FocalTech — Interim / Quarterly Report 2019

Dec 31, 2019

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2019 and 2018

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS		September 30, 2019	September 30, 2019	September 30, 2019		December 31, 2018	December 31, 2018	December 31, 2018		September 30, 2018	September 30, 2018	September 30, 2018
		Amount		％		Amount		％		Amount		％
CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through other comprehensive income – current (Note 8) Trade receivables, net (Note 10) Inventories (Note 11) Other financial assets (Note 9) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Property, plant and equipment (Note 13) Goodwill (Notes 14) Other intangible assets (Note 15) Deferred tax assets Other non-current assets (Note 29) Total non-current assets TOTAL LIABILITIES AND EQUITY		$ 2,910,374 180,055 1,076,818 1,406,039 2,054,943 230,771 7,859,000 87,007 82,144 1,402,938 1,237,268 108,593 118,503 53,960 3,090,413 $ 10,949,413 $ - 1,290,051 920,010 380,628 193,505 2,784,194 31,672 25,836 266,118 10,400 334,026 3,118,220 2,994,857 5,034,044 48,662 20,295 28,709 31,688 5,163,398 - ( 231,810) ( 231,810) 162,508 1,642 164,150 ( 268,656) 7,821,939 9,254 7,831,193 $ 10,949,413		26 2 10 13 19 2 72 1 1 13 11 1 1 - 28 100 - 12 8 3 2 25 - - 3 - 3 28 27 47 1 - - - 48 - ( 2) ( 2) 1 - 1 ( 2) 72 - 72 100		$ 2,355,926 130,716 983,496 2,120,600 2,283,900 158,385 8,033,023 112,063 183,253 1,394,372 1,237,268 148,998 134,858 56,286 3,267,098 $ 11,300,121 $ - 1,625,756 794,104 394,493 64,875 2,879,228 30,998 26,096 275,784 10,400 343,278 3,222,506 2,987,432 6,422,355 40,868 20,448 47,476 20,334 6,551,481 186,154 ( 1,434,755) ( 1,248,601) 149,454 ( 2,290) 147,164 ( 393,203) 8,044,273 33,342 8,077,615 $ 11,300,121		21 1 9 19 20 1 71 1 2 13 11 1 1 - 29 100 - 15 7 3 1 26 - - 3 - 3 29 26 58 - - - - 58 2 ( 13) ( 11) 1 - 1 ( 3) 71 - 71 100		$ 2,954,236 72,339 1,177,178 2,384,774 2,196,333 215,609 9,000,469 77,496 252,897 1,395,734 3,237,268 162,228 117,979 87,207 5,330,809 $ 14,331,278 $ 100,000 1,859,493 831,673 414,941 71,392 3,277,499 40,454 29,431 244,863 10,400 325,148 3,602,647 2,986,407 6,420,329 40,868 20,491 45,658 19,718 6,547,064 186,154 1,203,944 1,390,098 117,807 ( 4,321) 113,486 ( 353,718) 10,683,337 45,294 10,728,631 $ 14,331,278		21 - 8 17 15 2 63 - 2 10 22 1 1 1 37 100 1 13 6 3 - 23 - - 2 - 2 25 21 45 - - - - 45 1 9 10 1 - 1 ( 2) 75 - 75 100
CURRENT LIABILITIES Short-term borrowings (Note 16) Trade payables (Note 17) Other payables (Note 18) Current tax liabilities (Notes 4) Other current liabilities (Notes 21) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities Net defined benefit liabilities - non-current (Note 4) Guarantee deposits received Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Notes 20 and 25) Share capital Ordinary shares Capital surplus Additional paid-in capital Treasury shares Changes in ownership interests in subsidiaries Employee share options Employee share options - expired Total capital surplus Retained earnings (accumulated losses) Legal reserve Undistributed earnings (accumulated deficits) Total retained earnings (accumulated deficits) Other equity Exchange differences from translating the financial statements of foreign operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income Total other equity Treasury shares Equity attributable to owners of the parent NON-CONTROLLING INTERESTS Total equity TOTAL

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

This is the translation of the financial statements. CPAs do not audit or review on this translation. - 1 -

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In Thousands of New Taiwan Dollars, Except Earnings (Losses) Per Share)

NET REVENUE (Note 21) COST OF REVENUE (Note 11 and 22) GROSS PROFIT OPERATING EXPENSES (Note 19, 22, 26 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME (LOSS) NON-OPERATING INCOME AND EXPENSES Finance costs (Note 22) Interest income Other gains and losses - net Gain (Loss) on foreign exchange Total non-operating income and expenses INCOME (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (Note 4 and 23) NET INCOME (LOSS) OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss and Income tax relating to items that will not be reclassified to profit or loss (Notes23) Items that may be reclassified subsequently to profit or loss: Exchange differences from translating the financial statements of foreign operations Unrealized gains (losses) from debt instrument investments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss Total other comprehensive income TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD NET INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Parent Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Parent Non-controlling interests EARNINGS (LOSSES) PER SHARE (Note 24) Basic Diluted		**For the Three Months **	**For the Three Months **	Ended September 30	Ended September 30	％ 100 (76) 24 ( 4 ) ( 3 ) (16) (23) 1 - 1 1 - 2 3 - 3 - ( 1 ) - ( 1) ( 1) 2 3 - 3 2 - 2		**For the Nine **	Months Ended September 30	Months Ended September 30	Months Ended September 30
		2019	％ 100 (77) 23 ( 4 ) ( 3 ) (15) (22) 1 - 1 1 - 2 3 - 3 - ( 2 ) - ( 2) ( 2) 1 3 - 3 1 - 1		2018			2019	％ 100 (77) 23 ( 6 ) ( 4 ) (18) (28) ( 5) - 1 - - 1 ( 4 ) - ( 4) - - - - - ( 4) ( 4 ) - ( 4) ( 3 ) ( 1) ( 4)		2018
												％
												100 (78) 22 ( 4 ) ( 3 ) (14) (21) 1 - - 1 - 1 2 - 2 - 1 - 1 1 3 2 - 2 3 - 3

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

This is the translation of the financial statements. CPAs do not audit or review on this translation. - 2 -

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

Thousands of New Taiwan Dollars)
BALANCE, JANUARY 1, 2018 Effects of retrospective application and restatement Restated balance as of January 1, 2018 Cash distribution from additional paid-in capital Net income for the nine months ended September 30, 2018 Other comprehensive income (loss) for the nine months ended September 30, 2018, net of income tax Total comprehensive income (loss) for the nine months ended September 30, 2018 Treasury shares buyback (Note 20) Treasury shares transferred to employees (Note 20 and 25) Changes in ownership interests in subsidiaries Compensation cost of employee share options (Note 20 and 25) Issuance of ordinary shares from exercise of employee share options (Note 20 and 25) Increase in non-controlling interests BALANCE, SEPTEMBER 30, 2018 BALANCE, JANUARY 1, 2019 Reduction on legal reserve to offset accumulated deficits Reduction on capital surplus to offset accumulated deficits Cash distribution from additional paid-in capital Net loss for the nine months ended September 30, 2019 Other comprehensive income for the nine months ended September 30, 2019, net of income tax Total comprehensive income (loss) for the nine months ended September 30, 2019 Compensation cost of employee share options (Note 20 and 25) Treasury shares transferred to employees (Note 20 and 25) Changes in ownership interests in subsidiaries Issuance of ordinary shares from exercise of employee share options (Note 20 and 25) Decrease in non-controlling interests BALANCE SEPTEMBER 30 2019						Equity Attributable toOwners of the Parent
		Share Capital Ordinary Shares $ 2,983,700 - 2,983,700 - - - - - - - - 2,707 - $ 2,986,407 $ 2,987,432 - - - - - - - - - 7,425 - $ 2,994,857							Other Equity	Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income $ - ( 2,791) ( 2,791 ) - - ( 1,530) ( 1,530) - - - - - - ($ 4,321) ( $ 2,290 ) - - - - 3,932 3,932 - - - - - $ 1,642	Treasury Shares ( $ 191,998 ) - ( 191,998 ) - - - - ( 345,421 ) 183,701 - - - - ($ 353,718) ( $ 393,203 ) - - - - - - - 124,547 - - - ($ 268,656)
								Exchange Differences from Translating the Financial Statement of Foreign Operations $ 47,154 - 47,154 - - 70,653 70,653 - - - - - - $ 117,807 $ 149,454 - - - - 13,054 13,054 - - - - - $ 162,508	Unrealized Losses on Available-for-Sale Financial Assets ( $ 2,791 ) 2,791 - - - - - - - - - - - $ - $ - - - - - - - - - - - - $ -

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

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

• 3 -

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES (Loss) income before income tax Adjustments for: Depreciation expenses Amortization expenses Gain from reversal of expected credit impairment Net (gain) loss on financial assets at fair value through profit or loss Finance costs Interest income Compensation costs of employee share options (Reversal gain) loss from write-off of inventories Unrealized loss on foreign exchange Changes in operating assets and liabilities Financial assets mandatorily measured at fair value through profit or loss Trade receivables Inventories Other current assets Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Income tax paid Net cash inflow(outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial asset at fair value through other comprehensive income Proceeds from disposal of financial asset at fair value through other comprehensive income Acquisition of property, plant and equipment Acquisition of intangible assets Decrease (increase) in other financial assets Decrease (increase) in other non-current assets Interest received Net cash inflow(outflow) from investing activities

For the Nine Months Ended September 30 2019 2018 ( $ 229,232 ) $ 199,665 61,317 48,425 40,920 52,372 - ( 6,084 ) ( 384 ) 2,236 1,152 690 ( 82,840 ) ( 69,429 ) 8,083 22,305 ( 38,418 ) 119,789 4,589 14,205 26,405 ( 48,644 ) ( 89,605 ) 94,402 769,387 216,064 ( 9,717 ) 19,341 ( 349,640 ) 520,208 120,988 78,961 129,610 ( 10,614 ) ( 260) ( 189) 362,355 1,253,703 ( 1,152 ) ( 677 ) ( 27,998) ( 30,238) 333,205 1,222,788 - ( 58,671 ) 6,211 20,981 ( 94,707 ) ( 70,935 ) - ( 2,198 ) 247,508 ( 765,369 ) 2,004 946 73,508 47,511 234,524 ( 827,735) (Continued)

2019 ( $ 229,232 ) 61,317 40,920 - ( 384 ) 1,152 ( 82,840 ) 8,083 ( 38,418 ) 4,589 26,405 ( 89,605 ) 769,387 ( 9,717 ) ( 349,640 ) 120,988 129,610 ( 260) 362,355 ( 1,152 ) ( 27,998) 333,205 - 6,211 ( 94,707 ) - 247,508 2,004 73,508 234,524

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

• 4 -

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings (Decrease) increase in guarantee deposits Dividends paid to owners of the Company Proceeds from exercise of employee share options Payments for treasury shares buyback Treasury shares transferred to employees (Decrease) increase in non-controlling interests Net cash inflow(outflow) from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2019 $ - ( 11,376 ) ( 150,000 ) 10,013 - 124,547 ( 411) ( 27,227) 13,946 554,448 2,355,926 $ 2,910,374	2018
		$ 100,000 40,835 ( 150,000 ) 3,368 ( 345,421 ) 183,701 79,481 ( 88,036) 51,091 358,108 2,596,128 $ 2,954,236

(Concluded)

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

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

• 5 -

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

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

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on November 8, 2019.

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

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

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Company’s accounting policies:

1) IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that supersedes IAS 17“Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Company decides to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts signed or changed after January 1, 2019. Contracts currently identified as a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

The Company as lessee

Except for payments for low-value assets and short-term leases which are recognized as expenses on a straight-line basis, the Company recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets. On the consolidated statements of comprehensive income, the Company presents the depreciation expense charged on the right-of-use assets separately from

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

• 6 -

interest expense accrued on lease liabilities and computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities. Cash payments for the interest portion are classified within operating activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows.

Leases agreements classified as operating leases under IAS 17 are measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities. Right-of-use assets are subject to impairment testing under IAS 36.

The Company is applicable to the expedient method and accounts for those leases which the lease term ends on or before December 31, 2019 as short-term leases.

There is no impact on assets, liabilities and equity as of January 1, 2019 under the initial application.

• 2) IFRIC 23 “Uncertainty over Income Tax Treatments”

IFRIC 23 clarifies the accounting for uncertainties in income taxes. The Company is to assume that the taxation authority will examine any amounts reported to it and have full knowledge of all relevant information when doing so. If the Company concludes that it is probable that a particular tax treatment is accepted, the Company has to determine taxable profit (loss), tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatment included in its income tax filings. If it is not probable that a particular tax treatment is accepted, the Company has to use the most likely amount or the expected value of the tax treatment. The decision should be based on which method provides better predictions of the resolution of the uncertainty. The Company has to reassess its judgments and estimates if facts and circumstances change.

• 3) Amendments to IAS 19 " Employee Benefits - Plan Amendment, Curtailment or Settlement"

The amendments require the Company to use the most updated actuarial assumptions for its net defined benefit liabilities (assets) to determine current service cost and net interest for the remainder of the annual reporting period when a plan amendment, curtailment or settlement occurs. In addition, the amendments clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Company shall apply aforementioned amendments prospectively.

• b. The IFRSs issued by International Accounting Standards Board (IASB) and endorsed by FSC with effective date starting 2020

effective date starting 2020
New, Revised or Amended Standards and Interpretations Amendments to IFRS 3 “Definition of a Business” Amendments to IAS 1 and IAS 8 “Definition of Materiality”	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2)

• Note 1: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

• Note 2: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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

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

• 7 -

when the assessment is completed.

• c. The IFRSs issued by IASB but not yet endorsed and issued into effect by 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, 2021

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and IAS 34 “Interim Financial Reporting” as endorsed by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

• b. Basis of Preparation

The consolidated 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 fair value measurements are grouped into Levels 1 to 3 based on the observable intensity and importance of related input value:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• 3) Level 3 inputs are unobservable inputs for the asset or liability.

• c. Basis of consolidation

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

• d. Other significant accounting policies

Except for accounting policies for leases and the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2018.

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

• 8 -

1) Leases

2019

The Company assesses whether the contract is, or contains a lease at the inception of a contract.

The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

2018

The Company as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

2) Retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, and adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

• 3) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period. The effect of changes in tax rate resulting from the amendments in the tax regulations is recognized in profit or loss or other comprehensive income in full in the occurring period, which is consistent with the accounting treatment of the corresponding transaction itself.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The critical accounting judgments, estimations and assumptions applied in these consolidated financial statements are consistent with those in the consolidated financial statements for the year ended December 31, 2018.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent (time deposits with original maturities within three months)		September 30, 2019 $ 6,913 1,189,194 1,714,267 $ 2,910,374		December 31, 2018 $ 2,344 840,827 1,512,755 $ 2,355,926		September 30, 2018
						$ 2,564 1,434,648 1,517,024 $ 2,954,236

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

• 9 -

The interest rate intervals at the end of the reporting period are as follows:

Demand deposits Time deposits	September 30, 2019 0.001%～0.43% 0.9%～3.06%	December 31, 2018	September 30, 2018 0.001%~0.43% 0.9%~3.08%
		0.001%～0.48% 0.6%～3.37%

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

Mandatorily measured at fair value through profit or loss (FVTPL) Listed preferred shares Private Funds Structured Investments		September 30, 2019 $ 10,863 45,709 30,435 $ 87,007		December 31, 2018 $ 10,540 41,023 60,500 $ 112,063		September 30, 2018
						$ 10,370 37,593 29,533 $ 77,496

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in debt instruments

September 30, 2019 December 31, 2018 September 30, 2018

Current Foreign investments Fixed income bonds Non–Current Foreign investments Fixed income bonds Yield rates	$ 180,055 $ 82,144 2.201%～4.117%	$ 130,716 $ 183,253 1.963%～4.117%	$ 72,339
			$ 252,897
			1.963%~4.117%

9. OTHER FINANCIAL ASSETS

OTHER FINANCIAL ASSETS
Time deposits with original maturities more than three months Interest rate intervals		September 30, 2019 $ 2,054,943 1.1%～4.18%	**December 31, 2018 ** $ 2,283,900 1.75%～4.18%	September 30, 2018
					$ 2,196,333 1.55%~3.90%

10. TRADE RECEIVABLES, NET

TRADE RECEIVABLES, NET
Trade receivables Less: Allowance for doubtful accounts Trade receivables, net		September 30, 2019 $ 1,076,818 - $ 1,076,818		December 31, 2018		September 30, 2018
				$ 983,496 - $ 983,496		$ 1,274,858 ( 97,680) $ 1,177,178

The average credit term for sales of goods was 60-120 days. In order to minimize credit risk, the Company’s management has delegated a team responsible for determining line of credit, 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 receivable at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts. In this regard, the Company’s management believes the Company’s credit risk was significantly reduced.

The Company applies the simplified approach prescribed by IFRS 9, which permits the use of lifetime expected loss allowances for all trade receivables. The expected credit losses on trade receivables are estimated by using an allowance matrix with reference to customers’ past default records, customers’

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

• 10 -

current financial position, and general economic conditions of the industry. According to past experiences, there is no significant difference in the loss pattern among different customer groups. Therefore, the Company does not further identify any specific customer groups for the allowance matrix, and only sets the expected credit loss rate based on the overdue duration of trade receivables.

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

September 30, 2019

September 30, 2019
Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2018 Expected credit loss rate Gross carrying amount and Amortized cost September 30, 2018 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost		Non Past Due		Overdue 1-60 Days		Overdue 61-180 Days	Overdue Over 180 Days			Total
		0% $ 1,063,638 Non Past Due		0% $ 13,180 Overdue 1-60 Days		0% $ - Overdue 61-180 Days	0% $ - Overdue Over 180 Days			0% $ 1,076,818 Total
		0% $ 884,692 Non Past Due		0% $ 77,795 Overdue 1-60 Days		0% $ 1,937 Overdue 61-180Days	0% $ 19,072 Overdue Over 180Days			0% $ 983,496 Total
		0% $ 1,070,361 - $ 1,070,361		0% $ 88,127 - $ 88,127		0% $ - - $ -		84% $ 116,370 ( 97,680) $ 18,690		84% $ 1,274,858 ( 97,680) $ 1,177,178

The movements of the allowance for doubtful trade receivables were as following ：

Beginning balance Less: Impairment loss reversed Difference from foreign exchange translation Ending balance	For the Nine Months Ended September30,2019 $ - - - $ -	For the Nine Months Ended September30,2018
		$ 101,184 ( 6,084 ) 2,580 $ 97,680

Wintek Corporation announced the following material information on October 13, 2014. Due to continuous loss from operation, the board of directors of Wintek Corporation resolved to apply to court for an reorganization and emergency disposal of Wintek Corporation in accordance with relevant regulations of the Company Act. Until December 31, 2018, the reorganization plan had been approved and executed. The Company wrote off NT$97,344 thousand for the related doubtful accounts and reversed previously accrued losses of NT$6,084 thousand in 2018. The Company received NT$19,072 thousand in January, 2019.

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

• 11 -

11. INVENTORIES

INVENTORIES
Finished goods Work in process Raw materials and supplies		September 30, 2019 $ 451,689 717,871 236,479 $ 1,406,039		December 31, 2018 $ 537,585 921,944 661,071 $ 2,120,600		September 30, 2018
						$ 642,829 1,064,093 677,852 $ 2,384,774

The cost of goods sold are including the reversal of write-down of inventories which respectively are NT$15,843 thousand and NT$$38,318 thousand for the three months and nine months ended September 30, 2019. The above-mentioned reversal was mainly attributed from the sales of slow-moving inventories. The cost of goods sold includs the write-down of inventories which respectively are NT$63,206 thousand and NT$$119,789 thousand for the three months and nine months ended September 30, 2018.

12. SUBSIDIARIES

Details of the Company’s subsidiaries included in the consolidated financial statements are as follows:

Investor	Investee	Main Businesses	Percentage of Ownership	Percentage of Ownership	Percentage of Ownership
			September 30, 2019	December 31, 2018	September 30, 2018
FocalTech Systems Co., Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd.	Investment Research, development, manufacturing and sales of integrated circuits	100% 100%	100% 100%	100% 100%
FocalTech Systems Co., Ltd. And FocalTech Electronics Co., Ltd.	FocalTech Smart Sensors, Ltd.	Research, development, manufacturing and sales of integrated circuits	62.07% (Note)	61.88%	61.88%
FocalTech Smart Sensors, Ltd.	FocalTech Smart Sensors Co., Ltd.	Research and development of integrated circuits	100%	100%	100%
FocalTech Corporation, Ltd.	FocalTech Systems, Inc.	Investment	100%	100%	100%
FocalTech Systems, Inc.	FocalTech Systems, Ltd.	Research, development, manufacturing and sales of integrated circuits	100%	100%	100%
FocalTech Systems, Ltd.	FocalTech Systems (Shenzhen) Co., Ltd. FocalTech Electronics Co., Ltd.	Design and R&D of integrated circuits Import and export of integrated circuits	100% 100%	100% 100%	100% 100%
FocalTech Electronics, Ltd.	FocalTech Electronics (Shanghai) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co., Ltd.	Post-sales service for affiliates’ IC products Design and R&D of integrated circuits Research, development and sales of integrated circuits	100% 100% 100%	100% 100% 100%	100% 100% 100%

Note: The change in the Company’s direct and indirect holding percentage of FocalTech Smart Sensors, Ltd. was due to the purchase of unvested shares from resigned employees.

As of September 30, 2019, the immaterial subsidiaries of the Company included FocalTech Smart Sensors Co., Ltd., FocalTech Electronics Co., Ltd., FocalTech Systems (Shenzhen) Co., Ltd., FocalTech Electronics (Shenzhen) Co., Ltd., FocalTech Electronics (Shanghai) Co., Ltd., Hefei PineTech Electronics Co., Ltd. and FocalTech Smart Sensors, Ltd. As of September 30, 2018, the immaterial subsidiaries of the Company included FocalTech Smart Sensors Co., Ltd., FocalTech Electronics Co., Ltd., FocalTech Electronics (Shenzhen) Co., Ltd., FocalTech Electronics (Shanghai) Co., Ltd., Hefei PineTech Electronics Co., Ltd. and FocalTech Smart Sensors, Ltd.

The financial statements of the immaterial subsidiaries had not been reviewed by the auditors. As of September 30, 2019 and 2018, the total amounts of assets of the immaterial subsidiaries were NT$593,613

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

• 12 -

thousand, and NT$588,627 thousand, respectively, accounted for 5% and 4% of total consolidated assets, respectively. The total amounts of liabilities were NT$243,488 thousand, and NT$157,311 thousand, respectively, accounted for 8% and 4% of total consolidated liabilities, respectively. For the three months ended September 30, 2019 and 2018, and for the nine months ended September 30, 2019 and 2018, the total immaterial subsidiaries comprehensive income (loss) has been recognized at NT$8,963 thousand, NT$(35,829) thousand, NT$(57,246) thousand and NT$(59,293) thousand, respectively, accounted for 30%, (94%), 24% and (25%) of the comprehensive income (loss), respectively.

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2018 Additions Disposals Effect of foreign currency exchange differences Balance, September 30, 2018 Accumulated depreciation Balance, January 1, 2018 Depreciation Disposals Effect of foreign currency exchange differences Balance, September 30, 2018 Carrying amounts as of September 30, 2018 Cost Balance, January 1, 2019 Additions Effect of foreign currency exchange differences Balance, September 30, 2019 Accumulated depreciation Balance, January 1, 2019 Depreciation Effect of foreign currency exchange differences Balance, September 30, 2019 Carrying amounts as of December 31, 2018 and January 1, 2019 Carrying amounts as of September 30, 2019		Buildings	Development Equipment		Office Equipment		Information Equipment		Leasehold Improvements	**Total **
		$ 1,358,019 41,325 - ( 35,396) $ 1,363,948 $ 16,029 27,405 - ( 1,258) $ 42,176 $ 1,321,772 $ 1,375,563 - ( 25,920) $ 1,349,643 $ 51,610 27,683 ( 1,787) $ 77,506 $ 1,323,953 $ 1,272,137	$ 165,491 27,801 ( 3,841 ) ( 75) $ 189,376 $ 121,011 14,544 ( 3,841 ) 646 $ 132,360 $ 57,016 $ 192,558 93,461 ( 579) $ 285,440 $ 138,166 29,518 ( 116) $ 167,568 $ 54,392 $ 117,872		$ 14,479 1,226 - ( 311) $ 15,394 $ 10,236 1,186 - ( 203) $ 11,219 $ 4,175 $ 15,970 32 ( 231) $ 15,771 $ 11,635 931 ( 173) $ 12,393 $ 4,335 $ 3,378		$ 42,437 583 - ( 994) $ 42,026 $ 27,331 3,688 - ( 712) $ 30,307 $ 11,719 $ 42,675 1,214 ( 776) $ 43,113 $ 31,508 2,659 ( 605) $ 33,562 $ 11,167 $ 9,551		$ 39,209 - - ( 374) $ 38,835 $ 36,554 1,602 - ( 373) $ 37,783 $ 1,052 $ 38,956 - ( 277) $ 38,679 $ 38,431 526 ( 278) $ 38,679 $ 525 $ -	$ 1,619,635 70,935 ( 3,841 ) ( 37,150) $ 1,649,579 $ 211,161 48,425 ( 3,841 ) ( 1,900) $ 253,845 $ 1,395,734 $ 1,665,722 94,707 ( 27,783) $ 1,732,646 $ 271,350 61,317 ( 2,959) $ 329,708 $ 1,394,372 $ 1,402,938

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

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

Property, plant and equipment were not pledged as collateral.

14. GOODWILL

GOODWILL
Ending balance		September 30, 2019 $ 1,237,268		December 31, 2018 $ 1,237,268		September 30, 2018
						$ 3,237,268

Considering the synergy of integration of LCD driver and touch controller under the industry trend, the

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

• 13 -

reverse merger was triggered by FocalTech Corporation, Ltd. on January 2, 2015, resulting in the goodwill of NT3,237,268 thousand. In 2018, the impacts of market improper competition and the shortage of wafer supply made the company suffer a serious market share decline, which was expected to influence the market share and gross margins in the future. Therefore, it was estimated that the recoverable amount from IDC (Integrated Driver Controller) was less than the carrying value, and the Company recognized an impairment loss of NT2,000,000 thousand.

The recoverable amount derived from projected cash flows from IDC at a discount rate of 9.95%, under the assumptions of future growth rates of smartphone, market shares, gross margins and forecasted operating expenses made by management judgments and historical experiences.

15. OTHER INTANGIBLE ASSETS

Licenses and Franchises Software Cost Balance, January 1, 2018 $ 126,919 $ 149,951 Additions - 2,198 Effect of foreign currency exchange differences 2,782 3,431 Balance, September 30, 2018 $ 129,701 $ 155,580 Accumulated amortization Balance, January 1, 2018 $ 72,394 $ 98,685 Amortization expenses 16,950 24,033 Effect of foreign currency exchange differences 1,799 2,726 Balance, September 30, 2018 $ 91,143 $ 125,444 Carrying amounts as of September 30, 2018 $ 38,558 $ 30,136 Cost Balance, January 1, 2019 $ 130,393 $ 157,801 Effect of foreign currency exchange differences 1,182 1,408 Balance, September 30, 2019 $ 131,575 $ 159,209 Accumulated amortization Balance, January 1, 2019 $ 95,724 $ 133,210 Amortization expenses 12,357 17,174 Effect of foreign currency exchange differences 825 1,250 Balance, September 30, 2019 $ 108,906 $ 151,634 Carrying amounts as of December 31, 2018and January 1, 2019 $ 34,669 $ 24,591 Carrying amounts as of September 30, 2019 $ 22,669 $ 7,575 Other intangible assets amortized on a straight-line basis over Licenses and franchises Software Patents Trademark		Patents Trademark Total $ 76,718 $ 74,000 $ 427,588 - - 2,198 ( 6) - 6,207 $ 76,712 $ 74,000 $ 435,993 $ 23,595 $ 22,200 $ 216,874 5,839 5,550 52,372 ( 6) - 4,519 $ 29,428 $ 27,750 $ 273,765 $ 47,284 $ 46,250 $ 162,228 $ 76,714 $ 74,000 $ 438,908 ( 5) - 2,585 $ 76,709 $ 74,000 $ 441,493 $ 31,376 $ 29,600 $ 289,910 5,839 5,550 40,920 ( 5) - 2,070 $ 37,210 $ 35,150 $ 332,900 $ 45,338 $ 44,400 $ 148,998 $ 39,499 $ 38,850 $ 108,593 the estimated useful lives are as follows: 3-5 years 1-5 years 7-10 years 10 years		Total

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

• 14 -

16. SHORT-TERM BORROWINGS

Unsecured bank loans Interest rates TRADE PAYABLES Trade payables		September 30, 2019 $ - - September 30, 2019 $ 1,290,051		December 31, 2018 $ - - December 31, 2018 $ 1,625,756	September 30, 2018
					$ 100,000 1.25% September 30, 2018
					$ 1,859,493

17. TRADE PAYABLES

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

18. OTHER PAYABLES

OTHER PAYABLES
Payable for rebates Payable for salaries and bonuses Payable for labor, health and social insurance Reserve for litigations Payable for professional services and others		September 30, 2019 $ 399,641 395,095 14,808 52,653 57,813 $ 920,010		**December 31, 2018 ** $ 337,581 336,145 15,475 52,101 52,802 $ 794,104	September 30, 2018
					$ 462,796 244,562 14,626 54,931 54,758 $ 831,673

19. RETIREMENT BENEFIT

Pension expenses under the defined benefit plans, calculated using the actuarially determined pension cost rate as of December 31, 2018 and 2017, were NT$112thousand, NT$139 thousand, NT$335 thousand and NT$419 thousand for the three months ended September 30, 2019 and 2018, and nine months ended September 30, 2019 and 2018, respectively.

20. EQUITY

• a. Share capital

Ordinary shares (par value at NT$10 per share)

Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		September 30, 2019		December 31, 2018 500,000 $ 5,000,000 298,743 $ 2,987,432	September 30, 2018
		500,000 $ 5,000,000 299,486 $ 2,994,857			500,000 $ 5,000,000 298,641 $ 2,986,407

• b. Capital surplus

BALANCE, JANUARY 1, 2018 Cash distribution from additional paid-in capital Changes in ownership interests in subsidiaries Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options	Additional Paid-in Capital (1) $ 6,565,204 ( 150,000) - - 5,125	Treasury Shares (1) $ 40,868 - - - -	Changes in ownership interests in subsidiaries (2)	Employee Share Options (3) $ 30,179 - - 22,305 ( 4,464)	Employee Share Options -Expired (2)	Total
			$ 1,269 - 19,222 - -		$ 17,356 - - - -	$ 6,654,876 ( 150,000) 19,222 22,305 661

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

• 15 -

Expiration of employee share options BALANCE, SEPTEMBER 30, 2018 BALANCE, JANUARY 1, 2019 Capital surplus used to offset accumulated deficits Cash distribution from additional paid-in capital Changes in ownership interests in subsidiaries Treasury shares transferred to employees Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options Expiration of employee share options BALANCE, SEPTEMBER 30, 2019		Additional Paid-in Capital (1)		Treasury Shares (1)		Changes in ownership interests in subsidiaries (2)		Employee Share Options (3)	Employee Share Options -Expired (2)	Employee Share Options -Expired (2)		Total
		- $ 6,420,329 Additional Paid-in Capital (1)		- $ 40,868 Treasury Shares (1)		- $ 20,491 Changes in ownership interests in subsidiaries (2)		( 2,362) $ 45,658 Employee Share Options (3)	2,362 $ 19,718 Employee Share Options -Expired (2)			- $ 6,547,064 Total
	$ 6,422,355 ( 1,248,601) ( 150,000) - - - 10,290 - $ 5,034,044			$ 40,868 - - - 7,794 - - - $ 48,662	$ 20,448 - - ( 153) - - - - $ 20,295		$ 47,476 - - - ( 7,794) 8,083 ( 7,702) ( 11,354) $ 28,709			$ 20,334 - - - - - - 11,354 $ 31,688	$ 6,551,481 ( 1,248,601) ( 150,000) ( 153) - 8,083 2,588 - $ 5,163,398

• 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 transferred to share capital within a limited percentage of the paid-in capital each year.

• 2) This type of capital surplus may be used to offset a deficit.

• 3) This type of capital surplus cannot be used for any purposes.

• c. Retained earnings and dividend policy

The amendments to the Company’s Articles of Incorporation had been approved in the shareholders meeting held on June 20, 2019, which stipulate that earnings distribution or loss off-setting may be made on a quarterly basis after the quarter end.

The Company’s amended Articles of Incorporation provide that, when distributing earnings of the first three quarters, the Company shall first estimate and reserve the taxes to be paid, offset its losses, estimate and reserve remuneration for employees and directors, set aside a legal reserve at 10% of the remaining earnings, and then set aside or reverse a special reserve in accordance with relevant laws or regulations. The Board of Directors may prepare a distribution proposal for the remaining earnings plus the unappropriated retained earnings at the beginning of the period in consideration of the operation status. Earnings distribution may be made in the form of shares after an approved resolution made by the shareholders’ meeting, or in the form of cash after an approved resolution made by the BOD.

The Company’s amended Articles of Incorporation provide that, 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 thereto a report of such distribution shall be submitted to the shareholders’ meeting.

The Company’s Articles of Incorporation prior to the amendments provided that, when distributing annual earnings, the Company shall pay taxes, offset its losses, set aside 10% as legal reserve, and then set aside or reverse a special reserve in accordance with relevant laws or regulations. The Board of

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

• 16 -

Directors shall prepare a distribution proposal for the remaining earnings plus the unappropriated retained earnings of previous years for approval at the stockholders’ meeting.

See Note 22(d) for policy stipulated in the Articles of Incorporation regarding remuneration for employees and directors.

Considering current and future development plans, investment conditions, capital requirements, market competition situations, and shareholder interests, the Company shall distribute dividends to the shareholders no less than 10% of the current year’s earnings. Shareholders’ dividends could be paid in cash or shares while the cash dividends should not be less than 10% of the total distributable dividends. Dividends distribution may not be made if the amount of cash dividends per share is less than NT$0.5.

Appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficits. If the Company has no accumulated deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

NT$186,154 thousand from legal reserve and NT$1,248,601 thousand from capital surplus for loss offsetting as well as the cash distribution of NT$150,000 thousand, i.e. approximately NT$0.5 per share, from additional paid-in capital had been approved in the Company’s shareholders’ meeting on June 20, 2019.

The cash distribution of NT$150,000 thousand, i.e. approximately NT$0.51 per share, from additional paid-in capital had been approved in the Company’s shareholders’ meeting on June 15, 2018.

• d. Treasury share

Number of shares on January 1, 2018 Increase during the period Decrease during the period Number of shares as of September 30, 2018 Number of shares on January 1, 2019 Decrease during the period Number of shares as of September 30, 2019	Shares ( I n Th o us a n d s)	Shares ( I n Th o us a n d s)
	( (	5,936 13,953 5,655) 14,234 15,970 4,932) 11,038

The detailed information for other Shares Buy Back Programs could be found in Note 24 (b).

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

21. REVENUE

	For the Three	Months	Ended	For the Nine	For the Nine	Months Ended
	September 30				September 30
	2019	2018			2019	2018
IC for mobile devices	$ 2,573,411	$ 2,530,459		$	6,352,830	$ 7,875,850
Contract balances
	September 30, 2019		December 31, 2018 September 30, 2018
Contract liabilities
Sales of goods	$ 135,822		$	13,895	$	17,429

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

• 17 -

22. NET INCOME

a. Finance costs

Finance costs
Interest on bank loans Interest on deposits Others		For the Three Months Ended September 30 2019 2018 $ 2 $ 120 - - - - $ 2 $ 120			For the Nine Months Ended September 30
		2019 $ 2 - - $ 2			2019		2018
					$ 2 1,150 - $ 1,152		$ 126 471 93 $ 690

b. Depreciation and amortization

Property, plant and equipment Intangible assets An analysis of depreciation and amortization by function Operating costs Operating expenses	For the Three Months Ended September 30 2019 2018 $ 21,488 $ 16,017 11,249 15,446 $ 32,737 $ 31,463 $ 378 $ 581 32,359 30,882 $ 32,737 $ 31,463	For the Three Months Ended September 30 2019 2018 $ 21,488 $ 16,017 11,249 15,446 $ 32,737 $ 31,463 $ 378 $ 581 32,359 30,882 $ 32,737 $ 31,463	For the Three Months Ended September 30 2019 2018 $ 21,488 $ 16,017 11,249 15,446 $ 32,737 $ 31,463 $ 378 $ 581 32,359 30,882 $ 32,737 $ 31,463		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 21,488 11,249 $ 32,737 $ 378 32,359 $ 32,737			2019 $ 61,317 40,920 $ 102,237 $ 1,042 101,195 $ 102,237		2018
							$ 48,425 52,372 $ 100,797 $ 1,745 99,052 $ 100,797

• c. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) Share-based payments (Note 25) Other employee benefits An analysis of employee benefits expense by function Operating costs Operating expenses	For the Three Months Ended September 30 2019 2018 $ 7,083 $ 7,097 112 139 1,958 6,940 363,290 412,420 $ 372,443 $ 426,596 $ 28,561 $ 28,156 343,882 398,440 $ 372,443 $ 426,596	For the Three Months Ended September 30 2019 2018 $ 7,083 $ 7,097 112 139 1,958 6,940 363,290 412,420 $ 372,443 $ 426,596 $ 28,561 $ 28,156 343,882 398,440 $ 372,443 $ 426,596	For the Three Months Ended September 30 2019 2018 $ 7,083 $ 7,097 112 139 1,958 6,940 363,290 412,420 $ 372,443 $ 426,596 $ 28,561 $ 28,156 343,882 398,440 $ 372,443 $ 426,596	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 7,083 112 1,958 363,290 $ 372,443 $ 28,561 343,882 $ 372,443			2019 $ 21,412 335 8,083 1,113,995 $1,143,825 $ 83,102 1,060,723 $1,143,825		2018
							$ 21,262 419 22,305 1,105,304 $1,149,290 $ 81,537 1,067,753 $1,149,290

• 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, employees’ compensation, and remuneration to directors. Due to the net loss before tax for the six months ended September 30, 2019, there was no accrual for any remuneration to employees and directors. The accrued employees’ compensation and remuneration to directors for the three months and nine months ended September 30, 2018 are as follows:

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

• 18 -

Accrual rate

Employees’ compensation Remuneration to directors Amount Employees’ compensation Remuneration to directors	For the Nine Months Ended September 30,2018 19.82% 0.18% For the Three Months Ended September 30,2018 For the Nine Months Ended September 30,2018 $ 17,522 $ 49,468 $ 154 $ 449	For the Nine Months Ended September 30,2018	For the Nine Months Ended September 30,2018	For the Nine Months Ended September 30,2018
			19.82% 0.18% For the Nine Months Ended September 30,2018
				$ 49,468 $ 449

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

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.

23. INCOME TAXES

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

Current tax In respect of the current period Adjustments on prior periods Deferred tax In respect of the current period Effect of tax rate changes Income tax expense (benefit) recognized in profit or loss		For the Three Months Ended September 30 2019 2018 $ 6,661 $ 2,444 852) ( 3,371) 5,809 ( 927) 1,790 ( 4,587 ) - - 1,790 ( 4,587) $ 7,599 ($ 5,514)	For the Three Months Ended September 30 2019 2018 $ 6,661 $ 2,444 852) ( 3,371) 5,809 ( 927) 1,790 ( 4,587 ) - - 1,790 ( 4,587) $ 7,599 ($ 5,514)		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 6,661 852) 5,809 1,790 - 1,790 $ 7,599			2019 $ 9,932 346 10,278 16,747 - 16,747 $ 27,025		2018
	(					( (	$ 26,788 3,299) 23,489 21,876 11,437) 10,439 $ 33,928

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20% effective in 2018. The effect of the change in tax rate on deferred tax income was recognized in profit in 2018. In addition, the rate of the corporate surtax applicable to 2018 unappropriated earnings will be reduced from 10% to 5%.

• b. Income tax expense recognized in other comprehensive income

Deferred income tax Effect of tax rate change		For the Three Months Ended September 30 2019 2018 $ - $ -	For the Three Months Ended September 30 2019 2018 $ - $ -		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ -			2019 $ -		2018
							$ 276

• c. Income tax assessments

Tax returns of the Company and FocalTech Smart Sensors Co., Ltd. through 2017, and that of

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

• 19 -

FocalTech Electronics Co., Ltd. through 2016 had been assessed by the tax authorities.

24. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share Diluted earnings per share		For the Three Months Ended September 30 2019 2018 $ 0.29 $ 0.30 $ 0.28 $ 0.30	For the Three Months Ended September 30 2019 2018 $ 0.29 $ 0.30 $ 0.28 $ 0.30		Unit: NT$ Per Share For the Nine Months Ended September 30	Unit: NT$ Per Share For the Nine Months Ended September 30	Unit: NT$ Per Share For the Nine Months Ended September 30
		2019 $ 0.29 $ 0.28			2019 $ 0.84)		2018
				(			$ 0.66 $ 0.66

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

Net Profit/ (loss) for the Period

Earnings (loss) used in the computation of basic earnings (loss) per share		For the Three Months Ended September 30 2019 2018 $ 79,983 $ 85,284	For the Three Months Ended September 30 2019 2018 $ 79,983 $ 85,284		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 79,983			2019 $ 231,810)		2018
				(			$ 189,875

Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares)

Weighted average number of ordinary shares in computation of basic earnings (loss) per share Effect of potentially dilutive ordinary shares: Employee share option Employees’ compensation issued Tresury shares transferred to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share		For the Three Months Ended September 30	For the Three Months Ended September 30	For the Three Months Ended September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 276,676 60 - 11,419 288,155		2018		2019		2018
				286,279 976 975 - 288,230		275,415 - - - 275,415		286,217 1,033 1,944 - 289,194

Note ： The Company has a net loss after tax for the nine months ended September 30, 2019, so there is no dilution effect in the calculation of earnings (loss) per share.

If the Company is able to select the settlement of the compensation paid to employees in cash or shares, the weighted average number of outstanding shares used in the computation of diluted earnings per share should include the dilutive effect of the assumption that the entire amount of the compensation is settled in shares until the number of shares distributed to employees is resolved in the following year.

25. SHARE-BASED PAYMENT ARRANGEMENTS

The Company did not have new share option plan issued for employees for the nine months ended September 30, 2019 and 2018. The detailed information of the employee share option plans could be found in Note 26 of the consolidated financial statements for the year ended December 31, 2018.

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

• 20 -

• a. Employee share option plan

Information on outstanding options for the nine months ended September, 2019 and 2018 is as follows:

September 30, 2019

Employee Share Option Plan	BeginningBalance	BeginningBalance	Options unvested	Options unvested	Options exercised	Options exercised	Options expired	Options expired	EndingBalance	EndingBalance
	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ ) $ 23.79 - 12.20
2006 2013 2015	1,594,999 627,250 985,750	$ 19.86 37.90 12.20	- - ( 35,750)	$ - - 12.20	(630,200) - (112,250)	$ 13.72 - 12.20	( 38,400) (627,250) -	$ 25.93 37.90 -	926,399 - 837,750

September 30, 2018

Employee Share Option Plan	BeginningBalance	BeginningBalance	Options unvested	Options unvested	Options exercised	Options exercised	Options expired	Options expired	EndingBalance	EndingBalance
	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ )	Units of Option	Weighted- Average Exercise Price ( N T $ )
2006 2013 2015	1,637,199 768,750 1,476,500	$ 19.84 37.90 12.20	( 9,000) - (116,500)	$ 17.24 - 12.20	( 13,000) - (257,750)	$ 17.24 - 12.20	- (125,500) ( 15,000)	$ - 37.90 12.20	1,615,19 643,250 1,087,250	$ 19.88 37.90 12.20

b. Shares Buyback Program

Based on the 2nd and the 5rd Shares Buy Back Program for transferring to employees approved by The board of directors on April 28, 2016, May 12, 2017, July 26, 2018 and August 23, 2018, the Company bought back 5,000 thousand, 6,808 thousand, 8,000 thousand and 7,689 thousand shares respectively. The transferred price to employees would be the average purchase price which is respectively $26.53, $36.11, $24.10 and $24.98 per share.

Information about Shares Buy Back Programs for the nine months ended September 30, 2019 is as follows:

The 2nd Shares Buy Back Program The 3rd Shares Buy Back Program The 5th Shares Buy Back Program

Employee subscription base date	Shares transferred (In Thousands)	Shares transferred (In Thousands)	The fair value of the right to subscribe (NT$)	Employee subscription base date		Shares transferred (In Thousands)	The fair value of the right to subscribe (NT$)	Employee subscription base date	Shares transferred (In Thousands) 4,651 - - - - - 4,651	The fair value of the right to subscribe (NT$)
2016/10/28 2017/2/24 2018/2/8 2018/4/24 2018/7/26 2019/5/7 Total		2,624 50 120 255 1,765 186 5,000	$ 11.26 11.26 4.20 4.30 - -	2017/7/24 2018/7/26 2019/5/7 Total		3,198 3,515 95 - - - 6,808	$ 12.85 - -	2019/5/7 Total		$ -

Compensation cost of aforementioned share-based payments for the nine months ended September 30, 2019 and 2018 is as follows:

For the Nine Months Ended September 30

Employee share option plans Shares buyback programs Adjustment account: Capital surplus - employee share options		2019 $ 669 7,414 $ 8,083 $ 8,083		2018
				$ 1,778 20,527 $ 22,305 $ 22,305

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

• 21 -

26. OPERATING LEASE ARRANGEMENTS

The Company as Lessee

The Company and its subsidiaries have lease contracts in relation to office, plant and part of office equipment, and they will expire by September 2020. Those agreements are short-term leases and qualified for the recognition exemption to leases so the Company does not recognize right-of-use assets and lease liabilities for these leases. The committed payments for the short-term leases were $16,841 thousand as of September 30, 2019.

The lease payments recognized in profit or loss are as follows:

Lease payments	For the Three Months Ended September 30 2019 2018 $ 9,641 $ 9,548	For the Three Months Ended September 30 2019 2018 $ 9,641 $ 9,548	For the Three Months Ended September 30 2019 2018 $ 9,641 $ 9,548		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 9,641			2019 $ 27,805		2018
							$ 27,647

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

Not later than 1 year Later than 1 year and not later than 5 years		December 31, 2018 $ 22,573 240 $ 22,813		September 30, 2018
				$ 17,089 2,670 $ 19,759

27. FINANCIAL INSTRUMENTS

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

• a. The Company’s management believes the carrying amounts of financial assets and financial liabilities not measured at fair value approximate their fair values.

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

• 1) Fair value hierarchy

September 30, 2019 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Financial assets at FVTOCI Investments in debt instruments Fixed income bonds December 31, 2018 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Financial assets at FVTOCI Investments in debt instruments Fixed income bonds		Level 1 $ 10,863 - - $ 10,863 $ - Level 1 $ 10,540 - - $ 10,540 $ -		Level 2 $ - - 30,435 $ 30,435 $ 262,199 Level 2 $ - - 60,500 $ 60,500 $ 313,969		Level 3 $ - 45,709 - $ 45,709 $ - Level 3 $ - 41,023 - $ 41,023 $ -		Total
								$ 10,863 45,709 30,435 $ 87,007 $ 262,199 Total
								$ 10,540 41,023 60,500 $ 112,063 $ 313,969

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

• 22 -

September 30, 2018 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Financial assets at FVTOCI Investments in debt instruments Fixed income bonds		Level 1 $ 10,370 - - $ 10,370 $ -		Level 2 $ - - 29,533 $ 29,533 $ 325,236		Level 3 $ - 37,593 - $ 37,593 $ -		Total
								$ 10,370 37,593 29,533 $ 77,496 $ 325,236

There were no transfers between Level 1 and Level 2 for the nine months ended September 30, 2019 and 2018.

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

Financial assets at FVTPL Balance, beginning of period Purchases Recognized in profit or loss(other income or loss) Effect of foreign currency exchange differences Balance, end of period	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2019 $ 41,023 4,649 ( 275 ) 312 $ 45,709	2018
		$ 29,760 8,530 ( 1,434 ) 737 $ 37,593

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

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

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

The 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.

• c. Categories of financial instruments

Financial assets Fair value through profit or loss (FVTPL) Mandatorily at FVTPL Amortized cost (Note 1) Financial assets at FVTOCI Investments in debt instruments	September 30, 2019 $ 87,007 6,072,497 262,199	December 31, 2018 $ 112,063 5,661,319 313,969	September 30, 2018
			$ 77,496 6,365,462 325,236

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

• 23 -

Financial liabilities Amortized cost (Note 2)	September 30, 2019 $ 2,476,179	December 31, 2018 $ 2,695,644	September 30, 2018
			$ 3,036,029

• 1) The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, trade receivables, other financial assets and refundable deposits (categorized in other non-current assets).

• 2) The balances included financial liabilities measured at amortized cost, which comprise trade payables, other payables, and guarantee deposits received.

• d. Financial risk management objectives and policies

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

The board of directors is solely responsible for establishing and monitoring 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 Group, 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 conducting the financial-risk aversion policies. The financial risk management policies are periodically reviewed to reflect changes in 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 foreign currency at the end of the reporting period are shown in Note 31.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar. The following table details the Company’s sensitivity to a 5% increase and decrease in New Taiwan dollars (the functional currency)

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

• 24 -

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 by 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 functional currency against the relevant currency. In contrast, 5% appreciation of the functional currency against the relevant currency leads to an equal and opposite impact on pre-tax profit or equity.

Profit or loss/ equity		USD Impact	USD Impact	USD Impact
		For the Nine Months Ended September 30
		2019 $ 43,668 (i)		2018
				$ 18,076 (i)

• i. This was mainly attributable to the outstanding balances of USD time deposits, trade receivables, trade payables, other payables, other current assets and other current liabilities.

b) Interest rate risk

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

Financial assets exposed to interest rates at the end of the reporting period are as follows:

Fair value interest rate risk Financial assets Cash flow interest rate risk Financial assets Fair value interest rate risk Financial liabilities	September 30, 2019 $ 4,031,409 $ 1,219,629 $ -		December 31, 2018 $ 4,110,624 $ 901,327 $ -	September 30, 2018	September 30, 2018
					$ 4,038,593 $ 1,464,181 $ 100,000

Sensitivity analysis

The below sensitivity analysis was determined based on the Company’s exposure to interest rates for non-derivative instruments as of 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 nine months ended September 30, 2019 and 2018 would increase/ decrease by NT$2,287 thousand and NT$2,745 thousand, respectively.

2) Credit risk

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

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

• 25 -

The Company’s major credit risk of trade receivables mainly came from its top 5 customers. Ongoing credit evaluation of the financial condition of the customers is performed.

As of September 30, 2019, trade receivables from top 5 customers represented 74% of total trade receivables. The credit concentration risk of other trade receivables was insignificant.

Credit risk management for investments in debt instruments

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

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

Category Performing Category Performing Category Performing	Description The debtor with low credit risk and fully capable of paying off contractual cash flows Description The debtor with low credit risk and fully capable of paying off contractual cash flows Description The debtor with low credit risk and fully capable of paying off contractual cash flows	Basis for Recognizing Expected Credit Loss 12 months expected credit loss Basis for Recognizing Expected Credit Loss 12 months expected credit loss Basis for Recognizing Expected Credit Loss 12 months expected credit loss	Expected Credit Loss Ratio 0% Expected Credit Loss Ratio 0% Expected Credit Loss Ratio 0%	Carrying Amount as of September 30, 2019
				$ 292,634 Carrying Amount as of December 31, 2018
				$ 374,469 Carrying Amount as of September 30, 2018
				$ 354,769

3) Liquidity risk

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

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

• 26 -

As of September 30, 2019, December 31, 2018, and September 30, 2018, the available unused short-term bank loan facilities were set out in (b) Financing credit line.

• a) Liquidity and interest rate risk 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.

September30, 2019 Non-interest bearing December 31, 2018 Non-interest bearing September30, 2018 Fixed-rate instruments Non-interest bearing		On Demand or Less than 1 Year $ 2,210,061 On Demand or Less than 1 Year $ 2,419,860 On Demand or Less than 1 Year $ 100,014 2,691,166 $ 2,791,180		1-5 Years	1-5 Years
				$ 266,118
					1-5 Years
					$ 275,784
					1-5 Years
					$ - 244,863
					$ 244,863

• b) Financing credit line

Unsecured bank overdraft line of credit Amount used Amount unused	September 30, 2019 $ - 408,640 $ 408,640		December 31, 2018 $ - 1,300,000 $ 1,300,000	September 30, 2018	September 30, 2018
					$ 100,000 1,310,500 $ 1,410,500

The above amounts included credit line for the subsidiaries guaranteed by the Company.

28. TRANSACTIONS WITH RELATED PARTIES

• a. Balances, transactions, revenue and expenses between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.

• b. Compensation of key management personnel

Long-term employee benefits Short-term employee benefits Post-employment benefits Share-based payments		For the Three Months Ended September 30 2019 2018 $ - $ 21,096 9,767 11,376 135 135 730 1,491 $ 10,632 $ 34,098	For the Three Months Ended September 30 2019 2018 $ - $ 21,096 9,767 11,376 135 135 730 1,491 $ 10,632 $ 34,098		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ - 9,767 135 730 $ 10,632			2019		2018
					$ 20,001 30,505 405 2,240 $ 53,151		$ 28,320 34,113 332 4,680 $ 67,445

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

• 27 -

29. PLEDGED ASSETS

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

Pledge deposits (categorized in other non-current assets)		September 30, 2019 $ 4,000		December 31, 2018 $ 4,000		September 30, 2018
						$ 35,061

30. SIGNIFICANT CONTINGENT LIABILITIES

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

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

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

September 30, 2019 Financial assets Monetary items USD USD Financial liabilities Monetary items USD USD December 31, 2018 Financial assets Monetary items USD USD RMB Financial liabilities Monetary items USD USD September 30, 2018 Financial assets Monetary items USD	Foreign Currencies $ 52,564 3,427 21,253 6,600 Foreign Currencies $ 39,074 6,644 7,832 16,911 16,024 Foreign Currencies $ 45,164	Exchange Rate 31.04(USD:NTD) 7.0729(USD:RMB) 31.04(USD:NTD) 7.0729(USD:RMB) Exchange Rate 30.715 (USD:NTD) 6.8632 (USD:RMB) 0.1457 (RMB:USD) 30.715 (USD:NTD) 6.8632 (USD:RMB) Exchange Rate 30.525 (USD:NTD)	Carrying Amount
			$ 1,631,580 106,359 659,697 204,875 Carrying Amount
			$ 1,200,151 204,081 35,049 519,425 492,173 Carrying Amount
			$ 1,378,646

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

• 28 -

USD Financial liabilities Monetary items USD USD	Foreign Currencies 3,081 27,167 9,235	Exchange Rate 6.8792 (USD:RMB) 30.525 (USD:NTD) 6.8792 (USD:RMB)	Carrying Amount
			94,050 829,277 281,903

32. SEGMENT INFORMATION

Segment information is provided to business decision makers to allocate resources and assesse segment performance. The Company’s operation focuses on the sales and development of mobile device related IC under a single operation unit. Thus, the information of individual operating segment is not applicable.

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

• 29 -