	Applications
Global and Local Auto current limit (ACL)	Mobilephone`，`Wearable
Always on Display(AOD)	Mobilephone`，`Wearable
Dynamic ELVSS	Mobilephone`，`Wearable
SPR Compensation	Mobilephone`，`Wearable
Dynamic Gamma Control	Mobilephone`，`Wearable
Demura	Mobilephone`，`Wearable
IR Drop	Mobilephone`，`Wearable
Partial Area Gamma	Mobilephone`，`Wearable
Super RAM Solution	Mobilephone

(4). Long and short-term business development plans

FocalTech pursues sustainable development, regularly monitor and evaluate the risk and opportunities of the organization's internal and external issues (such as future industrial development as well as the overall economic environment and trends) proposed by stakeholders, serving as the reference and basis for the company's social responsibility and future operation plan. Through the formulation of long-term and short-term plans, the company's future management direction will be determined. The quality as well as the environment, health and safety management system will be improved continuously to ensure that the expected results and effectiveness can be achieved. Potential emergency and impact will be identified to prevent or reduce unexpected effect, better understanding the involved risks and opportunities to solve the company's problems, which in turn improves the company’s competitiveness. The short-term and long-term plans of the company are explained as follows ：

1. Short-term development plan

(1). Marketing strategy

A. Strengthen services and businesses of the existing customers and play the role of long-term strategic partner.
B. Develop new markets and customers and establish partnerships with marketing channels and new customers.
(2). Production strategy
A. Strengthen the strategic partnership with major wafer fabrication, package, and testing plants to obtain stable and adequate production capacity and technical services.
B. Strengthen the development of new wafer foundry around the world and signed a cooperative contract to increase the source and flexibility of wafer supply, providing customers with more choices of production sites.
C. Establish and strengthen the information network connection with the supply chain partners to grasp the progress and quantity of production at any time.

(3). Product strategy
A. Cooperate with customers to develop competitive products and solutions that lead in the industry.
B. Assist in enhancing customer’s value and innovation.
C. Reduce the operating risks of products, highlight the development principle of product line balance, and improve the value of products.
D. Support customers to develop highly flexible application development platform to meet the needs of fast and diversified market development.
E. Continue to develop highly integrated ICs, reduce the number of external components, and assist customers in lowering the overall material costs.
F. Launch new IC products that are small in sizes to effectively reduce costs.
G. Develop ultra-narrow bezel touch and display integrated IC technology.
H. Touch solution that can be used in rigid on-cell and flexible on-cell AMOLED panels.
I. Wearable touch solution with low power, small packages, and low cost.
J. Develop active stylus sensing technology.

(4). Operation strategy

  - A. Actively improve the market share and profitability of each product.

  - B. Spread risk and manage the conditions of each product line.

  - C. Expand the effectiveness of innovative research and development.

  - D. Strengthen talent cultivation and recruitment.

  - E. Make good use of strategic alliance to create mutually-benefit environment.

(5). Operation management and financial supporting
- A. In response to the development of the company's future operation, resources of the company will be distributed appropriately through sound financial planning and operational management, hoping to maximizing the company's resources.
- B. Establish sound and diversified funding channels, and build a close relationship with financial institutions in case operational funds are required for business growth and development.
Long-term development plan
(1). Marketing strategy
- A. Strengthen international market capabilities and enhance strategic collaboration with international customers.
- B. Innovate market demand; create new consumer demand
- C. Integrate industrial supply chain, strengthen the communication and cooperation between brand owners and panel manufacturers.
(2). Production strategy
- A. Share jointly the risks involved in new process and technology development with the supply chain partners.
- B. Expand economic scale and reduce production costs.
- C. Prepare our own test and production equipment to reduce costs and meet the production capacity expansion needs.
(3). Product strategy
- A. Increase technology lead, and strengthen the R&D of products.
- B. Integrate related technologies, expand the scope of product lines and deepen the level of technologies.
- C. Strengthen the technology for high-speed analog and mixed signals.

D. Develop high-efficiency image processing technology.
E. Develop optical fingerprint and bio-sensing technologies.
F. Develop touch technology with features of strong singal penetration, high signal-to-noise ratio, and good interference-resistance, as well as expand the application of touch IC in the area of industrial control and medical care.
(4). R&D strategy
A. Expand business operation teams, plan core products, establish the company’s key technologies and patents, and continue to invest in the development of new generation products to pursue leading technologies.
B. Enhance product design capacity, improve R&D processes, and establish the techniques for standardization and modulizaton to shorten development time and reduce development costs, increasing the competitiveness of new products.
(5). Operation management and financial planning
A. Establish a sound management system, implement the company's business philosophy, create an excellent corporate culture, and realize the vision of sustainable operation.
B. Utilize the diversified funding channels of capital market to strengthen the financial structure of the company as well as the capability for long-term development. In coordination with the growth of the company, reinforce the business operation teams and improve the company's popularity as well as image.

2. Market, Production, and Sales Outlook

(1). Market analysis

1. Regions for selling (offering) major products (services)

Unit ： NT$ thousand

			Unit`：`NT$ thousand	Unit`：`NT$ thousand
Year Region	2019		2020
	Sales amount	Percentage	Sales amount	Percentage
China	7,848,830	85.68%	12,527,084	90.77%
Taiwan	1,007,669	11%	1,121,492	8.13%
Others	303,762	3.32%	151,772	1.10%
Total	9,160,261	100%	13,800,348	100%

2. Market share

FocalTech’s current sales are based mainly on products such as Touch with Display Driver Integration (TDDI) or Integrated Driver Controller (IDC), out-cell capacitive touch IC, TFT LCD driver IC, and fingerprint recognition IC.

(1). Integrated Driver controller (IDC):

In recent years, FocalTech continued to devote itself to the launch of Integrated Driver Controller (IDC). Since LTPS MUX6 technology is widely used in high-end smartphones and high frame rate display technology has been adopted by HD+ and FHD+ smartphones, the shipments of Integrated Driver Controller (IDC) in 2020 have exceeded 200 million units. In addition, several tablet manufacturers have largely adopted IDC into their new models. It is expected that FocalTech's IDC shipments and market share will continue to grow in 2021, maintaining its leading position in the market.

(2). Out-cell capacitive touch IC:

As the touch and driver IC integrated chips are gradually accepted by the market, the market share of out-cell touch ICs in TFT panels has dropped sharply. However, with the increase production of AMOLED panels, and the fact that FocalTech’s touch ICs for AMOLED have successfully entered the supply chain of Korea, FocalTech's capacitive touch solution still maintains its leading position in terms of market share in the global smartphone market.

(3).TFT LCD driver IC:

Since Integrated Driver Controller (IDC) is widely accepted by the market, the number of smartphones using TFT LCD driver ICs has declined rapidly. For this reason, FocalTech has shifted its business focus to applications related to medium and large-size panels, such as smart speakers, notebook computers, digital cameras, automotives, etc, continuously evolving the product structure towards the direction of high-tech requirements and high integration. In addition to the mainstream specifications, high-resolution and high-PPI products such as WXGA+, FHD, and QHD were also launched. Due to the long lifecycle of medium and large size products, FocalTech's shipments and revenue have been maintained in 2020, resulting in a fixed market share as in the past.

(4). Fingerprint recognition IC:

After years of research and development, FocalTech began to increase the shipments of capacitive fingerprint recognition IC in 2020, a substantial growth compared with 2019. FocalTech will continue to put more efforts in product promotion, with the shipments of other human-machine interface solutions ICs, to provide customers with the convenience of one-stop shop service.

3. Supply, demand and growth of the future market

(1). Portable mobile device panel driver IC and touch IC:

For the supply of driver ICs for small and medium-sized LCD, China’s driver IC manufacturers such as NewVision, ViewSil Microelectronics, Chipone, Solomon Systech, etc., have devoted themselves to the development of LCD driver ICs in recent years. However, their technologies are not mature. On the other hand, although manufacturers in Europe, the United State, Japan, and Korea have well developed technologies, they are less competitive than Taiwanese manufacturers in terms of price, delivery time, service, and flexibility. As a result, they can only win the favor of some brand customers. Since manufacturers in Taiwan have the advantages in technologies, costs, local services and flexibility, and have a better control of the front-end wafer fabrication as well as the back-end package, they are capable of fulfilling most of the market needs. Therefore, Taiwanese manufacturers are currently the leading providers of driver ICs for small and medium-sized LCD.

IDC products and technologies are well developed. They have been mass-produced for mobile phone brand customers and tablet brand customers, providing them with lighter, thinner and better-performing device structure and outstanding touch performance. Therefore, IDC products will maintain its high competitiveness for the future market. With

IDC, FocalTech can expand its market share for intermediate-level products. In 2020, FocalTech shipped more than 200 million units of Integrated Driver Controller (IDC), and was the first to launch the new-generation IDC products for new applications, such as tablets, smart wearables, and automobiles. It it expected that in 2021, FocalTech will continue to maintain its leading position in the market and lead the advancement of in-cell technologies.

FocalTech's AMOLED driver ICs, whether for wearable applications or mobile phone applications, have been produced in small quantities. We will continue to carry out IC advancement for different applications. The advancement will be focused on two areas:

A. In response to larger size of AMOLED mobile phones with high-resolution applications, more sophisticated color algorithms will be developed to coincide with the evolution of display, improving panel performance and yield.
B. In response to the needs of the high-end wearable market, FocalTech will continue to develop AMOLED IDC that can reduce the weight and size of displays, and can be applied to GOLED Incell and POLED Oncell.

In the application of out-cell capacitive touch IC, FocalTech has developed mature LCD on-cell touch technology which can be applied to AMOLED on-cell solution. FocalTech will continue to promote the technology to international brand mobile phones and various AMOLED panel manufacturers. With the increase of AMOLED’s market share in the mobile phone panels, the growth of AMOLED on-cell touch IC will be promoted as well.

Furthermore, FocalTech's touch products have been successfully applied to smart watches, bracelets and earphones. The shipment of touch ICs in the wearable device market will continue to increase, creating more revenue and profits for the company.

(2). Fingerprint recognition IC:

Currently, capacitive fingerprint recognition ICs are widely used for the front, back, and sides of portable electronic devices. They support the cutting of various sizes (track type, square and round), allowing pressing in all directions (360 degrees). They also support coating, ceramic cover, and glass cover. Capacitive fingerprint recognition ICs have been affected by the in-display fingerprint recognition solution in terms of application, making their market share in high-end mobile phones to decline in the future. However, the technology can still be regarded as the mainstream for intermediate-level and low-end mobile phones; consequently, considerable shipments can be maintained. FocalTech has its own algorithm that enables quick unlocked. It can provide functions such as black screen wake-up, file folder privacy protection, fingerprint photo shooting, and fingerprint phone answering. As the number of fingerprint recognition operations increases, the algorithm will perceive changes in fingerprint characteristics caused by temperature and humidity, continue to carry out detection, and automatically update the collection of samples, thereby ensuring a consistent user experience. While ensuring both FRR (False Rejection Rate) and FAR (False Acceptance Rate) are good, the smallest array in the industry, and the

fastest unlocking speed of less than 0.2 seconds were achieved, maintaining the leading position in gesture performance and low power consumption in the industry. These technologies and achievements will increase the willingness of customers to adopt them in the mature market of capacitive fingerprint recognition products. In addition, FocalTech will take the initiative to explore the notebook computer market, winning substantial orders from the market.

With the promotion of full-screen mobile phones, in-display optical fingerprint recognition technology and side-mounted capacitive fingerprint recognition technology will enter a period of rapid growth. In the future, with the decrease in cost, penetration rate and market size will be increased rapidly. In the course of the development process, FocalTech will ensure its full participation, and act aggressively to seize any market opportunities. Since in-display optical fingerprint recognition must be used together with AMOLED displays at current stage, AMOLED display shipment is also an important factor that restricts the penetration of in-display optical fingerprint recognition.

Currently, full-screen displays have become the major configuration for intermediate-level and high-end smartphones, and continue to penetrate towards the whole mobile market. FocalTech's in-display optical fingerprint recognition solution is expected to begin small-volume shipments to end customers in 2021.

(3). Physiological monitoring products:

Taiwan’s population over the age of 65 reached 14% in March 2018, officially entering an aging society. It is estimated that by 2026, the population over the age of 65 will exceed 20%, entering a super-aged society, which will increase the number of people in need of long-term caring. Moreover, since the pressure on individual and family caring is increasing, social as well as economic problems may therefore arise. Common diseases of elderly may include chronic diseases such as high blood pressure, diabetes, and heart failure. Patients with these diseases can live like normal people most of the time. However, these diseases may occur from time to time. Therefore, regular monitoring of the conditions of the patient is required, so that appropriate response measures can be taken at the beginning of the onset. Even before the onset, and prediction and warning through various indicators can be provided to achieve the purpose of reducing personal heath damage as well as treatment costs.

Through smart sensors and advanced application tools, information collection and management of body data can be carried out. The data can then be returned to the central database for medical care. In addition, video conferencing equipment, medical monitoring, and remote monitoring interfaces can be adopted to observe conditions of patients, improving the management of medical processes. Whether it is Compal and Rueifang Miner Hospital, BenQ Group’s medical-related companies in China, ASUS and Show Chwan Health Care System, or Quanta’s smart medical cloud, they all hope to utilize the huge resources accumulated by the original Group in the electronics industry and apply them to the biomedical industry. Their main point of entry is based on products related to the medical

equipment industry. FocalTech’s core technology lies in the development of electronic devices and algorithms. In the future, we will integrate biomedical health monitoring solutions with the existing optical fingerprint recognition solutions to link personal physiological information with personal data protection, allowing users to feel more secure about data safety.

Competitiveness: In response to the fierce competition at home and abroad, FocalTech has the following competitive advantages.
(1).Professional management team: FocalTech's management team has complete training and rich experiencees in product market strategy and positioning.
(2). Strong R&D capability ：
- A. FocalTech continues to demonstrate strong capability in technological innovation and new product development, and has taken the leading position in several areas of the the market.
- B. The technical support service bases established at home and abroad can promptly solve customers’ product application and production problems, enhancing customer's efficiency in mass production.
(3).Reliable and close customer relationship: FocalTech has an excellent corporate culture, and maintains a long-term close relationship with upstream, midstream and downstream customers and the supply chain. When facing problems, we always adhere to the idea of integrity and do our best to help customers solve their problems. Therefore, we can maintain long-term, close and reliable partnerships with both customers and suppliers.
(4).Deep understanding of various display platforms and products: In addition to solid research and development capabilities, FocalTech has a deep understanding of various display platforms, such as mobile phones, tablets, notebooks, digital cameras, printers, etc., to create more added value for customers.
(5).Good strategic partner: In addition to deep-rooted customer relationships, actively form strategic alliances with brand customers and platform solution providers.
Advantages and disadvantages of FocalTech’s future development and corresponding countermeasures (1). Advantages
- A. The display industry and its application market are changing rapidly; therefore, operating efficiency and rapid response capabilities are particularly important. In the fast-changing environment, the operating efficiency of professional IC design companies has surpassed the group operation model of traditional Integrated Device Manufacturer (IDM). With the performance of domestic professional wafer fabrication, testing and package plants have reached world-class standards, the long-term competitiveness of professional IC design companies is promising.
- B. The overall Touch with Display Driver Integration (TDDI) market continues to grow, especially in the application of small-size panels. The output value of ICs in the market aforestated is still increasing. This area is currently the focus of FocalTech and is the momentum to continuously boost FocalTech's revenue growth.
- C. The brand owners of flat-panel displays attach great importance to the

development of related display technologies and standards. The demand for collaboration with related domestic flat-panel display manufacturers is increasing. Therefore, it is beneficial to FocalTech, who has a solid R&D capability. Regardless of technology development or innovation, FocalTech is in the leading position.

D. With IC design and software development capabilities, FocalTech owned ITO touch patented patterns will be able to effectively provide customers with solutions in the shortest time and avoid been accused.
E. Stay close to the market to grasp the market trend, and meet customer order requirements at any time. FocalTech is one of the few IC design companies who can meet the rapidly changing market in China, enhancing the company's position in the market.
(2). Disadvantages and corresponding countermeasures
A. Product prices are facing downward pressure

To stimulate the end consumer market, flat-panel display manufacturers and mobile phone brand customers may adopt low-price strategies, and they also require upstream component suppliers to reduce prices. Although the production capacity has experienced shortage since the second half of 2020, FocalTech strives for production capacity at higher cost, which can also be passed on to customers, reducing the risk of price decline. However, the cost increase level may exceed the that in selling price. In addition, if the production capacity of suppliers in the future is increased, FocalTech will have to face the pressure of falling prices from customers and high production cost inventory on hand, which may seriously affect the profitability.

Countermeasures `：`

FocalTech will continue to improve product manufacturing processes as well as R&D and design capabilities. In addition, we will seek lower-cost wafer and packaging technologies to reduce manufacturing costs and increase product profit margins. In response to market development trends, we will accelerate the development of new technologies and new products in order to widen the technological gap with competitors in the industry. Furthermore, we will explore new applications, such as wearables, smart home devices, security devices, and automobiles, to increase product competitiveness. We will also take the initiative to sign production capacity guarantee agreements and supply guarantee agreements with suppliers and customers to lock in prices between both parties to avoid the double troubles of high inventory cost and declining of prices after the production capacity is increased.

B. Competitors have engaged in integrated IC solutions

Traditional display driver IC manufacturers and touch IC manufacturers are eager to try. They all launched solutions for Touch with Display Driver Integration to take over a share of the market, worsening the subsequent market competition.

Countermeasures `：`

Continue to strengthen the deployment of domestic and international patents to increase the entry barrier, and focus on R&D to develop

next-generation products, widening the gap with competitors, and providing customers with more cost-effective and competitive solutions.

C. R&D personnel resign risk

The IC design industry is a knowledge-intensive industry. The development and training of R&D and design personnel requires long-term cultivation. The ability to recruit high-quality R&D personnel will be the core competitiveness of IC design companies. However, due to the large number of competitors in the IC industry, recruitment of outstanding professional talents is becoming increasingly difficult, and high costs are often required to recruit excellent talents. To enhance the loyalty of talents to the company, the company will need to pay higher labor costs.

Countermeasures `：`

FocalTech adopts various equity retention tools, sets rules for the distribution of earnings to employees, implements the product line profit-sharing system, conducts performance assessment and promotion, and carries out specific measures such as internal/external education and training to improve the adhesion and loyalty of employees.

D. Risk of inadequate wafer production capacity

With the continuous innovation of electronic products, the demand for semiconductor has increased significantly. In addition to smartphone applications, automotive electronics will consume semiconductor production capacity significantly in the future. Therefore, the amount of production capacity that can be secured will affect the extent of future operational growth.

Countermeasures `：`

Continue to strengthen the strategic partnership with wafer fabs, closely develop product application processes, and obtain certain degree of supply guarantee. In addition, spread the sources of production capacity can reduce the risk of insufficient production capacity from a single wafer fab.

(2). Important use and production process of major products

1. Important use of major products

Currently, the major products of FocalTech include Touch with Display Driver Integration (TDDI) or Integrated Driver controller (IDC), capacitive touch IC, TFT LCD and AMOLED driver IC and fingerprint recognition IC. They are mainly used in various types of smartphones, tablets, notebooks, wearable devices, digital cameras, automobiles and printers.

2. Production process of major products

FocalTech is a professional IC design company. The fabrication of wafers is conducted by foundries. After preliminary tests, the wafers produced by fabs are sent to package plants for packaging or bumping processes and complete chip functional tests. The following is the flow chart showing the manufacturing process ：

==> picture [371 x 138] intentionally omitted <==

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

Material Material
Silicon ingot Lead frame
Wafer Wafer test Package test
Design Mask fabrication Package Finished
product
Gold bumping Wafer test Tape and reel package
----- End of picture text -----

(3). Supply of major material

Name of major material	Major supplier	Supplying condition
Wafer	Supplier A, Supplier B, Supplier C	Stable quality and supply under long-term cooperationand relationship

(4). The name of the supplier (customer) who has accounted for more than 10% of the total purchases (sales) in any one of the most recent two years, as well as the purchase (sales) amount and percentage

1. Information of major suppliers in the past two years

Unit ： NT$ thousand

									Unit`：`NT$ thousand	Unit`：`NT$ thousand	Unit`：`NT$ thousand	Unit`：`NT$ thousand
	2019				2020				Q1 of 2021
N o.	Name	Amount	Percenta ge to annual net purchas es (%)	Relation ship with the issuer	Name	Amount	Percenta ge to annual net purchas es (%)	Relation ship with the issuer	Name	Amount	Percenta ge to net purchas es in the current quarter (%)	Relation ship with the issuer
1	Supplier A	1,852,265	42%	Non	Supplier A	2,898,657	39%	Non	Supplier A	854,246	42%	Non
2	Supplier B	369,847	8%	Non	Supplier B	2,173,710	29%	Non	Supplier B	679,382	34%	Non
3	Supplier C	1,853,794	42%	Non	Supplier C	1,798,039	24%	Non	Supplier C	290,247	14%	Non
	Others	378,338	8%	`－`	Others	606,544	8%	`－`	Others	202,665	10%	`－`
	Net purchases	4,454,244	100%	`－`	Net purchases	7,476,950	100%	`－`	Net			`－`
									purchases	2,026,540	100%

Note ： The variation was due to the change in product combination.

2. Information of major customers in the past two years

Unit ： NT$ thousand

N o.	2019	2019	2019	2019		2020	2020	2020		Q1 of 2021	Q1 of 2021	Q1 of 2021
	Name	Amount	Percenta ge to annual net sales (%)	Relation ship with the issuer	Name	Amount	Percen tage to annual net sales (%)	Relations hip with the issuer	Name	Amount	Percenta ge to net sales in the current quarter (%)	Relati onshi p with the issuer
1	Company A	1,193,501	13%	Non	Company A	2,060,074	15%	Non	Company H	677,985	16%	Non

==> picture [486 x 187] intentionally omitted <==

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

2019 2020 Q1 of 2021
Percenta
Percen
Percenta ge to net Relati
Relation tage to
N ge to Relations sales in onshi
ship annual
o. Name Amount annual Name Amount hip with Name Amount the p with
with the net
net sales the issuer current the
issuer sales
(%) quarter issuer
(%)
(%)
2 [Company E ] 1,292,221 14% Non Company G 1,666,900 12% Non Company A 456,236 10% Non
3 [Company D ] 1,793,388 20% Non Company E 1,539,211 11% Non Company I 453,061 10% Non
Company D 1,166,796 8% Non
Others 4,881,151 53% － Others 7,367,367 54% － Others 2,762,572 64% －
Net sales 9,160,261 100% － Net sales 13,800,348 100 － Net sales 4,349,854 100% －
----- End of picture text -----

Note 1 ： The above company includes the company and its affiliates.

Note 2 ： The variation was due to the change in product combination.

(5). Production volume and value in the past two years

Unit ： 1000 units ； NT$ thousand

Year Production volume and value	2019	2019	2019	2020	2020	2020
	Production capacity	Production volume	Production value	Product ion capacit y	Production volume	Production value
Major product
Human-machine interface application related ICs	`－`	403,595	7,296,496	`－`	518,318	10,617,261

Note ： FocalTech is an IC design company and all products are produced by outsourced manufactures. Therefore, there is no production capacity data available.

(6). Sales volume and value in the past two years

(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years	(6). Sales volume and value in the past two years
Unit`：`1000 units`；`NT$ thousand
Year	2019				2020
Sales volume and value Majorproduct	Domestic sales		International sales		Domestic sales		International sales
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Human-machin e interface application related ICs	7,715	246,411	417,604	8,913,850	13,810	555,576	510,052	13,244,772

3. Information of employees

Information of employees in the past two years and as of the publication date of the annual report: number of employees, average year of service, average age, and education background.

2021.04.30; Unit ： person

			2021.04.30;	Unit`：`person
	Year	2019		2021
			2020
				As of April 30


No. of eml	managerial officers	17
			15	17

	Production line operator	－	－	－
p oyees	Regular staff	771	787	813
	Total	788	802	830
Average age		35	36	36
Seniority of service		4.4
			5.1	5

	PhD	1%	1%	1%
Educ	Master degree	48%	46%	47%
ation bk	College	50%	52%	51%
ac grou	Senior high school	1%	1%	1%
nd	Under Senior high school	－%
			－%	－%

4. Information on environmental protection expenditures

In the most recent year and as of the publication date of the annual report, disclose the losses incurred due to environmental pollution (including compensation and environmental protection audit results that violate environmental protection laws and regulations, the date of penalty, the penalty number, the laws and regulations violated, the content of violation, and the penalty shall be listed) and the estimated amount that may occur at present and in the future as well as the corresponding measures. If it is impossible to carry out the estimation, the reason shall be stated ：

FocalTech is a high-tech integrated circuit design company. It is engaged in the research and development of semiconductors in the Hsinchu Science Park. The company outsources the manufacturing functions to various well-known domestic and international integrated circuit manufacturers to carry out wafer fabrication. Therefore, it is not involved in any pollution sources or pollution incident specified by the environmental protection related regulations.

5. Labor relations

(1). Employee welfare and benefits

In accordance with relevant laws and regulations, FocalTech allocates employee welfare funds and organizes an employee welfare committee to plan, supervise and implement employee welfare matters. In addition to following the provisions of the Labor Insurance Act, all employees of the company shall join the labor insurance and group insurance. Besides the employees, their family members can also join the group insurance under the condition that the premium is self-paid. FocalTech provides a safe and healthy working environment for employees. We have certified nurses and on-site doctors to provide regular medical and counseling services, offering facilities and environment that are superior to those required by the Occupational Safety and Health Act and providing regular health checkups better than those prescribed by the related laws and regulations. In addition, to enhance the company's competitiveness, we provide a complete training program for employees' career planning and

professional skills. We also implement profit sharing and fair evaluation as well as promotion systems to increase employees’ adhesion towards the organization. Subsidiaries are handled in accordance with local laws and regulations.

(2). Education and training of employees
FocalTech provides employees with rich learning resources. Employees can enhance their knowledge and skills through internal and external training, on-the-job training, knowledge management systems, and guidance from supervisors and peers. Furthermore, through courses for new recruits, professional competencies, supervisory talents, as well as general courses and self-inspired training systems, employees are able to obtain assistance in learning and growth. On the other hand, through dual-track promotion, job rotation, and project assignment, the career and job of employees can be integrated, allowing them to enjoy the pleasure of learning and growing, and create a better future.
FocalTech has formulated the "Management Guidelines for Employee Education and Training" and planned related training courses in accordance with the requirements of competencies, professions, regulations and ISO to enhance the knowledge and the quality of employees, improving business performance. The education and training conducted in 2020 are as follows ：

Type of training	No. ofpeople	Costs	Class hours
Management trainingcourse
	133	337,272	156

Professional trainingcourse
	1,833	602,790	3,575

Self-development trainingcourse
	322	144,121	158

General training course
	0	0	0

New employee orientation
	157	4,250	377

Total	2,445	1,088,433	4,266

(3). Retirement system and its implementation status

To secure the retirement life of employees, and improve the spirit of working, FocalTech has formulated the Employee Retirement Management Guidelines in accordance with the Labor Standards Act, specifying the retirement conditions, payment standards and application procedures, and establishing an Employee Retirement Reserve Supervision Committee in accordance with related laws. Retirement funds are allocated monthly and deposited in a special account of the Bank of Taiwan under the name of the Employee Retirement Reserve Supervisory Committee. At the end of the year, if the estimated balance of the special account is insufficient to pay for the employees who are qualified for retirement in the next year, the difference in amount will be provided by the company at once before the end of March of the next year. Since the Labor Pension Act came into effect on July 1, 2005, employees can choose to follow the old pension system or the new system and retain the working experience that are applicable according to the related regulations (retain the working experience accumulated during the old pension system). For employees who are eligible for the new pension system, FocalTech will allocate 6% of the employee’s salary

every month to the individual labor insurance account. Subsidiaries are handled in accordance with local laws and regulations.

(4). Labor-management agreement

In accordance with relevant labor laws and related regulations, FocalTech handles labor-management agreement based on the employment contract, working rules and various management regulations. Since the establishment of the company, the labor-management relation has been harmonious, and no major labor disputes and losses have occurred.

(5). Various employee rights protection measures FocalTech has formulated comprehensive management regulations, which clearly stipulate the rights and obligations of employees as well as their welfare and benefits to protect the rights and interests of employees.
(6). In the most recent year and as of the publication date of the annual report, disclose the losses incurred due to labor disputes (including labor inspection results that violate the Labor Standards Act, the date of penalty, the penalty number, the laws and regulations violated, the content of violation, and the penalty shall be listed) and the estimated amount that may occur at present and in the future as well as the corresponding measures. If it is impossible to carry out the estimation, the reason shall be stated: none.

6. Material Contracts `：`

FocalTech is not currently a party to any material contracts,other than those entered into in the ordinary course of its business.

VI. Financial Status

1. Condensed Balance Sheets, Statements of Comprehensive Income, and CPA Audit Opinions for the latest five Years

(1) Condensed Balance Sheet

Consolidated Financial Statement - IFRS

		Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Year Item		Financial information for the Most Recent five Years					Financial information as of March 31,2021
		2016	2017	2018	2019	2020
Current assets		9,565,949	8,173,173	8,033,023	8,531,407	8,970,922	10,550,394
Property, plant and equipment		112,096	1,408,474	1,394,372	1,361,478	1,321,940	1,302,523
Intangible assets		3,440,250	3,447,982	1,386,266	1,336,457	1,300,470	1,296,456
Other assets		1,839,036	514,439	486,460	373,627	751,721	917,799
Total assets		14,957,331	13,544,068	11,300,121	11,602,969	12,345,053	14,067,172
Current liabilities	Before distribution	3,162,905	2,543,857	2,879,228	3,412,424	3,956,253	4,681,351
	After distribution	3,352,890	2,693,857	3,029,228	3,562,424	Note 1
Non-current liabilities		356,044	256,847	343,278	462,375	577,340	690,469
Total liabilities	Before distribution	3,518,949	2,800,704	3,222,506	3,874,799	4,533,593	5,371,820
	After distribution	3,708,934	2,950,704	3,372,506	4,024,799	Note 1
Equity attributable to owners of theparent
Share capital		2,965,344	2,983,700	2,987,432	2,996,759	2,103,532	2,105,279
Capital surplus		6,625,846	6,654,876	6,551,481	5,145,377	4,843,642	4,851,110
Retained earnings	Before distribution	1,500,205	1,245,139	(1,248,601)	(183,307)	1,012,301	1,857,784
	After distribution	1,310,220	1,245,139	0	0	Note 1
Other Equity		396,046	44,363	147,164	5,807	(122,316)	(127,536)
Treasuryshare		(62,992)	(191,998)	(393,203)	(267,158)	(24,316)	(24,316)
Non-controllinginterest		13,933	7,284	33,342	30,692	(1,383)	33,031
Total shareholders' equity	Before distribution	11,438,382	10,743,364	8,077,615	7,728,170	7,811,460	8,695,352
	After distribution	11,248,397	10,593,364	7,927,615	7,578,170	Note 1

Data Source: Financial statements audited or reviewed by CPAs.

Note 1: The distribution proposal of 2020 earnings has not yet been resolved by the shareholders’ meeting.

2. Individual Financial Statement - IFRS

Unit: NT$ thousand

		Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Year Item		Financial information for the Most Recent five Years`（`Note 1`）`
		2016	2017	2018	2019	2020
Current assets		2,879,316	2,827,100	1,789,171	2,240,119	5,449,676
Property, plant and equipment		28,837	27,744	30,753	19,408	15,226
Intangible assets		3,365,109	3,350,278	1,328,629	1,312,375	1,296,766
Other assets		6,362,052	5,663,752	5,575,173	5,363,643	4,845,714
Total assets		12,635,314	11,868,874	8,723,726	8,935,545	11,607,382
Current liabilities	Before distribution	1,023,164	972,667	505,919	1,052,458	3,225,284
	After distribution	1,213,149	1,122,667	655,919	1,202,458	Note 1
Non-current liabilities		187,701	160,127	173,534	185,609	569,255
Total liabilities	Before distribution	1,210,865	1,132,794	679,453	1,238,067	3,794,539
	After distribution	1,400,850	1,282,794	829,453	1,388,067	Note 1
Equity attributable to owners of theparent
Share capital		2,965,344	2,983,700	2,987,432	2,996,759	2,103,532
Capital surplus		6,625,846	6,654,876	6,551,481	5,145,377	4,843,642
Retained earnings	Before distribution	1,500,205	1,245,139	(1,248,601)	(183,307)	1,012,301
	After distribution	1,310,220	1,245,139	0	0	Note 1
Other Equity		396,046	44,363	147,164	5,807	(122,316)
Treasuryshare		(62,992)	(191,998)	(393,203)	(267,158)	(24,316)
Non-controllinginterest		－	－	－	－	－
Total shareholders' equity	Before distribution	11,424,449	10,736,080	8,044,273	7,697,478	7,812,843
	After distribution	11,234,464	10,586,080	7,894,273	7,547,478	Note 1

Data Source: Financial statements audited by CPAs.

Note 1: The distribution proposal of 2020 earnings for has not yet been resolved by the shareholders’ meeting.

(2) Condensed Statements of Comprehensive Income ／ Condensed Income Statement
Consolidated Financial Statement - IFRS

Unit: NT$ thousand; Earnings Per Share: NT$

	Unit: NT$ thousand; Earnings Per Share:	Unit: NT$ thousand; Earnings Per Share:	Unit: NT$ thousand; Earnings Per Share:	Unit: NT$ thousand; Earnings Per Share:	Unit: NT$ thousand; Earnings Per Share:	NT$
Year Item	Financial information for the Most Recent five Years					Financial information as of Q1 of 2021
	2016	2017	2018	2019	2020
Operatingrevenue	11,018,225	10,798,334	9,919,368	9,160,261	13,800,348	4,349,854
Operating grossprofit	2,266,437	2,270,185	1,562,300	1,993,200	3,428,776	1,628,584
Operating profit or loss	207,484	162,215	(675,056)	(340,656)	1,030,737	925,494
Non-operating income and expenses	34,411	41,518	(1,828,593)	160,295	126,360	52,919
Profit before tax	241,895	203,733	(2,503,649)	(180,361)	1,157,097	978,413
Net profit of continued operations for theyear	210,109	(103,210)	(2,488,118)	(205,680)	983,458	836,951
Loss of discontinued operations	`－`	`－`	`－`	`－`	`－`	`－`
Netprofit(loss)for theyear	210,109	(103,210)	(2,488,118)	(205,680)	983,458	836,951
Other comprehensive income for the year (profit after tax)	(176,390)	(373,132)	107,575	(141,671)	(131,355)	(5,033)
Total comprehensive income for theyear	33,719	(476,342)	(2,380,543)	(347,351)	852,103	831,918
Net profit attributable to owners of theparent	211,094	(79,680)	(2,451,642)	(175,249)	1,011,992	845,740
Net profit attributable to non-controllinginterest	(985)	(23,530)	(36,476)	(30,431)	(28,534)	(8,789)
Comprehensive income attributable to owners of the parent	34,704	(452,812)	(2,346,299)	(315,164)	884,178	840,520
Comprehensive income attributable to non-controllinginterest	(985)	(23,530)	(34,244)	(32,187)	(32,075)	(8,602)
Earningsper share	0.73	(0.28)	(8.66)	(0.63)	3.97	4.24

Data Source: Financial statements audited or reviewed by CPAs.

2. Individual Financial Statements - IFRS

Unit: NT$ thousand; Earnings Per Share: NT$

	Unit: NT$thousand;Earnings Per Share: NT$	Unit: NT$thousand;Earnings Per Share: NT$	Unit: NT$thousand;Earnings Per Share: NT$	Unit: NT$thousand;Earnings Per Share: NT$	Unit: NT$thousand;Earnings Per Share: NT$
Year Item	Financial information for the Most Recent five Years
	2016	2017	2018	2019	2020
Operatingrevenue	5,637,003	5,197,671	4,298,242	2,901,766	11,410,350
Operating grossprofit	1,218,548	1,244,047	679,540	956,905	2,598,804
Operating profit or loss	104,236	303,405	(195,555)	70,632	1,227,794
Non-operating income and expenses	121,048	(347,946)	(2,278,218)	(231,226)	(51,815)
Profit(loss)before tax	225,284	(44,541)	(2,473,773)	(160,594)	1,175,979
Net profit of continued operations for theyear	211,094	(79,680)	(2,451,642)	(175,249)	1,011,992
Loss of discontinued operations	`－`	`－`	`－`	`－`	`－`
Net profit (loss) for the year	211,094	(79,680)	(2,451,642)	(175,249)	1,011,992
Other comprehensive income for the year (profit after tax)	(176,390)	(373,132)	105,343	(139,915)	(127,814)
Total comprehensive income for theyear	34,704	(452,812)	(2,346,299)	(315,164)	884,178
Earningsper share	0.73	(0.28)	(8.66)	(0.63)	3.97

Data Source: Financial statements audited by CPAs.

(3) The names of CPA conducting financial audits in the Most Recent five Years and their audit opinions

opinions
Year	AccountingFirm	Names of CPAs	Audit opinions
2016	Deloitte & Touche	CPA Lilac Shue, CPA Shu-Wan Lin	Unqualified opinion
2017	Deloitte & Touche	CPA Lilac Shue, CPA Shu-Wan Lin	Unqualified opinion
2018	Deloitte & Touche	CPA Lilac Shue, CPA Shu-Wan Lin	Unqualified opinion
2019	Deloitte & Touche	CPA Lilac Shue, CPA Chih-MingShao	Unqualified opinion
2020	Deloitte & Touche	CPA Lilac Shue, CPA Chih-MingShao	Unqualified opinion

2. Financial Analysis for the latest five Years

(1) Consolidated Financial Statements - IFRS

Year Analytical items(Note 2)	Year Analytical items(Note 2)	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years	Financial Information as of March 31,2021
		2016	2017	2018	2019	2020
Financial Structure (%)	Debt-asset Ratio	23.53	20.68	28.52	33.39	36.72	38.19
	Ratio of Long-term Capital to Property, Plant and Equipment	10,521.72	780.48	601.53	599.34	634.69	718.05
Solvency (%)	Current Ratio	302.44	321.29	279.00	250.01	226.75	225.37
	Quick Ratio	219.59	212.82	202.62	195.64	180.46	180.86
	Interest Coverage Ratio	2,924.56	2,205.55	(318,430.41)	(15,556.34)	57,95.67	41,16.89
Operating Efficiency (Note 1)	Receivables Turnover Rate (times)	7.54	8.33	8.85	7.62	9.04	10.07
	Average Collection Days for Receivables	48.4	43.81	41.24	47.89	40.37	36.26
	Inventory Turnover Rate (times)	3.44	3.27	3.48	3.88	6.24	5.77
	Payables Turnover Rate (times)	6.96	5.98	5.69	3.97	5.58	5.74
	Average Days of Sale	105.96	111.62	104.88	94	58.49	63.3
	Property, Plant and Equipment Turnover Rate (times)	84.66	14.2	7.08	6.65	10.29	13.26
	Total Asset Turnover Rate (times)	0.73	0.76	0.8	0.8	1.15	1.32
Profitability	Return on Assets(%)	1.44	(0.67)	(20.02)	(1.79)	8.23	6.35
	Return on Equity (%)	1.83	(0.72)	(26.11)	(2.23)	13.05	10.27
	Ratio of Income Before Tax to Paid-in Capital(%)	8.16	6.83	(83.81)	(6.02)	55.01	46.47
	Profit Margin Before Tax(%)	1.91	(0.96)	(25.08)	(2.25)	7.13	19.24
	Earningsper share(NT$)	0.73	(0.28)	(8.66)	(0.63)	3.97	4.24
Cash Flow	Cash Flow Ratio(%)	36.28	17.31	(3.73)	29.22	22.31	20.73
	Cash Flow Adequacy Ratio (%)	293.81	267.18	131.81	170.34	183.83	195.24
	Cash Flow Reinvestment Ratio(%)	10.88	3.18	(3.51)	11.8	9.81	11.43
Leveraging	OperatingLeverage	2.20	2.39	0.64	0.26	1.28	1.07
	Financial Leverage	1.04	1.06	1	1	1	1
Specify reasons for financial ratio differences for latest two fiscal years (not required if the difference does not exceed 20%): 1. Interest Coverage Ratio: Primarily due to the significant 2020 increase in income before income tax and interest expenses.
2. Inventory Turnover Rate and Payables Turnover Rate: Primarily due to the increase in cost of goods sold in 2020. 3. Average Days of Sale: Primarily due to the increase in inventory turnover rate. 4. Property, Plant and Equipment Turnover Rate and Total Asset Turnover Rate: Primarily due to the 2020 increase in operating revenue. 5. Return on Assets, Return on Equity, Ratio of Income Before Tax to Paid-in Capital , Profit Margin Before Tax, and Earnings per Share: The significant increase in Net Profit for the Year was primarily due to the 2020 increase in operating revenue and gross margin. 6. Cash Flow Ratio: Primarily due to the 2020 increase in current liabilities. 7. OperatingLeverage: Primarilydue to the 2020 increase ingross margin.

Inventory Turnover Rate and Payables Turnover Rate: Primarily due to the increase in cost of goods sold in 2020.
Average Days of Sale: Primarily due to the increase in inventory turnover rate.
Property, Plant and Equipment Turnover Rate and Total Asset Turnover Rate: Primarily due to the 2020 increase in operating revenue. 5. Return on Assets, Return on Equity, Ratio of Income Before Tax to Paid-in Capital , Profit Margin Before Tax, and Earnings per Share: The significant increase in Net Profit for the Year was primarily due to the 2020 increase in operating revenue and gross margin.
Cash Flow Ratio: Primarily due to the 2020 increase in current liabilities.
Operating Leverage: Primarily due to the 2020 increase in gross margin.

Data Source: Financial reports audited or reviewed by CPAs.

Note 1: The above operating efficiency is expressed on an annualized basis.

Note 2: The formulas for the financial analysis are as follows:

Financial Structure:
(1) Debt-asset Ratio = Total Liabilities / Total Assets
(2) Ratio of Long-term Capital to Property, Plant and Equipment = (Total Equity / Non-Current Liabilities) / Net Worth of Property, Plant and Equipment
Solvency:
(1) Current Ratio = Current Assets / Current Liabilities
(2) Quick Ratio = (Current Assets – Inventory – Prepaid Expenses) / Current Liabilities
(3) Interest Coverage Ratio = Income Before Income Tax and Interest Expenses / Interest Expenses for the Period
Operating Ability:
(1) Receivables (including accounts receivable and notes receivable arising from business operations) Turnover Rate = Net Sales / Average Receivables (including accounts receivable and notes receivable arising from business operation) for Each Period
(2) Average Collection Days for Receivables = 365 / Receivables Turnover Rate
(3) Inventory Turnover Rate = Cost of Goods Sold / Average Inventory
(4) Payables (including accounts payable and notes payable arising from business operations) Turnover Rate = Cost of Goods Sold / Average Payables (including accounts payable and notes payable arising from business operations) for Each Period
(5) Average Days of Sale = 365 / Inventory Turnover Rate
(6) Property, Plant and Equipment Turnover Rate = Net Sales / Average Net Worth of Property, Plant and Equipment
(7) Total Asset Turnover Rate = Net Sales / Average Total Assets
Profitability:
(1) Return on Assets = [Net Income + Interest Expenses × (1 – Tax Rate)] / Average Total Assets
(2) Return on Equity = Net Income / Average Total Equity
(3) Profit Margin Before Tax = Net Income / Net Sales
(4) Earnings per Share = (Profit and Loss Attributable to Owners of the Parent – Dividends on Preferred Shares) / Weighted Average Number of Issued Shares (Note 4)
Cash Flow:
(1) Cash Flow Ratio = Net Cash Flow from Operating Activities / Current Liabilities
(2) Cash Flow Adequacy Ratio = Net Cash Flow from Operating Activities for the Most Recent Five Fiscal Years / (Capital Expenditures + Inventory Increase + Cash Dividend) for the Most Recent Fiscal Years
(3) Cash Flow Reinvestment Ratio = (Net Cash Flow from Operating Activities – Cash Dividend) / (Gross Value of Property, Plant and Equipment + Long-term Investment + Other Non-current Assets + Working Capital) (Note 5)
Leveraging:

(1) Operating Leverage = (Net Operating Revenue – Variable Operating Costs and Expenses) / Operating Income (Note 6)

(2) Financial Leverage = Operating Income / (Operating Income – Interest Expenses)

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(2) Individual Financial Statements - IFRS

Year Analytical items(Note 1)	Year Analytical items(Note 1)	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years	Financial Analysis for the Most Recent five Years
		2016	2017	2018	2019	2020
Financial Structure(%)	Debt-asset Ratio	9.58	9.54	7.79	13.86	32.69
	Ratio of Long-term Capital to Property, Plant and Equipment	40,268.23	39,274.10	26,721.97	40,617.72	55,051.22
Solvency(%)	Current Ratio	281.41	290.65	353.65	212.85	168.97
	Quick Ratio	177.07	198.21	246.14	133.77	130.89
	Interest Coverage Ratio	3,529.50	(11,007.48)	(315,835.25)	(13,840.45)	62,255.34
Operating Efficiency	Receivables Turnover Rate (times)	4.56	5.56	5.45	5.02	11.49
	Average Collection Days for Receivables	80.12	65.59	66.93	72.78	31.76
	Inventory Turnover Rate (times)	3.20	4.13	5.2	3.37	9.62
	Payables Turnover Rate (times)	6.27	5.52	7.05	3.86	6.68
	Average Days of Sale	114.23	88.29	70.25	108.2	37.95
	Property, Plant and Equipment Turnover Rate (times)	172.89	183.72	146.96	115.7	658.91
	Total Asset Turnover Rate (times)	0.43	0.42	0.42	0.33	1.11
Profitability	Return on Assets(%)	1.65	(0.65)	(23.8)	(1.97)	9.87
	Return on Equity (%)	1.84	(0.72)	(26.11)	(2.23)	13.05
	Ratio of Income Before Tax to Paid-in Capital(%)	7.60	(1.49)	(82.81)	(5.36)	55.9
	Profit Margin Before Tax(%)	3.74	(1.53)	(57.04)	(6.04)	8.87
	Earningsper share(NT$)	0.73	(0.28)	(8.66)	(0.63)	3.97
Cash Flow	Cash Flow Ratio(%)	145.82	36.31	40.9	38.65	35.42
	Cash Flow Adequacy Ratio (%)	5.19	3.98	3.25	1.81	1.84
	Cash Flow Reinvestment Ratio(%)	17.74	2.14	0.82	3.9	14.06
Leveraging	OperatingLeverage	2.11	1.31	0.38	2.09	1.07
	Financial Leverage	1.07	1.00	1.00	1.02	1.00
Specify reasons for financial ratio differences for most recent two fiscal years (not required if difference does not exceed 20%): 1. Debt-asset Ratio and Current Ratio: Primarily due to the 2020 increase in current liabilities. 2. Ratio of Long-term Capital to Property, Plant and Equipment: Primarily due to the significant 2020 increase in shareholders’ equity. 3. Interest Coverage Ratio: Primarily due to the significant 2020 increases in income before income tax and interest expenses. 4. Receivables Turnover Rate; Average Collection Days for Receivables; Inventory Turnover Rate; Payables Turnover Rate; Average Days of Sale; Property, Plant and Equipment Turnover Rate ; Total Asset Turnover Rate: Primarily due to the significant 2020 increases in operating revenue and cost of goods sold. 5. Return on Assets, Return on Equity, Ratio of Income Before Tax to Paid-in Capital , Profit Margin Before Tax, and Earnings per Share: The significant increase in Net Profit for the Year was primarily due to the 2020 increases in revenue and gross margin. 6. Cash Flow Reinvestment Ratio: Primarily due to the 2020 increase in the net cash inflow from operating activities. 7. Operating Leverage: Primarily due to the increase in operating income and the decrease in the ratio of interest expenses to operatingincome.

Data Source: Financial reports audited by CPAs.

Note 1: The formulas for the financial analysis are as follows:

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1.Financial Structure
(1)Debt-asset Ratio ＝ Total Liabilities / Total Assets
(2) Ratio of Long-term Capital to Fixed Assets = (Net Shareholders' Equity + Long-term Liabilities) / Net Fixed Assets
2.Solvency
(1)Current Ratio ＝ Current Assets / Current Liabilities
(2)Quick Ratio ＝ (Current Assets – Inventory – Prepaid Expenses) / Current Liabilities
(3)Interest Coverage Ratio ＝ = Income Before Income Tax and Interest Expenses / Interest Expenses for the Period
3.Operating Ability

(1) Receivables (including accounts receivable and notes receivable arising from business operations) Turnover Rate = Net Sales / Average Receivables (including accounts receivable and notes receivable arising from business operation) for Each Period

(2)Average Collection Days for Receivables ＝ 365 ／ Receivables Turnover Rate
(3) Inventory Turnover Rate = Cost of Goods Sold / Average Inventory

(4) Payables (including accounts payable and notes payable arising from business operations) Turnover Rate = Cost of Goods Sold / Average Payables (including accounts payable and notes payable arising from business operations) for Each Period

(5)Average Days of Sale ＝ 365 ／ Inventory Turnover Rate
(6) Fixed Assets Turnover Rate = Net Sales / Average Net Worth of Fixed Assets
(7) Total Asset Turnover Rate = Net Sales / Average Total Assets
4.Profitability

(1)Return on Assets ＝ [Net Income + Interest Expenses × (1 – Tax Rate)] / Average Total Assets

(2)Return on Shareholders' Equity ＝ Net Income / Average Net Shareholders' Equity
(3)Profit Margin Before Tax ＝ Net Income / Net Sales
(4) Earnings per Share ＝（ Profit after tax － Dividends on Preferred Shares ）／ Weighted Average Number of Issued Shares （ Note 4 ）
5.Cash Flow
(1)Cash Flow Ratio ＝ Net Cash Flow from Operating Activities / Current Liabilities
(2) Cash Flow Adequacy Ratio = Net Cash Flow from Operating Activities for the Most Recent Five Fiscal Years / (Capital Expenditures + Inventory Increase + Cash Dividend) for the Most Recent Fiscal Years
＝
(3)Cash Flow Reinvestment Ratio (Net Cash Flow from Operating Activities – Cash Dividend) ／ (Gross Value of Fixed Assets ＋ Long-term Investment ＋ Other Assets ＋ Working Capital) (Note 5)
6.Leveraging:

(1)Operating Leverage ＝ (Net Operating Revenue – Variable Operating Costs and Expenses) / Operating Income (Note 6)

(2)Financial Leverage ＝ Operating Income / (Operating Income – Interest Expenses)

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3. Audit Committee’ Review Report on the Financial Statement of the most recent year

FocalTech Systems Co., Ltd.

Audit Committee’ Review Report

The Board of Directors has prepared the 2020 Business Report, Financial Statements, and proposal for earnings distribution of the Company. The CPA firm of Deloitte & Touche was appointed to audit the Company’s Financial Statements and has issued an audit report accordingly. The Business Report, Financial Statements, and proposal for earnings distribution have been reviewed by the Audit Committee members of the Company and determined to be correct and accurate. We hereby submit this report in accordance with the Securities and Exchange Act and the Company Act.

Chairperson of Audit Committee Chan-Jane Lin

April 28, 2021

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4. The financial reports of the Company for the most recent years have been audited by CPA.: Please refer to attachment 1.

5. The individual financial reports of the Company for the most recent years have been audited by CPA.: Please refer to attac hment 2.

6. In the case of any insolvency of the Company and its affiliates in the most recent year and up to the date of publication of the annual report, the effects on the financial position of the company shall be listed: None.

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VII. Review of Financial Position, Financial Conditions, and Risk Matters

1. Financial Position

1. Financial Position	1. Financial Position	1. Financial Position
			Unit: NT$thousand
Year Item	2020	2019	Variation
			Amount	`％`
Current assets	8,970,922	8,531,407	439,515	5
Fund and investments	482,636	117,252	365,384	312
Property, plant and equipment	1,321,940	1,361,478	(39,538)	(3)
Intangible assets	1,300,470	1,336,457	(35,987)	(3)
Other assets	269,085	256,375	12,710	5
Total assets	12,345,053	11,602,969	742,084	6
Current liabilities	3,956,253	3,412,424	543,829	16
Non-current liabilities	577,340	462,375	114,965	25
Total liabilities	4,533,593	3,874,799	658,794	17
Share capital	2,103,532	2,996,759	(893,227)	(30)
Capital surplus	4,843,642	5,145,377	(301,735)	(6)
Retained earnings	1,012,301	(183,307)	1,195,608	(652)
Other Equity	(122,316)	5,807	(128,123)	(2,206)
Treasuryshare	(24,316)	(267,158)	242,842	(91)
Non-controllinginterest	(1,383)	30,692	(32,075)	(105)
Total shareholders' equity	7,811,460	7,728,170	83,290	1
The primary reasons and effects for the financial ratio differences of 20% or more between the latest two periods, amounting to NT$10 million or more are described as follows: 1. Increase in Funds and Investments: Primarily due to the increase in financial product investments. 2. Increase in Non-current Liabilities: Primarily due to the increase in guarantee deposits received and deferred income tax liabilities. 3. Decrease in Share Capital: Primarily due to cash refund capital reduction in 2020. 4. Increase in Retained Earnings: Primarily due to the 2020 increase in net income. 5. Decrease in Other Equity: Primarily due to the decrease in gains (losses) on the exchange differences resulting from translating the financial statements in foreign operations. 6. Treasury Shares: Primarily due to the transfer of treasury shares to employees. 7. Decrease in Non-controlling Interest: Primarily due to subsidiaries’ net losses.

The primary reasons and effects for the financial ratio differences of 20% or more between the latest two periods, amounting to NT$10 million or more are described as follows:

Increase in Funds and Investments: Primarily due to the increase in financial product investments.
Increase in Non-current Liabilities: Primarily due to the increase in guarantee deposits received and deferred income tax liabilities.
Decrease in Share Capital: Primarily due to cash refund capital reduction in 2020.
Increase in Retained Earnings: Primarily due to the 2020 increase in net income.
Decrease in Other Equity: Primarily due to the decrease in gains (losses) on the exchange differences resulting from translating the financial statements in foreign operations.
Treasury Shares: Primarily due to the transfer of treasury shares to employees.
Decrease in Non-controlling Interest: Primarily due to subsidiaries’ net losses.

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2. Financial Conditions

Unit: NT$ thousand

2. Financial Conditions			Unit: NT$thousand	Unit: NT$thousand
Year Item	2020	2019	Variation
			Amount	`％`
Operatingrevenue	13,800,348	9,160,261	4,640,087	51
Operating grossprofit	3,428,776	1,993,200	1,435,576	72
Net operating profit or loss	1,030,737	(340,656)	1,371,393	403
Non-operating income and expenses	126,360	160,295	(33,935)	(21)
Profit before tax	1,157,097	(180,361)	1,337,458	742
Netprofit for theyear	983,458	(205,680)	1,189,138	578
Other comprehensive income for theyear(profit after tax)	(131,355)	(141,671)	10,316	7
Total comprehensive income for the year	852,103	(347,351)	1,199,454	345
Net profit (loss) attributable to owners of the parent	1,011,992	(175,249)	1,187,241	677
Comprehensive income attributable to owners of the parent for the year	884,178	(315,164)	1,199,342	381
The primary reasons and effects for the financial ratio differences of 20% or more between the latest two periods, amounting to NT$10 million or more are described as follows: 1. Increase in Operating Revenue, Operating Gross Profit, and Operating Profit: Primarily due to the significant 2020 increases in operating revenue and gross margin. 2. Decrease in Non-operating Income and Expenses: Primarily due to the decrease in interest income. 3. Increase in Profit Before Tax, Net Profit for the Year, Net Profit, and Total Comprehensive Income Attributable to Owners of the Company: Primarily due to the significant 2020 increases in operating revenue andgross margin.

The primary reasons and effects for the financial ratio differences of 20% or more between the latest two periods, amounting to NT$10 million or more are described as follows:

Increase in Operating Revenue, Operating Gross Profit, and Operating Profit: Primarily due to the significant 2020 increases in operating revenue and gross margin.
Decrease in Non-operating Income and Expenses: Primarily due to the decrease in interest income.
Increase in Profit Before Tax, Net Profit for the Year, Net Profit, and Total Comprehensive Income Attributable to Owners of the Company: Primarily due to the significant 2020 increases in operating revenue and gross margin.

3. Cash Flow

Analysis of changes in cash flow for the most recent year, improvement plan for liquidity deficiencies and cash flow analysis for the next year

Beginning of year cash balance	Expected net operating activities cash flow for the whole year	Expected net cash flow of investing and financing activities for the wholeyear	Exchange rate effects	Estimated cash surplus (deficit)	Correction action for cash deficit	Correction action for cash deficit
					Investment	Financing
3,461,503	726,916	(104,085)	(72,652)	4,011,682	－	－

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(1) Analysis of changes in cash flow for the current year

Operating Activities: Net cash inflow of NT$726,916,000 was primarily due to the increase in Net Profit for the Year.
Investing Activities: Net cash inflow of NT$63,318,000 was primarily due to the decrease in other financial assets and the increase in the financial products acquired.
Financing Activities: The net cash of NT$167,403,000 used was primarily due to the cash refund capital reduction, and the increase in cash dividend distribution, transfer of treasury shares to employees, and guarantee deposits received in 2020.
(2) Correction action for estimated cash deficit and cash flow analysis: No deficit in cash projected.
(3) Cash flow analysis for the coming fiscal year: N/A.

4. Impact of Major Capital Expenditures on Financial Operations in the Most Recent Year

(1) Utilization of major capital expenditures: None.
(2) Projected possible effects: None.

5. Policy for the Most Recent Fiscal Year on Investment in Other Companies, Main Reasons for Profits/Losses Resulting Therefrom, Plans for Improvement, and Investment Plans for the Coming Fiscal Year:

The Company’s investments in other companies are primarily strategic investments. The investment loss under equity method of NT$16,072,000 in 2020 was primarily due to operating losses by Company-owned subsidiaries in 2020. In the future, the Company will continue to prudently assess and substantially manage investments in other companies based on the long-term strategic principle.

6. Risk Analysis for the Most Recent Fiscal Year as well as the Current Fiscal Year up to the Date of Publication of the Annual Report

Risk Management Framework

	Risk Identification  Managers of all functional unit form a team to identify current and future risks.  Risks and countermeasures are reported to the Audit Committee.			Risk Assessment and Response Planning  Functional unit managers propose countermeasures for the relevant risks.  The CEO assigns a dedicated personnel to handle major crises and contingency plans.			Risk	Control and Effectiveness Evaluation Functional units execute it according to the management plan. Audits are conducted occasionally to examine the implementation of risk response measures.
				 			 

(1) Effect on the Company’s Profits/Losses by Interest and Exchange Rate Fluctuations and Inflation Rate Changes, and Response Measures to Be Taken in the Future

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Effect on the Company’s profits/losses by interest rate fluctuations in the most recent fiscal year, and response measures to be taken in the future

The Consolidated Company’s interest rate risk arose primarily from both fixed deposits and bond investments with fixed interest rates, as well as from cash in bank and structured investment products with floating rates. The Consolidated Company’s time deposits had fixed interest rates, and its bond investments had fixed or guaranteed minimum interest rates and were measured at amortized cost; therefore, changes in interest rates did not affect future cash flows. As for the Group’s financial assets held as of December 31, 2019 and 2020 associated with interest rate fluctuations, for every 0.25% increase in market interest rates, profit before tax for financial assets with floating rates would increase by NT$5,259,000 and NT$9,445,000, respectively. If the market interest rate decreased by 0.25%, the resulting amounts would be the same but in negative values.

To avoid impacts from changes in interest rates, the Company will take the following response measures as appropriate:

(1) The Company regularly evaluates bank deposit/borrowing rates, obtains average market rates, and closely liaises with banks to strive for the most favorable deposit/borrowing rates.
(2) In the future, the Company will use various financing channels for fundraising in a timely manner, depending on the operating conditions and capital requirements.
Effect on the Company’s profits/losses of exchange rate fluctuation, and response measures to be taken in the future

The Group’s exchange rate risk relates primarily to operating activities (when the currency used for revenue or expenses differs from the Company’s functional currency) and net investments in foreign operations. The Group is primarily affected by fluctuations in the exchange rates with the U.S. dollar (USD) and Renminbi (RMB). Based on the sensitivity analysis of the Group’s foreign exchange rate risk for the U.S. dollar and Renminbi currencies as of December 31, 2020, the amount of increase/decrease in profit before tax associated with net assets/liabilities, in a situation where the New Taiwan dollar (NTD) had weakened 5% against the respective currencies, is shown in the table below:

Unit: NTD thousands Impact of USD Impact of RMB Effect on Profit and Loss or Equity 59,478 2,699	Unit: NTD thousands Impact of USD Impact of RMB Effect on Profit and Loss or Equity 59,478 2,699	Unit: NTD thousands Impact of USD Impact of RMB Effect on Profit and Loss or Equity 59,478 2,699
	Impact of USD	Impact of RMB
Effect on Profit and Loss or Equity	59,478	2,699

The above table shows that when the NTD:USD exchange rate fluctuates sharply, it may affect the Company’s profit and loss. Therefore, the Company always keeps track of exchange rate fluctuations in the international market and continues to implement the following response measures:

(1) The Company’s finance department maintains frequent communication with the foreign exchange departments of correspondent financial institutions to collect information on exchange rate changes on a constant basis and to keep abreast of international exchange rate trends and changes, in order to proactively respond to negative effects from exchange rate

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fluctuations. The Company manages its forward exchange transactions and foreign exchange settlements with reference to exchange rate movements.

(2) The finance department submits monthly internal assessment reports on net foreign currency asset (liability) positions that require hedging to the Company’s management, for the purpose of determining hedging measures to be taken.
(3) The use of foreign currency from the sale of products in/to foreign countries to pay for foreign currency payables arising from the purchase of materials can hedge part of the exchange rate risk by taking advantage of the natural hedging feature. Therefore, the Company only has to use other instruments for net foreign currency assets (liabilities); examples include the purchase and sale of forward exchange, depending on the exchange rate fluctuations to hedge the risk of exchange rate changes in a timely manner.
Effects on the Company’s profits/losses from changes in the inflation rate, and response measures to be taken in the future

The Company will closely monitor the inflation situation, and adjust the selling price of products and material inventory as appropriate, to reduce the impact of inflation on the Company; the Company will also enter into purchase contracts with cooperative vendors for major raw materials.

(2) Policies Regarding High-risk Investments, Highly Leveraged Investments, Loans to Other Parties, Endorsements, Guarantees, and Derivatives Transactions; the Primary Reasons for Profits/Losses Generated Thereby; and Response Measures to Be Taken in the Future

The Company operates in a conservative and prudent manner and does not engage in high-risk, highly leveraged investments.

The Company’s loaning of funds to others, endorsements, and guarantees are performed in accordance with the policies and response measures set forth in the Company’s Operational Procedures for Loaning Funds to Others and Procedures for Endorsement and Guarantees, which have been carefully executed taking into account the risk conditions and relevant regulations.

The Company’s derivatives transactions policy remains conservative and prudent, and is not used for arbitrage or speculative purposes, so there is no significant market risk. Thus, in addition to following laws and regulations of the competent authorities and generally accepted accounting principles, the Company has established the Procedures for the Acquisition or Disposal of Assets, as approved by the shareholders’ meeting, to regulate procedures for engaging in derivatives transactions.

(3) Research and Development Plans to Be Carried Out in the Future, and Further Expenditures Expected

The Company is committed to the development of integrated, high value-added products, and the relevant R&D plans along with their progress are in line with the Company’s direction of product development. R&D expenses are expected to account for approximately 15% of consolidated revenue in the coming fiscal year, which will be adjusted annually depending on operating conditions. The Company will continue to involve itself in R&D work, develop new

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products, and master key factors such as talent, capital, and technology to pursue a leading R&D position.

(4) Effects on the Company’s Financial Operations by Important Policies Adopted and Changes in the Legal Environment at Domestic and Foreign; and Response Measures to Be Taken

The Company follows domestic and foreign laws and regulations in its daily operations, and is always aware of domestic and foreign policy trends and regulatory changes to fully understand and respond to changes in market conditions. Changes in domestic and foreign policies and laws have not had a significant impact on the Company’s financial operations in the most recent fiscal year.

(5) Effects from the Company’s Financial Operations of Developments in Science and Technology as Well as Industrial Change, and Response Measures to Be Taken

The Company stays constantly aware of technological changes and developments in the industry in which it operates, and quickly grasps industry dynamics. Additionally, the Company is constantly enhancing its R&D capabilities, applying for patents to protect its various innovative concepts and designs, and actively expanding its market applications for the future. Hence, changes in technology and the industry have a positive impact on the Company.

(6) Effects from Changes in the Company’s Corporate Image on the Company’s Crisis Management, and Response Measures to Be Taken

Since its establishment, the Company has actively strengthened its internal management, improved management quality and performance, strived to maintain its corporate image, and complied with relevant laws and regulations. As of now, nothing has happened sufficient to affect the Company’s corporate image.

(7) Expected Benefits and Possible Risks Associated with Any Mergers or Acquisitions, and Mitigation Measures Being or to Be Taken: None.
(8) Expected Benefits and Possible Risks Associated with Any Plant Expansion, and Mitigation Measures Being or to Be Taken: None.
(9) Risks Associated with Any Consolidation of Sales or Purchasing Operations, and Mitigation Measures Being or to Be Taken
Risks from Consolidated Purchasing Operations

The Company’s current production configuration is not consolidated in a single foundry. In addition to maintaining long-term and close cooperative relationships with specific foundries, the Company also increases its sources of supply from other professional foundries to provide more choices and protection for quality, sources and prices of raw materials. Hence, there is no risk from consolidated purchasing operations.

Risks from Consolidated Sales Operations

The Company sells its products primarily through dealers, mobile phone module manufacturers, and panel manufacturers, and sells to major mobile phone brands in Japan in addition to the mobile phone market in China. The Company sells its products to a wide range of end-user customers through dealers, module, and panel manufacturers. In 2020, no single customer accounted for 25% or more of net operating revenues, and thus there is no risk of over-reliance on a single customer or high customer concentration.

(10) Effects Upon and Risks to the Company in the Event a Major Quantity of Shares Belonging to a Director, Supervisor, or Shareholder Holding Greater than a 10 Percent Stake in the Company Being Transferred or Otherwise Changing Hands; and Mitigation Measures Being or to Be Taken:

110

None.

(11) Effects Upon and Risks to the Company Associated with Any Change in Governance Personnel or Top Management; and Mitigation Measures Being or to Be Taken: None.
(12) Litigious and Non-litigious Matters
If there has been any material impact upon shareholders’ equity or prices for the Company’s securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving the Company that was finalized or remained pending during the most recent two fiscal years prior to the publication date of the annual report, the facts and amount in dispute, commencement date, main parties involved, and current status of the case(s) shall be disclosed:
- In addition to compiling relevant information to support and protect the Company’s rights
- in its litigation and non-litigious proceedings, the Company keeps track constant of the progress of cases that have been brought to court. As of the publication date of the annual report, the Company has not been involved in any litigation, non-litigious proceeding, or administrative dispute whose outcome would have a material impact upon Company shareholders’ equity, financial position or securities prices.
If there has been any material impact upon Company shareholders’ equity or securities’ prices as a result of any litigation, non-litigious proceeding, or administrative dispute involving a company director, supervisor, president, de facto responsible person, or major shareholder with a stake of more than 10 percent, and the matter was finalized or remained pending during the most recent two fiscal years prior to the publication date of the annual report, the facts and amount in dispute, commencement date, main parties involved, and current status of the case shall be disclosed: None.
The occurrence of any event set forth under Article 157 of the Securities and Exchange Act that involves a company director, supervisor, managerial officer, or any major shareholder with a stake of more than 10 percent, provided the event occurred in the most recent two fiscal years prior to the publication date of the annual report, and current status of the case handled by the Company: None.
(13) Information Security Risks and Mitigation Measures Being or to Be Taken
With the globalization of the Internet, network security risks has become a major concern in enterprises. It is especially significant in the IC design industry, where the outflow of technology has to be prevented while at the same time intellectual achievements must be presented. As a result, the Company has set up information security policies and specific management plans for information security operations, such as strengthening protection measures to avoid unauthorized internal/external access and virus invasion, improving backup policies and conducting recovery tests and drills, monitoring for abnormalities, etc. The goal is to implement risk management on information security, protect the Company’s trade secrets and intellectual property, and achieve sustainable business development.

(14) Other Important Risks and Mitigation Measures Being or to Be Taken: None.

7. Other Important Matters: None.

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VIII. Special Disclosure

1. Information regarding the Company’s Affiliates

(1) Organization Chart of the Company’s Affiliates

December 31, 2020

==> picture [549 x 436] intentionally omitted <==

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

FocalTech Systems Co.,
Ltd.
(Located in R.O.C.)
100% 100% 50%
FocalTech Electronics, Ltd. Vitrio Technology
(Located in Cayman Islands) FocalTech Corporation, Ltd. Corporation
(Located in Cayman Islands) (Located in R.O.C.)
100%
100% 100% 100%
FocalTech Systems, Inc.
(Located in U.S.A.)
Hefei PineTech FocalTech Electronics FocalTech Electronics
Electronics Co., Ltd. (Shanghai) Co., Ltd. (Shenzhen) Co., Ltd. 100%
(Located in China) (Located in China) (Located in China)
FocalTech Systems,Ltd.
(Located in Cayman Islands)
100% 100%
FocalTech Systems FocalTech Electronics Co.,
(Shenzhen) Co., Ltd. Ltd.
(Located in China) (Located in R.O.C.)
67.15%
FocalTech Smart Sensors,
Ltd.
(Located in Cayman Islands)
100%
FocalTech Smart Sensors
Co., Ltd.
(Located in R.O.C.)
----- End of picture text -----

112

(2) Profiles of the Company’s Affiliates

December 31, 2020; Unit: NT$ thousand/Foreign currency: thousands

Name of Enterprise	Date of establishment	Address	Paid-in Capital	Major operations
FocalTech Corporation, Ltd.	July 2012	Cayman Islands	TWD 7,059,264	Investment holding
FocalTech Systems,Inc.	October 2005	U.S.A.	USD 102,293	Investment holding
FocalTech Systems, Ltd.	October 2005	Cayman Islands	USD 23,350	Investment holding
FocalTech Electronics, Ltd.	August 2014	Cayman Islands	USD 100	Investment holding
FocalTech Systems (Shenzhen) Co., Ltd.	April 2006	China	USD 37,000	Design and R&D of consumer electronic chips
FocalTech Electronics (Shenzhen) Co., Ltd.	March 2015	China	USD 2,300	R & D, production management and sales of consumer electronic chips
FocalTech Electronics (Shanghai) Co., Ltd.	November 2014	China	USD2,000	Sales service of consumer electronic chips
FocalTech Electronics Co., Ltd.	June 2006	R.O.C.	TWD 20,000	Customs declaration for import and export of consumer electronic chips
FocalTech Smart Sensors Co., Ltd.	July 2016	R.O.C.	TWD87,085	R & D, production management and sales of consumer electronic chips
Hefei PineTech Electronics Co., Ltd.	July 2015	China	RMB30,000	R & D and sales of consumer electronic chips
FocalTech Smart Sensors, Ltd.	December 2017	Cayman Islands	USD9,115	Investment holding
Vitrio Technology Corporation	September 2020	R.O.C.	TWD 2,840	R & D, production management and sales of consumer electronic chips

(3) No controlling or subordinate relations, as adjudged by Article 369-3 of the Company Act, exist for the Company.

(4) Industries and Business Covered by the Company and Affiliates

The businesses of the Company and its affiliates include IC production management, design, R&D, sales, and related investment. The businesses of the Company’s affiliates as a whole include R&D, sales&marketing, after-sales service, and general investment in chips for display drivers, touch and fingerprint recognition, etc.

(5) Information on the Directors, Supervisors, and Presidents of Each Affiliate

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December 31, 2020

			December 31,2020	December 31,2020
Name of Enterprise	Title	Name or representative	Status of shareholding
			Quantity	Ratio of Shareholding
FocalTech Corporation,Ltd.	Director	Genda J. Hu	`－`	`－`
FocalTech Systems,Inc.	Director	Genda J. Hu	`－`	`－`
FocalTech Systems,Ltd.	Director	Genda J. Hu	`－`	`－`
FocalTech Electronics,Ltd.	Director	Genda J. Hu	`－`	`－`
FocalTech Systems (Shenzhen) Co., Ltd.	CEO President Supervisor	Genda Hu Genda Hu Hsiao-PengKuo	`－`	`－`
FocalTech Electronics (Shenzhen) Co., Ltd.	Executive Director President Supervisor	Genda Hu Genda Hu Hsiao-PengKuo	`－`	`－`
FocalTech Electronics (Shanghai) Co., Ltd.	Executive Director President Supervisor	Genda Hu Genda Hu Ya-Tzu Tseng	`－`	`－`
FocalTech Electronics Co., Ltd.	Chairman Director Director Supervisor	Genda Hu James Liao Hsing-Chuan Chung Chiung-Ju Chou	`－`	`－`
FocalTech Smart Sensors Co., Ltd.	Chairman Director Director Supervisor	James Liao Ya-Tzu Tseng Hsing-Chuan Chung Pei-Hsin Wu	`－`	`－`
Hefei PineTech Electronics Co., Ltd.	Chairman President Director Director Supervisor	Wei-Ching Hou Wei-Ching Hou James Liao Lien-Kuo Wang Hsiao-Wen Liu	`－`	`－`
FocalTech Smart Sensors, Ltd.	Chairman	James Liao	405,000	1.45%
	Director	GWAA LLC(Designated representative:Pei-Tzu Wu)	375,000	1.34%
	Director	FocalTech Electronics Co., Ltd. (Designated representative: Ching-Kai Chang)	18,813,050	67.15%
	Director	FocalTech Systems Co., Ltd.(Designated representative: Jui-ChengHsu)	-	-
	Director	Chou-Hao Tsai	-	-
	Director	Yen Shen	-	-
	Director	FocalTech Electronics,Ltd.	-	-
Vitrio Technology Corporation	Chairman Director Director Director Supervisor Supervisor	Ming-Tuo Yu Jui-Cheng Hsu Yu-Hsuan Lin Pei-Tzu Wu Chia-Chi Chang James Liao	`－`	`－`

114

(6) Operation Result of Each Affiliate:

December 31, 2020; Earnings per share are expressed in NTD, while others are expressed in NT$ thousand

Name of Enterprise	Capital	Total assets	Total liabilities	Net Worth	Operating revenue	Operating profit	Profit or loss for the year (after tax)	Earnings per share (loss) (NT$) Earnings per share (after tax)
FocalTech Corporation,Ltd.	7,059,264	2,980,445	6,250	2,974,195	-	(8,117)	26,164	Note 1
FocalTech Electronics,Ltd.	2,848	1,990,350	427,472	1,562,878	800,665	(91,016)	2,732	Note 1
FocalTech Smart Sensors,Ltd.	259,602	123,949	128,160	(4,211)	-	(25,134)	(86,850)	(3.10)
FocalTech Systems, Inc.	2,913,300	3,165,667	316,648	2,849,019	25,117	(552)	35,774	Note 1
FocalTech Systems, Ltd.	665,010	3,449,701	526,737	2,922,964	1,460,591	(17,637)	34,840	Note 1
FocalTech Systems (Shenzhen)Co.,Ltd.	1,053,764	1,374,378	97,071	1,277,307	431,537	15,012	20,761	Note 2
FocalTech Electronics (Shenzhen)Co.,Ltd.	65,504	237,034	178,760	58,274	296,586	11,770	13,801	Note 2
FocalTech Electronics (Shanghai)Co.,Ltd.	56,960	49,786	14,036	35,750	72,658	3,460	2,032	Note 2
FocalTech Electronics Co.,Ltd.	20,000	144,340	-	144,340	1,921	238	(20,731)	Note 1
FocalTech Smart Sensors Co.,Ltd.	87,085	47,259	249,298	(202,039)	190	(72,155)	(62,102)	Note 1
Vitrio Technology Corporation	2,840	5,786	1,615	4,171	483	(5,769)	(5,769)	(20.31)
Hefei PineTech Electronics Co.,Ltd.	130,944	229,285	12,140	217,145	48,744	(14,855)	57,091	Note 2

Note 1: 100% directly and indirectly controlled by the Company; these shares are issued for the purpose of equity management. Hence, the calculation of earnings per share based on the number of shares has no reference value. Note 2: Calculation of earnings per share is not applicable, as this is a limited company with no shares issued.

2. Private placement of securities in the most recent year and up to the date of publication of the annual report: Not applicable

3. Subsidiaries’ holding or disposal of the Company’s shares in the most recent year and up to the date of publication of the annual report: Not applicable

4. Other necessary supplementary notes: None

IX. Any matter in the most recent year and up to the date of publication of the annual report which has a significant impact on shareholders' equity or securities prices as stipulated in subparagraph 2 of paragraph 2 of Article 36 of the Securities and Exchange Act: None

115

Attachment 1

REPRESENTATION LETTER

The entities that are required to be included in the combined financial statements of FocalTech Systems Co., Ltd. as of and for the year ended December 31, 2020, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, FocalTech Systems Co., Ltd. and Subsidiaries do not prepare a separate set of combined financial statements.

==> picture [89 x 89] intentionally omitted <==

Very truly yours, FocalTech Systems Co., Ltd.

By Genda James Hu Chairman March 29, 2021

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

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

116

INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying consolidated balance sheets of FocalTech Systems Co., Ltd. and its subsidiaries (the “Group”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2020 and 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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 Consolidated 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated 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 Group’s consolidated 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 exist the pressure to achieve the

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117

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 in 2020.

Refer to Notes 4,21 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 2020, 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.

Other Matter

We have also audited the parent company only financial statements of FocalTech Systems Co., Ltd. as of and for the years ended December 31, 2020 and 2019 on which we have issued an unmodified opinion.

Responsibilities of Corporate Management and Governance hierarchy For the Consolidated Financial Statements

Management Level is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated 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 Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and

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118

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 Group’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 Group’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 Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group 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 consolidated financial statements for the year ended December 31, 2020 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

March 29, 2021

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

119

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 4 and 6) Financial asset at fair value through other comprehensive income-current(Note 4 and 8 ) Trade receivables, net (Note 4 and 10) Inventories (Note 4 and 11) Other financial assets (Note 4 and 9) Other current assets Total current assets NON-CURRENT ASSETS Financial asset at fair value through profit or loss - non-current (Note 4 and 7 ) Financial asset at fair value through other comprehensive income - non-current (Note 4 and 8 ) Property, plant and equipment (Note 4 and 13) Goodwill (Notes 4 , 5 and 14) Other intangible assets (Notes 4 and 15) Deferred income tax assets (Notes 4 and 23) Other non-current assets (Note 29) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 16) Trade payables (Note 17) Other payables (Note 18) Current tax liabilities (Notes 4 and 23) Other current liabilities(Note 21) Total current liabilities NON-CURRENT LIABILITIES Deferred income tax liabilities (Notes 4 and 23) Net defined benefit liabilities - non-current (Notes 4 and 19) Guarantee deposits received Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 , 20 and 25) Share capital Ordinary shares Capital surplus Additional paid-in capital Treasury shares Employee share options Employee share options - expired Total capital surplus Undistributed earnings (deficits to be offset) Other equity Exchange differences from translating the financial statements of foreign operations Unrealized loss on financial assets at fair value through other comprehensive income Total other equity Treasury shares Equity attributable to owners of the company NON-CONTROLLING INTERESTS Total equity TOTAL		2020 Amount % $ 4,011,682 33 - - 1,633,900 13 1,755,142 14 1,385,936 11 184,262 2 8,970,922 73 234,662 2 247,974 2 1,321,940 11 1,237,268 10 63,202 - 85,154 1 183,931 1 3,374,131 27 $ 12,345,053 100 $ 523,648 4 1,731,109 14 1,037,431 8 433,121 4 230,944 2 3,956,253 32 53,213 1 23,366 - 490,361 4 10,400 - 577,340 5 4,533,593 37 2,103,532 17 4,725,445 38 69,361 1 14,903 - 33,933 - 4,843,642 39 1,012,301 8 (125,038) (1) 2,722 - (122,316) (1) (24,316) - 7,812,843 63 (1,383) - 7,811,460 63 $ 12,345,053 100		2019
				Amount $ 3,461,503 120,475 1,420,459 1,570,753 1,596,292 361,925 8,531,407 56,354 60,898 1,361,478 1,237,268 99,189 120,782 135,593 3,071,562 $ 11,602,969 $ - 1,986,219 954,449 363,172 108,584 3,412,424 33,537 24,078 394,360 10,400 462,375 3,874,799 2,996,759 5,037,671 48,662 25,510 33,534 5,145,377 ( 183,307) 4,057 1,750 5,807 (267,158) 7,697,478 30,692 7,728,170 $ 11,602,969	% 30 1 12 14 14 3 74 - 1 12 11 1 1 1 26 100 - 17 8 3 1 29 - - 4 - 4 33 26 43 1 - - 44 (1) - - - (2) 67 - 67 100

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

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

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FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

REVENUE (Note 4 and 21) COSTS OF SALES (Notes 4,11 and 22) GROSS PROFIT OPERATING EXPENSES (Notes 23, 25,27 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATIONS LOSS NON-OPERATING INCOME AND EXPENSES Finance costs (Note 22) Share of loss of subsidiaries and joint ventures(Note4) Interest income (Note 4) Gain (loss) 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 (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET INCOME (LOSS) OTHER COMPREHENSIVE (LOSS) INCOME 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 23)		2020 Amount % $ 13,800,348 100 (10,371,572) (75) 3,428,776 25 (398,828) (3) (363,193) (3) (1,636,018) (12) (2,398,039) (18) 1,030,737 7 (2,009) - (4,970) - 51,835 - (5,607) - 92,446 1 (5,335) - 126,360 1 1,157,097 8 (173,639) (1) 983,458 7 359 - (50) - 309 -		2019
				Amount $ 9,160,261 (7,167,061) 1,993,200 (469,272) (312,638) (1,551,946) (2,333,856) (340,656) (1,152) - 111,144 1,077 71,949 (22,723) 160,295 (180,361) (25,319) (205,680) 1,677 (235) 1,442	% 100 (78) 22 (5) (4) (17) (26) (4) - - 1 - 1 - 2 ( 2) - (2) - - -

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

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FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences from translating the financial statements of foreign operations (Notes 4) Unrealized gains from debt instrument investments measured at fair value through other comprehensive income (Notes 4) Total other comprehensive loss (net of income tax) TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE YEAR NET LOSS ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: Owners of the Company Non-controlling interests LOSS PER SHARE (Note 24) Basic Diluted		2020	% (1) - (1) (1) 6 7 - 7 6 - 6		2019
		Amount $ (132,636) 972 (131,664) (131,355) $ 852,103 $ 1,011,992 (28,534) $ 983,458 $ 884,178 (32,075) $ 852,103 $ 3.97 $ 3.73			Amount $ (147,153) 4,040 (143,113) (141,671) $ (347,351) $ (175,249) (30,431) $ (205,680) $ (315,164) (32,187) $ (347,351) $ (0.63)	% (2) - (2) (2) (4) (2) - (2) (4) - (4)

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

(Concluded)

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

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FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

		Equity Attributable to Owners of the Company Retained Earnings(Accumulated Deficits) Other Equity Undistributed Earnings (Deficits Exchange Differences from Translating Financial Statement of Unrealized gains(losses) from financial assets measured at fair value through other comprehensive Legal Reserve to be offset) Foreign Operations income Treasury Shares $ 186,154 $ (1,434,755) $ 149,454 $ (2,290) $ (191,998) (186,154) 186,154 - - - - 1,248,601 - - - - - - - - - (175,249) - - - - 1,442 (145,397) 4,040 - - (173,807) (145,397) 4,040 - - - - - 126,045 - (9,500) - - - - - - - - - - - - - - - - - - - (183,307) 4,057 1,750 (267,158) - 183,307 - - - - - - - - - 1,011,992 - - - - 309 (129,095) 972 - - 1,012,301 (129,095) 972 - - - - - 5,191 - - - - - - - - - 237,651 - - - - - $ - $ 1,012,301 $ (125,038) $ 2,722 $ (24,316)	Equity Attributable to Owners of the Company Retained Earnings(Accumulated Deficits) Other Equity Undistributed Earnings (Deficits Exchange Differences from Translating Financial Statement of Unrealized gains(losses) from financial assets measured at fair value through other comprehensive Legal Reserve to be offset) Foreign Operations income Treasury Shares $ 186,154 $ (1,434,755) $ 149,454 $ (2,290) $ (191,998) (186,154) 186,154 - - - - 1,248,601 - - - - - - - - - (175,249) - - - - 1,442 (145,397) 4,040 - - (173,807) (145,397) 4,040 - - - - - 126,045 - (9,500) - - - - - - - - - - - - - - - - - - - (183,307) 4,057 1,750 (267,158) - 183,307 - - - - - - - - - 1,011,992 - - - - 309 (129,095) 972 - - 1,012,301 (129,095) 972 - - - - - 5,191 - - - - - - - - - 237,651 - - - - - $ - $ 1,012,301 $ (125,038) $ 2,722 $ (24,316)	Total Equity $ 8,077,615 - - (150,000) (205,680) (141,671)
Share Capital Ordinary Shares $ 2,987,432 - - - - - - - - - 9,327 - 2,996,759 - - - - - (899,721) - - 6,494 $ 2,103,532	Capital Surplus $ 6,551,481 - (1,248,601) (150,000) - - - - (20,448) 9,787 3,158 - 5,145,377 (183,307) (150,000) - - - - 21,279 1,228 9,065 $ 4,843,642	Retained Earnings(Accumulated Deficits)
		Legal Reserve $ 186,154 (186,154) - - - - - - - - - - - - - - - - - - - - $ -	Undistributed Earnings (Deficits to be offset) $ (1,434,755) 186,154 1,248,601 - (175,249) 1,442 (173,807) - (9,500) - - - (183,307) 183,307 - 1,011,992 309 1,012,301 - - - - $ 1,012,301
				(347,351)
				126,045 - 9,787 12,485 (411)
				7,728,170 - (150,000) 983,458 (131,355)
				852,103
				(894,530) 21,279 238,879 15,559
				$ 7,811,460

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

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

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FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Loss before income tax from continuing operation Adjustments for: Depreciation expenses Amortization expenses Loss (gain) on financial assets and liabilities at fair value through profit or loss Finance costs Interest income Compensation cost of employee share options Share of loss of subsidiaries and joint ventures Loss on disposal of property, plant and equipment Loss on disposal of investments Write-down of inventories Unrealized gain on foreign currency exchange Changes in operating assets and liabilities Increase in financial assets mandatorily classified as at fair value through profit or loss Trade receivables Inventories Other current assets Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial asset at fair value through other comprehensive income Proceeds from disposal of financial asset at fair value through other comprehensive income Acquisition of investments accounted for using equity method Purchase for property, plant and equipment Purchase of intangible assets Decrease in other financial assets Increases in other non-current assets Interest received Net cash generated from investing activities	2020 $ 1,157,097 77,433 35,903 5,607 2,009 (51,835) 21,279 4,970 1,264 40,928 (229,556) (37,330) (230,416) (233,170) 19,988 165,670 (228,551) 113,845 125,308 (353) 760,090 (1,792) (31,382) 726,916 (197,216) 118,197 (4,970) (22,860) (147) 155,603 (48,937) 63,648 63,318	2019 $ (180,361) 81,185 50,186 (1,077) 1,152 (111,144) 9,787 - - - (115,912) (8,917) 56,476 (461,962) 646,063 (209,611) 394,137 181,302 47,295 (341) 378,258 (1,152) (31,938) 345,168 - 132,921 (101,704) (825) 651,819 (80,012) 114,389 716,588

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

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FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Increases in short-term borrowings Increase in guarantee deposits received Cash dividends Capital reduction payments to shareholders Proceeds from issuance ordinary shares under employee share options Treasury stock transferred to employees Decrease in non-controlling interests Net cash (used) generated in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES 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	2020 $ 522,827 99,862 (150,000) (894,530) 15,559 238,879 - (167,403) (72,652) 550,179 3,461,503 $ 4,011,682	2019 $ - 126,134 (150,000) - 12,485 126,045 (411) 114,253 (70,432) 1,105,577 2,355,926 $ 3,461,503

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

(Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

FocalTech Systems Co., Ltd. (the “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 (“TSE”) 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 is mainly engaged in research, development, design, manufacturing, and sales of solutions regarding to human and machine interface devices, such as Display Driver IC, Touch Control IC and so on.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on February 4, 2021.

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 IFRSs endorsed and issued into effect by the FSC did not have significant impact on the Group’s accounting policies:

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2021

New, Revised or Amended Standards and Interpretations Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2”	Effective Date Issued by IASB
	Effective immediately upon promulgation by the IASB January 1, 2021

The Group assessed the application of abovementioned standards and interpretations do not have significant impact on the Group’s accounting policies.

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c. New IFRSs in issue 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) “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 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 IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 6) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 7) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 4) before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 5) Contract”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” 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 3: 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.
Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 7: 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.

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

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The present Consolidated Financial Report has been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by Financial Supervisory Commission.

b. Basis of preparation

The consolidated financial statements are prepared on the historical cost basis, except for the financial instruments measured at fair value and the net defined benefit liabilities recognized in the fair value of the estimated assets, and explained in the accounting policies below.

The evaluation of fair value could be classified into level 1 to level 3 based on the degree of 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.
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. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Applicable adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Total comprehensive income of the subsidiaries is attributed both to the shareholders of the parent and the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing

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controlling over the subsidiaries are accounted as equity transactions. The carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their interests in the subsidiaries respectively. The amount adjusted for the non-controlling interests and the difference between fair value and the consideration paid or received are recognized directly in equity and attributed to shareholders of the parent.

See Note 12, Table 5 and Table 6 for the detailed information of the subsidiaries (including the percentage of ownership and main business).

e. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’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.

For the purpose of presenting consolidated 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 and accumulated in equity (attributed to non-controlling interests as appropriate).

f. 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.

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.

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For the purposes of impairment testing, goodwill is allocated to each of the Group’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 cash-generating 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 straight-line 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 tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible 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 Group 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.

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 cash-generating 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 a group entity becomes a party to the contractual provisions of the instruments.

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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 Group’s financial assets include those measured at FVTPL, at amortized cost and investments in debt instruments measured at FVTOCI.

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.

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.

C. Investments in debt instruments at FVTOCI

Investments in debt instruments that meet both the following conditions are subsequently measured at FVTOCI:

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(1) The objective of the business model to hold the financial asset is to collect contractual cash flows and sell financial assets; 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.

Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment losses or reversed gains on investments in debt instruments at FVTOCI are recognized in profit or loss. Other changes in the carrying amount of these debt instruments are recognized in other comprehensive income and will be reclassified to profit or loss when these debt instruments are disposed.

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 trade receivables) and for investments in debt instruments in FVTOCI.

The loss allowance for trade receivables is determined by the expected credit losses over the lifetime. For other financial assets at amortized cost and investments in debt instruments that are measured at FVTOCI, 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 Group 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. If the financial asset is an investment in debt instruments at FVTOCI and derecognized in its entirety, the difference between the asset’s carrying amount and the sum of the consideration plus the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

2) Equity instruments

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Debt and equity instruments issued by a group entity 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 a group entity 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.

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 Group recognizes revenue when customer’s contract obligations are satisfied.

Revenue comes from sales of human and 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 trade receivables are recognized concurrently.

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

n. Lease

2020

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

The Group as lessee

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

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o. Government Grants

Government grants are not recognized until it is assured reasonably that the Group will be able to comply with the conditions attaching to the subsidies and the grants will be received possibly.

Government grants used as the compensation for expenses or losses already incurred are recognized in profit or loss in the period in which they become receivable and are not necessary to return.

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.

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 straight-line basis over the vesting period, based on the Group’s optimal estimate number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options.

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

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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.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Group 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 Group 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 are recognized in other comprehensive income.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’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.

Impairment of Goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

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6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent (investments with original maturities less than three months)		December 31	December 31
		2020 $ 2,182 3,668,013 341,487 $ 4,011,682	2019 $ 4,381 2,103,526 1,353,596 $ 3,461,503

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Demand deposits Time deposits	December 31
	2020 2019 0.001%-0.35% 0.001%-0.35% 0.1%-0.35% 1.56%-2.32%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS-NON-CURRENT

		December 31	December 31	December 31	December	31
				2020	2019
Mandatorily at fair value through profit or loss
(FVTPL)
Listed preferred shares		$		72,186	$ 10,931
Private Funds				52,579	45,423
Structured Investments			109,897			-
		$	234,662		$ 56,354
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
	December 31, 2020			December 31, 2019
Investments in debt instruments
Current
Foreign investments
Fixed income bonds	$	-			$ 120,475
Non–Current
Foreign investments
Fixed income bonds	$ 247,974				$ 60,898
Yield rates	1.801%`～`4.117%			2.307%`～`4.117%

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

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9. OTHER FINANCIAL ASSETS

December 31	December 31	December 31
2020 2019 $ 1,385,936 $ 1,596,292 0.2%`～`4.18% 1.5%`～`4.18% December 31 2020 2019 $ 1,633,900 $ 1,420,459

	2020 $ 1,633,900	2019 $ 1,420,459

The average credit period on sales of goods was 60-120 days. In order to minimize credit risk, management of the Group 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 Group 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 Group’s credit risk was significantly reduced.

The Group recognizes the allowance loss for accounts receivable based on expected credit losses during the duration. The expected credit losses on trade 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 trade receivable.

The following table details the loss allowance of trade receivables based on the Group’s allowance matrix.

December 31, 2020

Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2019 Expected credit loss rate Gross carrying amount and Amortized cost	Non Past Due 0% $1,593,485 Non Past Due 0% $1,420,085		Overdue 1-60 Days 0% $ 40,401 Overdue 1-60 Days 0% $ 374	Overdue 61-180 Days 0% $ 14 Overdue 61-180 Days 0% $ -	Overdue Over 181 Days 0% $ - Overdue Over 181 Days 0% $ -		Total
							0% $ 1,633,900 Total
							0% $ 1,420,459

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11. INVENTORIES

Finished goods Work in progress Raw materials and supplies		December 31	December 31
		2020 $ 418,694 1,025,201 311,247 $ 1,755,142	2019 $ 476,430 775,899 318,424 $ 1,570,753

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $10,371,572 thousand and $7,167,061 thousand, included gain from price recovery of inventory of $229,556 thousand and $115,912 thousand for the years ended December 31, 2020 and 2019, respectively.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statement were as follows:

Investor Investee Nature of Activities	Proportion of Ownership
	December 31 2020 2019
FocalTech Systems FocalTech Corporation, Ltd. Investment activity Co.,Ltd. FocalTech Electronics,Ltd. Investment activity	100% 100% 100% 100%
FocalTech Systems Co., Ltd. and FocalTech Electronics Co., Ltd. FocalTech Smart Sensors,Ltd. Investment activity	67.15% (a) 67.15%
FocalTech Smart Sensors,Ltd. FocalTech Smart Sensors Co., Ltd. Research, development, manufacturing and sale of integrated circuits	100% 100%
FocalTech Corporation,Ltd. FocalTech Systems, Inc. Investment activity	100% 100%
FocalTech Systems, Inc. FocalTech Systems, Ltd. Investment activity	100% 100%
FocalTech Systems, Ltd. FocalTech Systems (Shenzhen) Co., Ltd. Design and research of integrated circuits FocalTech Electronics Co.,Ltd. Import and export of integrated circuits	100% 100% 100% 100%
FocalTech Electronics, Ltd. FocalTech Electronics (Shanghai) Co., Ltd. Sales support and post-sales service for affiliates’ IC products FocalTech Electronics (Shenzhen) Co., Ltd. Research, development, manufacturing and sale of integrated circuits Hefei PineTech Electronics Co., Ltd. Research, development and sale of integrated circuits	100% 100% 100% 100% 100% 100%

a. FocalTech Smart Sensors, Ltd. is owned solely by FocalTech Electronics Co., Ltd. which was held by The company and FocalTech Electronics Co., Ltd.

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2019 Additions Effect of foreign currency exchange (	Buildings Development Equipment $ 1,375,563 $ 192,558 578 99,552 53,180) ( 6,450) (	Office Equipment Information Equipment $ 15,970 $ 42,675 54 1,520 476) ( 1,574) (	Leasehold Improve- ments $ 38,956 - 568) (	Total $ 1,665,722 101,704 62,248)

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differences Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation Effect of foreign currency exchange differences ( Balance at December 31, 2019 Carrying amounts at December 31, 2019 Cost Balance at January 1, 2020 Additions Reclassification Disposals Effect of foreign currency exchange differences Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation Reclassification Disposals Effect of foreign currency exchange differences Balance at December 31, 2020 Carrying amounts at December 31, 2020	$ 1,322,961 $ 285,660 $ 15,548 $ 42,621 $ 51,610 $ 138,166 $ 11,635 $ 31,508 36,526 39,537 1,142 3,454 3,375) ( 3,335) ( 346) ( 1,210) ( $ 84,761 $ 174,368 $ 12,431 $ 33,752 $ 1,238,200 $ 111,292 $ 3,117 $ 8,869 $ 1,322,961 $ 285,660 $ 15,548 $ 42,621 - 19,431 97 3,332 - ( 259 ) ( 76 ) 335 - ( 5,965 ) ( 4,123 ) ( 7,935 ) 20,129 ( 5,890) 111 516 $ 1,343,090 $ 292,977 $ 11,557 $ 38,869 $ 84,761 $ 174,368 $ 12,431 $ 33,752 35,022 39,020 798 2,593 - - 10 ( 10 ) - ( 5,868 ) ( 3,750 ) ( 7,141 ) 1,913 ( 3,798) 85 367 $ 121,696 $ 203,722 $ 9,574 $ 29,561 $ 1,221,394 $ 89,255 $ 1,983 $ 9,308	$ 38,388 $ 1,705,178 $ 38,431 $ 271,350 526 81,185 569) ( 8,835) $ 38,388 $ 343,700 $ - $ 1,361,478 $ 38,388 $ 1,705,178 - 22,860 - - - ( 18,023 ) 216 15,082 $ 38,604 $ 1,725,097 $ 38,388 $ 343,700 - 77,433 - - - ( 16,759 ) 216 ( 1,217) $ 38,604 $ 403,157 $ - $ 1,321,940

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

Buildings 45-50 years Development equipment 3-5 years Office equipment 3-5 years Information equipment 3-5 years Leasehold improvements 1-5 years

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

14. GOODWILL

Ending balance	For the Year Ended	For the Year Ended	December 31
		2020 $ 1,237,268	2019 $ 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

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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 15.45% and 10.66% for the years ended December 31, 2020 and 2019, under the assumptions of management team judgments and historical experiences with regard to future growth rates and gross margin .

15. OTHER INTANGIBLE ASSETS

Cost Balance at January 1, 2019 Additions Effect of foreign currency exchange differences ( Balance at December 31, 2019 Accumulated amortization Balance at January 1, 2019 Amortization expense Effect of foreign currency exchange differences ( Balance at December 31, 2019 Carrying amounts at December 31, 2019 Cost Balance at January 1, 2020 Additions Effect of foreign currency exchange differences ( Balance at December 31, 2020 Accumulated amortization Balance at January 1, 2020 Amortization expense Effect of foreign currency exchange differences ( Balance at December 31, 2020 Carrying amounts at December 31, 2020	Licenses and Franchises $ 130,393 - 2,674) ( $ 127,719 $ 95,724 16,296 2,344) ( $ 109,676 $ 18,043 $ 127,719 - 5,457) ( $ 122,262 $ 109,676 17,660 5,206) ( $ 122,130 $ 132	Software $ 157,801 825 3,656) ( $ 154,970 $ 133,210 18,704 3,538) ( $ 148,376 $ 6,594 $ 154,970 147 6,870) $ 148,247 $ 148,376 3,057 6,890) $ 144,543 $ 3,704	Patents Trademark $ 76,714 $ 74,000 - - 10) - ( $ 76,704 $ 74,000 $ 31,376 $ 29,600 7,786 7,400 10) - ( $ 39,152 $ 37,000 $ 37,552 $ 37,000 $ 76,704 $ 74,000 - - 4 - ( $ 76,708 $ 74,000 $ 39,152 $ 37,000 7,786 7,400 4 - ( $ 46,942 $ 44,400 $ 29,766 $ 29,600	Total $ 438,908 825 6,340) $ 433,393 $ 289,910 50,186 5,892) $ 334,204 $ 99,189 $ 433,393 147 12,323) $ 421,217 $ 334,204 35,903 12,092) $ 358,015 $ 63,202

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

Licenses and franchises 3-5 years Software 1-5 years Patents 7-10 years Trademark 10 years

16. SHORT-TERM BORROWINGS

Unsecured bank loans Secured bank loans Annual interest rate Unsecured bank loans Secured bank loans		December 31	December 31
	2020 $ 480,000 43,648 $ 523,648 0.88`～`1.06% 4.1%		2019 $ - - $ -

17. TRADE PAYABLES

Trade payables		December 31	December 31
		2020 $ 1,731,109	2019 $ 1,986,219

The average credit period on purchases was 30-60 days. The Group 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 rebates 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
		2020 $ 423,800 467,979 13,977 47,598 84,077 $1,037,431	2019 $ 408,291 411,236 12,367 50,105 72,450 $ 954,449

19. RETIREMENT BENEFIT

a. Defined contribution plans

、 The Company FocalTech Smart Sensors Co., Ltd. and FocalTech Electronics Co., Ltd. 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.

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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 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 consolidated balance sheets in respect of the Group’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
		(	2020 $ 42,275 18,909) $ 23,366	2019 $ 45,235 (21,157) $ 24,078

Movements in net defined benefit liability were as follows:

	Present Value of
	the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liability (Asset)
Balance at January 1, 2019	$ 45,590	($ 19,494)	$ 26,096
Service cost
Current service cost	125	-	125
Net interest expense (income)	570	(248)	322
Recognized in profit or loss	695	(248)	447
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	( 627)	( 627)
Actuarial loss - changes in financial
assumptions	1,421	-	1,421
Actuarial loss - experience adjustments	(2,471)	-	(2,471)
Recognized in other comprehensive income	(1,050)	(627)	(1,677)
Contributions from the employer	-	(788)	(788)
Balance at December 31, 2019	45,235	(21,157)	24,078
Service cost
Current service cost	126	-	126
Net interest expense (income)	452	(215)	237
Recognized in profit or loss	578	(215)	363
Remeasurement

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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, 2020	(	- 1,436 1,151 2,327) 260 - 3,798) $ 42,275	( 619) ( 619) - 1,436 - 1,151 - (2,327) ( 619) (359) ( 716) ( 716) 3,798 - ($ 18,909) $ 23,366
	(

Through the defined benefit plans under the Labor Standards Law, the Group 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
	2020 2019 0.8% 1% 4.5% 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
	( (	2020 $ 1,501) ( $ 1,566 $ 6,441 $ 5,567) (	2019 $ 1,422) $ 1,481 $ 6,141 $ 5,334)

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

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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	31
		2020 $ 717 16.1 years	2019 $ 770 14.9 years

20. 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
		2020 500,000 $ 5,000,000 210,353 $ 2,103,532	2019 500,000 $ 5,000,000 299,676 $ 2,996,759

b. Capital surplus

BALANCE, JANUARY 1, 2019 Capital surplus used to cover accumulated deficits Cash distribution from additional paid-in capital Changes in ownership interests in subsidiaries Employee treasury share vested Compensation cost of employee share options Issue of ordinary shares under employee share options Employee share options expired BALANCE AT DECEMBER 31, 2019 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 Issue of ordinary shares under employee share options Employee share options expired BALANCE AT DECEMBER 31, 2020		Additional Paid-in Capital (1)		Treasury Shares (1)	Changes in ownership interests in subsidiaries (2) $ 20,448 - - ( 20,448) - - - - - - - - - - - - $-	Employee Share Options (3)	S	Employee hare Options -Expired (2)	Total
		$ 6,422,355 ( 1,248,601) ( 150,000) - - - 13,917 - 5,037,671 ( 183,307) ( 150,000) - - - 21,081 - $ 4,725,445		$ 40,868 - - - 7,794 - - - 48,662 - - 19,471 1,228 - - - $ 69,361		$ 47,476 - - - ( 7,794) 9,787 ( 10,759) ( 13,200) 25,510 - - ( 19,471) - 21,279 ( 12,016) ( 399 ) $ 14,903	(	$ 20,334 - - - - - - 13,200) 33,534) - - - - - - 399 $ 33,933	$ 6,551,481 ( 1,248,601) ( 150,000) ( 20,448) - 9,787 3,158 - 5,145,377 ( 183,307) ( 150,000) - 1,228 21,279 9,065 - $ 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 may be used to offset a deficit.
3) This type of capital surplus cannot be used for any purposes.
c. Retained earnings and dividend policy

The amendments to the Company’s Articles of Incorporation had been approved by the Company’s shareholders in its meeting held on June 20, 2019, which stipulate that earnings distribution may be

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made on a quarterly basis after the close of each quarter.

The Company’s amended Articles of Incorporation provides that, when distributing earnings belonging to the first three quarter, the Company shall first estimate and reserve taxes to be paid, offset its deficits, estimate and reserve employees’ compensation and remuneration to directors, then set aside a legal capital reserve at 10% of the remaining earnings and set aside or reversing special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings at the beginning shall be used by the Company’s board of directors as the basis for proposing a distribution plan after the Company’s board of directors consider operational situation and retain proper amount. By the way of stock dividends, it shall be approved by the Company’s shareholders in its meeting; by the way of cash dividends, it shall be approved by the Company’s board of directors.

When distributing annual earnings, the Company 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 prepare a distribution proposal for the remaining earnings plus 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 earing distribution is only allowed after yearly closing by the approval of the shareholders’ meeting. The rest 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.

NT$186,154 thousand from legal reserve and NT$1,248,601 thousand from capital surplus for loss offsetting as well as the cash distribution of NT$150,000 thousand, i.e. NT$0.52010840 per share, from additional paid-in capital of share issue premium had been approved in the Company’s shareholders’ meeting on June 20, 2019.

NT$183,307 thousand from additional paid-in capital for loss offsetting as well as the cash distribution of NT$150,000 thousand, i.e. NT$0.50291032 per share, from additional paid-in capital of share issue premium had been approved in the Company’s shareholders’ meeting on June 20, 2020.

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To increase the return on shareholders’ equity, it 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 amount of capital reduction was returned to the company’ shareholders on October 28, 2020.

d. Treasury stock

(In Number of shares at January 1, 2019 Decrease during the period ( Number of shares at December 31, 2019 Number of shares at January 1, 2020 Decrease during the period ( Decrease due to capital reduction during the period ( Number of shares at December 31, 2020	Shares Thousands) 15,970 4,992) 10,978 10,978 9,681) 519) 778

The detailed information for other Shares Buy Back Programs could be found in Note 25 (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.

e. Non - controlling interests

		December 31	December 31
( ( ( For		2020 2019 $ 30,692 $ 33,342 28,534) ( 30,431) 3,541) ( 1,756) - 29,948 - (411) $ 1,383) $ 30,692 the Year Ended December 31
	2020 2019 $ 13,800,348 $ 9,160,261 December 31
	2020 $ 149,430		2019 $ 53,847

21. REVENUE

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22. NET INCOME

a. Finance costs

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2020 $ 1,078 931 $ 2,009 For the Year Ended			2019 $ 1,150 2 $ 1,152 December 31
2020 $ 77,433 35,903 $ 113,336 $ 722 112,614 $ 113,336 For the Year Ended			2019 $ 81,185 50,186 $ 131,371 $ 1,299 130,072 $ 131,371 December 31
	2020 $ 28,022 363 21,279 1,442,245 $ 1,491,909 $ 124,636 1,367,273 $ 1,491,909	2019 $ 28,771 447 9,787 1,431,412 $ 1,470,417 $ 111,910 1,358,237 $ 1,470,147

b. Depreciation and amortization
c. Employee benefits expense
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. In 2020 and 2019, due to the net loss before tax, there was no accrual for any remuneration to employees and directors. The accrued employees’

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compensation and remuneration to directors for the year ended December 31, 2020 are as follows:

The remuneration to employees The remuneration to directors The remuneration to employees The remuneration to directors	December 31, 2020	December 31, 2020
	9.4% 0.6% December 31, 2020
		$123,450 $ 7,214

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

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 2020 financial statements.

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

23. INCOME TAXES

a. Income tax expense (benefit) recognized in profit or loss

Current tax In respect of the current year Adjustments for prior years Deferred tax In respect of the current year Adjustments for prior years Income tax expense (benefit) recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 114,160 4,006 118,166 54,139 1,334 55,473 $ 173,639	2019 $ 8,318 1,199 9,517 16,654 (852) 15,802 $ 25,319

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

Loss 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 Unrecognized temporary differences Unrecognized loss carryforwards Adjustments for prior years’ tax Others	For the Year Ended	For the Year Ended	December 31
		2020 $1,157,097 $ 156,784 7,510 21,734 (31,207) 13,478 5,340 -	2019 $(180,361) $ 3,775 1,409 4,597 - 13,591 347 1,600

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Income tax expense recognized in profit or loss

$ 173,639 $ 25,319

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.

For other jurisdictions, taxes are calculated using the applicable tax rate for each individual jurisdiction.
b. Current tax assets and liabilities

Current tax assets( recorded as other current assets) Tax refund receivable Current tax liabilities Income tax levied on accumulated overseas undistributed earnings (i) Income tax payable Total	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020 2019 $ 2,050 $ 1,788 For the Year Ended December 31
		2020 $ 316,119 117,002 $ 433,121	2019 $ 354,833 8,339 $ 363,172

(i) The estimated income tax from accumulated overseas undistributed earnings determined at the end of 2017 for FocalTech Systems, Inc. could be paid in installments for eight years under the US tax law.
c. Deferred tax assets and liabilities

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

2020

Deferred tax assets Temporary differences Obsolete of inventory Others Loss carryforwards Deferred tax liabilities Intangible assets Temporary differences Investment income recognized from foreign investees	Opening Balance Recognized in Profit or Loss Recognized in Other Compre- hensive Income Exchange Differences $ 89,699 $ (18,363) $ - $ - 2,111 (6,011) (50) - 91,810 (24,374) (50) - 28,972 11,423 - 219 $ 120,782 $(35,797) $ (50) $ 219 $ 10,290 $ (2,058) $ - $ - 23,247 21,734 - - $ 33,537 $ 19,676 $ - $ -	Closing Balance $ 71,336 (3,950)
		67,386 17,768
		$ 85,154
		$ 8,232 44,981
		$ 53,213

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2019

Deferred tax assets Temporary differences Obsolete of inventory Others Loss carryforwards Deferred tax liabilities Intangible assets Temporary differences Investment income recognized from foreign investees	Opening Balance Recognized in Profit or Loss Recognized in Other Compre- hensive Income Exchange Differences $ 109,571 $ (19,872) $ - $ - 3,350 (1,004) (235) - 112,921 (20,876) (235) - 21,937 7,613 - (578) $ 134,858 $(13,263) $ (235) $ (578) $ 12,348 $ (2,058) $ - $ - 18,650 4,597 - - $ 30,998 $ 2,539 $ - $ -	Closing Balance $ 89,699 2,111 91,810 28,972 $ 120,782 $ 10,290 23,247 $ 33,537

d. Information about unused loss carryforwards and tax-exemption.

Loss carryforwards as of December 31, 2020 comprised of:

Unused Amount	Unused Amount	Expiry Year
$	623	2021
	2,321	2023
	5,405	2024
	22,897	2026
	73,861	2027
	92,564	2028
	69,519	2029
	91,287	2030
$	358,477

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

As of December 31, 2020 and 2019, the taxable temporary differences associated with investment in subsidiaries for which no deferred tax liabilities have been recognized were $2,480,872 thousand and $2,742,072 thousand, respectively.

f. Income tax assessments

The Company, FocalTech Smart Sensors Co., Ltd., and FocalTech Electronics Co., Ltd.’s tax returns until 2018 have been assessed by the tax authorities.

24. EARNINGS (LOSS) PER SHARE

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Basic earnings (loss) per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31
		2020 $ 3.97 $ 3.73	2019 $ (0.63)

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

For the Year Ended 2020 losses used in the computation of basic earnings (loss) per share $1,011,992 Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares):	For the Year Ended	December 31
		2019 $(175,249)

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee shares buyback program(note) Employee share options (note) 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	December 31
		2020 254,897 14,592 569 1,322 271,380	2019 276,714 - - - 276,714

The Company may settle the compensation of employees in cash or shares; therefore, the Company assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

Note: The Group has a net loss after tax, so there is no dilutive effect in 2019.

25. SHARE-BASED PAYMENT ARRANGEMENTS

The company did not issue any additional employee stock option plan in 2020 and 2019.

The Company’s shareholders’ meeting resolved to issue restricted stocks for employees up to 6,000 thousand shares on June 20, 2020. There was no restricted stock granted to employees by the end of 2020 while the restricted stocks plan was approved by Financial Supervisory Commission on August 12, 2020.

a. Employee stock option plan

Information about vested options of 2020 and 2019 are as following:

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Employee Stock Option Plan 2006 2015	December	31,2020 Weighted-aver age remaining contractual life (years) 1.1~2.27 4.67	December	31,2019
	Range of exercise price (NT$) $5.46~36.8 15.9		Range of exercise price (NT$) $4.2~32.10 12.2	Weighted-aver age remaining contractual life (years) 1.32~3.48 5.67

Information about outstanding options in 2020 and 2019 is as following:

Employee Stock Option Plan	2020 Beginning Quantity of Options 805,599 677,500 2019 Beginning Quantity of Options 1,594,999 627,250 985,750	Balance	Options unvested	Options unvested	Options exercised	Options exercised	Options	EndingBalance	EndingBalance

	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Quantity of Options	Weighted- average Exercise Price (NT$)
2006 2015 Employee Stock Option Plan		$ 23.49 12.20 Balance					( 38,000) Options

	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Quantity of Options	Weighted- average Exercise Price (NT$)
2006 2013 2015	1,594,999 627,250 985,750	$ 19.86 37.90 12.2	- - (35,750)	$ - - 12.2	(660,200) - (272,500)	$ 13.86 - 12.2	(129,200) (627,250) -	805,599 - 677,500	$ 23.49 - 12.2

As of December 31, 2020, 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	Vesting Terms
			(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,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. Shares Buy Back Program

Information about the Company buyback its shares as follows:

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Items The 2nd Shares Buy Back Program The 3rd Shares Buy Back Program The 4th Shares Buy Back Program The 5th Shares Buy Back Program	The date of board of directors approved 2016/4/28 2017/5/12 2018/7/26 2018/8/23	Buyback shares (In thousand share) 5,000 6,808 8,000 7,689	Transferred shares (In thousand share) Adjustment due to capital reduction (In thousand share) 5,000 - 6,808 - 7,848 ( 46 ) 6,544 ( 473 )	Shares not transferred yet (In thousand share) - - 106 672	Transferred price (in dollar)
					$ 26.53 36.11 33.81 (Adjusted) 34.09 (Adjusted)

Information about Shares Buy Back Programs is as follows:

The 2nd Shares Buy Back Program The 3rd Shares Buy Back Program

The 2nd Shares BuyBack Program The 3rd Shares Buy Back Program	ck Program
Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) 2016/10/28 2,624 $ 11.26 2017/07/24 3,198 $ 12.85 2017/02/24 50 11.26 2018/07/26 3,515 - 2018/02/08 120 4.20 2019/05/07 95 - 2018/04/24 255 4.30 2018/07/26 1,765 - 2019/05/07 186 - Total 5,000 Total 6,808 The 4th Shares BuyBack Program The 5th Shares Buy Back Program Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) 2020/03/20 7,848 $ 11.26 2019/05/07 4,651 $ - 2019/11/08 60 - 2020/03/20 1,399 3.70 2020/11/06 434 1.90 Total 7,848 Total 6,544	The fair value of the right to subscribe (NT$)
Employee subscription base date 2020/03/20 Total
	$ - - 3.70 1.90

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. Options of the share transfer plan granted were measured by using the Black-Scholes pricing model

Compensation cost recognized for share-based payments above in 2020 and 2019 were as follows:

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Employee share option plans Shares buy back program Capital surplus - employee share options	For the Year Ended	For the Year Ended	December 31
	2020 $ - 21,279 $ 21,279 For the Year Ended		2019 $ 669 9,118 $ 9,787 December 31
		2020 $ 21,279	2019 $ 9,787

26. Equity transactions with non - controlling interests

In November 2019, the Group ownership interest over FocalTech Smart Sensors Co., Ltd. increase to 67.15% from 61.88% Due to capital injection and no pro rata subscription in new shares.

The transactions did not change the controlling status. FocalTech Smart Sensors Co., Ltd. was treated as a subsidiary under equity method.

27. OPERATING LEASE ARRANGEMENTS

The Group is Lessee

The Company and its subsidiaries have lease contracts for office, plant and some office equipment, which would be expired before December 2021. Above mentioned lease contracts are short-term lease agreement, and the Group applies practical expedients so the Group does not recognize right-of-use assets and lease liabilities. The amount of short-term commitment which the Group apply practical expedients is $16,702 thousand and $16,611 thousand for the years ended December 31,2020 and 2019,respectively.

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
		2020 $ 35,178	2019 $ 36,524

28. CAPITAL MANAGEMENT

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

To define the strategy of the Group’s capital structure, the Group 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 Group plans the research and development investment and capital expenditure. Furthermore, the Group 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 Group 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 Group adopted prudent capital management strategy.

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The Group was not restricted to other external capital requirements.

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, 2020 Financial asset at FVTPL Listed preferred shares Private funds Structured Investments Total Financial assets at FVTOCI assets Investments in debt instruments Fixed income bonds December 31, 2019 Financial asset at FVTPL Listed preferred shares Private funds Total Financial assets at FVTOCI assets Investments in debt instruments Fixed income bonds	Level 1 $ 72,186 - - $ 72,186 $- Level 1 $ 10,931 - $ 10,931 $-	Level 2 $ - - 109,897 $ 109,897 $ 247,974 Level 2 $ - - $- $ 181,373	Level 3 $ - 52,579 - $ 52,579 $- Level 3 $ - 45,423 $ 45,423 $-	Total $ 72,186 52,579 109,897
				$ 234,662
				$ 247,974 Total $ 10,931 45,423
				$ 56,354
				$ 181,373

There were no transfers between Level 1 and Level 2 in 2020 and 2019.

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

	December	31
	2020		2019
Financial assets at FVTPL
Balance at January 1, 2020	$ 45,423	$	41,023
Purchases	10,000		5,355
Disposals	( 483)	(	7)
Recognized in profit or loss(other income or loss)	( 914)	(	251)
Effect of foreign currency exchange differences	(1,447)	(	697)
Balance at December 31, 2020	$ 52,579	$	45,423

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3) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

The fair values of foreign fixed income bonds are determined by quoted market prices provided by the independent third party. The fair values of structured investments are determined by quoted prices provided by the seller.

4) 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.

c. Categories of financial instruments

Financial assets Fair value through profit or loss (FVTPL) Mandatorily at FVTPL Amortized cost (Note 1) Financial assets at FVTOCI Investments in debt instruments Financial liabilities Amortized cost (Note 2)	December 31
	2020 2019 $ 234,662 $ 56,354 7,203,983 6,597,902 247,974 181,373 3,782,549 3,335,028

1) The amounts include financial instruments measured at amortized cost, which comprise cash and cash equivalents, trade receivables, other financial assets and refundable deposits, booked in other non-current assets.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term loans, trade and other payables and deposits received.
d. Financial risk management objectives and policies

The Group’s major financial instruments include cash and cash equivalents, trade receivable, other financial assets, financial assets at FVTPL, financial assets at FVTOCI, trade and other payables. The Group’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 Group 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 Group, 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 Group’s financial risk management policies are developed for identifying and analyzing the

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financial risks to the Group, evaluating the impacts of the financial risks, and executing the financial-risk 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 Group is engaged in developing a disciplined and constructive control environment, in order to have all employees understand own responsibilities.

The Group’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.

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

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar and RMB.

The following table details the Group’s sensitivity to a 5% increase and decrease 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 at the end of the reporting period for a 5% change in foreign currency rates. A positive number below indicates a decrease in pre-tax profit and other equity associated with New Taiwan dollars strengthen 5% against the relevant currency. For a 5% weakening of New Taiwan dollars against the relevant currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss/ equity	USD Impact For the Year Ended December 31 2020 2019 $ 59,478(1) $ 26,976(1)	USD Impact For the Year Ended December 31 2020 2019 $ 59,478(1) $ 26,976(1)	RMB Impact	RMB Impact	RMB Impact
			For the Year Ended December 31
		2020 $ 59,478(1)		2020 $ 2,699(2)	2019 $ 1,630(2)

(1). This was mainly attributable to the exposure outstanding on USD time deposits, trade receivables, trade payables, other payables, other current assets and other current liability.

(2). This was mainly attributable to the exposure to outstanding RMB time deposits.

ii) Interest rate risk

The Group was exposed to interest risk arising from fixed rate time deposits, bond investments

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and floating rate demand deposits and structured investments. The time deposits were at fixed interest rates, and bonds were at fixed rates or with guaranteed minimal interest rates and carried at amortized costs, and, therefore, the variations to interest rates did not affect future cash flows.

The carrying amount of the Group’s financial assets with exposure to interest rates at the end of the reporting period were as follows.

the reporting period were as follows.
Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Sensitivity analysis		December 31
		2020 $ 1,975,397 $ 523,648 $ 3,777,910	2019 $ 3,131,261 $ - $ 2,103,526

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate assets, the analysis was prepared assuming the amount of the assets outstanding at the end of the reporting period was outstanding for the whole year. 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 all other variables were held constant, the Group’s post-tax profit for the year ended December 31, 2020 and 2019 would decrease/increase by $9,445 thousand and $5,259 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 Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure of counterparties to discharge an obligation from the carrying amounts of the financial assets as recognized in the balance sheets.

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

As of December 31, 2020, the Group’s five largest customers took 65% of total trade receivables, the remaining transactions with a large number of unrelated customers, thus, no significant concentration of credit risk was observed.

Credit risk management for investments in debt instruments

The Group’s investments in debt instruments are financial assets at fair value through other comprehensive income. The Company policy allows only to invest the targets with credit ratings equal to or higher than the investment grade and with low credit risk after the impairment assessment. Credit rating information is provided by independent rating institute. The Company continuously tracks external rating information to monitor changes in credit risk of the invested debt instruments, and also examines other information such as the bond yield curve and the debtor's material information to assess whether the credit risk of the debt instrument investment has increased significantly after the original recognition.

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The Company assesses the 12-month expected credit loss based on the probability of default and loss given from default provided by external credit rating agencies. The current credit risk assessment policies and carrying amount of investments in debt instruments for each credit rating are as follows:

Category Performing Category Performing	Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable paying off contractual cash flows 12 months expected credit loss Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable paying off contractual cash flows 12 months expected credit loss	Expected Credit Loss Ratio	Carrying Amount as of December 31, 2020 $ 247,974 Carrying Amount as of December 31, 2019 $ 181,373	Carrying Amount as of December 31, 2020 $ 247,974 Carrying Amount as of December 31, 2019 $ 181,373
		0% Expected Credit Loss Ratio
		0%		$ 181,373

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, bank loans are a significant resource of liquidity for the Group.

As of December 31, 2020 and 2019, the available unutilized short-term bank loan facilities refer to (ii) Financing facilities.

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

The Group’s remaining contractual maturity for its financial liabilities was based on the undiscounted cash flows, including interest and principal cash flow, of financial liabilities from the earliest date on which the Group can be required to pay.

December 31, 2020

On Demand or Less than 1 Year Non-interest bearing $ 2,768,322 Fixed interest rate liabilities 523,866 $ 3,292,188	1-5 Years $ 490,361 - $ 490,361

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ii)	December 31, 2019 On Demand or Less than 1 Year Non-interest bearing $ 2,940,668 Financing facilities December 31, 2020 Unsecured bank line of credits Amount used $ 495,665 Amount unused 204,335 $ 700,000 Secured bank loans credits Amount used $ 43,648 Amount unused 392,832 $ 436,480	1-5 Years $ 394,360 December 31, 2019 $ - 800,000 $ 800,000 $ - - $ -

30. TRANSACTIONS WITH RELATED PARTIES

a. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.
b. 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
		2020 $ 20,629 54,148 459 3,888 $ 72,124	2019 $ 21,855 39,224 540 2,921 $ 64,540

31. ASSETS PLEDGED AS COLLATERAL

The following assets were provided as collateral for bank loans and legal proceedings of import customs duties:

Properties, plants and equipments – net of buildings Pledge deposits		December	31
		2020 $ 524,487 4,000 $ 528,487	2019 $ - 4,000 $ 4,000

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32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACTUAL COMMITMENTS

FocalTech Electronics, Ltd., a subsidiary of the Company, filed a litigation of patent infringement against Novatek Microelectronics Corp. in September 2018 .As of the report issue date, the result of litigation and the effect on financial statements still could not be inferred.

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, 2020

		Foreign	Exchange Rate	Carrying
	Currencies			Amount
Financial assets
Monetary items
USD	$	147,429	28.48 (USD:NTD)	$ 4,198,767
USD		2,459	6.5249 (USD:RMB)	70,018
RMB		12,369	0.1533 (RMB:USD)	53,988
Financial liabilities
Monetary items
USD		105,765	28.48 (USD:NTD)	3,012,178
USD		2,354	6.5249 (USD:RMB)	67,049
December 31, 2019
		Foreign	Exchange Rate	Carrying
	Currencies			Amount
Financial assets
Monetary items
USD	$	55,218	29.98 (USD:NTD)	$ 1,655,432
USD		6,641	6.9762 (USD:RMB)	199,101
RMB		7,588	0.1433 (RMB:USD)	32,610
Financial liabilities
Monetary items
USD		38,218	29.98 (USD:NTD)	1,145,788
USD		5,644	6.9762 (USD:RMB)	169,222

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35. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others (Table 1)
2) Endorsements/guarantees provided (Table 2)
3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital
- (None)
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)
10) Others: The business relationship between the parent and the subsidiaries and significant transactions between them: (Table 4)
11) Information on investees (Table 5)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 6)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: (None)
c. Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: (Table 7)

36. SEGMENT INFORMATION

a. Operating segments

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Segment information is provided to those who allocate resources and assesse segment performance separately. The Company’s operation focuses on the selling and developing human and machine interface devices related IC under a single operation unit. Thus, the information of operating segment should not be disclosed individually.

b. Revenue from major products and services

The following is an analysis of the Group’s revenue from continuing operations from its major products and services.

IC for human and machine interface devices	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 13,800,348	2019 $ 9,160,261

c. Geographical information

The Group operates in two principal geographical areas -China and Taiwan.

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below.

China Taiwan Others	Revenue from External Customers For the Year Ended December 31 2020 2019 $ 12,527,084 $ 7,848,830 1,121,492 1,007,669 151,772 303,762 $ 13,800,348 $ 9,160,261	Revenue from External Customers For the Year Ended December 31 2020 2019 $ 12,527,084 $ 7,848,830 1,121,492 1,007,669 151,772 303,762 $ 13,800,348 $ 9,160,261		Non-current Assets	Non-current Assets
				December 31
		2020 $ 12,527,084 1,121,492 151,772 $ 13,800,348		2020 $ 1,304,279 253,328 - $ 1,557,607	2019 $ 1,339,365 240,950 - $ 1,580,315

The Group’s revenue was classified by location of receivable. Non-current assets which comprise property, plant and equipment, other intangible assets and guarantee deposits, exclude Measured at fair value through other comprehensive income-financial assets, financial assets at fair value through profit, goodwill, deferred tax assets and other non-current assets.

d. Information about major customers

Single customers contributed 10% or more to the Group’s revenue were as follows:

Custom A and subsidiaries Custom B and subsidiaries Custom C and subsidiaries Custom D and subsidiaries	For the Year Ended December 31
	2020 2019 $ NA Note 1 $ 1,793,388 1,539,211 1,292,221 2,060,074 1,193,501 1,666,900 1,054,709

Note 1:The sale amount is under 10% of the Group’s revenue.

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TABLE 1

FocalTech Systems Co., Ltd.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 4)	Ending Balance (Note 4)	Amount Actually Drawn	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	$ 1,708,800 ( USD 60,000 )	$ 1,708,800 ( USD 60,000 )	$ -	-	The need for short-term financing	$ -	Operating capital	$ -	-	$ -	$ 2,922,964	$ 2,922,964	Note 3

Note 1: The items are numbered as follows:
a. Issuer is numbered as “0”.
b. Investee companies are numbered from “1”.
Note 2: The maximum amount for financing provided to others:
a. The maximum amount of financing provided by the Company and its subsidiaries shall not exceed 20% of total of the Company and its subsidiaries’ net worth.
b. The maximum amount of financing provided by the Company and its subsidiaries to each individual is as follows:
- i. The maximum amount of financing provided to all businesses shall not exceed 20% of the Company’s net worth. The maximum amount of financing provided to an individual shall not exceed 10% of the lending company’s net worth, 30% of the borrowing company’s net worth, or the gross transaction amount (the higher of purchase amount or sales amount between the two parties) for the past year.

ii. In the case of financing companies with short-term financing needs, the total maximum amount of financing provided to such companies shall not exceed 20% of their net worth; the maximum amount of financing provided to an individual shall not exceed 10% of the lending company’s net worth or 30% of the borrowing company’s net worth.

c. The maximum amount of financing provided by the Company and its subsidiaries shall not exceed 100% of the Company’ net worth.
d. Net worth is based on latest financial statements audited or reviewed by independent auditors. The Company prepared financial report according to IFRSs, The Company’s net worth is the amount attributed to parent’s equity in the Company’s balance sheet.

Note 3: The transactions between the Company and subsidiaries were all eliminated.

Note 4: The exchange rate is US$1=$28.48 on December 31, 2020.

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

164

TABLE 2

FocalTech Systems Co., Ltd.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 2)	Maximum Amount Endorsed/ Guaranteed During the Period (Note 6)	Outstanding Endorsement/ Guarantee at the End of the Period (Note 6)	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	Note
		Name	Relationship
0 1	FocalTech Systems Co., Ltd. FocalTech Systems (Shenzhen) 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. FocalTech Electronics (Shenzhen) Co., Ltd.	A subsidiary in which the Parent Company holds directly and indirectly over 50% of an equity interest. A subsidiary in which the Parent Company holds directly and indirectly 100% of an equityinterest.	$3,906,421 $3,906,421 $3,906,421 $3,906,421 $3,906,421 $3,906,421 $1,277,307	$ 1,281,600 ( USD 45,000) 1,298,810 ( USD 45,604) 1,281,600 ( USD 45,000) 1,737,280 ( USD 61,000) 199,680 99,680 ( USD 3,500) 436,480 ( RMB100,000)	$ 1,281,600 ( USD 45,000) 1,298,810 ( USD 45,604) 1,281,600 ( USD 45,000) 1,737,280 ( USD 61,000) 199,680 99,680 ( USD 3,500) 436,480 ( RMB100,000)	$9,398 3,097 - 19,638 - - 43,648	$ - - - - - - 436,480 ( RMB100,000)	16.4% 16.62% 16.4% 22.24% 2.56% 1.28% 34.17%	$3,906,421 3,906,421 3,906,421 3,906,421 3,906,421 3,906,421 1,277,307	Y Y Y Y Y Y N	N N N N N N N	N N Y Y N N Y	(Note 3) (Note 3) (Note 3) (Note 3) (Note 4 and 5) (Note 4)

Note 1: The items are numbered as follows:

a. Issuer is numbered as “0”.
b. Investee companies are numbered from “1”.
Note 2: The maximum amount for guarantees provided to others:
a. The Company provides guarantees due to business, the amount shall not exceed as follows.
b. The maximum amount of guarantees provided to all subsidiaries and an individual shall not exceed 50% of the Company’s net worth.
c.

The maximum amount of guarantees provided between subsidiaries shall not exceed 100% of the subsidiary’s net worth.

d. The total amount of guarantees of the Company and its subsidiaries shall not exceed 50% of the Company’s net worth. The maximum amount of guarantees provided to an individual by the Company and its subsidiaries shall not exceed 50% of the Company’s net worth. e. Net worth is based on the latest financial statements audited or reviewed by independent auditors. The Company prepared financial report according to IFRSs, The Company’s net worth is the amount attributed to parent’s equity in the Company’s balance sheet.

Note 3: The Company provides USD 45,000 thousand sharing guarantee to FocalTech Electronics, Ltd., FocalTech Systems, Ltd., Hefei PineTech Electronics Co., Ltd. and FocalTech Electronics (Shenzhen) Co., Ltd. to purchase materials. 3,097 thousand, 9,398 thousand, 0 thousand and 1,304 thousand were used in this period.

Note 4: The Company provides USD 3,500 thousand sharing guarantee to both FocalTech Smart Sensors, Ltd. and FocalTech Smart Sensors Co., Ltd. to purchase materials. There is no actual usage in this period.

Note 5: The Company provides $100,000 thousand guarantee for common financing usage.

Note 6: The exchange rate is US$1=$28.48 and RMB=$4.3648 on December 31, 2020.

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

165

TABLE 3

FocalTech Systems Co., Ltd.

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

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

Holding Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2019	December 31, 2019		Note
				Shares	Carrying Value	Percentage of Ownership	Fair Value
FocalTech Systems Co., Ltd. FocalTech Systems, Ltd. FocalTech Electronics, Ltd.	Shares Fubon Financial Holding Co., Ltd. Preferred Shares B WT MICROELECTRONICS CO., LTD. Preferred Shares A Beneficiary certificates CDIB Capital Growth Partners CDIB Capital Healthcare Ventures II structured investments CLN Link HSBC SUB CLN Link Barclays SUB Corporate bond Bank of China Maturity date:2024/11/13 Industrial and Commercial Bank of China Ltd Maturity date:2025/9/21 Azure Nova International Finance Limited Maturity date:2022/3/21 Beneficiary certificates TIEF FUND, L.P.	- - - - - - - - -	Financial assets at fair value through profit or loss – non-current `〃` Financial assets at fair value through profit or loss – non-current `〃` Financial assets at fair value through profit or loss – non-current `〃` Financial assets at fair value through other comprehensive income – non-current `〃` `〃` Financial assets at fair value through profit or loss – non-current	170,000 1,268,000 - - - - - - - -	$ 10,625 61,561 20,016 4,937 54,996 ( USD 1,931) 54,901 ( USD 1,928) 135,878 ( USD 4,771) 53,770 ( USD 1,888) 58,326 ( USD 2,048) 27,626 (USD970)	0.03% 0.94% 0.66% 0.96% 4.83	10,625 61,561 20,016 4,937 54,996 ( USD 1,931) 54,901 ( USD 1,928) 135,878 ( USD 4,771) 53,770 ( USD 1,888) 58,326 ( USD 2,048) 27,626 (USD970)

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

Note 2: The exchange rate is US$1=$28.48 on December 31, 2020.

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

166

TABLE 4

FocalTech Systems Co., Ltd.

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2020

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

No. (Note 1)	Company Name	Counterparty	Nature of Relationship `（`Note 3`）`		Intercompany Transactions	Intercompany Transactions
				Financial statements Item	Amount `（`Note 4`）`	Terms	Percentage of Consolidated Net Revenue or Total Assets
0 0 0 1 1 1 2 2 3 4 5	FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics, Ltd. FocalTech Electronics, Ltd. FocalTech Electronics, Ltd. FocalTech Systems, Ltd. FocalTech Systems, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Smart Sensors, Ltd. FocalTech Systems, Inc.	FocalTech Systems, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. FocalTech Systems (Shenzhen) Co., Ltd. FocalTech Systems, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Electronics (Shanghai) Co., Ltd. Hefei PineTech Electronics Co., Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Systems, Ltd.	1 1 1 2 2 2 2 2 2 2 2	Advances from related parties Service revenue Trade payables Costs of sales Trade payables Prepayments to related parties Research and development expenses Trade payables Service revenue Research and development expenses Trade payables Research and development expenses Research and development expenses Trade payables Service revenue Other receivables Service revenue	$ 247,263 43,670 19,394 46,550 518,851 85,440 431,535 27,945 30,256 20,247 22,156 72,658 46,811 34,918 25,858 242,734 25,117	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2	1.02% 0.32% 0.08% 0.34% 2.15% 0.35% 3.13% 0.12% 0.22% 0.15% 0.09% 0.53% 0.34% 0.14% 0.19% 1.00% 0.18%

Note 1: The items are numbered as follows:

a. Issuer is numbered as “0”.
b. Investee companies are numbered from “1”.

Note 2: The intercompany transactions provide services of manufacturing, sales and research and development. Terms are determined in accordance with mutual agreements.

Note 3:

Represents the transactions from parent company to subsidiary.
Represents the transactions between subsidiaries.

Note 4: The intercompany transactions are eliminated when prepare consolidated financial statements.

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

167

TABLE 5

FocalTech Systems Co., Ltd.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31, 2020	As of December 31, 2020	As of December 31, 2020	Net Income (Loss) of the Investee	Share of Profit (Loss) of the Investee	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of Ownership	Carrying Amount
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. 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	TWD 7,059,264 TWD 2,848 (USD 100) - TWD 4,970 TWD 238,821 TWD 11,990 TWD 2,913,300 (USD 102,293) TWD 665,010 (USD 23,350) TWD 20,000	TWD 7,059,264 TWD 452,698 (USD 15,100) TWD 205,305 - TWD 33,516 TWD 11,990 TWD 3,066,740 (USD 102,293) TWD 700,035 (USD 23,350) TWD 20,000	5,491 (in thousand) 2 - 142 (in thousand) 18,813 (in thousand) 17,417 (in thousand) 100 2 2,000 (in thousand)	100% 100% - 50% 67.15% 100% 100% 100% 100%	TWD 2,974,195 ( USD 104,431 ) TWD 1,562,878 ( USD 54,876 ) - - ( TWD 2,828 ) ( USD 99 ) ( TWD 202,039 ) TWD 2,849,019 ( USD 100,036 ) TWD 2,922,964 ( USD 102,632 ) TWD 144,340 ( USD 5,068 )	TWD 26,164 ( USD 885 ) TWD 2,732 ( USD 92 ) (TWD 86,850 ) ( USD 2,939 ) (TWD 5,769 ) (TWD 86,850 ) ( USD 2,939 ) (TWD 62,102 ) TWD 35,774 (USD 1,211 ) TWD 34,840 (USD 1,179 ) (TWD 20,731 ) (USD 702 )	TWD 26,164 (USD 885 ) TWD 2,732 (USD 92 ) (TWD 39,998 ) (USD 1,354 ) (TWD 4,970 ) (TWD 18,322 ) (USD 620 ) (TWD 62,102 ) TWD 35,774 (USD 1,211 ) TWD 34,840 (USD 1,179 ) (TWD 20,731 ) (USD 702 )	Subsidiaries Subsidiaries Subsidiaries (Note 5) Joint venture Subsidiaries (Note 5) Subsidiaries (Note 5) Subsidiaries Subsidiaries Subsidiaries

Note 1: Information of investments in mainland China is listed in Table 6.

Note 2: The exchange rate is US$1=$28.48 on December 31, 2020.

Note 3: The exchange rate is US$1=$29.98 on December 31, 2019.

Note 4: The average exchange rate average rate US$1=$29.5492 during 2020/1/1~2020/12/31.

Note 5: FocalTech Smart Sensors, Ltd. is owned solely by FocalTech Electronics Co., Ltd. which was held by The company and FocalTech Electronics Co., Ltd.. The original investment amount of FocalTech Electronics Co., Ltd. includes the amount invested by the Company.

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

168

TABLE 6

FocalTech Systems Co., Ltd.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Paid-in Capital `（`Note 1`）`	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2020 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020 (Note 1)	Net Income (Loss) of the Investee (Note 2)	Percentage of Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 2)	Carrying Amount as of December 31, 2020 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2020	note
					Outward	Inward
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, manufacturing and sale of integrated circuits Design and research of integrated circuits Research, development and sale of integrated circuits	TWD 56,960 ( USD 2,000 ) TWD 65,504 ( USD 2,300 ) TWD1,053,764 ( USD 37,000 ) TWD 130,944 ( RMB 30,000 )	`（`Note 3and 4`）` `（`Note 3`）` `（`Note 4`）` `（`Note 4`）`	TWD 28,480 ( USD 1,000 ) TWD 28,480 ( USD 1,000 ) - -	$ - - - -	$ - - - -	TWD 28,480 ( USD 1,000 ) TWD 28,480 ( USD 1,000 ) - -	TWD 2,032 ( USD 69 ) TWD 13,801 ( USD 467 ) TWD 20,761 ( USD 703 ) TWD 57,091 ( USD 1,932 )	100% 100% 100% 100%	TWD 2,032 ( USD 69 ) TWD 13,801 ( USD 467 ) TWD 20,761 ( USD 703 ) TWD 57,091 ( USD 1,932 )	TWD 35,750 ( USD 1,255 ) TWD 58,274 ( USD 2,046 ) TWD1,227,307 ( USD 44,849 ) TWD 217,145 ( USD 7,624 )	$

Accumulated Outward Remittance for Investment Investment Amount Authorized by Investment Upper Limit on the Amount of Investment in Mainland China as of December 31, 2020 Commission, MOEA Stipulated by Investment Commission, MOEA $56,960 $1,722,104 $4,687,707 (US$2,000) (US$60,467)

Note 1: The exchange rate is US$1=NT$29.48 and RMB$1=$4.3648 on December 31, 2020.

Note 2: The average exchange rate is US$1=NT$29.5492 and RMB$1=4.2827 on December 31, 2020.

Note 3: The Company founded a subsidiary in other area and then invested in mainland china.

Note 4 It was founded by the oversea subsidiary, so the paid-in capital did not remit from Taiwan.

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

169

TABLE 7

FocalTech Systems Co., Ltd.

INFORMATION ON MAJOR SHAREHOLDERS DECEMBER 31, 2020

Shareholders	Shares
	Total Shares Owned	Ownership Percentage
Egis Technology Inc.	33,966,575	16.14%

Note 1: Major shareholders showed in the list above include those owned the ownership of 5 percent or more.

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

170

Attachment 2

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, 2020 and 2019, and the related statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2020 and 2019, 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, 2020 and 2019, 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 exist 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 2020.

Refer to Notes 4,21 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 2020, 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

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

171

exception.

We sampled purchase orders, shipping documents bills of lading, and collection records in revenue breakdown to ensure the occurrence of sales revenue.

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.

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

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

172

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.
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.

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 year ended December 31, 2020 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

March 29, 2021

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

173

FOCALTECH SYSTEMS CO., LTD. BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 4 and 6) Trade receivables, net (Note 4 , 9 and 29) Inventories (Note 4 and 10) Other financial assets (Note 4 and 8) Other current assets (Note 22and 29) 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 , 5 and 13) Other intangible assets (Notes 4 and 14) Deferred income tax assets (Notes 4 and 22) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 15) Trade payables (Note 16 and 29) Other payables (Note 17) Current tax liabilities (Note 4 and 22) Other current liabilities(Note 20 and 29) Total current liabilities NON-CURRENT LIABILITIES Deferred income tax liabilities (Notes 4 and 22) Net defined benefit liabilities - non-current (Notes 4 and 18) Guarantee deposits received Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 , 19 and 24) Share capital Ordinary shares Capital surplus Additional paid-in capital Treasury shares Changes in ownership interests in subsidiaries Employee share options Employee share options - expired Total capital surplus Undistributed earnings (deficits to be offset) Other equity Exchange differences from translating the financial statements of foreign operations Unrealized loss on financial assets at fair value through other comprehensive income Total other equity Treasury shares Total equity TOTAL		2020 Amount % $ 2,455,926 21 1,445,186 12 1,215,281 11 170,880 2 162,403 1 5,449,676 47 97,139 1 4,537,073 39 15,226 - 1,237,268 11 59,498 - 65,898 1 145,604 1 6,157,706 53 $ 11,607,382 100 $ 480,000 4 1,936,299 17 339,556 3 108,514 1 360,915 3 3,225,284 28 53,213 1 23,366 - 482,276 4 10,400 - 569,255 5 3,794,539 33 2,103,532 18 4,725,445 41 69,361 1 - - 14,903 - 33,933 - 4,843,642 42 1,012,301 8 (125,038) (1) 2,722 - (122,316) (1) (24,316) - 7,812,843 67 $ 11,607,382 100		2019
				Amount % $ 841,430 9 540,554 6 617,115 7 - - 241,020 3 2,240,119 25 27,849 - 5,121,499 58 19,408 - 1,237,268 14 75,107 1 101,745 1 112,550 1 6,695,426 75 $ 8,935,545 100 $ - - 700,543 8 190,912 2 - - 161,003 2 1,052,458 12 33,537 1 24,078 - 117,594 1 10,400 - 185,609 2 1,238,067 14 2,996,759 33 5,037,671 57 48,662 1 - - 25,510 - 33,534 - 5,145,377 58 (183,307) (2) 4,057 - 1,750 - 5,807 - (267,158) (3) 7,697,478 86 $ 8,935,545 100

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.

174

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

REVENUE (Note 4 ,20 and 29) COSTS OF SALES (Notes 4,10,21 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 21,24, 26 and 29) 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 21) Share of loss of subsidiaries and joint ventures(Note4) Interest income (Note 4) (Loss) gain on financial assets and liabilities at fair value through profit or loss (Notes 4) Loss on disposal of investments (Notes 4) Other gains and losses, net (Notes 29) Loss on foreign currency exchange(Note 4) Total non-operating income and expenses INCOME (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 22) NET INCOME (LOSS) OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 4 and 18) Income tax related to items that will not be reclassified subsequently to profit or loss (Notes 4 and 22)		2020 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) - (40,928) (1) 21,144 - (17,880) - (51,815) (1) 1,175,979 10 (163,987) (1) 1,011,992 9 359 - (50) - 309 -		2019
				Amount $ 2,901,766 (1,944,861) 956,905 (102,450) (157,957) (625,866) (886,273) 70,632 (1,152) (229,956) 14,045 372 - 8,345 (22,880) (231,226) (160,594) (14,655) (175,249) 1,677 (235) 1,442	% 100 (67) 33 (4) (5) (22) (31) 2 - (8) 1 - - - (1) (8) (6) - (6) - - -

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

175

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences from translating the financial statements of foreign operations (Notes 4) Total other comprehensive Loss (net of income tax) TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR EARNINGS (LOSS) PER SHARE (Note 23) Basic Diluted		2020	% (1) (1) 8		2019
		Amount $ (128,123) (127,814) $ 884,178 $ 3.97 $ 3.73			Amount $ (141,357) (139,915) $ (315,164) $ (0.63)	% (5) (5) (11)

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.

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FOCALTECH SYSTEMS CO., LTD. STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2019 Legal reserve used to cover accumulated deficits Capital surplus used to cover accumulated deficits Cash distribution from additional paid-in capital Net loss for the year ended December 31, 2019 Other comprehensive income for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 Treasury stock transferred to employees (Note 19 and 24) Decrease in ownership interests in subsidiaries (Note 25) Compensation cost of employee share options (Note 19 and 24) Issue of ordinary shares under employee share options (Note 19 and 24) BALANCE AT DECEMBER 31, 2019 Capital surplus used to cover accumulated deficits Cash distribution from additional paid-in capital Net income for the year ended December 31, 2020 Other comprehensive loss for the year ended December 31, 2020, net of income tax Total comprehensive income (loss) for the year ended December 31, 2020 Reduction of capital (Note 19) Treasury stock transferred to employees (Note 19 and 24) Compensation cost of employee share options (Note 19 and 24) Issue of ordinary shares under employee share options (Note 19 and 24) BALANCE AT DECEMBER 31, 2020		Share Capital Ordinary Shares $ 2,987,432 - - - - - - - - - 9,327 2,996,759 - - - - - (899,721) - - 6,494 $ 2,103,532	Capital Surplus $ 6,551,481 - (1,248,601) (150,000) - - - - (20,448) 9,787 3,158 5,145,377 (183,307) (150,000) - - - - 1,228 21,279 9,065 $ 4,843,642		Retained Earnings(Accumulated Deficits) Undistributed Earnings (Deficits Legal Reserve to be offset) $ 186,154 $ (1,434,755) (186,154) 186,154 - 1,248,601 - - - (175,249) - 1,442 - (173,807) - - - (9,500) - - - - - (183,307) - 183,307 - - - 1,011,992 - 309 - 1,012,301 - - - - - - - - $ - $ 1,012,301	Retained Earnings(Accumulated Deficits) Undistributed Earnings (Deficits Legal Reserve to be offset) $ 186,154 $ (1,434,755) (186,154) 186,154 - 1,248,601 - - - (175,249) - 1,442 - (173,807) - - - (9,500) - - - - - (183,307) - 183,307 - - - 1,011,992 - 309 - 1,012,301 - - - - - - - - $ - $ 1,012,301		Other Equity Exchange Differences from Translating Financial Statement of Unrealized gains(losses) from financial assets measured at fair value through other comprehensive Foreign Operations income $ 149,454 $ (2,290) - - - - - - - - (145,397) 4,040 (145,397) 4,040 - - - - - - - - 4,057 1,750 - - - - - - (129,095) 972 (129,095) 972 - - - - - - - - $ (125,038) $ 2,722	Treasury Shares $ (393,203) - - - - - - 126,045 - - - (267,158) - - - - - 5,191 237,651 - - $ (24,316)		Total Equity $ 8,044,273 - - (150,000) (175,249) (139,915) (315,164) 126,045 (29,948) 9,787 12,485 7,697,478 - (150,000) 1,011,992 (127,814) 884,178 (894,530) 238,879 21,279 15,559 $ 7,812,843
					Legal Reserve $ 186,154 (186,154) - - - - - - - - - - - - - - - - - - - $ -			Exchange Differences from Translating Financial Statement of U f Foreign Operations $ 149,454 - - - - (145,397) (145,397) - - - - 4,057 - - - (129,095) (129,095) - - - - $ (125,038)

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.

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FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax from continuing operation Adjustments for: Depreciation expenses Amortization expenses Loss (gain) on financial assets and liabilities at fair value through profit or loss Finance costs Interest income Compensation cost of employee share options 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 Trade receivables Inventories Other current assets Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Income tax paid Net cash generated 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 Increases in other non-current assets Interest received Net cash generated (used) from investing activities	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	2019 $ (160,594) 14,286 16,254 (372) 1,152 (14,045) 4,934 229,956 - (70,676) (5,348) 76,101 (10,474) (218,289) 394,331 5,265 146,943 (341) 409,083 (1,152) (1,199) 406,732 (90,885) - - (2,941) - (99,425) 13,156 (180,095) (Continued)

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

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FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Increases in short-term borrowings Increase in guarantee deposits received Cash dividends paid Capital reduction payments to shareholders Proceeds from issuance ordinary shares under employee share options Treasury stock transferred to employees Net cash generated in 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	2020 $ 480,000 364,682 (150,000) (894,530) 15,559 238,879 54,590 1,614,496 841,430 $ 2,455,926	2019 $ - 11,554 (150,000) - 12,485 126,045 84 226,721 614,709 $ 841,430

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

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FOCALTECH SYSTEMS CO., LTD.

1. GENERAL INFORMATION

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

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on February 4, 2021.

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 IFRSs endorsed and issued into effect by the FSC did not have significant impact on the Company’s accounting policies:

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2021

New, Revised or Amended Standards and Interpretations Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2”	Effective Date Issued by IASB
	Effective immediately upon promulgation by the IASB January 1, 2021

The Company assessed the application of abovementioned standards and interpretations do not have significant impact on the Company’s accounting policies.

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c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

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 to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” 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 3: 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.
Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the annual reporting period beginning on or after January 1, 2023.

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 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

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

b. Basis of preparation

The financial statements are prepared on the historical cost basis, except for the financial instruments measured at fair value and the net defined benefit liabilities recognized in the fair value of the estimated assets, and explained in the accounting policies below.

The evaluation of fair value could be classified into level 1 to level 3 based on the degree of 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 financial statements, the Company accounts for subsidiaries by using the equity method. In order to maintain the consistency of amounts 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.

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

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

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.

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g. Property, plant and equipment

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

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.

i. Intangible assets

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 tangible and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible 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.

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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.

4) Financial assets

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

iv) Measurement category

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

D. 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.

E. Financial assets at amortized cost

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

(3) The objective of the business model to hold the financial asset is to collect contractual cash flows; and
(4) 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

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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.

v)

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 trade receivables).

The loss allowance for trade 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.

vi) 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.

5) 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.

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

6) Financial liabilities

i) Subsequent measurement

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

ii) Derecognition of financial liabilities

l. Provisions

m. Revenue recognition

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

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 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. 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.

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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.

p. 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 straight-line 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.

q. 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 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.

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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

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.

Impairment of Goodwill

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
		2020 $ 381 2,455,545 - $ 2,455,926	2019 $ 377 421,333 419,720 $ 841,430

The market rate intervals of cash in bank at the end of the reporting period were as follows:

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Demand deposits Time deposits	December 31
	2020 2019 0.001%-0.35% 0.001%-0.35% - 2.2%-2.24%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS-NON-CURRENT

Mandatorily at fair value through profit or loss (FVTPL) Listed preferred shares Private Funds		December	31
		2020 $ 72,186 24,953 $ 97,139	2019 $ 10,931 16,918 $ 27,849

8. OTHER FINANCIAL ASSETS

Time deposits with original maturities less than three months Market rate intervals TRADE RECEIVABLES, NET Trade receivables		December 31	December 31
		2020 2019 $ 170,880 $ - 0.37% - December 31
		2020 $ 1,455,186	2019 $ 540,554

9. TRADE RECEIVABLES, NET

The average credit period on sales of goods was 60-120 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 trade 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 trade receivable.

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

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December 31, 2020

Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2019 Expected credit loss rate Gross carrying amount and Amortized cost	Non Past Due 0% $1,404,771 Non Past Due 0% $540,180		Overdue 1-60 Days 0% $ 40,401 Overdue 1-60 Days 0% $ 374	Overdue 61-180 Days 0% $ 14 Overdue 61-180 Days 0% $ -	Overdue Over 181 Days 0% $ - Overdue Over 181 Days 0% $ -		Total
							0% $ 1,445,186 Total
							0% $ 540,554

10. INVENTORIES

Finished goods Work in progress Raw materials and supplies		December 31	December 31
		2020 $ 311,159 812,109 92,013 $ 1,215,281	2019 $ 198,145 304,486 114,484 $ 617,115

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $8,811,546 thousand and $1,944,861 thousand, included gain from price recovery of inventory of $131,157 thousand and $70,676 thousand for the years ended December 31, 2020 and 2019, respectively.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Unlisted companies FocalTech Corporation, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd.		December 31	December 31
		2020 2019 $ 4,537,073 $ 5,121,499 December 31
		2020 $ 2,974,195 1,562,878 - $ 4,537,073	2019 $ 3,002,990 2,071,743 46,766 $ 5,121,499

Unlisted companies FocalTech Corporation, Ltd.	Proportion of Ownership and Voting Rights
	December 31
	2020 2019 100% 100%

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FocalTech Electronics, Ltd.	100%	100%
FocalTech Smart Sensors, Ltd.(a)	-	50.06%

a. FocalTech Smart Sensors, Ltd. is owned solely by FocalTech Electronics Co., Ltd. in 2020, which was originally held by The Company and FocalTech Electronics Co., Ltd.

The share of profit or loss and other comprehensive income of these subsidiaries accounted for using the equity method recognized in 2019 and 2020 financial statements were based on the audited subsidiaries’ financial statements of the corresponding periods.

11. PROPERTY, PLANT AND EQUIPMENT

Development Equipment Office Equipment Leasehold Improve- ments Cost Balance at January 1, 2019 $ 70,226 $ 304 $ 16,878 Additions 2,941 - - Balance at December 31, 2019 $ 73,167 $ 304 $ 16,878 Accumulated depreciation Balance at January 1, 2019 $ 39,991 $ 231 $ 16,433 Depreciation 13,768 73 445 Balance at December 31, 2019 $ 53,759 $ 304 $ 16,878 Carrying amounts at December 31, 2019 $ 19,408 $ - $ - Cost Balance at January 1, 2020 $ 73,167 $ 304 $ 16,878 Additions 6,385 - - Disposals ( 5,001) - - Balance at December 31, 2020 $ 74,551 $ 304 $ 16,878 Accumulated depreciation Balance at January 1, 2020 $ 53,759 $ 304 $ 16,878 Depreciation 10,567 - - Disposals ( 5,001) - - Balance at December 31, 2020 $ 59,325 $ 304 $ 16,878 Carrying amounts at December 31, 2020 $ 15,226 $ - $ -	Total $ 87,408 2,941
	$ 90,349
	$ 56,655 14,286
	$ 70,941
	$ 19,408
	$ 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 not been pledged as collateral.

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13. GOODWILL

Beginning balance Impairment loss Ending balance	For the Year Ended	For the Year Ended	December 31
		2020 $ 1,237,268 - $ 1,237,268	2019 $ 1,237,268 - $ 1,237,268

14. OTHER INTANGIBLE ASSETS

Licenses and Franchises Cost Balance at January 1, 2019 and December 31, 2019 $ 18,657 Accumulated amortization Balance at January 1, 2019 $ 17,262 Amortization expense 840 Balance at December 31, 2019 $ 18,102 Carrying amounts at December 31, 2019 $ 555 Cost Balance at January 1, 2020 and December 31, 2020 $ 18,657 Accumulated amortization Balance at January 1, 2020 $ 18,102 Amortization expense 423 Balance at December 31, 2020 $ 18,525	Software $ 8,445 $ 8,217 228 $ 8,445 $- $ 8,445 $ 8,445 - $ 8,445	Patents Trademark $ 76,478 $ 74,000 $ 31,140 $ 29,600 7,786 7,400 $ 38,926 $ 37,000 $ 37,552 $ 37,000 $ 76,478 $ 74,000 $ 38,926 $ 37,000 7,786 7,400 $ 46,712 $ 44,400	Total $ 177,580 $ 86,219 16,254 $ 102,473 $ 75,107 $ 177,580 $ 102,473 15,609 $ 118,082

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Carrying amounts at December 31, 2020	$ 132	$-	$ 29,766	$ 29,600

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. SHORT-TERM BORROWINGS

Unsecured borrowings Line of credit borrowings Market rate intervals		December 31	December 31
		2020 $ 480,000 0.88%~1.06%	2019 $ - -

16. TRADE PAYABLES

Trade payables Trade payables-related party		December 31	December 31
		2020 $ 1,397,089 539,210 $ 1,936,299	2019 $ 668,113 32,430 $ 700,543

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.

17. 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
		2020 $ 238,059 12,450 32,052 56,995 $ 339,556	2019 $ 110,306 12,450 25,806 42,350 $ 190,912

18. 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.

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b. Defined benefit plans

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
	(	2020 $ 42,275 18,909) ( $ 23,366	2019 $ 45,235 21,157) $ 24,078

Movements in net defined benefit liability were as follows:

	Present Value of	Present Value of
	the Defined				Net Defined
		Benefit	Fair Value of			Benefit
	Obligation		the Plan Assets		Liability (Asset)
Balance at January 1, 2019	$	45,590	($	19,494)	$	26,096
Service cost
Current service cost		125		-		125
Net interest expense (income)		570	(	248)		322
Recognized in profit or loss		695	(	248)		447
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-	(	627 )	(	627 )
Actuarial loss - changes in financial
assumptions		1,421		-		1,421
Actuarial loss - experience adjustments	(	2,471)		-	(	2,471)
Recognized in other comprehensive income	(	1,050)	(	627)	(	1,677)
Contributions from the employer		-	(	788)	(	788)
Balance at December 31, 2019		45,235	(	21,157)		24,078
Service cost
Current service cost		126		-		126
Net interest expense (income)		452	(	215)		237
Recognized in profit or loss		578	(	215)		363
Remeasurement
Return on plan assets (excluding amounts		-	(	619 )	(	619 )

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included in net interest) Actuarial loss - changes in financial assumptions Actuarial loss -demographic assumptions Actuarial loss - experience adjustments ( Recognized in other comprehensive income Contributions from the employer Benefits paid ( Balance at December 31, 2020	1,151 - 1,151 1,436 - 1,436 2,327) - ( 2,327) 260 ( 619) ( 359) - ( 716 ) ( 716 ) 3,798) 3,798 - $ 42,275 ($ 18,909) $ 23,366

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.

Discount rate Expected rate of salary increase	December 31
	2020 2019 0.8% 1% 4.5% 4.5%

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 1% increase 1% decrease		December 31	December 31
		2019 ($ 1,501) ($ 1,566) ($ 6,441) ($ 5,567)	2019 ($ 1,422) ($ 1,481) ($ 6,141) ($ 5,334)

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The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2020 $ 717 16.1 years	2019 $ 770 14.9 years

19. 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
		2020 500,000 $ 5,000,000 210,353 $ 2,103,532	2019 500,000 $ 5,000,000 299,676 $ 2,996,759

b. Capital surplus

BALANCE, JANUARY 1, 2019 Capital surplus used to cover accumulated deficits Cash distribution from additional paid-in capital Changes in ownership interests in subsidiaries Employee treasury share vested Compensation cost of employee share options Issue of ordinary shares under employee share options Employee share options expired BALANCE AT DECEMBER 31, 2019 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 Issue of ordinary shares under employee share options Employee share options expired BALANCE AT DECEMBER 31, 2020		Additional Paid-in Capital (1)	Treasury Shares (1) $ 40,868 - - - 7,794 - - - 48,662 - - 19,471 1,228 - - - $ 69,361	Changes in ownership interests in subsidiaries (2) ($0,0020,448) (-) (-) ($ 0,020,448) (-) (-) (-) ( -) ($ 0,0-) (-) (-) (-) (-) (-) (-) ( -) ($-)	Employee Share Options (3)	Employee Share Options -Expired (2)	Total
	( ( ( (	$ 6,422,355 1,248,601 ) 150,000 ) - - - 13,917 - 5,037,671 183,307 ) 150,000 ) - - - 21,081 - $ 4,725,445			($0,047,476) (-) (-) (-) ($ 0,007,794) ($ 0,009,787) ($ 0,010,759) ( 13,200) ($ 0,025,510) (-) (-) ($ 0,019,471) (-) 21,279 ($ 0,012,016) ($ 0,000,399) ($ 14,903)	($0,020,334) (-) (-) (-) (-) (-) (-) (13,200) ($ 0,033,534) (-) (-) (-) (-) (-) (-) (399) ($ 33,933)	($ 6,551,481) ($1,248,601) ($ 0,150,000) ($ 0,020,448) (-) ($ 0,009,787) ($ 0,03,158) ( -) ($5,145,377) ($ 0,183,307) ($ 0,150,000) (-) (1,228) 21,279 ($ 0,09,065) ( -) ($ 4,843,642)

4) 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).
5) This type of capital surplus may be used to offset a deficit.
6) This type of capital surplus cannot be used for any purposes.
c. Retained earnings and dividend policy

The amendments to the Company’s Articles of Incorporation had been approved by the Company’s

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shareholders in its meeting held on June 20, 2019, which stipulate that earnings distribution may be made on a quarterly basis after the close of each quarter.

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

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premium had been approved in the Company’s shareholders’ meeting on June 20, 2020.

To increase the return on shareholders’ equity, it 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 cash of capital reduction was returned to the company’ shareholders on October 28, 2020.

d. Treasury stock

	Shares
	(In Thousands)
Number of shares at January 1, 2019	(15,970)
Decrease during the period	(4,992)
Number of shares at December 31, 2019	(10,978)
Decrease during the period	( 9,681)
Decrease due to capital reduction during the period	(519)
Number of shares at December 31, 2020	(778)

The detailed information for other Shares Buy Back Programs could be found in Note 24 (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.

20. REVENUE

IC for human and machine interface devices Service revenue Contract balances Contract liabilities (classified as current liabilities) Sales of goods	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 2019 $ 11,366,680 $ 2,445,648 43,670 456,118 $ 11,410,350 $ 2,901,766 December 31
		2020 $ 106,683	2019 $ 2,998

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21. NET INCOME

a. Finance costs

Interest on deposits Interest on bank loans	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,078 814 $ 1,892	2019 $ 1,150 2 $ 1,152

b. 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	December 31
		2020 $ 10,567 15,609 $ 26,176 $ 722 25,454 $ 26,176	2019 $ 14,286 16,254 $ 30,540 $ 1,299 29,241 $ 30,540

c. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans (see Note 18) Share-based payments (see Note 24) 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
		2020 $ 25,596 363 12,433 833,872 $ 872,264 $ 94,586 777,678 $ 872,264	2019 $ 26,189 447 4,934 647,418 $ 678,988 $ 83,197 595,791 $ 678,988

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. Due to the net loss before tax for the year ended December 31, 2019, there was no accrual for any remuneration to employees and directors. The

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accrued employees’ compensation and remuneration to directors for the year ended December 31, 2020 are as follows:

The remuneration to employees The remuneration to directors The remuneration to employees The remuneration to directors	December 31, 2020	December 31, 2020
	9.4% 0.6% December 31, 2020
		$123,450 $ 7,214

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

22. INCOME TAXES

a. Income tax expense (benefit) recognized in profit or loss

Current tax In respect of the current year Adjustments for prior years 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
		2020 $ 108,514 - 108,514 54,139 1,334 55,473 $ 163,987	2019 $ - 1,199 1,199 14,308 ( 852) 13,456 $ 14,655

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

Income (loss) before tax from continuing operations Income tax expense (benefit) 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 Unrecognized temporary differences Adjustments for prior years’ tax	For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2020 $1,175,979 $ 164,637 5,730 21,734 (29,448) 1,334	$	2019 (160,594) $ (22,483) - 4,597 32,194 347

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$ 163,987

$ 14,655

Income tax expense recognized in profit or loss

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	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,032	2019 $ 1,788

c. Recognized in other comprehensive income

Recognized in other comprehensive income
Deferred tax Remeasurement of defined benefit plans	For the Year Ended December 31
		2020 $ 50	2019 $ 235

d. Deferred tax assets and liabilities

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

2020

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

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2019

Deferred tax assets Temporary differences Obsolete of inventory Others Loss carryforwards Deferred tax liabilities Temporary differences Intangible assets Investment income recognized from foreign investees	Opening Balance Recognized in Profit or Loss Recognized in Other Compre- hensive Income $ 109,571 $ (19,872) $ - (484) 1,342 (235) 109,087 (18,530) (235) 3,810 7,613 - $ 112,897 $(10,917) $ (235) $ 12,348 $ (2,058) $ - 18,650 4,597 - $ 30,998 $ 2,539 $ -	Closing Balance $ 89,699 623 90,322 11,423 $ 101,745 $ 10,290 23,247 $ 33,537

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

f. Income tax assessments

The Company’s tax returns until 2018 have been assessed by the tax authorities.

23. EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share Diluted earnings (loss) per share	Unit: NT$ Per Share For the Year Ended December 31
		2020 $ 3.97 $ 3.73	2019 $ (0.63)

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

Earnings (loss) used in the computation of basic earnings per share	For the Year Ended	For the Year Ended	December 31
		2020 $1,011,992	2019 $(175,249)

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Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares):

Weighted average number of ordinary shares used in the computation of diluted earnings per share Effect of potentially dilutive ordinary shares: Employee shares buyback program(note) Employee share options (note) 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	December 31
		2020 254,897 14,592 569 1,322 271,380	2019 276,714 - - - 276,714

Note: The Company has a net loss after tax, so there is no dilutive effect in 2019.

24. SHARE-BASED PAYMENT ARRANGEMENTS

The company did not issue any additional employee stock option plan in 2020 and 2019.

a. Employee stock option plan

Information about vested options of 2020 and 2019 are as following:

Employee Stock Option Plan 2006 2015	December	31,2020 Weighted-aver age remaining contractual life (years) 1.1~2.27 4.67	December	31,2019
	Range of exercise price (NT$) $5.46~36.8 15.9		Range of exercise price (NT$) $4.2~32.10 12.2	Weighted-aver age remaining contractual life (years) 1.32~3.48 5.67

Information about outstanding options in 2020 and 2019 is as following:

Employee Stock Option Plan	2020 Beginning Quantity of Options 805,599 677,500	Balance	Options unvested	Options unvested	Options exercised	Options exercised	Options	EndingBalance	EndingBalance

	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Quantity of Options	Weighted- average Exercise Price (NT$)
2006 2015	805,599 677,500	$ 23.49 12.20	- -	$ - -	( 407,400) (242,000)	$ 29.68 14.33	- ( 38,000)	398,199 397,500	$ 26.65 15.90

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2019

Employee Stock Option Plan	Beginning	Balance	Options unvested	Options unvested	Options exercised	Options exercised	Options	expired	EndingBalance	EndingBalance
	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)	Quantity of Options	Weighted- average Exercise Price (NT$)
2006 2013 2015	1,594,999 627,250 985,750	$ 19.86 37.90 12.2	- - ( 35,750)	$ - - 12.2	( 660,200) - (272,500)	$ 13.86 - 12.2	( 129,200) (627,250) -	$ 27.80 37.90 -	805,599 - 677,500	$ 23.49 - 12.2

As of December 31, 2020, 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	Vesting Terms
			(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.

d. Shares Buy Back Program

Information about the Company buyback its shares as follows:

Items The 2nd Shares Buy Back Program The 3rd Shares Buy Back Program The 4th Shares Buy Back Program The 5th Shares Buy Back Program	The date of board of directors approved 2016/4/28 2017/5/12 2018/7/26 2018/8/23	Buyback shares (In thousand share) 5,000 6,808 8,000 7,689	Transferred shares (In thousand share) Adjustment due to capital reduction (In thousand share) 5,000 - 6,808 - 7,848 ( 46 ) 6,544 ( 473 )	Shares not transferred yet (In thousand share) - - 106 672	Transferred price (in dollar)
					$ 26.53 36.11 33.81 (Adjusted) 34.09 (Adjusted)

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Information about Shares Buy Back Programs transferred is as follows:

T h e 2 n d S h a r e s B u y B a c k P r o g r a m T h e 3 r d S h a r e s B u y B a c k P r o g r a m

Employee subscription base date 2016/10/28 2017/02/24 2018/02/08 2018/04/24 2018/07/26 2019/05/07 Total	Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) Employee subscription base date 2,624 $ 11.26 2017/07/24 50 11.26 2018/07/26 120 4.20 2019/05/07 255 4.30 1,765 - 186 - 5,000 Total	Shares transferred (In Thousands) 3,198 3,515 95 6,808	The fair value of the right to subscribe (NT$)
			$ 12.85 - -

T h e 4 t h S h a r e s B u y B a c k P r o g r a m T h e 5 t h S h a r e s B u y B a c k P r o g r a m

Employee subscription base date 2020/03/20 Total	Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) Employee subscription base date 7,848 $ 3.30 2019/05/07 2019/11/08 2020/03/20 2020/11/06 7,848 Total	Shares transferred (In Thousands) 4,651 60 1,399 434 6,544	The fair value of the right to subscribe (NT$)
			$ - - 3.70 1.90

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.

e. Options of the share transfer plan granted were measured by using the Black-Scholes pricing model

Compensation cost recognized for share-based payments above in 2020 and 2019 were as follows:

Employee share option plans Shares buyback program	For the Year Ended	For the Year Ended	December 31
		2020 $ - $ 12,433	2019 $ 241 $ 4,693

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$ 12,433 $ 4,934

Capital surplus - employee share options	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 12,433	2019 $ 4,934

25. Equity transactions with non - controlling interests

In November 2019, the Company ownership interest over FocalTech Smart Sensors, Ltd. increase to 50.06% from 42.34% Due to capital injection and no pro rata subscription in new shares.

The transactions did not change the controlling status. FocalTech Smart Sensors, Ltd. was treated as a subsidiary under equity method.

26. OPERATING LEASE ARRANGEMENTS

The Company is Lessee

The Company and its subsidiaries have lease contracts for office, plant and some office equipment, which would be expired before September 2021. 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 amount of short-term commitment which the Company apply practical expedients is $9,140 thousand.

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
		2020 $ 22,726	2019 $ 23,150

27. 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.

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28. 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, 2020

Financial asset at FVTPL Listed preferred shares Private funds Total December 31, 2019 Financial asset at FVTPL Listed preferred shares Private funds Total	Level 1 $ 72,186 - $ 72,186 Level 1 $ 10,931 - $ 10,931	Level 2 $ - - $- Level 2 $ - - $-	Level 3 $ - 24,953 $ 24,953 Level 3 $ - 16,918 $ 16,918	Total $ 72,186 24,953 $ 97,139 Total $ 10,931 16,918 $ 27,849

There were no transfers between Level 1 and Level 2 in 2020 and 2019.

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

Financial assets at FVTPL Balance, beginning of year Purchases Disposals Recognized in profit or loss(other income or loss) Balance, end of year	For the Years Ended in December 31	For the Years Ended in December 31
	(	2020 2019 $ 16,918 $ 11,589 10,000 5,355 - ( 7 ) 1,965) ( 19) $ 24,953 $ 16,918

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

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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
	2020 2019 $ 97,139 $ 27,849 4,217,596 1,494,534 3,238,131 1,009,049

1) The amounts include financial instruments measured at amortized cost, which comprise cash and cash equivalents, trade receivables, other financial assets and refundable deposits which is booked in other non-current assets.
2) The balances included financial liabilities measured at amortized cost, which comprise trade and other payables and deposits received.
d. Financial risk management objectives and policies

The Company’s major financial instruments include cash and cash equivalents, trade receivable, other financial assets, financial assets at FVTPL, trade 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 financial-risk 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.

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).

iii) Foreign currency risk

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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 31.

Sensitivity analysis

The Company was mainly exposed to the U.S. dollar. The following table details the Company’s sensitivity to a 5% increase and decrease 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 at the end of the reporting period for a 5% change in foreign currency rates. A positive number below indicates a decrease in pre-tax profit and other equity associated with New Taiwan dollars strengthen 5% against the relevant currency. For a 5% weakening of New Taiwan dollars against the relevant currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss/ equity	USD Impact	USD Impact	USD Impact
	For the Year Ended December 31
		2020 $ 67,415(i)	2019 $ 29,008(i)

(1).This was mainly attributable to the exposure of outstanding USD including trade receivables, trade payables, other payables, other current assets and other current liability.
iv) Interest rate risk

The Company was exposed to interest risk arising from 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, and, therefore, the variations to interest rates did not affect future cash flows.

The carrying amount of the Company’s financial assets with exposure 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
		2020 $ 170,880 $ 480,000 $ 2,454,853	2019 $ 419,720 $ - $ 421,333

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

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210

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 year ended December 31, 2020 and 2019 would decrease/increase by $6,137 thousand and $1,053 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 trade receivables. Ongoing credit evaluation is performed on the financial condition of trade receivables.

As of December 31, 2020, the Company’s five largest customers took 69% of total trade 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 a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, bank loans are a significant resource of liquidity for the Company.

As of December 31, 2020 and 2019, the available unutilized short-term bank loan facilities refer to (ii) Financing facilities.

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

The Company’s remaining contractual maturity for its financial liabilities was based on the undiscounted cash flows, including interest and principal cash flow, of financial liabilities from the earliest date on which the Company can be required to pay.

December 31, 2020 On Demand or Less than 1 Year Non-interest bearing $ 2,275,649 Fixed interest rate liabilities 480,206 $ 2,755,855	1-5 Years $ 482,276 - $ 482,276

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

211

ii)	December 31, 2019 On Demand or Less than 1 Year Non-interest bearing $ 891,455 f Financing facilities	1-5 Years $ 117,594

Unsecured bank lines of credit Amount used Amount unused	December 31, 2020 $ 495,665 204,335 $ 700,000	December 31, 2019 $ - 800,000 $ 800,000

29. 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.	Related Party Category
	Subsidiary Subsidiary Subsidiary

b. Sales of goods

Line Item Related Party Category/Name Sales Subsidiaries FocalTech Systems, Ltd. Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 43,670 - $ 43,670	2019 $ 433,048 23,070 $ 456,118

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

c. Purchases of goods

Line Item Related Party Category/Name Subsidiaries Purchase FocalTech Electronics, Ltd. Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ - 46,550 $ 46,550	2019 $ 243,174 - $ 243,174

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

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

212

d. Payables to related parties

Line Item Related Party Category/Name Subsidiaries Trade payables FocalTech Electronics, Ltd. Others		December 31	December 31
		2020 $ 518,851 20,359 $ 539,210	2019 $ 19,063 13,367 $ 32,430

The outstanding trade 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.		December 31	December 31
		2020 2019 $ 85,440 $ - December 31
		2020 $ 247,263	2019 $ 154,595

f. Advances (accounted for other current liabilities)

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

g. Other transactions with related parties

The Company provides guarantee services to its subsidiaries, and charged for 802 thousand service revenue in 2019. Please refer to Table 2.

h. 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
		2020 $ 15,450 40,107 459 2,689 $ 58,705	2019 $ 16,646 29,618 540 1,990 $ 48,794

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACTUAL COMMITMENTS

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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213

disclosed.

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

December 31, 2020

		Foreign	Exchange Rate	Carrying
	Currencies			Amount
Financial assets
Monetary items
USD	$	144,584	28.48 (USD:NTD)	$ 4,117,740
Monetary items
USD		159,307	28.48 (USD:NTD)	4,573,073
Financial liabilities
Monetary items
USD		97,242	28.48 (USD:NTD)	2,769,444
December 31, 2019
		Foreign	Exchange Rate	Carrying
	Currencies			Amount
Financial assets
Monetary items
USD	$	51,829	29.980 (USD:NTD)	$ 1,553,825
Monetary items
USD		170,831	29.980 (USD:NTD)	5,121,499
Financial liabilities
Monetary items
USD		32,477	29.980 (USD:NTD)	973,667

32. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others (Table 1)
2) Endorsements/guarantees provided (Table 2)
3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (None)

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214

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)
10) Information on investees (Table 4)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 5)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: (None)
c. Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: (Table 6)

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

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TABLE 1

FocalTech Systems Co., Ltd.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 4)	Ending Balance (Note 4)	Amount Actually Drawn	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	$ 1,708,800 ( USD 60,000 )	$ 1,708,800 ( USD 60,000 )	$ -	-	The need for short-term financing	$ -	Operating capital	$ -	-	$ -	$ 2,922,964	$ 2,922,964	Note 3

Note 1: The items are numbered as follows:
a. Issuer is numbered as “0”.
b. Investee companies are numbered from “1”.
Note 2: The maximum amount for financing provided to others:
a. The maximum amount of financing provided by the Company and its subsidiaries shall not exceed 20% of total of the Company and its subsidiaries’ net worth.
b. The maximum amount of financing provided by the Company and its subsidiaries to each individual is as follows:

i. The maximum amount of financing provided to all businesses shall not exceed 20% of the Company’s net worth. The maximum amount of financing provided to an individual shall not exceed 10% of the lending company’s net worth, 30% of the borrowing company’s net worth, or the gross transaction amount (the higher of purchase amount or sales amount between the two parties) for the past year.

ii. In the case of financing companies with short-term financing needs, the total maximum amount of financing provided to such companies shall not exceed 20% of the lending company net worth; the maximum amount of financing provided to an individual shall not exceed 10% of the lending company’s net worth or 30% of the borrowing company’s net worth.

c. The maximum amount of financing provided by the Company and its 100% owned subsidiaries shall not exceed 100% of the Company’ net worth.
d. Net worth is based on latest financial statements audited or reviewed by independent auditors. The Company prepared financial report according to IFRSs, The Company’s net worth is the amount attributed to parent’s equity in the Company’s balance sheet.

Note 3: The exchange rate is US$1=$28.48 on December 31, 2020.

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

216

TABLE 2

FocalTech Systems Co., Ltd.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 2)	Maximum Amount Endorsed/ Guaranteed During the Period (Note 6)	Outstanding Endorsement/ Guarantee at the End of the Period (Note 6)	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	Note
		Name	Relationship
0	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.	A subsidiary in which the Parent Company holds directly and indirectly over 50% of an equity interest.	$3,906,421 $3,906,421 $3,906,421 $3,906,421 $3,906,421 $3,906,421	$ 1,281,600 ( USD 45,000) 1,298,810 ( USD 45,604) 1,281,600 ( USD 45,000) 1,737,280 ( USD 61,000) 199,680 99,680 ( USD 3,500)	$ 1,281,600 ( USD 45,000) 1,298,810 ( USD 45,604) 1,281,600 ( USD 45,000) 1,737,280 ( USD 61,000) 199,680 99,680 ( USD 3,500)	$9,398 3,097 - 19,638 - -	$ - - - - - -	16.4% 16.62% 16.4% 22.24% 2.56% 1.28%	$3,906,421 3,906,421 3,906,421 3,906,421 3,906,421 3,906,421	Y Y Y Y Y Y	N N N N N N	N N Y Y N N	(Note 3) (Note 3) (Note 3) (Note 3) (Note 4 and 5) (Note 4)

Note 1: The items are numbered as follows:

a. Issuer is numbered as “0”.
b. Investee companies are numbered from “1”.
Note 2: The maximum amount for guarantees provided to others:
a. The Company provides guarantees due to business, the amount shall not exceed as follows.
b. The maximum amount of guarantees provided to all subsidiaries and an individual shall not exceed 50% of the Company’s net worth.
c.
The maximum amount of guarantees provided between subsidiaries shall not exceed 100% of the Company’s net worth.
d. The total amount of guarantees of the Company and its subsidiaries shall not exceed 50% of the Company’s net worth. The maximum amount of guarantees provided to an individual by the Company and its subsidiaries shall not exceed 50% of the Company’s net worth.
e. Net worth is based on the latest financial statements audited or reviewed by independent auditors. The Company prepared financial report according to IFRSs, The Company’s net worth is the amount attributed to parent’s equity in the Company’s balance sheet.

Note 5: The Company provides $100,000 thousand guarantee for common financing usages.

Note 6: The exchange rate is US$1=$28.48 and RMB=$4.3648 on December 31, 2020.

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

217

TABLE 3

FocalTech Systems Co., Ltd.

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

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

Holding Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2019	December 31, 2019		Note
				Shares	Carrying Value	Percentage of Ownership	Fair Value
FocalTech Systems Co., Ltd.	Shares Fubon Financial Holding Co., Ltd. Preferred Shares B WT MICROELECTRONICS CO., LTD. Preferred Shares A Beneficiary certificates CDIB Capital Growth Partners CDIB Capital Healthcare Ventures II	- - -	Financial assets at fair value through profit or loss – non-current Financial assets at fair value through profit or loss – non-current Financial assets at fair value through profit or loss – non-current Financial assets at fair value through profit or loss – non-current	170,000 1,268,000 - -	$ 10,625 61,561 20,016 4,937	0.03% 0.94% 0.66% 0.96%	10,625 61,561 20,016 4,937

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.

218

TABLE 4

FocalTech Systems Co., Ltd.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31, 2020	As of December 31, 2020	As of December 31, 2020	Net Income (Loss) of the Investee	Share of Profit (Loss) of the Investee	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of Ownership	Carrying Amount
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. 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	TWD 7,059,264 TWD 2,848 (USD 100) - TWD 4,970 TWD 238,821 TWD 11,990 TWD 2,913,300 (USD 102,293) TWD 665,010 (USD 23,350) TWD 20,000	TWD 7,059,264 TWD 452,698 (USD 15,100) TWD 205,305 - TWD 33,516 TWD 11,990 TWD 3,066,740 (USD 102,293) TWD 700,035 (USD 23,350) TWD 20,000	5,491 (in thousand) 2 - 142 (in thousand) 18,813 (in thousand) 17,417 (in thousand) 100 2 2,000 (in thousand)	100% 100% - 50% 67.15% 100% 100% 100% 100%	TWD 2,974,195 ( USD 104,431 ) TWD 1,562,878 ( USD 54,876 ) - - ( TWD 2,828 ) ( USD 99 ) ( TWD 202,039 ) TWD 2,849,019 ( USD 100,036 ) TWD 2,922,964 ( USD 102,632 ) TWD 144,340 ( USD 5,068 )	TWD 26,164 ( USD 885 ) TWD 2,732 ( USD 92 ) (TWD 86,850 ) ( USD 2,939 ) (TWD 5,769 ) (TWD 86,850 ) ( USD 2,939 ) (TWD 62,102 ) TWD 35,774 (USD 1,211 ) TWD 34,840 (USD 1,179 ) (TWD 20,731 ) (USD 702 )	TWD 26,164 (USD 885 ) TWD 2,732 (USD 92 ) (TWD 39,998 ) (USD 1,354 ) (TWD 4,970 ) (TWD 18,322 ) (USD 620 ) (TWD 62,102 ) TWD 35,774 (USD 1,211 ) TWD 34,840 (USD 1,179 ) (TWD 20,731 ) (USD 702 )	Subsidiaries Subsidiaries Subsidiaries (Note 5) Joint venture Subsidiaries (Note 5) Subsidiaries Subsidiaries Subsidiaries Subsidiaries

Note 1: Information of investments in mainland China is listed in Table 6.

Note 2: The exchange rate is US$1=$28.48 on December 31, 2020.

Note 3: The exchange rate is US$1=$29.98 on December 31, 2019.

Note 4: The average exchange rate average rate US$1=$29.5492 during 2020/1/1~2020/12/31. Note 5: FocalTech Smart Sensors, Ltd. is owned solely by FocalTech Electronics Co., Ltd. which was held by The company and FocalTech Electronics Co., Ltd.. The original investment amount of FocalTech Electronics Co., Ltd. includes the amount invested by the Company.

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

219

TABLE 5

FocalTech Systems Co., Ltd.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Paid-in Capital `（`Note 1`）`	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2020 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020 (Note 1)	Net Income (Loss) of the Investee (Note 2)	Percentage of Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 2)	Carrying Amount as of December 31, 2020 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2020	note
					Outward	Inward
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 Design and research of integrated circuits Design and research of integrated circuits Research, development and sale of integrated circuits	TWD 56,960 ( USD 2,000 ) TWD 65,504 ( USD 2,300 ) TWD1,053,764 ( USD 37,000 ) TWD 130,944 ( RMB 30,000 )	`（`Note 3and 4`）` `（`Note 3`）` `（`Note 4`）` `（`Note 4`）`	TWD 28,480 ( USD 1,000 ) TWD 28,480 ( USD 1,000 ) - -	$ - - - -	$ - - - -	TWD 28,480 ( USD 1,000 ) TWD 28,480 ( USD 1,000 ) - -	TWD 2,032 ( USD 69 ) TWD 13,801 ( USD 467 ) TWD 20,761 ( USD 703 ) TWD 57,091 ( USD 1,932 )	100% 100% 100% 100%	TWD 2,032 ( USD 69 ) TWD 13,801 ( USD 467 ) TWD 20,761 ( USD 703 ) TWD 57,091 ( USD 1,932 )	TWD 35,750 ( USD 1,255 ) TWD 58,274 ( USD 2,046 ) TWD1,227,307 ( USD 44,849 ) TWD 217,145 ( USD 7,624 )	$

Note 1: The exchange rate is US$1=NT$29.48 and RMB$1=$4.3648 on December 31, 2020.

Note 2: The average exchange rate is US$1=NT$29.5492 and RMB$1=4.2827 on December 31, 2020.

Note 3: The Company founded a subsidiary in other area and then invested in mainland china.

Note 4 It was founded by the oversea subsidiary, so the paid-in capital did not remit from Taiwan.

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

220

TABLE 6

FocalTech Systems Co., Ltd.

INFORMATION ON MAJOR SHAREHOLDERS DECEMBER 31, 2020

Shareholders	Shares
	Total Shares Owned	Ownership Percentage
Egis Technology Inc.	33,966,575	16.14%

Note 1: Major shareholders showed in the list above include those owned the ownership of 5 percent or more.

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

221

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 accounts receivable, 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 short-term loans
Statement of accounts payables
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
Note 12
Note 12
Note 14
Note 22
4
5
6
7
8
9
10

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

222

STATEMENT 1

FocalTech Systems Co., Ltd.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Description Petty cash and cash on hand Including EUR 3 thousand @35.02, HKD 3 thousand @3.673,RMB 7 thousand @4.3648 , JPY 530 thousand @0.2763 ,USD 1 thousand @28.48 and NTD 50 thousand Cash in banks Checking accounts and current accounts Foreign currency current accounts Including USD 80,518 thousand @28.48 ,JPY 3,976 thousand @0.2763 and EUR 5 thousand @35.02	Amount $ 381 161,123 2,294,422 2,455,545 $ 2,455,926

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

223

STATEMENT 2

FocalTech Systems Co., Ltd.

STATEMENT OF ACCOUNTS RECEIVABLE, NET DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Client A Client B Client C Client D Client E Others (Note) Less: Allowance for doubtful accounts	Amount $ 319,286 234,958 184,242 153,181 99,186 454,333 1,445,186 - $ 1,445,186

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.

224

STATEMENT 3

FocalTech Systems Co., Ltd.

STATEMENT OF INVENTORIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Finished goods Work in process Raw materials	Amount
	Book value Net Realizable Value $ 311,159 $ 441,489 812,109 1,099,771 92,013 116,291 $1,215,281 $1,657,551

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

225

STATEMENT 4

FocalTech Systems Co., Ltd.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investees Unlisted companies FocalTech Corporation, Ltd. FocalTech Electronics, Ltd FocalTech Smart Sensors, Ltd. Vitrio Technology Corporation	Balance, January 1, 2020 Shares (In thousand) Amount 5,491 $3,002,990 3 shares 2,071,743 14,025 46,766 - - $5,121,499	Additions in Investment Shares (In thousand) Amount - $ - - - - - 142 4,970 $ 4,970	Share of Decrease in Investment Profit (Loss) Other Amount of the Comprehen- sive Shares (In thousand) (Note) Investee Income - $ - $ 26,164 $ (63,805) ( 1) ( 451,200) 2,732 (60,397) ( 14,025) ( 2,847) (39,998) (3,921) - ( -) (4,970) - $(454,047) $ (16,072) $(128,123)	Other Adjustment $ 8,846 - - - $ 8,846	Balance, December 31, 2019 Percentage of Ownership Shares (%) Amount Collateral Note 5,491 100 $2,974,195 Nil Note1 2 shares 100 1,562,878 Nil - - - 142 50 - Nil $4,537,073
		Shares (In thousand) - - - 142	Shares (In thousand) - ( 1) ( 14,025) -
	Shares (In thousand) 5,491 3 shares 14,025 -

Note 1 : Other adjustment is compensation cost of employee share options, $8,846 thousand .

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

226

STATEMENT 5

FocalTech Systems Co., Ltd.

STATEMENT OF SHORT-TREM LOANS DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Type Bank credit loan Mega Bank Far Eastern Int'l Bank Land Bank of Taiwan Total	Balance, End of Year $ 100,000 280,000 100,000 $ 480,000	Contract Period 2020/10/23~ 2021/4/21 2020/12/14~ 2021/1/14 2020/12/14~ 2021/1/14	Range of Interest Rates (%) 0.88 1.00 1.06		Credit Amounts $ 200,000 300,000 200,000 $ 700,000	Collateral
						Nil Nil Nil

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

227

STATEMENT 6

FocalTech Systems Co., Ltd.

STATEMENT OF ACCOUNTS PAYABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Account payable-related party FocalTech Electronics, Ltd. Others(Note) Account payable-others Vendor A Vendor B Vendor C Vendor D Vendor E Vendor F Others (Note)	Amount $ 518,851 20,359 539,210 $ 330,715 259,208 238,294 188,063 163,205 152,842 64,762 1,397,089 $1,936,299

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.

228

STATEMENT 7

FocalTech Systems Co., Ltd.

STATEMENT OF REVENUES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Quantity (in thousand units) Net sales IC for human and machine interface devices 307,299 Service revenue - Less: Sales discounts Sales returns	Amount $ 11,458,620 43,670 85,122 6,818 $ 11,410,350

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

229

STATEMENT 8

FocalTech Systems Co., Ltd.

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2020 (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
$ 114,484
6,997,513
(
17,606)
(
92,013)
7,002,378

2,484,530
9,486,908
304,486
(
88,211)
(
812,109)
8,891,074
198,145
217,121
(
183,635)
(
311,159)
$ 8,811,546

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

230

STATEMENT 9

FocalTech Systems Co., Ltd.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

			General and	Research and
			Administrative	Development
Item	Selling Expenses		Expenses	Expenses
Payroll	$ 121,997		$ 100,368	$ 480,560
Rent expense		-	22,551	-
Freight		10,677	127	1
Mask expense		-	-	117,077
Consumables		-	-	126,710
Sample expense		26,364	-	-
Welfare		-	11,814	-
Professional service fees		10,012	23,434	10,864
Management fees of the Science Park Administration		-	22,139	-
Others (Note)		17,521	45,139	223,655
	$ 186,571		$ 225,572	$ 958,867

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.

231

STATEMENT 10

FocalTech Systems Co., Ltd.

STATEMENT OF EMPLOYEE BENEFIT, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Employee benefit Salary and bonus Labor and health insurance Pension Board compensation Others Depreciation Amortization	2020	Total $ 768,593 40,856 25,959 14,230 22,626 $ 872,264 $ 10,567 $ 15,609	2019
	Classified as Operating Costs Classified as Operating Expenses $ 78,898 $ 688,695 7,200 33,656 5,170 20,789 - 14,230 2,318 20,308 $ 94,586 $ 777,678 $ 722 $ 9,845 $ - $ 15,609		Classified as Operating Costs Classified as Operating Expenses $ 69,508 $ 521,549 6,842 34,129 4,642 21,994 - 6,400 2,205 11,719 $ 83,197 $ 595,791 $ 1,299 $ 12,987 $ - $ 16,254	Total $ 591,057 40,971 26,636 6,400 13,924 $ 678,988 $ 14,286 $ 16,254

Note 1: In 2020 and 2019, the Company had 392 and 396 employees, respectively. There were 7 and 6 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 benefit for the years ended December 31, 2020 and 2019 was NT$2,229 thousand and NT$1,725 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, 2020 and 2019 was NT$1,996 thousand and NT$1,516 thousand, respectively.

(Total salary and bonus/“Total employee headcount - Total non-employee director headcount”)

c. The average salary and bonus increased by 31.73% 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, 2020 and 2019. 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.

232

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FocalTech Systems Co., Ltd.

Chairman ： Genda Hu

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233

AI assistant

FocalTech — Annual Report 2020

52342_rns_2021-08-27_8717e57f-4cce-4d1b-9f81-7aa0fb2f5ce1.pdf

FocalTech Systems Co., Ltd. 2020 Annual Report

1. Spokesperson, Deputy Spokesperson

2. Address and Tel Number of Headquarters, Branches and Plant

3. Appointment of a professional shareholder services agent: Handling stock transfer and shareholders' regular meeting affairs

4. CPA for recent financial reports

5. Website of Overseas Securities Exchange Office & the way to inquire into information of securities: None

6. Company Website: http://www.focaltech-electronics.com/

FocalTech Systems Co., Ltd. 2020 Annual Report

Contents

VII. REVIEW OF FINANCIAL POSITION, FINANCIAL CONDITIONS, AND RISK

I. Letter to Shareholders

II. Company Profile

1. An Introduction to FocalTech

2. Milestones

III. Corporate Governance

1. Organization

2. Profiles of Directors, Supervisors, President, Executive Vice President, Deputy Executive Vice President, Division Heads, and Branch Heads

(1) Directors and Supervisors

1. Profiles of Directors and Supervisors

(1)Major Shareholders of Corporate Shareholders

2. Information on Directors and Supervisors in professional expertise and independence

(2) Information of President, Executive Vice President, Deputy Executive Vice President, Division Heads, and Branch Heads

(3) Remuneration paid during the most recent year to directors, supervisors, president and executive vice presidents

3. President’s and Executive Vice Presidents’ Remuneration

4. Remuneration paid to each of its top five management personnel for the company listed on the TWSE or the TPEx

3. Implementation of Corporate Governance

(1) The function of the Board

(1)-1 Implementation status of Evaluation of the Board of Directors

(2) The function of Audit Committee

Further Studying Status of Directors in 2020:

(4) The operation of the Remuneration Committee

1. Information on the members of the Remuneration Committee

March 31, 2021

(9) Implementation Status of Internal Control System

FocalTech Systems Co., Ltd. Internal Control System Statement

2. Important Resolutions of Shareholders’ Meeting and Implementation Status

4. Disclosure of the CPAs’ fee

(1) Fee information

1. Disclosure of the CPA's Fee Range

5. Changes of CPA: None

8. Information on shareholders among the top 10 by proportion of shareholding who are related parties to one another, spouse or kindred within the 2nd degree of kinship

9. Quantity of shareholdings of the same investee by the Company and Directors, Supervisors, Managial Officer, and direct or indirect subsidiaries in proportion to the combined holdings of all, and combined to calculate the proportion of overall shareholding.

IV. Capital Overview

1. Capital and Shares

(1) Sources of Capital Stock

1. Formation process of Capital Stock

(2) Composition of Shareholders

1. Common Share Distribution Status

2. Preferred Share Distribution Status: N/A.

(4) List of Major Shareholders

(9) Repurchase of Company shares

2. Issuance of corporate bonds: None

3. Preferred shares: None

4. Issuance of overseas depositary shares: None

5. Status of employee stock option plan

1. Managerial officers who have obtained employee share warrants

6. Status of employee restricted stock shall include the following:

7. Status of new share issuance in connection with mergers and acquisitions: None.

8. Funding plans and implementation: N/A.

V. Operational Highlights

1. Business activities

foldable AMOLED mobile phones.

(2) Fingerprint recognition IC industry:

3. Market trend of Company’s products

(1) Portable mobile device panel driver IC and touch IC:

(2) Fingerprint recognition IC:

(3) Physiological monitoring products:

4. Product Competition

(1) Portable mobile device panel driver IC and touch IC:

(2) Fingerprint recognition IC:

(3) Physiological monitoring products:

(3). Technology and R&D status

(1).TFT-LCD driver IC ：

(2). Capacitive touch IC ：

(4).Fingerprint recognition IC ：

(5). AMOLED driver IC ：

(4). Long and short-term business development plans

FocalTech Annual Report 2020

(1).TFT-LCD driver IC `：`

(2). Capacitive touch IC `：`

(4).Fingerprint recognition IC `：`

(5). AMOLED driver IC `：`

Countermeasures `：`

Countermeasures `：`

Countermeasures `：`

Countermeasures `：`

6. Material Contracts `：`