FocalTech - Annual Report 2023 | FinancialReports.eu

FocalTech Systems Co., Ltd.

Financial Statements for the Years Ended December 31, 2023 and 2022

Notice to Readers

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

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

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Shareholders FocalTech Systems Co., Ltd.

Opinion

We have audited the accompanying financial statements of FocalTech Systems Co., Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2023 and 2022, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, 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, 2023 and 2022, 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 the Standards on Auditing of 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 for the year ended December 31,2023. These matters were addressed in the context of our audit of the financial statements as a whole and, in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s financial statements for the year ended December 31, 2023 are stated as follows:

Recognition for Sales Revenue

The sales revenue of Integrated Driver Controller is the main indicator of financial and business performance evaluated by investors and the management. It possibly exists the pressure to achieve the financial target, and it might result in the risk of the occurrence of sales revenue. Therefore, the sales revenue of Integrated Driver Controller is considered as a key audit matter for the financial year ended December 31, 2023.

Refer to Notes 4 and 22 for the accounting policy, accounting estimation and disclosure information. Our audit procedures related to the abovementioned Key Audit Matters included the following:

We evaluated the design of internal control related to sales and collection cycle and the implement of the internal control.
We obtained customer ranking list in 2023, and analyze the differences of customers and its sales amount.
We analyzed if the sales quantities, sales revenue and gross margin by products existed material exception.
We sampled purchase orders, shipping documents bills of lading, and collection records in revenue breakdown to ensure the occurrence of sales revenue.

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

Valuation of Inventory

Due to high market demand fluctuation and rapid technological development, the inventories may turn obsolete or have a lower net realizable value which may result in inventories being impaired. The Company has performed impairment assessment on inventories through evaluation of aging and net realizable value of inventories quarterly. The management has practiced their professional judgement in estimating the possible loss on impairment based on the sales performance of each product. Therefore, inventory valuation is considered as a key audit matter for the financial year ended December 31, 2023.

Refer to Notes 4 and 10 for the accounting policy, accounting estimation and disclosure information. Our audit procedures related to the abovementioned Key Audit Matters included the following:

We obtained an understanding of the Company’s accounting policies and procedures on the assessment of impairment through analyzing the net realizable value calculation report and inventory aging report prepared by the management. We have inspected the supporting documents of recent selling price, and re-calculated the net realizable value of inventory to ensure its accuracy and reasonableness of the management's estimation on impairment loss.
We obtained an understanding of the Company’s judgement on the estimation of impairment loss for obsolete items information and discussed recent sales performance and the reasonableness on the estimates of inventory devaluation in the future. We also performed inspection on recent sales to evaluate the reasonableness of the impairment loss provided on obsolete stock.

Responsibilities of Corporate Management and Governance Hierarchy For the Financial Statements

Management 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.

Those charged with governance, (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 Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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 financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the years ended December 31, 2023 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 Yu-Hong Kuo and Chih-Ming Shao.

Deloitte & Touche Taipei, Taiwan Republic of China

February 23, 2024

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

FOCALTECH SYSTEMS CO., LTD. BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 4 and 6) Accounts receivables, net (Note 4 and 9) Inventories (Note 4 and 10) Other financial assets (Note 4 and 8) Other current assets (Note 24) Total current assets NON-CURRENT ASSETS Financial asset at fair value through profit or loss (Note 4 and 7) Investments accounted for using equity method (Note 4 and 11) Property, plant and equipment (Note 4 and 12) Goodwill (Notes 4 and 13) Other intangible assets (Notes 4 and 14) Deferred income tax assets (Notes 4 and 24) Refundable deposits (Notes 15) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 16) Accounts payables (Note 17 and 30) Other payables (Note 18) Current tax liabilities (Note 4 and 24) Current position of long-term borrowings (Note 16) Other current liabilities (Note 22) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 16) Deferred tax liabilities (Notes 4 and 24) Net defined benefit liabilities (Notes 4 and 19) Guarantee deposits received (Notes 20) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 21 and 26) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2023	% 17 9 10 11 - 47 1 22 8 8 1 1 12 - 53 100 - 9 2 1 - - 12 5 1 - 23 29 41 14 38 4 - 5 9 (1) (1) 59 100		2022
		Amount $ 2,781,182 1,368,404 1,555,548 1,688,775 94,465 7,488,374 217,670 3,557,725 1,238,657 1,237,268 112,465 175,545 1,852,750 - 8,392,080 $ 15,880,454 $ - 1,500,085 229,991 127,997 26,386 11,812 1,896,271 760,454 219,167 13,955 3,682,534 4,676,110 6,572,381 2,178,900 6,031,904 712,562 - 757,830 1,470,392 (210,063) (163,060) 9,308,073 $ 15,880,454			Amount $ 3,113,907 922,393 4,109,927 184,260 126,136 8,456,623 325,460 3,694,408 1,254,558 1,237,268 58,006 301,072 2,648,946 2,486 9,522,204 $ 17,978,827 $ 1,400,000 1,225,732 589,688 327,127 25,000 44,756 3,612,303 961,840 216,757 13,560 4,342,936 5,535,093 9,147,396 2,161,107 6,041,988 712,562 211,479 196,847 1,120,888 (296,495) (196,057) 8,831,431 $ 17,978,827	%
						17 5 23 1 1 47 2 20 7 7 - 2 15 - 53 100 8 7 3 2 - - 20 6 1 - 24 31 51 12 34 4 1 1 6 (2) (1) 49 100

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

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

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

REVENUE (Note 4 and 22) COSTS OF SALES (Notes 4,10, 23 and 30) GROSS PROFIT OPERATING EXPENSES (Notes 23, 26, 27 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATIONS INCOME (LOSS) NON-OPERATING INCOME AND EXPENSES Finance costs (Note 23) Share of loss of subsidiaries and joint ventures (Note 4) Interest income (Note 4) Gain (loss) on financial assets and liabilities at fair value through profit or loss (Notes 4) Other gains and losses Gain on foreign currency exchange (Note 4) Total non-operating income and expenses INCOME (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 24) 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 19) Income tax related to items that will not be reclassified subsequently to profit or loss (Notes 4 and 24)		2023	% 100 (83) 17 (1) (2) (10) (13) 4 - (2) 2 - - - - 4 (1) 3 - - -		2022
		Amount $ 10,073,062 (8,316,026) 1,757,036 (87,347) (218,780) (1,002,973) (1,309,100) 447,936 (17,051) (190,940) 155,746 17,038 9,460 15,632 (10,115) 437,821 (75,902) 361,919 (861) 120 (741)			Amount % $ 9,642,718 100 (9,069,529) (94) 573,189 6 (197,124) (2) (333,874) (4) (1,571,102) (16) (2,102,100) (22) (1,528,911) (16) (21,132) - (794,020) (8) 59,007 - (81,318) (1) 126,363 4 353,987 - (357,113) (4) (1,886,024) (20) (26,015) - (1,912,039) (20) 7,985 - (1,117) - 6,868 - (Continued)	%

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

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Share of other comprehensive loss of subsidiaries (Notes 4) Total other comprehensive (loss) income, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR EARNINGS (LOSS) PER SHARE (Note 25) Basic Diluted		2023		% - - 3		2022
		Amount $ (34,675) (35,416) $ 326,503 $ 1.74 $ 1.69				Amount $ 250,813 257,681 $ (1,654,358) $ (9.39)		%
								3 3 (17)

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

(Concluded)

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

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2022 Appropriation of 2021 earnings Legal reserve Special reserve Cash dividends Net loss for the year ended December 31, 2022 Other comprehensive loss for the year ended December 31, 2022, net of income tax Total comprehensive income (loss) for the year ended December 31, 2022 Compensation cost of employee share options Treasury shares acquired Treasury shares transferred to employees Retirement of restricted stock employees Issuance of ordinary shares from exercise of employee share options Unvested restricted stock to employees refund cash dividends Compensation cost of restricted stock of employees BALANCE AT DECEMBER 31, 2022 Appropriation of 2022 earnings Special reserve Net income for the year ended December 31, 2023 Other comprehensive income for the year ended December 31, 2023 ,net of income tax Total comprehensive loss for the year ended December 31, 2023 Cash dividends distributed from capital surplus Compensation cost of employee share options Treasury shares transferred to employees Issuance of ordinary shares from exercise of employee share options Issuance of restricted stock for employees Retirement of restricted stock employees Compensation cost of restricted stock of employees Other BALANCE AT DECEMBER 31, 2023		Share Capital Ordinary Shares $ 2,162,367 - - - - - - - - - (3,880) 2,620 - - 2,161,107 - - - - - - - 463 20,330 (3,000) - - $ 2,178,900		Capital Surplus $ 6,062,869 - - - - - - 46,258 - - (79,540) 12,401 - - 6,041,988 - - - - (108,000) 24,940 - 508 137,024 (63,057) - (1,499) $ 6,031,904		Retained Earnings	Retained Earnings		Undistributed Earnings $ 6,202,079 (611,332) (89,163) (3,400,000) (1,912,039) 6,868 (1,905,171) - - - - - 434 - 196,847 211,479 361,919 (741) 361,178 - - - - - - - (11,674) $ 757,830		Other Equity	Unearned employee compensation $ (813,720) - - - - - - - - - 79,540 - - 398,351 (335,829) - - - - - - - - (137,024) 63,057 195,074 - $ (214,722)	Treasury Shares $ - - - - - - - - (507,621) 311,564 - - - - (196,057) - - - - - - 32,997 - - - - - $ (163,060)	Total Equity
						Legal Reserve $ 101,230 611,332 - - - - - - - - - - - - 712,562 - - - - - - - - - - - - $ 712,562	Special Reserve $ 122,316 - 89,163 - - - - - - - - - - - 211,479 (211,479) - - - - - - - - - - - $ -			Exchange Differences from Translating Financial Statement of Foreign Operations Un o O $ (211,648) - - - - 264,120 264,120 - - - - - - - 52,472 - - (41,294) (41,294) - - - - - - - - $ 11,178	realized Gains(losses) n Financial Assets at Fair Value through ther comprehensive income $ 169 - - - - (13,307) (13,307) - - - - - - - (13,138) - - 6,619 6,619 - - - - - - - - $ (6,519)
														$ 13,625,662 - - (3,400,000) (1,912,039) 257,681 (1,654,358) 46,258 (507,621) 311,564 (3,880) 15,021 434 398,351 8,831,431 - 361,919 (35,416) 326,503 (108,000) 24,940 32,997 971 20,330 (3,000) 195,074 (13,173) $ 9,308,073

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

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

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 Net (gain) loss 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 Gain on disposal of property plant and equipment Loss (gain) on disposal of investments (Reversal gain) loss on write-down of inventories Compensation cost of restricted stock to employees Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Accountsreceivables Inventories Other current assets Accountspayables Other payables Other current liabilities Other non-current liabilities Net defined benefit liabilities Cash generated (used) from operations Interest paid Income tax paid Net cash inflow (outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Disposal of property, plant and equipment Decrease in refundable deposits Acquisition of intangible assets Decrease (increase) in other non-current assets (Increase) decrease in other financial assets Interest received Net cash (outflow) inflow from investing activities		2023 $ 437,821 62,873 91,362 (17,038) 17,051 (155,746) 8,633 190,940 - 5,942 (1,089,693) 110,775 118,886 (446,011) 3,644,072 59,302 274,353 (359,697) (31,988) - (466) 2,921,371 (18,007) (153,677) 2,749,687 (46,972) - 796,196 (145,821) 2,486 (1,504,515) 134,817 (763,809)		2022
				$(1,886,024) 43,502 71,170 81,318 21,132 (59,007) 15,304 794,020 (1,143) (97,765) 2,018,719 242,146 94,476 1,988,274 (3,474,487) 91,537 (1,598,647) 173,263 (168,327) (10,400) (595) (1,661,534) (20,008) (1,201,208) (2,882,750) (107,079) 7,685 177,906 (71,091) (2,486) 2,902,570 45,069 2,952,574 (Continued)

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

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023AND 2022 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings (Decrease) increase in long-term borrowings Decrease in guarantee deposits received Cash dividends paid Exercise of employee share options Treasury shares acquired Treasury shares transferred to employees Issuance of restricted stock for employees Retirement of restricted stock employees Unvested restricted stock employees refund cash dividends Other Net cash outflow from financing activities NET DECREASE 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		2023 $(1,400,000) (200,000) (660,402) (108,000) 971 - 32,997 20,330 (3,000) - (1,499) (2,318,603) (332,725) 3,113,907 $ 2,781,182		2022
				$ 1,400,000 200,000 (45,354) (3,400,000) 15,021 (507,621) 311,564 - (3,880) 434 - (2,029,836) (1,960,012) 5,073,919 $ 3,113,907

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

(Concluded)

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

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FOCALTECH SYSTEMS CO., LTD.

1. GENERAL INFORMATION

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

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

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on February 23, 2024.

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 in to effect by the FSC did not have a significant impact on the Company’s accounting policies.

b. b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2024:

New, Revised or Amended Standards and Interpretations Amendments to IFRS 16” Lease liabilities in a sale and leaseback” Amendments to IAS 1 “Classification of Liabilities as Current or Non- current” Amendments to IAS 1 “Noncurrent liabilities with Convnants” Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”	Effective Date Announced by IASB (Note 1)
	January 1, 2024 (Note 2) January 1, 2024 January 1, 2024 January 1, 2024 (Note 3)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

Note3: The amendments provide some transition relief regarding initial disclosure requirements.

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

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

c. The IFRSs issued by International Accounting Standards Board (IASB), but not yet endorsed and issued into effect by the Financial Supervisory Commission (FSC):

Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17January 1, 2023 Comparative Information” Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Note 2)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

b. Basis of preparation

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

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

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

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

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

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

Current assets include:

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

Current liabilities include:

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

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

d. Foreign currencies

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

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

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

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

e. Inventories

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

f. Investments in subsidiaries

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

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

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted

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

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.

g. Property, plant and equipment

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

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

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

h. Goodwill

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

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

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

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

i. Intangible assets

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

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

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

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

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

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

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

k. Financial instruments

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

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

1) Financial assets

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

i) Measurement category

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

A. Financial asset at FVTPL

The equity instruments that are not specified as FVTOCI and debt instruments that do not

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

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.

ii) Impairment of financial assets

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

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

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

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

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

iii) Derecognition of financial assets

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

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

2) Equity instruments

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

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

Repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. The carrying amount is calculated by weighted average of stock types. 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 Company recognizes revenue when customer’s contract obligations are satisfied.

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

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

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

n. Lease

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

The Company as a lessee

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

o. Borrowing costs

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

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

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

p. Employee benefits

1) Short-term employee benefits

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

2) Retirement benefits

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

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

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

q. Share-based payment arrangements

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

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

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

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

their payments on the stocks to employees when they resign. It should be recognized in payables.

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

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

r. Taxation

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

1) Current tax

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

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

2) Deferred tax

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

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

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

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

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

3) Current and deferred tax for the year

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

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

Impairment of inventory

Net realizable value of inventory is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value was based on current market conditions and the historical experience of selling products of a similar nature. Changes in market conditions may have a material impact on the estimation of net realizable value.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent (time deposits with original maturities less than three months)		December 31	December 31	December 31
		2023 $ 571 803,561 1,977,050 $ 2,781,182		2022
				$ 646 779,301 2,333,960 $ 3,113,907

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Non-Current Mandatorily measured at fair value throughprofit or loss (FVTPL) Listed preferred shares Private Funds OTHER FINANCIAL ASSETS Time deposits with original maturities more than three months		December 31	December 31	December 31
		2023 2022 $ 10,183 $ 147,391 207,487 178,069 $ 217,670 $ 325,460 December 31		2022

		2023 $ 1,688,775		2022
				$ 184,260

8. OTHER FINANCIAL ASSETS

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

9. ACCOUNTS RECEIVABLES, NET

Accountsreceivables		December 31	December 31	December 31
		2023 $ 1,368,404		2022
				$ 922,393

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

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

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

December 31, 2023

Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2022 Expected credit loss rate Gross carrying amount and Amortized cost	Non PastDue 0% $ 1,368,404 Non PastDue 0% $ 876,915		Overdue 1-60 Days 0% $ - Overdue 1-60 Days 0% $ 14,143	Overdue 61-180 Days 0% $ - Overdue 61-180 Days 0% $ 31,335	Overdue Over 181 Days 0% $ - Overdue Over 181 Days 0% $ -		Total
							0% $ 1,368,404 Total
							0% $ 922,393

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

10. INVENTORIES

Finished goods Work in progress Raw materials and supplies		December 31	December 31	December 31
		2023		2022
		$ 633,068 681,924 240,556 $ 1,555,548		$ 737,897 1,823,306 1,548,724 $ 4,109,927

The cost of goods sold were including amounts of which write-down inventory cost to net realizable value and reverse of write-down inventories due to sales. The amounts are illustrated below:

(Reversal gain) loss on write-down of inventories	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31
		2023		2022
		($ 1,089,693)		$ 2,018,719

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

December 31	December 31	December 31
2023 2022 $ 2,350,762 $ 2,194,116 1,205,321 1,496,253 1,642 4,039 $ 3,557,725 $ 3,694,408 Percentage of Ownership as of December 31		2022

2023 100% 100% 9.14%	2022
	100% 100% 9.14%

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

The share of profit or loss and other comprehensive income of these subsidiaries accounted for using the equity method recognized in 2023 and 2022 financial statements were based on the audited subsidiaries’ financial statements of the corresponding periods.

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

12. PROPERTY, PLANT AND EQUIPMENT

Land	Buildings	Development Equipment	Leasehold Improve- ments	Construction inprogress	Total
$ - - - 557,110 $ 557,110 $ - - - $ - $ 557,110 $ 557,110 - - - $ 557,110 $ - - - $ - $ 557,110	$ - - - 500,183 $ 500,183 $ - 5,001 - $ 5,001 $ 495,182 $ 500,183 - - - $ 500,183 $ 5,001 10,004 - $ 15,005 $ 485,178	$ 190,003 25,522 ( 38,850) - $ 176,675 $ 72,610 36,706 ( 32,308) $ 77,008 $ 99,667 $ 176,675 15,204 ( 9,445) - $ 182,434 $ 77,008 38,631 ( 9,445) $ 106,194 $ 76,240	$ 16,878 - ( 16,878) - $ - $ 16,878 - (16,878) $ - $ - $ - - - - $ - $ - - - $ - $ -	$1,080,130 33,803 - (1,057,293) $ 56,640 $ - - - $ - $ 56,640 $ 56,640 - - ( 56,640) $ - $ - - - $ - $ -	$1,287,315 107,079 ( 56,032) - $1,338,362
					$ 89,792 43,502 ( 49,490) $ 83,804 $1,254,558
					$1,338,362 46,972 ( 9,578) - $1,375,756
					$ 83,804 62,873 ( 9,578) $ 137,099 $1,238,657

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

Buildings 50 years Development equipment 4 years Office equipment 4 years Leasehold improvements 1-4 years

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

13. GOODWILL

Ending balance		December 31	December 31	December 31
		2023 $ 1,237,268		2022
				$ 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 Company estimated cash flows from sales of IDC (Integrated Driver Controller), and the recoverable amount exceeded the carrying value. Therefore, the Company did not recognize any impairment on goodwill.

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

The recoverable amount is calculated by IDC projected net cash flows, discounted at 15.55% and 13.98% for the years ended December 31, 2023 and 2022, under the assumptions of management team judgments and historical experiences with regard to future growth rates and gross margin.

14. OTHER INTANGIBLE ASSETS

Cost Balance, January 1, 2022 Additions Reclassification Balance, December 31, 2022 Accumulated amortization Balance at January 1, 2022 Amortization expense Balance at December 31, 2022 Carrying amounts at December 31, 2022 Cost Balance, January 1, 2023 Additions Disposals Balance, December 31, 2023 Accumulated amortization Balance at January 1, 2023 Amortization expense Disposals Balance at December 31, 2023 Carrying amounts at December 31, 2023		Licenses and Franchises $ 18,657 4,451 - $ 23,108 $ 18,657 2,226 $ 20,883 $ 2,225 $ 23,108 - ( 18,656) $ 4,452 $ 20,883 2,225 ( 18,656) $ 4,452 $-			Software $ 8,445 66,640 13,904 $88,989 $ 8,445 54,163 $62,608 $ 26,381 $ 88,989 145,821 ( 60,784) $174,026 $ 62,608 74,437 ( 60,784) $ 76,261 $ 97,765		Patents $ 76,478 - - $ 76,478 $ 54,497 7,381 $ 61,878 $ 14,600 $ 76,478 - - $ 76,478 $ 61,878 7,300 - $ 69,178 $ 7,300	Trademark $ 74,000 - - $ 74,000 $ 51,800 7,400 $ 59,200 $ 14,800 $ 74,000 - - $ 74,000 $ 59,200 7,400 - $ 66,600 $ 7,400		Total
										$ 177,580 71,091 13,904 $ 262,575 $ 133,399 71,170 $ 204,569 $ 58,006 $ 262,575 145,821 (79,440) $ 328,956 $ 204,569 91,362 (79,440) $ 216,491 $ 112,465

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

Licenses and franchises	1-5 years
Software	1-3 years
Patents	9-10 years
Trademark	10 years

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

15. REFUNDABLE DEPOSITS

Capacity guarantee deposits and others		December 31	December 31	December 31
		2023		2022
		$ 1,852,750		$ 2,648,946

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

16. BORROWINGS

a. Short-term borrowings Unsecured bank loans Annual interest rate b. Long-term borrowings Secured bank loans (1) Unsecured bank loans (2) Less: reclassification to Current position of long-term borrowings Annual interest rate Secured bank loans Unsecured bank loans		December 31	December 31	December 31
		2023 2022 $ - $ 1,400,000 - 1.30%~2.78% December 31		2022

		2023 $ 786,840 - 786,840 (26,386) $ 760,454 1.75~1.875% -		2022
				$ 786,840 200,000 986,840 (25,000) $ 961,840 1.625~1.75% 1.65%

(1) For secured bank loans, the principals will be paid monthly or quarterly after three years from drawdown date. The period of borrowings is from September, 2021 to September, 2036. Commercial building is pledged as collateral for the long-term loans, please refer to Note 31.

(2) For unsecured bank loans, the principals will be paid monthly after one year from drawdown date. The period of borrowings is from September, 2022 to September, 2025. The borrowing was settled in March, 2023.

17. ACCOUNTS PAYABLES

Accountspayables Accountspayables-related party		December 31	December 31	December 31
		2023 $ 1,022,290 477,795 $ 1,500,085		2022
				$ 643,689 582,043 $ 1,225,732

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.

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

18. OTHER PAYABLES

Payable for salaries and bonus Payable for labor, health and social insurance Reserve for litigations Payable for professional services and others		December 31	December 31	December 31
		2023 $ 170,850 12,450 1,091 45,600 $ 229,991		2022
				$ 469,666 12,450 58,919 48,653 $ 589,688

19. RETIREMENT BENEFIT

a. Defined contribution plans

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

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.

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

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		December 31	December 31	December 31
		2023 $ 35,423 21,468) $ 13,955		2022
	(		(	$ 33,968 20,408) $ 13,560

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

Movements in net defined benefit liability were as follows:

Balance at January 1, 2022 Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial gain - changes in financial assumptions Actuarial gain - experience adjustments Recognized in other comprehensive income Contributions from the employer Balance at December 31, 2022 Balance at January 1, 2023 Net interest expense (income) Recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest) Actuarial loss - experience adjustments Recognized in other comprehensive income Contributions from the employer Balance at December 31, 2023	Present Value of the Defined Benefit Obligation $ 40,265 262 262 - ( 2,453 ) ( 4,106) ( 6,559) - $ 33,968 $ 33,968 425 425 - 1,030 1,030 - $ 35,423	Fair Value of the Plan Assets ($ 18,125) ( 120) ( 120) ( 1,426 ) - - ( 1,426) ( 737) ($ 20,408) ($ 20,408) ( 260) ( 260) ( 169 ) - ( 169) ( 631) ($ 21,468)	Net Defined Benefit Liability (Asset)
			$ 22,140 142 142 ( 1,426 ) ( 2,453 ) ( 4,106) ( 7,985) ( 737) $ 13,560 $ 13,560 165 165 ( 169 ) 1,030 861 ( 631) $ 13,955

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.

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

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

Discount rate Expected rate of salary increase	December 31	December 31
	2023 1.25% 4.5%	2022
		1.25% 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	December	31
		2023 $ 957) $ 992) ($ 4,059) ($ 3,600)		2022
	( (		(	$ 985) ($ 1,022) ($ 4,180) ($ 3,674)

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation GUARANTEE DEPOSITS RECEIVED Capacity guarantee deposits and others			December	December	31
			2023 $ 600 13.5 years December		2022
					$ 720 14.6 years 31
					2022
					$ 4,342,936

20. GUARANTEE DEPOSITS RECEIVED

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

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

21. EQUITY

a. Share capital

Ordinary shares (NT$10 par value per share)

Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31	December 31
		2023		2022
		500,000 $ 5,000,000 217,890 $ 2,178,900		500,000 $ 5,000,000 216,111 $ 2,161,107

The registration processes of 15 thousand shares of restricted stocks for employees have not been completed as of February 23, 2024.

b. Capital surplus

The categories of uses and the sources of capital surplus based on regulations were as follows:

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital(1) Additional paid-in capital Treasury stock Employee share options-expired Maybe used to offset a deficit only Other – unclaimed dividend Maynot be used for any purpose Restricted stock for employees Employee share options			December 31	December 31	December 31	December 31
						2022
					$4,753,839 125,381 34,448 - 1,066,015 62,305 $ 6,041,988

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).

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

c. Retained earnings and dividend policy

Under the Company’s Article of Incorporation, 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.

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.

The Company is required to set aside additional special capital reserve equal to the total amount of items that are accounted for as deductions from stockholders’ equity shall be set aside from prior-year earnings.

The annual shareholders’ meeting on May 30, 2023 resolved to distribute the additional paid-in capital in the amount of $108,000 thousand, or $0.5 per share.

The appropriations of earnings for 2022 and 2021 were resolved by the annual shareholders’ meeting on May 30, 2023, and June 9, 2022, respectively. The details of the distribution are as follows:

Legal reserve Special reserve (reversed) Cash dividends Cash dividends per share	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31
		2022 $- $ (211,479) $- $-		2021
				$ 611,332 $ 89,163 $3,400,000 $ 15.71

The Board of Directors’ meeting resolved the appropriations of earnings for 2023 on February 23,2024 are as follows:

Legal reserve Cash dividends Cash dividends per share		2023
		$ 34,950 $ 217,151 $ 1.00

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

The appropriations of earnings will be resolved in annual shareholders’ meeting on June 7, 2024.

d. Special reserve

Balance, beginning Special reserve (reversed) appropriated Balance, ending	For the Years Ended December 31 2023 2022 $ 211,479 $ 122,316 (211,479) 89,163 $ - $ 211,479	For the Years Ended December 31 2023 2022 $ 211,479 $ 122,316 (211,479) 89,163 $ - $ 211,479	For the Years Ended December 31 2023 2022 $ 211,479 $ 122,316 (211,479) 89,163 $ - $ 211,479
			$ 122,316 89,163 $ 211,479

e. Treasury shares

Number of shares on January 1, 2022 Increase during the period Decrease during the period Number of shares on December 31, 2022 Decrease during the period Number of shares on December 31, 2023	Shares (In Thousands)	Shares (In Thousands)
		- 4,000 (2,455) 1,545 (260) 1,285

On February 23, 2022, the board of directors resolved the 6th treasure stock transferred to employees program no more than 4,000,000 shares for transferring to employees. The transferring price to employees would be the average purchase price.

The detailed information for other treasure stock transferred to employee programs could be found in Note 27 (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.

f. Unearned employee compensation

Balance, beginning Issurance of shares Retirement of shares Share-based payment expenses recognized Balance, ending	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31
		2023 $ 335,829 ) 137,024 ) 63,057 195,074 $ 214,722)		2022
	( ( (		( (	$ 813,720 ) - 79,540 398,351 $ 335,829)

The detailed information for restricted share for employees program referred to Note 26 (c).

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

22. REVENUE

IC for Human-Machine Interface Solutions 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	For the Year Ended December 31
		2023 2022 $ 10,073,062 $ 9,642,718 December 31		2022

		2023 $ 6,439		2022
				$ 39,290

23. NET INCOME

a. Finance costs

For the Year Ended	For the Year Ended	December 31
		2022
		$ 21,132 - $ 21,132 December 31
		2022
		$ 43,502 71,170 $ 114,672 $ 26,612 88,060 $ 114,672 December 31
2023 $ 31,606 165 119,408 665,043 $ 816,222 $ 121,228 694,994 $ 816,222		2022
	$ 32,090 142 257,450 1,391,268 $ 1,680,950 $ 241,084 1,439,866 $ 1,680,950

b. Depreciation and amortization

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

d. The remuneration to employees and directors

According to the Company’s Articles of Incorporation, the distributable compensation to employees and remuneration to directors shall not be less than 1% and not more than 1.5%, respectively, of net profit before income tax. There was no employees’ compensation accrued due to loss before income tax for the year ended December 31, 2022. The accrued employees’ compensation and remuneration of directors for the year ended December 31, 2023 is as follows:

Amount

Employees’ compensation Remuneration of directors		2023
		$ 82,352 $ 1,042

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

The board of directors resolved the remuneration of employees and directors for 2021 on February 23,2022. There is no difference between the actual amount of remuneration to employees and directors resolved and the amount of remuneration to employees and directors accounted for in 2021 consolidated financial statements.

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

24. INCOME TAXES

a. Major components of tax expense recognized in profit or loss

Current income tax expense In respect of the current year Other income tax adjustments Deferred income tax expense In respect of the current year Other income tax adjustments Income tax expense recognized in profit or loss		For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31
		2023 $ - ( 52,155) ( 52,155) 88,098 39,959 128,057 $ 75,902		2022
				$ 158,174 - 158,174 132,159 - ( 132,159) $ 26,015

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

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

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2023 $ 437,821 $ 61,295 487 4,468 (3,943) 25,791 (12,196) $ 75,902		2022
	(	$ 1,886,024) ($264,043) 15,187 167,231 (3,342) 110,982 - $ 26,015

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. Recognized in other comprehensive income

Deferred tax Remeasurement of defined benefit plans	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31
		2023 $ 120)		2022
	(			$ 1,117

c. Current tax assets and liabilities

Current tax assets( recorded as other current assets) Tax refund receivable Current tax liabilities Income tax payable		December	December	31
		2023 $ 12,292 $ 127,997		2022
				$ 5,590 $ 327,127

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

d. Deferred tax assets and liabilities

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

2023

Deferred tax assets Temporary differences Obsolete of inventory Others Loss carryforwards Deferred tax liabilities Temporary differences Intangible assets Investment income recognized from foreign investees 2022	Beginning Balance $ 283,740 17,332 301,072 - $ 301,072 $ 4,116 212,641 $ 216,757	Recognized in Profit or Loss ($ 180,799) 4,748 ( 176,051) 50,404 ($ 125,647) ($ 2,058) 4,468 $ 2,410	Recognized in Other Comprehensive Income $ - 120 120 - $ 120 $ - - $ -		Ending Balance
					$ 102,941 22,200 125,141 50,404 $ 175,545 $ 2,058 217,109 $ 219,167

Deferred tax assets Temporary differences Obsolete of inventory Others Deferred tax liabilities Temporary differences Intangible assets Investment income recognized from foreign investees	Beginning Balance $ 10,779 ( 5,922) $ 4,857 $ 6,174 45,410 $ 51,584	Recognized in Profit or Loss $ 272,961 24,371 $ 297,332 ($ 2,058) 167,231 $ 165,173	Recognized in Other Comprehensive Income $ - ( 1,117) ($ 1,117) $ - - $ -		Ending Balance
					$ 283,740 17,332 $ 301,072 $ 4,116 212,641 $ 216,757

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

Loss carryforwards as of December 31, 2023 comprised of:

Unused Amount $ 360,025	Expiry Year 2033

f. Income tax assessments

The Company’s tax returns until 2020 have been assessed by the tax authorities.

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

25. EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31
		2023 $ 1.74 $ 1.69	2022
			($ 9.39)

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

Net Profit (Loss) for the Period

For the Year Ended December 31 2023 2022 Earnings used in the computation of basic earnings per share $361,919 ($ 1,912,039) Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares):	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
			2022
		(	$ 1,912,039)

Weighted average number of ordinary shares used in the computation of basic (loss) earnings per share Effect of potentially dilutive ordinary shares: Treasury shares transferred to employees Employee stock options (share) Restricted stock for employees(share) The remuneration to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2023 207,742 3,732 59 2,248 732 214,513		2022
				203,701

Note: There is no diluted effectiveness for the years ended December 31, 2022 due to operating loss.

26. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee stock option plan

The Company did not have new share option plan issued for employees for the years ended December 31, 2023 and 2022.

Information about vested options as of December 31, 2023 and 2022 are as following:

Employee Stock Option Plan 2006 2015	December31,2023 Range of exercise price (NT$) Weighted-average remaining contractual life (years) $ - - 12.80 1.67	December31,2022	December31,2022
	Range of exercise price (NT$) $ - 12.80	Range of exercise price (NT$) $29.68 12.80	Weighted-average remaining contractual life (years)
			0.27 2.67

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

Information about outstanding options for the years ended December 31, 2023 and 2022 are as following:

2023

2023
BeginningBalance Employee stock Option Plan Quantity of Options Weighted-average Exercise Price (NT$) 2006 22,399 $ 29.68 2015 87,000 12.80 2022 BeginningBalance Employee stock Option Plan Quantity of Options Weighted-average Exercise Price (NT$) 2006 198,399 $ 19.86 2015 209,000 15.60	Options exercised Quantity of Options Weighted-average Exercise Price (NT$) ( 22,399) $ 29.68 ( 24,000) 12.80 Options exercised Quantity of Options Weighted-average Exercise Price (NT$) ( 140,000) $ 20.98 (122,000) 15.16	Options expired Quantity of Options Weighted-average Exercise Price (NT$) - $ - - - Options expired Quantity of Options Weighted-average Exercise Price (NT$) ( 36,000) $ 5.37 - -	EndingBalance
			Quantity of Options Weighted-average Exercise Price (NT$) - $ - 63,000 12.80 EndingBalance	Weighted-average Exercise Price (NT$)
	Quantity of Options ( 140,000) (122,000)	Quantity of Options ( 36,000) -	Quantity of Options 22,399 87,000	Weighted-average Exercise Price (NT$)
				$ 29.68 12.80

As of December 31, 2023, the valid and outstanding employee stock option plans are as following:

Plan 2015 employee stock option plan	Number of Options 2,800,000	Valid Period 10 years	VestingTerms
			A certain percentage of the options defined in the plan are vested and exercisable after the second anniversary.

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

b. Treasury shares transferred to employees

Information about treasure stock transferred to employee are as follows:

Items	The date of board of directors approved	Buyback shares (In thousand share)	Transferred shares (In thousand share) 2,715	Transferred price (in dollar)
The 6th treasure stock transferred to employee program	2022/2/23	4,000		126.91

Information about treasure stock transferred to employee as of December 31, 2023 are as follows:

The 6th treasury stock transferred to employee program

Employee subscription base date 2022/06/21 2022/11/11 2023/02/23 Total	Shares transferred (In Thousands) 2,315 140 260 2,715	The fair value of the right to subscribe (NT$)
		$ - - -

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

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

1) The employees cannot sell, pledge, transfer, donate, or dispose these shares. 2) The Company and the employees should enter into a trust agreement with a trust and custodian institution and authorize the institution to exercise the shareholders’ rights including but not limited to attendance, proposing, speaking and voting in the shareholder meetings.
c. Restricted stock for employees

The Company’s shareholders’ meeting resolved to issue restricted stocks for employees up to 6,000 thousand shares on May 30, 2023, and the issued price is NT$10 per share. The restricted stocks plan was approved by Financial Supervisory Commission on July 25, 2023.

The information of the issued restricted stock for employees as of December 31, 2023 are as follows:

Items Grantdate 2020 restricted stocks for employees plan 2021/04/07 2020 restricted stocks for employees plan 2021/07/29 2023 restricted stocks for employees plan 2023/09/26	Fair value per share (indollar) $ 205.00 265.00 67.40	Actual shares of issued (in thousand)
		5,749 236 2,033

2020 restricted stocks for employees plan

From the date when employees are granted restricted stock units, they have to fulfill the service code, and should not violate the company's labor contract, work rules or the company's employee management measures, etc. The vesting condition are as follows:

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

2023 restricted stocks for employees plan

The constraints of restricted stock are as follows:

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

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

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

d. Compensation cost of aforementioned share-based payments for the years ended December 31, 2023 and 2022 was as follows:

Shares buyback programs Restricted stock for employees Adjustment account: Capital surplus - employee stock options Other equity - unearned employee compensation	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 8,633 110,775 $ 119,408 $ 8,633 110,775 $ 119,408	2022 $ 15,304 242,146 $ 257,450 $ 15,304 242,146 $ 257,450

27. LEASE ARRANGEMENTS

The Company as a lessee

The Company has lease contracts for office, plant and some office equipment, which would be expired before December 2022. Above mentioned lease contracts are short-term lease agreement, and the Company applies practical expedients so the Company does not recognize right-of-use assets and lease liabilities.

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

Lease payment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 789		2022
				$ 14,176

28. CAPITAL MANAGEMENT

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

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

The Company was not restricted to other external capital requirements.

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

29. FINANCIAL INSTRUMENTS

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

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

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

December 31, 2023

Financial asset at FVTPL Listed preferred shares Private funds Total December 31, 2022 Financial asset at FVTPL Listed preferred shares Private funds Total		Level 1 $ 10,183 - $ 10,183 Level 1 $ 147,391 - $ 147,391		Level 2 $ - - $- Level 2 $ - - $-		Level 3 $ - 207,487 $ 207,487 Level 3 $ - 178,069 $ 178,069		Total $ 10,183 207,487 $ 217,670 Total $ 147,391 178,069 $ 325,460

There were no transfers between Level 1 and Level 2 for the years ended December 31, 2023 and 2022.

2.) Reconciliation of Level 3 fair value measurements of financial instruments

	For the Year Ended in December 31	For the Year Ended in December 31	For the Year Ended in December 31	For the Year Ended in December 31
		2023		2022
Financial assets at FVTPL
Balance, beginning		$ 178,069		$ 132,470
Purchases		17,500		45,778
Disposals	(	3,345 )	(	1,469 )
Recognized in profit or loss(other income or loss)		15,263		1,290
Balance, ending		$ 207,487		$ 178,069

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

The fair values of non-publicly traded equity investments are mainly determined by using the market approach, with reference to the recent financing activities of investees or the market transaction prices and status of the similar instruments. The Company evaluated and selected the suitable valuation method with discretion, but the use of different valuation models or fair values may result in different valuation results.

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

c. Categories of financial instruments

Financial assets Fair value through profit or loss (FVTPL) Mandatorily at FVTPL Amortized cost (Note 1) Financial liabilities Amortized cost (Note 2)	December 31	December 31
	2023 $ 217,670 7,691,111 6,199,450	2022
		$ 325,460 6,869,506 8,545,196

1) The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, accounts receivables, other financial assets and refundable deposits.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, accounts payables, other payables, current position of long-term borrowings, long-term borrowings, and guaranteed deposits received.

d. Financial risk management objectives and policies

The Company’s major financial instruments include cash and cash equivalents, accounts receivable, other financial assets, financial assets at FVTPL, accounts payables 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 foreign 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 chairman is authorized by the board of directors to develop and monitor the risk management policy of the Company with the operation center of the Company, and regularly reported the situation to the board of directors.

The Company’s financial risk management policies are established for identifying and analyzing the financial risks to the Company, evaluating the impacts of the financial risks, and executing the financialrisk aversion policies. The financial risk management policies are periodically reviewed to reflect changes to the market and the operations. The Company devotes to build a disciplined and constructive control environment through proper internal controls, such as training and establishing managerial principles and operation procedures in order to have all employees aware of their own roles and responsibilities.

The Company’s management oversees the company operates in compliance with financial risk management policies and reviews the appropriateness of risk management structure under supervision of the board of directors. Internal auditors, in assistance to the board of directors, perform periodical and exceptional reviews on the controls and procedures of financial risk management and report the results of review to the board of directors.

1) Market risk

The major financial risks from the Company’s operations were foreign currency exchange risk referred to a) and interest rate risk referred to b).

a) Foreign currency risk

The carrying amounts of the Company’s monetary assets and monetary liabilities denominated in

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

foreign currency at the end of the reporting period are shown in Note 33.

Sensitivity analysis

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

Profit or loss/ equity		USD Impact For the Year Ended December 31	USD Impact For the Year Ended December 31	USD Impact For the Year Ended December 31
		2023 $ 19,504(i)		2022
				$ 50,349(i)

i. This was mainly attributable to the outstanding balances of USD time deposits, accounts receivables, accounts payables, other payables, refundable deposits, other current liability and guarantee deposits received.

b) Interest rate risk

The Company was exposed to interest risk primarily related to its investments time deposits with fixed-rate interest, short-term borrowing, demand deposits with floating-rate interest, current position of long-term borrowings and long-term borrowings. The time deposits were at fixed interest rates. Therefore, changes in interest rates would not affect the future cash flows.

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities		December 31	December 31	December 31
		2023 $ 3,665,825 $ - $ 800,233 $ 786,840		2022
				$ 2,518,220 $ 1,400,000 $ 775,974 $ 986,840

Sensitivity analysis

The below sensitivity analysis was determined based on the Company’s exposure to interest rates for non-derivative instruments at the end of the reporting period. An increase or a decrease of 25 basis points 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 Company’s pre-tax profit for the years ended December 31, 2023 and 2022 would decrease/increase by $33 thousand and $(527) thousand, respectively.

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

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 major credit risk of accounts receivables mainly came from its top 5 customers. Ongoing credit evaluation of the financial condition of the customers is performed.

As of December 31, 2023, accounts receivables from top 5 customers represented 71% of total accounts receivables. The credit concentration risk of other accounts receivables was insignificant.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining adequate cash and cash equivalents to fund its operations and mitigate the impacts of fluctuations in cash flows. The Company relies on bank borrowings as a significant source of liquidity.

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

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

December 31, 2023

Non-interest bearing Fixed interest rate liabilities Floating interest rate liabilities December 31, 2022	On Demand or Less than 1 Year $ 1,729,694 382 26,386 $ 1,756,462		1-5 Years $ 3,682,534 - 258,893 $ 3,941,427		More than 5 Years
					$ - - 501,561 $ 501,561

Non-interest bearing Fixed interest rate liabilities Floating interest rate liabilities	On Demand or Less than 1 Year $ 1,814,082 1,401,338 25,000 $ 3,240,420		1-5 Years $ 4,342,936 - 395,556 $ 4,738,492		More than 5 Years
					$ - - 566,284 $ 566,284

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

30. TRANSACTIONS WITH RELATED PARTIES

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

a. Related party name and category

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

b. Purchases of goods

Line Item Purchase	Related Party Category/Name Subsidiaries	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
			2023 $ 32,902		2022
					$ 10,290

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

c. Payables to related parties

Line Item Related Party Category/Name Subsidiaries Accountspayables FocalTech Electronics, Ltd. Others The outstandingaccountspayables to related parties are unpledged. Compensation of key management personnel Long-term employee benefits Short-term employee benefits Post-employment benefits Share-based payments	Line Item Related Party Category/Name Subsidiaries Accountspayables FocalTech Electronics, Ltd. Others The outstandingaccountspayables to related parties are unpledged. Compensation of key management personnel Long-term employee benefits Short-term employee benefits Post-employment benefits Share-based payments		December 31	December 31	December 31	December 31
						2022
			2023
			$ 19,705 40,721 540 41,321 $ 102,287

The outstanding accounts payables to related parties are unpledged.

d. Compensation of key management personnel

31. PLEDGED ASSETS

The following assets were provided as collateral for bank loans:

Properties, plants and equipment – Net of buildings Properties, plants and equipment – Land	For the Year Ended	For the Year Ended	For the Year Ended	December 31
		2023		2022
		$ 485,178 557,110 $ 1,042,288		$ 495,182 557,110 $ 1,052,292

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

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACTUAL COMMITMENTS

NOVATEK MICROELECTRONICS CORP. (“NOVATEK”) filed five patent infringement actions with Intellectual Property and Commercial Court on August 9, 2021, asking the court to prohibit the Company from manufacturing, offering for sale, selling, utilizing or importing, for the aforementioned purposes, products infringing on such patents and asking for indemnification for any losses. The parties have reached a settlement agreement after the both parties have withdrawn all civil and administrative actions against the other party in April 2023. It does not have material impact on the Company’s operation and finance.

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Company 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, 2023

Financial assets Monetary items USD Non-Monetary items USD Financial liabilities Monetary items USD December 31, 2022 Financial assets Monetary items USD Non-Monetary items USD Financial liabilities Monetary items USD	Foreign Currencies (thousand) $ 181,561 115,868 168,856 Foreign Currencies (thousand) $ 215,813 120,300 183,023	Exchange Rate 30.705 (USD:NTD) 30.705 (USD:NTD) 30.705(USD:NTD) Exchange Rate 30.71 (USD:NTD) 30.71 (USD:NTD) 30.71 (USD:NTD)	NT$ (thousand)
			$ 5,574,824 3,557,725 5,184,737 NT$ (thousand)
			$ 6,627,613 3,694,408 5,620,630

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

34. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others: See Table 1 attached;
2) Endorsements/guarantees provided: See Table 2 attached;
3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): See Table 3 attached;
4) Marketable securities acquired and disposed of with accumulated amount exceeding the lower 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 of 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) Information about the derivative financial instrument transaction: None;
b. Names, locations, and related information of investees over which the Company exercises significant influence (excluding information on investment in mainland China): See Table 4 attached.
c. Information on investments in mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 5 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in Mainland China on financial reports: None.
d. Information of major shareholder

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

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

TABLE 1

FocalTech Systems Co., Ltd.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023

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

No (Note 1)	Financing Company	Counterparty	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 4)	Ending Balance (Note 4)	Amount Actually Drawn (Note 4)	Interest Rate	Nature for Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 2)	Note
													Item	Value
1	FocalTech Systems, Ltd.	FocalTech Systems Co., Ltd.	Other receivables from relatedparties	Yes	$ 1,842,300 (USD 60,000)	$ 921,150 (USD 30,000)	$ -	-	The need for short- term financing	$ -	Operating capital	$ -	-	$ -	$ 2,219,691	$ 2,219,691	Note 3

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

1) The parent company is coded "0".
2) The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.
Note 2: The lending limits:
1) The total amount available for lending purpose shall not exceed 20% of the net worth of the Company.
2) The lending limits for any borrowers are set forth as below:
A. The total amount for lending to a company having a business relationship with the company shall not exceed the total transaction amount between the parties during the period of twelve months prior to the time of lending (the transaction amount shall mean the sales or purchasing amount between the parties, whichever is higher), and shall not exceed 20% of the net worth of the financing company or 30% of the net worth of the counterparty, whichever is lower.
B. The total amount for lending to a company in need of funds for a short-term period shall not exceed 20% of the net worth of the financing company. The lending limits for any borrower shall not exceed 10% of the net worth of the creditor or 30% of the net worth of the borrower, whichever is lower.
3) For financing needs between offshore subsidiaries whose voting shares are 100% owned, directly or indirectly, by the Company, or financing needs to the Company by offshore subsidiaries whose voting shares are 100% owned, directly or indirectly, by the Company, the total amount for such fund-lending shall not be subject to the limit of 100% of the net worth of the creditor

4) Where the Company’s financial reports are prepared in accordance with the International Financial Reporting Standards, “net worth” in the Procedures means the equity attributable to shareholders of the parent in the balance sheet. Note 3: The balances have been eliminated on consolidation.

Note 4: Using the exchange rate of 1 USD: 30.705 NTD as of December 31, 2023.

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

TABLE 2

FocalTech Systems Co., Ltd.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2023

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

No. (Note1)	Endorsement/ Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party (Note 2)	Maximum Balance for the Period (Note 5)	Ending Balance	Amount Actually Drawn	Amount of Endorsement / Guarantee Collateralize d by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Equity per Latest Financial Statements(%)	Maximum Endorsement/ Guarantee Amount Allowable (Note 2)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries in Mainland China	Note
		Name	Nature of Relationship
0 0 0 0 0 0	FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd.	FocalTech Systems, Ltd. FocalTech Electronics, Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Smart Sensors, Ltd.	The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company.	$ 4,654,037 4,654,037 4,654,037 4,654,037 4,654,037 4,654,037	$ 1,381,725 ( USD 45,000 ) 1,400,279 ( USD 45,604 ) 2,579,220 ( USD 84,000 ) 3,316,140 ( USD 108,000 ) 107,468 ( USD 3,500 ) 107,468 ( USD 3,500 )	$ 1,381,725 ( USD 45,000 ) 1,400,279 ( USD 45,604 ) 2,579,220 ( USD 84,000 ) 3,316,140 ( USD 108,000 ) 107,468 ( USD 3,500 ) 107,468 ( USD 3,500 )	$ - - 69,484 29,497 - -	$ - - - - - -	14.84% 15.04% 18.80% 22.76% 1.15% 1.15%	$ 4,654,037 4,654,037 4,654,037 4,654,037 4,654,037 4,654,037	Y Y Y Y Y Y	N N N N N N	N N Y Y N N	(Note 3) (Note 3) (Note 3.6 and 8) (Note 3.7 and 8) (Note 4) (Note 4)

Note 1: Number should be input in the remark column for intercompany transactions. Here illustrate how to assign numbers to transaction
1) 0 for parent company.
2) Subsidiaries are given a number in sequence starting with No. 1.
Note 2: Limits on Endorsement/ Guarantee Amount
1) The ceilings on the amount of endorsements/guarantees due to business transaction are as below:
2) The total amount of endorsements/guarantees and the amount of endorsements/guarantees for any single entity shall not exceed 50% of the net worth of the Company.
3) The total amount of endorsements/guarantees between the Company owns directly or indirectly 100% voting shares shall not exceed 100% of the net worth of the guarantee company.
4) The total amount of endorsement/guarantee provided by the Company or by the Company and its subsidiaries shall not exceed 50% of the net worth of the Company. The total amount of the endorsement/guarantee provided by the Company and the subsidiaries to any individual entity shall not exceed 50% of the net worth of the Company.
5) The net worth referred to above are based on the latest reviewed financial statements. Where the Company’s financial reports are prepared in accordance with the International Financial Reporting Standards, “net worth” in the Procedures means the equity attributable to shareholders of the parent in the balance sheet.
Note 3: FocalTech Systems Co., Ltd. provided USD 45,000 thousand of endorsements/guarantees for FocalTech Electronics Ltd., FocalTech Systems, Ltd., Hefei PineTech Electronics Co., Ltd. and FocalTech Electronics (Shenzhen) Co., Ltd. for the purchases, the amount actually drawn during the period is NT$0, NT$0, NT$0, and NT$ 29,095 thousand respectively.
Note 4: FocalTech Systems Co., Ltd. provided USD 3,500 thousand of endorsements/guarantees for FocalTech Smart Sensors Ltd. and FocalTech Smart Sensors Co., Ltd. for the purchases, the amount actually drawn during the period is NT$ 0.
Note 5: FocalTech Systems Co., Ltd. provided USD 17,000 thousand of endorsements/guarantees for Hefei PineTech Electronics Co., Ltd. and FocalTech Electronics (Shenzhen) Co., Ltd. for the purchases, the amount actually drawn during the period is NT$ 0.
Note 6: FocalTech Systems Co., Ltd. renewed endorsements/guarantees contract with Hefei PineTech Electronics Co., Ltd. on the Board of Directors’ resolution before old contract is due. Therefore, it resulted in the balance calculated repeatedly. Amount USD 27,000 included in the balance USD 84,000 is provided by old contract.
Note 7: FocalTech Systems Co., Ltd. renewed endorsements/guarantees contract with FocalTech Electronics (Shenzhen) Co., Ltd. on the Board of Directors’ resolution before old contract is due. Therefore, it resulted in the balance calculated repeatedly. Amount USD 39,000 included in the balance USD 108,000 is provided by old contract.
Note 8: Using the exchange rate of 1 USD: 30.705 NTD as of December 31, 2023.

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

TABLE 3

FocalTech Systems Co., Ltd.

MARKETABLE SECURITIES HELD DECEMBER 31, 2023 (Amount in thousand; Currency denomination in NTD)

Held Company Name		Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31,2023	December 31,2023		Note
					Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value
FocalTech Systems Co., Ltd.		Stock Series B Preferred Stock of Fubon Financial Holding Co., Ltd. Privately Offered Fund CDIB Capital Healthcare Ventures II Limited Partnership CDIB Capital Growth Partners L.P. CDIB-Innolux Limited Partnership Cathay Private Equity Smart Tech Limited Partnership	- - - - -	Financial assets at fair value through profit or loss - non current Financial assets at fair value through profit or loss - non current `〃` `〃` `〃`	170,000 - - - -	NT$ 10,183 NT$ 30,660 NT$ 30,766 NT$ 59,951 NT$ 86,110	0.03 0.96 0.66 4.37 22.16	NT$ 10,183 NT$ 30,660 NT$ 30,766 NT$ 59,951 NT$ 86,110	- - - - -

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

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

TABLE 4

FocalTech Systems Co., Ltd.

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) (Note 1) FOR THE YEAR ENDED DECEMBER 31, 2023

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

Investor Company	Investee Company	Location	Main Businesses and Products	Original InvestmentAmount	Original InvestmentAmount	Balance as of December31,2023	Balance as of December31,2023	Balance as of December31,2023	Net Income (Losses) of the Investee (Note 4)	Share of Profits/Losses of Investee (Note 4)	Note
				December 31,2023 (Note 2)	December 31,2022 (Note 3)	Shares	Percentage of Ownership	Carrying Value (Note 2)
FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics Co., Ltd. FocalTech Smart Sensors, Ltd. FocalTech Corporation, Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. Vitrio Technology Corporation FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd. FocalTech Electronics Co., Ltd.	Cayman Islands Cayman Islands Cayman Islands Taiwan Cayman Islands Taiwan U.S.A Cayman Islands Taiwan	Investment activity Investment activity Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Investment activity Import and export of integrated circuits	NT$ 7,059,264 NT$ 3,071 (USD 100 ) NT$ 85,350 NT$ - NT$ 238,821 NT$ 11,990 NT$ 3,140,902 (USD 102,293 ) NT$ 716,964 (USD 23,350 ) NT$ 20,000	NT$ 7,059,264 NT$ 3,071 (USD 100 ) NT$ 85,350 NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 3,141,414 (USD 102,293 ) NT$ 717,080 (USD 23,350 ) NT$ 20,000	5,491,200 2 3,000,000 - 18,813,050 17,417,000 100 2 2,000,000	100% 100% 9.14% - 57.31% 100% 100% 100% 100%	NT$ 2,350,762 (USD 76,560 ) NT$ 1,205,321 (USD 39,255 ) NT$ 1,642 (USD 53 ) NT$ - NT$ 10,294 (USD 335 ) NT$ 16,350 NT$ 2,157,617 (USD 70,269 ) NT$ 2,219,691 (USD 72,291 ) NT$ 93,297 (USD 3,038 )	(NT$ 298,721 ) (USD 9,588) NT$ 110,207 USD 3,537 (NT$ 26,539 ) (USD 852 ) (NT$ 71 ) (NT$ 26,539 ) (USD 852 ) (NT$ 5,340 ) (NT$ 297,154 ) (USD 9,538 ) (NT$ 306,849 ) (USD 9,849 ) (NT$ 14,133 ) (USD 454 )	(NT$ 298,721 ) (USD 9,588) NT$ 110,207 USD 3,537 (NT$ 2,426 ) (USD 78 ) NT$ - (NT$ 15,210 ) (USD 488 ) (NT$ 5,340 ) (NT$ 297,154 ) (USD 9,538 ) (NT$ 306,849 ) (USD 9,849 ) (NT$ 14,133 ) (USD 454 )	Subsidiary Subsidiary Subsidiary Joint Venture (Note 5) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note 1: Please refer to the table 6 for the information on investment in Mainland China.

Note 2: Using the exchange rate of 1 USD: 30.705 NTD as of December 31, 2023.

Note 3: Using the exchange rate of 1 USD: 30.71 NTD as of December 31, 2022.

Note 4: Using the average exchange rate of 1 USD: 31.155 NTD for the year ended December 31, 2023.

Note 5: Vitrio Technology Corporation has been dissolved on April 18, 2023, and submitted liquidation tax return on June 8, 2023.

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

TABLE 5

FocalTech Systems Co., Ltd.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023

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

Investee company	Main businesses and products	Total amount of paid-in capital (Note 1)	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2023 (Note 1)	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2023 (Note 1)	Net income (loss) of investee company (Note 2)	Percentage of ownership	Investment income (loss) recognized (Note 2)	Carrying amount as of December 31, 2023 (Note 1)	Accumulated inward remittance of earnings as of December 31, 2023	Note
					Outflow	Inflow
FocalTech Electronics (Shanghai) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co., Ltd.	Sales support and post-sales service for affiliates’ IC products Research, development, manufacturing and sale of integrated circuits Design and research of integrated circuits Research, development and sale of integrated circuits	NT$ 61,410 (USD 2,000) NT$ 285,557 (USD 9,300) NT$ 1,136,090 (USD 37,000) NT$ 130,056 (RMB 30,000)	(Note 3 and 4) (Note 3) (Note 4) (Note 4)	NT$ 30,705 (USD 1,000) NT$ 30,705 (USD 1,000) - -	$ - - - -	$ - - - -	NT$ 30,705 (USD 1,000) NT$ 30,705 (USD 1,000) - -	NT$ 3,987 (USD 128) NT$ 147,687 (USD 4,740) (NT$ 319,227) (USD 10,246) NT$ 18,836 (USD 605)	100% 100% 100% 100%	NT$ 3,987 (USD 128) NT$ 147,687 (USD 4,740) (NT$ 319,227) (USD 10,246) (NT$ 18,836) (USD 605)	NT$ 37,747 (USD 1,229) NT$ 174,874 (USD 5,695) NT$ 601,583 (USD 19,592) (NT$ 18,836) (USD 605)	$ - - - -	- - - -

Accumulated Investment in Mainland China as of December31,2023	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
$61,410 (USD2,000)	$1,856,643 (USD60,467)	$5,584,844

Note 1: Using the exchange rate of 1 USD: 30.705 NTD and 1 RMB :4.3352 NTD as of December 31, 2023. Note 2: Using the average exchange rate of 1 USD: 31.155 NTD and 1 RMB :4.424 NTD for the year ended December 31, 2023. Note 3: Indirect investment in Mainland China through a holding company established in other countries. Note 4: The investment is through the foreign subsidiaries, has not been remitted from Taiwan.

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

FocalTech Systems Co., Ltd.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

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

Statements Index

1
2
Table 3
3
4
5
Note 12
Note 12
Note 14
Note 24
6
Note 18
7
Note 24
8
9
10
Note 23
11

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

STATEMENT 1

FocalTech Systems Co., Ltd.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Petty cash and cash on hand Cash in banks Checking accounts and current accounts Foreign currency current accounts Cash equivalents Time Deposits	Description Including EUR 3 thousand, HKD 23 thousand, RMB 31 thousand, JPY 530 thousand, USD 3 thousand and NTD 40 thousand Including USD 12,280 thousand, JPY 7,949 thousand, RMB 23 thousand and EUR 1 thousand Which would be expired before March 29, 2024, interest rates at 1.2%-5.6%, including USA 10,000 thousand		Amount
			$ 571 424,648 378,913 803,561 1,977,050 $ 2,781,182

Note : Using the exchange rate of 1 USD: 30.705 NTD, 1 EUR :33.98 NTD, 1 HKD : 3.929 NTD ,1 RMB :4.3352 NTD and 1 JPY :0.2172 as of December 31, 2023.

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

STATEMENT 2

FocalTech Systems Co., Ltd.

STATEMENT OF OTHER FINANCIAL ASSETS DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item Description Time deposits with original maturities more than three months Including USD 55,000 thousand`；` Expiration date 2024.07.14~2024.08.23 Note 1: Using the exchange rate of 1 USD: 30.705 NTD as of December 31, 2023.	Rate 5.30%- 5.662%		Amount
			$ 1,688,775

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

STATEMENT 3

FocalTech Systems Co., Ltd.

STATEMENT OF ACCOUNTS RECEIVABLES, NET DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Item Client A Client B Client C Client D Client E Client F Others (Note) Less: Allowance for doubtful accounts		Amount
		$ 459,778 200,635 125,102 98,054 91,933 64,592 328,310 1,368,404 - $ 1,368,404

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

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

STATEMENT 4

FocalTech Systems Co., Ltd.

STATEMENT OF INVENTORIES DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Amount

Item Finished goods Work in process Raw materials	Book value $ 633,068 681,924 240,556 $1,555,548	Net Realizable Value	Net Realizable Value
			$ 702,277 793,515 301,729 $1,797,521

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

STATEMENT 5

FocalTech Systems Co., Ltd.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

FocalTech Corporation, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. Vitrio Technology Corporation	Balance, January 1, 2023	Balance, January 1, 2023	Balance, January 1, 2023	Amount Shares (In thousand) $ 2,194,116 - 1,496,253 - 4,039 - - (142) $ 3,694,408	Amount $ - - - - $ -	Share of Profit (Loss) of the Investee ( $ 298,721 ) 110,207 ( 2,426 ) - ($ 190,940)	Other Comprehensi ve Income $ 69,804 ( 104,508 ) 29 - ($ 34,675)	Other Adjustment $ 385,563 ( 296,631 ) - - $ 88,932	Balance, December 31, 2023 Shares (In thousand) Percentage of Ownership(%) Amount 5,491 100 $ 2,350,762 2 shares 100 1,205,321 3,000 9.14 1,642 - - - $ 3,557,725	Balance, December 31, 2023 Shares (In thousand) Percentage of Ownership(%) Amount 5,491 100 $ 2,350,762 2 shares 100 1,205,321 3,000 9.14 1,642 - - - $ 3,557,725	Balance, December 31, 2023 Shares (In thousand) Percentage of Ownership(%) Amount 5,491 100 $ 2,350,762 2 shares 100 1,205,321 3,000 9.14 1,642 - - - $ 3,557,725	Collateral Nil Nil Nil Nil
	Shares (In thousand) 5,491 2 shares 3,000 142	Percentage of Ownership(%) 100 100 9.14 50							Shares (In thousand) 5,491 2 shares 3,000 -	Percentage of Ownership(%) 100 100 9.14 -
						( ( (	( (	(

Note 1: Other adjustment is compensation cost of employee share options, NT$82,567 thousand and organizational structure adjustment NT$ 302,996 thousand. Note 2: Other adjustment is compensation cost of employee share options, NT$18,039 thousand and organizational structure adjustment NT$(314,670) thousand. Note 3: Vitrio Technology Corporation has been dissolved on April 18, 2023, and submitted liquidation tax return on June 8, 2023.

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

STATEMENT 6

FocalTech Systems Co., Ltd.

STATEMENT OF ACCOUNTS PAYABLES DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item Accountspayables-related party FocalTech Electronics, Ltd. Others(Note) Accountspayables-others Vendor A Vendor B Vendor C Others (Note)		Amount
		$ 456,237 21,558 477,795 $ 476,792 177,916 125,530 242,052 1,022,290 $1,500,085

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

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

STATEMENT 7

FocalTech Systems Co., Ltd.

STATEMENT OF LONG-TREM LOANS DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

		Balance,		Range of Interest
Type	End of Year		Contract Period	Rates (%)	Collateral
Secured bank loans
Mega Bank		500,000	2021/09/24~	1.75%	Land and
			2031/09/24		buildings
					pledged as
					collateral
Chang Hwa Bank		286,840	2021/09/24~	1.875%	Land and
			2036/09/24		buildings
					pledged as
					collateral
		786,840
	(	26,386)
Total	$	760,454

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

STATEMENT 8

FocalTech Systems Co., Ltd.

STATEMENT OF REVENUES FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Net sales IC for Human-Machine Interface Solutions Less: Sales discounts Sales returns	Quantity (in thousand units) 219,057		Amount
			$ 10,151,847 (75,017) (3,768) $ 10,073,062

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

STATEMENT 9

FocalTech Systems Co., Ltd.

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2023 (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
		$ 1,548,724 4,135,770 ( 34,292) ( 240,556) 5,409,646 1,729,150 7,138,796 1,823,306 ( 12,676) ( 681,924) 8,267,502 737,897 32,902 ( 89,207) ( 633,068) $ 8,316,026

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

STATEMENT 10

FocalTech Systems Co., Ltd.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item Payroll Freight Insurance fees Depreciation expense Amortization expense Mask expense Test board expense Professional service fees Miscellaneous fees Others (Note)	Selling Expenses $ 58,554 10,776 5,004 90 - - - - 29 12,894 $ 87,347	General and Administrative Expenses $ 79,544 235 21,538 29,344 2,598 - - 11,311 20,130 54,080 $ 218,780	Research and Development Expenses	Research and Development Expenses
				$ 463,137 - 21,600 9,515 87,407 109,012 122,783 28,035 772 160,712 $1,002,973

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

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

STATEMENT 11

FocalTech Systems Co., Ltd.

STATEMENT OF EMPLOYEE BENEFIT, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

(In Thousands of New Taiwan Dollars)

Employee benefits Salary and bonus Labor and health insurance Pension Board compensation Others Depreciation Amortization		2023		Total $ 700,798 54,519 31,771 7,093 22,041 $ 816,222 $ 62,873 $ 91,362		2022
	Classified as Operating Costs $ 106,656 7,200 5,160 - 2,212 $ 121,228 $ 23,924 $ 1,357	Classified as Operating Expenses $ 594,142 47,319 26,611 7,093 19,829 $ 694,994 $ 38,949 $ 90,005			Classified as Operating Costs $ 226,188 7,200 5,160 - 2,536 $ 241,084 $ 26,007 $ 605	Classified as Operating Expenses $ 1,331,269 54,397 27,072 6,899 20,229 $ 1,439,866 $ 17,495 $ 70,565		Total
								$ 1,557,457 61,597 32,232 6,899 22,765 $ 1,680,950 $ 43,502 $ 71,170

Note 1: The Company’s average employees totaled to 423 and 451 as of December 31, 2023 and 2022, respectively, including 6 and 7 non-employee directors, respectively.

Note 2: Listed Company at Taiwan Stock Exchange and over-the-counter company at Taipei Exchange should disclose additional information below:
a. The average amount of employee benefits for the years ended December 31, 2023 and 2022 was NT$1,940 thousand and NT$3,770 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, 2023 and 2022 was NT$1,681 thousand and NT$3,508 thousand, respectively. (Total salary and bonus/ “Total employee headcount - Total non-employee director headcount”)
c. The average salary and bonus increased by (52%) 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, 2023 and 2022. Therefore, there was no compensation to the supervisors.
e. The compensation paid to board of directors and the executive officers is based on their contribution and market trends. It is reviewed by the Compensation Committee. The compensation paid to the employees is based on their contribution and market trends.

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation GUARANTEE DEPOSITS RECEIVED Capacity guarantee deposits and others			December	December	31
			2023 $ 600 13.5 years December		2022
					$ 720 14.6 years 31
					2022
					$ 4,342,936

For the Year Ended	For the Year Ended	December 31
		2022
		$ 21,132 - $ 21,132 December 31
		2022
		$ 43,502 71,170 $ 114,672 $ 26,612 88,060 $ 114,672 December 31
2023 $ 31,606 165 119,408 665,043 $ 816,222 $ 121,228 694,994 $ 816,222		2022
	$ 32,090 142 257,450 1,391,268 $ 1,680,950 $ 241,084 1,439,866 $ 1,680,950

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2023 $ 437,821 $ 61,295 487 4,468 (3,943) 25,791 (12,196) $ 75,902		2022
	(	$ 1,886,024) ($264,043) 15,187 167,231 (3,342) 110,982 - $ 26,015

AI assistant

FocalTech — Annual Report 2023

52342_rns_2023-11-14_7f1c9b8d-b496-4e60-a19b-1725a9c1e763.pdf

FocalTech Systems Co., Ltd.

Notice to Readers

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Recognition for Sales Revenue

Valuation of Inventory

Responsibilities of Corporate Management and Governance Hierarchy For the Financial Statements

Auditors’ Responsibilities for the Audit of the Financial Statements

FOCALTECH SYSTEMS CO., LTD. BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Par Value)

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

FOCALTECH SYSTEMS CO., LTD.

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

FOCALTECH SYSTEMS CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023AND 2022 (In Thousands of New Taiwan Dollars)

FOCALTECH SYSTEMS CO., LTD.

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

d. Foreign currencies

g. Property, plant and equipment

i. Intangible assets

k. Financial instruments

1) Financial assets

i) Measurement category

iii) Derecognition of financial assets

2) Equity instruments

n. Lease

The Company as a lessee

p. Employee benefits

2) Retirement benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Impairment of inventory

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. OTHER FINANCIAL ASSETS

9. ACCOUNTS RECEIVABLES, NET

December 31, 2023

10. INVENTORIES

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

12. PROPERTY, PLANT AND EQUIPMENT

13. GOODWILL

14. OTHER INTANGIBLE ASSETS

15. REFUNDABLE DEPOSITS

16. BORROWINGS

17. ACCOUNTS PAYABLES

18. OTHER PAYABLES

19. RETIREMENT BENEFIT

a. Defined contribution plans

b. Defined benefit plans

20. GUARANTEE DEPOSITS RECEIVED

21. EQUITY

a. Share capital

b. Capital surplus

d. Special reserve

22. REVENUE

23. NET INCOME

Amount

24. INCOME TAXES

d. Deferred tax assets and liabilities

f. Income tax assessments

25. EARNINGS (LOSS) PER SHARE

26. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee stock option plan

The 6th treasury stock transferred to employee program

27. LEASE ARRANGEMENTS

The Company as a lessee

28. CAPITAL MANAGEMENT

29. FINANCIAL INSTRUMENTS

c. Categories of financial instruments

d. Financial risk management objectives and policies

FocalTech Annual Report 2023