FocalTech — Interim / Quarterly Report 2021

Dec 29, 2021

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2021 and 2020

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

INDEPENDENT AUDITORS’ REVIEW REPORT The Board of Directors and Shareholders FocalTech Systems Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of FocalTech Systems Co., Ltd. and its subsidiaries (collectively, the “Company”) as of March 31, 2021 and 2020, the related consolidated statements of comprehensive income for the three months ended March 31, 2021 and 2020 and for the three months ended March 31, 2021 and 2020, the consolidated statements of changes in equity and of cash flows for the three months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies(collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 "Review of Financial Information Performed by the Independent Auditor of the Entity". A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As disclosed in Note 12 to the consolidated financial statements, the financial statements of non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of March 31, 2021 and 2020, combined total assets of these non-significant subsidiaries were NT$503,098 thousand and NT$588,619 thousand, respectively, representing 4% and 5%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$35,648 thousand and NT$98,299 thousand, respectively, representing 1% and 2%, respectively, of the consolidated total liabilities; for the three months and three months ended March 31, 2021 and 2020, the amounts of combined comprehensive income(loss) of these subsidiaries were NT$(48,101) thousand,NT$(25,489) thousand respectively, representing (6%) (33%).

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries and as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not give a true and fair view of the consolidated financial position of the Group as of March 31, 2021 and 2020, its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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

Deloitte & Touche Taipei, Taiwan Republic of China May 7, 2021

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 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 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 Employee share options Employee share options – expired Total capital surplus 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 (Note 20) Total equity TOTAL		March 31, 2021 Amount % $ 5,186,951 37 58,314 - 1,823,036 13 2,020,602 14 1,209,703 9 251,788 2 10,550,394 75 466,535 3 188,938 1 1,302,523 9 1,237,268 9 59,188 1 80,379 1 181,947 1 3,516,778 25 $ 14,067,172 100 $ 566,848 4 2,062,737 15 1,197,490 8 565,114 4 289,162 2 4,681,351 33 56,665 1 23,251 - 600,153 4 10,400 - 690,469 5 5,371,820 38 2,105,279 15 4,731,161 34 78,015 1 8,001 - 33,933 - 4,851,110 35 1,857,784 13 (130,195) (1) 2,659 - (127,536) (1) (24,316) - 8,662,321 62 33,031 - 8,695,352 62 $ 14,067,172 100		December 31, 2020 Amount % $ 4,011,682 33 - - 1,633,900 13 1,755,142 14 1,385,936 11 184,262 2 8,970,922 73 234,662 2 247,974 2 1,321,940 11 1,237,268 10 63,202 - 85,154 1 183,931 1 3,374,131 27 $12,345,053 100 $ 523,648 4 1,731,109 14 1,037,431 8 433,121 4 230,944 2 3,956,253 32 53,213 1 23,366 - 490,361 4 10,400 - 577,340 5 4,533,593 37 2,103,532 17 4,725,445 38 69,361 1 14,903 - 33,933 - 4,843,642 39 1,012,301 8 (125,038) (1) 2,722 - (122,316) (1) (24,316) - 7,812,843 63 (1,383) - 7,811,460 63 $ 12,345,053 100		March 31, 2020
				Amount $ 4,011,682 - 1,633,900 1,755,142 1,385,936 184,262 8,970,922 234,662 247,974 1,321,940 1,237,268 63,202 85,154 183,931 3,374,131 $12,345,053 $ 523,648 1,731,109 1,037,431 433,121 230,944 3,956,253 53,213 23,366 490,361 10,400 577,340 4,533,593 2,103,532 4,725,445 69,361 14,903 33,933 4,843,642 1,012,301 (125,038) 2,722 (122,316) (24,316) 7,812,843 (1,383) 7,811,460 $ 12,345,053		Amount % $ 3,559,430 29 112,347 1 1,527,095 13 2,347,041 19 1,281,055 11 261,628 2 9,088,596 75 54,182 - 62,560 1 1,337,986 11 1,237,268 10 76,406 1 107,145 1 131,631 1 3,007,178 25 $ 12,095,774 100 $ - - 2,212,002 18 828,816 7 395,188 3 180,040 2 3,616,046 30 32,331 1 23,976 - 375,637 3 10,400 - 442,344 4 4,058,390 34 2,999,069 25 5,045,484 42 48,662 - 24,096 - 33,534 - 5,151,776 42 (117,121) (1) 19,292 - 2,915 - 22,207 - (43,074) - 8,012,857 66 24,527 - 8,037,384 66 $ 12,095,774 100

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

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

REVENUE (Note 21) COSTS OF SALES (Notes 11 and 22) GROSS PROFIT OPERATING EXPENSES (Notes 22,25, 26 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATIONS INCOME NON-OPERATING INCOME AND EXPENSES Finance costs(Note 22) Interest income Gain on financial assets and liabilities at fair value through profit or loss Other gains and losses - net (Loss) gain on foreign currency exchange Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 23) NET INCOME OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss: Exchange differences from translating the financial statements of foreign operations Unrealized gain(loss) from debt instrument investments measured at fair value through other comprehensive loss		**For the Three Months **	**For the Three Months **	**Ended March 31 **
		2021 Amount % $ 4,349,854 100 (2,721,270) (63) 1,628,584 37 (113,511) (3) (112,679) (2) (476,900) (11) (703,090) (16) 925,494 21 (2,351) - 7,619 - 37,761 1 16,622 - (6,732) - 52,919 1 978,413 22 (141,462) (3) 836,951 19 (4,970) - (63) -		2020
				Amount % $ 2,909,637 100 (2,269,808) (78) 639,829 22 (94,154) (3) (87,317) (3) (387,653) (13) (569,124) (19) 70,705 3 (1,078) - 19,520 1 (2,762) - 13,652 - 2,771 - 32,103 1 102,808 4 (43,410) (2) 59,398 2 15,858 1 1,165 -

(Continued)

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

Items that may be reclassified subsequently to profit or loss Total other comprehensive Loss TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 24) Basic Diluted		For the Three Months	For the Three Months	Ended March 31
		2021 Amount % $ (5,033) - (5,033) - $ 831,918 19 $ 845,740 19 (8,789) - $ 836,951 19 $ 840,520 19 (8,602) - $ 831,918 19 $ 4.24 $ 4.01		2020
				Amount % $ 17,023 1 17,023 1 $ 76,421 3 $ 66,186 2 (6,788) - $ 59,398 2 $ 82,586 3 (6,165) - $ 76,421 3 $ 0.24 $ 0.23
		$		$
		$		$
		$		$
		$		$
		$		$

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

(Concluded)

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

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

CONSOLIDATED STATEMENTS OF CHANGES IN (In Thousands of New Taiwan Dollars)	EQUITY
BALANCE, JANUARY 1, 2020 Net income for the three months ended March 31, 2020 Other comprehensive income (loss) for the three months ended March 31, 2020, net of income tax Total comprehensive income (loss) for the three months ended March 31, 2020 Compensation cost of employee share options (Note 20 and 25) Treasury shares transferred to employees (Note 20 and 25) Issuance of ordinary shares from exercise of employee share options (Note 20 and 25) BALANCE, MARCH 31, 2020 BALANCE, JANUARY 1, 2021 Net income for the three months ended March 31, 2021 Other comprehensive income (loss) for the three months ended March 31, 2021, net of income tax Total comprehensive income (loss) for the three months ended March 31, 2021 Compensation cost of employee share options (Note 20 and 25) Increase in non-controlling interests Changes in ownership interests in subsidiaries Issuance of ordinary shares from exercise of employee share options (Note 20 and 25) BALANCE, MARCH 31, 2021						Equity Attributable toOwners of the Parent						Non-controlling Interests $ 30,692 (6,788) 623 (6,165) - - - $ 24,527 $ (1,383) (8,789) 187 (8,602) - 42,759 257 - $ 33,031		Total Equity
	Share Capital Ordinary Shares $ 2,996,759 - - - - - 2,310 $ 2,999,069 $ 2,103,532 - - - - - - 1,747 $ 2,105,279	Capital Surplus				Retainted Earnings (Accumulated deficits) $ (183,307) 66,186 - 66,186 - - - $ (117,121) $ 1,012,301 845,740 - 845,740 - - (257) - $ 1,857,784	Other	Equity	Treasury Shares $ (267,158) - - - - 224,084 - $ (43,074) $ (24,316) - - - - - - - $ (24,316)		Total $ 7,697,478 66,186 16,400 82,586 2,978 224,084 5,731 $ 8,012,857 $ 7,812,843 845,740 (5,220) 840,520 4,838 - (257) 4,377 $ 8,662,321
							Exchange Differences from Translating the Financial Statement of Foreign Operations $ 4,057 - 15,235 15,235 - - - $ 19,292 $ (125,038) - (5,157) (5,157) - - - - $ (130,195)	Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income $ 1,750 - 1,165 1,165 - - - $ 2,915 $ 2,722 - (63) (63) - - - - $ 2,659
			$ 5,145,377 - - - 2,978 - 3,421 $ 5,151,776 $ 4,843,642 - - - 4,838 - - 2,630 $ 4,851,110											$ 7,728,170 59,398 17,023 76,421 2,978 224,084 5,731 $ 8,037,384 $ 7,811,460 836,951 (5,033) 831,918 4,838 42,759 - 4,377 $ 8,695,352

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.

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Net (gain) loss on financial assets at fair value through profit or loss Finance costs Interest income Compensation costs of employee share options Loss on disposal of investments Reversal gain on write-off of inventories Unrealized (gain) 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 Proceeds from disposal of financial asset at fair value through other comprehensive income Acquisition of property, plant and equipment Acquisition of intangible assets Decrease in other financial assets Decrease in other non-current assets Interest received Net cash inflow from investing activities		For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 978,413 19,160 3,997 (37,761) 2,351 (7,619) 4,838 - (15,743) 4,625 (193,845) (189,087) (254,392) (66,843) 333,600 157,977 59,042 (115) 798,598 (2,466) (1,978) 794,154 - (5,937) - 176,099 1,974 7,444 179,580	2020 $ 102,808 19,659 22,991 2,762 1,078 (19,520) 2,978 40,928 - 5,216 (41,290) (102,534) (770,588) 101,592 219,745 (130,782) 71,277 (102) (473,782) (1,078) (1,913) (476,773) 9,032 (4,620) (149) 324,028 3,901 18,539 350,731 (Continued)

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

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 Increase (decrease) in guarantee deposits Exercise of employee share options Increase in non-controlling interests Treasury shares transferred to employees Net cash inflow 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 Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 43,766 109,821 4,377 42,759 - 200,723 812 1,175,269 4,011,682 $ 5,186,951	2020 $ - (20,123) 5,731 - 224,084 209,692 14,277 97,927 3,461,503 $ 3,559,430

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

(Concluded)

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

FocalTech Systems Co., Ltd. (the “FocalTech” or the “Company”), formerly named as Orise Technology Co., Ltd., was incorporated in the Republic of China (“ROC”) in January 2006 and moved to Hsinchu Science Park in April in the same year. The Company’s shares have been listed on the Taiwan Stock Exchange (“TSE”) since July 2007. On January 2, 2015, the Company acquired FocalTech Corporation, Ltd. through a share swap and renamed on January 17, 2015. This acquisition was comprehensively considered as a reverse merger, where FocalTech Corporation, Ltd. was treated as the acquirer in the financial statements. The Company 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 April 28, 2021.

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

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

The initial application of the amendments to the IFRSs endorsed and issued in to effect by the FSC did not have a significant impact on the Group’s accounting policies.

• b. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New, Revised or Amended Standards and Interpretations Annual Improvements to IFRS Standards 2018–2020 Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 16 “Property, Plant and Equipment-Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts—Cost of Fulfilling a Contract”

Effective Date Announced by IASB (Note 1)

January 1, 2022 (Note 2) January 1, 2022 (Note 3) To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 6) January 1, 2023 (Note 7) January 1, 2022 (Note 4) January 1, 2022 (Note 5)

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

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

• Note 2: The amendments to IFRS 9 will be applied prospectively to modifications or exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

• Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

• Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

• Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

• Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have impact on the Group’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 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

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

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

• c. Basis of consolidation

The detail information, holding percentages, and main business of the subsidiaries could be found in Note 12.

• d. Other significant accounting policies

Except for 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, 2020.

• 1) 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.

• 2) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income and the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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, 2020.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent (time deposits with original maturities within three months)	March 31, 2021 December 31, 2020 $ 2,991 $ 2,182 3,686,153 3,668,013 1,497,807 341,487 $ 5,186,951 $ 4,011,682	March 31, 2020 $ 11,562 2,198,323 1,349,545 $ 3,559,430

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

	March 31,	December 31,	March 31,
	2021	2020	2020
Demand deposits	0.001%-0.35%	0.001%-0.35%	0.001%-0.35%
Time deposits	0.05%-0.33%	0.1%-0.35%	0.7%-2.5%

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

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

8. 9. 10.

March 31, 2021 December 31, 2020 March 31, 2020 Mandatorily measured at fair value through profit or loss (FVTPL) Listed preferred shares $ 303,266 $ 72,186 $ 10,336 Private Funds 52,291 52,579 43,846 Structured Investments 110,978 109,897 - $ 466,535 $ 234,662 $ 54,182 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME March 31, 2021 December 31, 2020 March 31, 2020 Investments in debt instruments Current Foreign investments Fixed income bonds $ 58,314 $ - $ 112,347 Non–Current Foreign investments Fixed income bonds $ 188,938 $ 247,974 $ 62,560 Yield rates 1.801%-4.117% 1.801%-4.117% 2.307%-4.117% OTHER FINANCIAL ASSETS March 31, 2021 December 31, 2020 March 31, 2020 Time deposits with original maturities more than three months $ 1,209,703 $ 1,385,936 $ 1,281,055 Interest rate intervals 0.1%-4.18% 0.2%-4.18% 1.5%-4.18% TRADE RECEIVABLES, NET March 31, 2021 December 31, 2020 March 31, 2020 Trade receivables $ 1,823,036 $ 1,633,900 $ 1,527,095

The average credit term for sales of goods was 60-120 days. In order to minimize credit risk, management of the Group 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 Group 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 Group’s

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

management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach prescribed by IFRS 9, which permits the use of allowances of expected credit losses over the lifetime for all trade receivables. The expected credit losses on trade receivables are estimated by using an allowance matrix with references to past 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 in the loss patterns of different customer groups. Therefore, the allowance matrix does not further distinguish the customer base, and only sets the expected credit loss rate based on the overdue days of trade receivable.

The following table details the loss allowance of trade receivables based on the Group’s allowance matrix. March 31, 2021

Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2020 Expected credit loss rate Gross carrying amount and Amortized cost March 31, 2020 Expected credit loss rate Gross carrying amount and Amortized cost	Non Past Due 0% $ 1,682,026 Non Past Due 0% $ 1,593,485 Non Past Due 0% $ 1,292,282		Overdue 1-60 Days 0% $ 141,010 Overdue 1-60 Days 0% $ 40,401 Overdue 1-60 Days 0% $ 223,934	Overdue 61-180 Days 0% $ - Overdue 61-180 Days 0% $ 14 Overdue 61-180 Days 0% $ 879	Overdue Over 180 Days 0% $ - Overdue Over 180 Days 0% $ - Overdue Over 180 Days 0% $ -		Total
							0% $ 1,823,036 Total
							0% $ 1,633,900 Total
							0% $ 1,527,095

11. INVENTORIES

Finished goods Work in process Raw materials and supplies	March 31, 2021 December 31, 2020 $ 505,004 $ 418,694 890,915 1,025,201 624,683 311,247 $ 2,020,602 $ 1,755,142	March 31, 2020 $ 790,604 1,054,133 502,304 $ 2,347,041

The cost of goods sold were NT$2,721,270 thousand and NT$2,269,808 thousand, including reverse of write-off of inventories of NT$15,743 thousand and NT$ 0 thousand for the three months ended March 31, 2021 and 2020, respectively. Abovementioned reversals are resulted from sales of slow moving inventory.

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

12. SUBSIDIARIES

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

Investor Investee Main Businesses	Percentage of Ownership
	March 31, 2021 December 31, 2020 March 31, 2020
FocalTech Systems Co., Ltd. FocalTech Corporation, Ltd. Investment activity FocalTech Electronics, Ltd. Investment activity	100% 100% 100% 100% 100% 100%
FocalTech Systems Co., Ltd. And FocalTech Electronics Co., Ltd. (a) FocalTech Smart Sensors, Ltd. Investment activity	66.45% (Note) 67.15% 67.15%
FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd. Research, development, manufacturing and sale of integrated circuits	100% 100% 100%
FocalTech Corporation,Ltd. FocalTech Systems, Inc. Investment activity	100% 100% 100%
FocalTech Systems, Inc. FocalTech Systems, Ltd. Investment activity	100% 100% 100%
FocalTech Systems, Ltd. FocalTech Systems (Shenzhen) Co., Ltd. Design and research of integrated circuits FocalTech Electronics Co.,Ltd. Import and export of integrated circuits	100% 100% 100% 100% 100% 100%
FocalTech Electronics, Ltd. FocalTech Electronics (Shanghai) Co., Ltd. Sales support and post-sales service for affiliates’ IC products FocalTech Electronics (Shenzhen) Co., Ltd. Research, development, manufacturing and sale of integrated circuits Hefei PineTech Electronics Co.,Ltd. Research, development and sale of integrated circuits	100% 100% 100% 100% 100% 100% 100% 100% 100%

a. FocalTech Smart Sensors, Ltd. issued its ordinary shares but the Group did not subscribe according to the shareholding ratio causing changes in the shareholding ratio. The transaction did not change the control over subsidiary, the group regarded it as equity transaction.

As of March 31, 2021 and 2020, the immaterial subsidiaries of the Company included FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd., FocalTech Systems (Shenzhen) Co., Ltd., FocalTech Electronics Co., Ltd., FocalTech Electronics (Shanghai) Co., Ltd., FocalTech Electronics (Shenzhen) Co., Ltd., Hefei PineTech Electronics Co., Ltd..

The financial statements of part of the immaterial subsidiaries had not been reviewed by auditors. As of March 31, 2021 and 2020, the total amounts of assets of the immaterial subsidiaries were NT$503,098 thousand, and NT$588,619 thousand, respectively, accounted for 4% and 5% of total consolidated assets, respectively. The total amounts of liabilities were NT$35,648 thousand, and NT$98,299 thousand, respectively, accounted for 1% and 2% of total consolidated liabilities, respectively. For the three months ended March 31, 2021 and 2020, and for the three months ended March 31, 2021 and 2020, the total

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

immaterial subsidiaries comprehensive income (loss) has been recognized at NT$(48,101) thousand, NT$(25,489) thousand , respectively, accounted for (6%), and (33%) of the comprehensive income (loss), respectively.

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2020 Additions Reclassification Effect of foreign currency exchange differences Balance, March 31, 2020 Accumulated depreciation Balance, January 1, 2020 Depreciation Effect of foreign currency exchange differences Balance, March 31, 2020 Carrying amounts as of March 31, 2020 Cost Balance, January 1, 2021 Additions Reclassification Effect of foreign currency exchange differences Balance, March 31, 2021 Accumulated depreciation Balance, January 1, 2021 Depreciation Effect of foreign currency exchange differences Balance, March 31, 2021 Carrying amounts as of December 31, 2020 and January 1, 2021 Carrying amounts as of March 31, 2021	Buildings Development Equipment $ 1,322,961 $ 285,660 - 4,442 - (261 ) (9,422 ) (718 ) $ 1,313,539 $ 290,559 $ 84,761 $ 174,368 8,824 9,936 (689 ) 354 $ 92,896 $ 184,658 $ 1,220,643 $ 105,901 $ 1,343,090 $ 292,977 - 5,232 - (158 ) (6,700 ) (122 ) $ 1,336,390 $ 297,929 $ 121,696 $ 203,722 8,943 9,436 (666 ) (21 ) $ 129,973 $ 213,137 $ 1,221,394 $ 89,255 $ 1,206,417 $ 84,792	Office Equipment $ 15,548 - - (84 ) $ 15,464 $ 12,431 232 (63 ) $ 12,600 $ 2,864 $ 11,557 88 105 (43 ) $ 11,707 $ 9,574 142 (33 ) $ 9,683 $ 1,983 $ 2,024	Information Equipment $ 42,621 178 261 (284 ) $ 42,776 $ 33,752 667 (221 ) $ 34,198 $ 8,578 $ 38,869 617 53 (182 ) $ 39,357 $ 29,561 639 (133 ) $ 30,067 $ 9,308 $ 9,290	Leasehold Improve- ments $ 38,388 - - (100 ) $ 38,288 $ 38,388 - (100 ) $ 38,288 $ - $ 38,604 - - (71 ) $ 38,533 $ 38,604 - (71 ) $ 38,533 $ - $ -	Total $ 1,705,178 4,620 - (9,172 )
					$ 1,700,626 $ 343,700 19,659 (719 )
					$ 362,640 $ 1,337,986 $ 1,725,097 5,937 - (7,118 )
					$ 1,723,916 $ 403,157 19,160 (924 )
					$ 421,393 $ 1,321,940 $ 1,302,523

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

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

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

Property, plant and equipment were pledged as collateral. Refer to Note 29.

14. GOODWILL

Ending balance	March 31, 2021 December 31, 2020 $ 1,237,268 $ 1,237,268	March 31, 2020 $ 1,237,268

Considering the synergy of integration of LCD driver and touch controller under the industry trend, the reverse merger was triggered by FocalTech Corporation, Ltd. on January 2, 2015, accounted for goodwill according to business combination.The Group estimated cash flows from sales of IDC (Integrated Driver Controller) based on smartphone market growth rate and market share. Refer to Note 14 in financial statements in 2020 for related information.

15. OTHER INTANGIBLE ASSETS

Cost Balance, January 1, 2020 Additions Effect of foreign currency exchange differences Balance, March 31, 2020 Accumulated amortization Balance, January 1, 2020 Amortization expenses Effect of foreign currency exchange differences Balance, March 31, 2020 Carrying amounts as of March 31, 2020	Licenses and Franchises $ 127,719 - 891 $ 128,610 $ 109,676 17,690 817 $ 128,183 $ 427	Software $ 154,970 149 1,093 $ 156,212 $ 148,376 1,505 1,108 $ 150,989 $ 5,223	Patents Trademark $ 76,704 $ 74,000 - - (1) - $ 76,703 $ 74,000 $ 39,152 $ 37,000 1,946 1,850 (1) - $ 41,097 $ 38,850 $ 35,606 $ 35,150	Total $ 433,393 149 1,983
				$ 435,525
				$ 334,204 22,991 1,924
				$ 359,119
				$ 76,406

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

Cost Balance, January 1, 2021 Effect of foreign currency exchange differences Balance, March 31, 2021 Accumulated amortization Balance, January 1, 2021 Amortization expenses Effect of foreign currency exchange differences Balance, March 31, 2021 Carrying amounts as of December 31, 2020and January 1, 2021 Carrying amounts as of March 31, 2021	$ 122,262 200 $ 122,462 $ 122,130 40 200 $ 122,370 $ 132 $ 92	$ 148,247 224 $ 148,471 $ 144,543 161 241 $ 144,945 $ 3,704 $ 3,526	$ 76,708 (1) $ 76,707 $ 46,942 1,946 (1) $ 48,887 $ 29,766 $ 27,820	$ 74,000 - $ 74,000 $ 44,400 1,850 - $ 46,250 $ 29,600 $ 27,750	$ 421,217 423 $ 421,640 $ 358,015 3,997 440 $ 362,452 $ 63,202 $ 59,188 (concluded)

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

Licenses and franchises 3-5 years Software 1-5 years Patents 7-10 years Trademark 10 years 16. SHORT-TERM BORROWINGS

Unsecured bank loans Secured bank loans Annual interest rate Unsecured bank loans Secured bank loans	March 31, 2021 December 31, 2020 $ 480,000 $ 480,000 86,848 43,648 $ 566,848 $ 523,648 0.88-1.16% 0.88-1.06% 4.1-4.3% 4.1%	March 31, 2020 $ - - $ -

Properties, plants and equipments is pledged as collateral for the bank loans, please refer to Note 29.

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

17. TRADE PAYABLES

Trade payables	March 31, 2021 December 31, 2020 $ 2,062,737 $ 1,731,109	March 31, 2020 $ 2,212,002

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

18. OTHER PAYABLES

Payable for rebates Payable for salaries and bonuses Payable for labor, health and social insurance Reserve for litigations Payable for professional services and others	March 31, 2021 December 31, 2020 $ 495,044 $ 423,800 554,900 467,979 13,423 13,977 47,690 47,598 86,433 84,077 $1,197,490 $1,037,431	March 31, 2020 $ 406,112 285,137 25,901 50,514 61,152 $ 828,816

19. RETIREMENT BENEFIT

Pension expenses under the defined benefit plans, calculated using the actuarially determined pension cost rate as of December 31, 2020 and 2019, were NT$46 thousand and NT$91 thousand for the three months ended March 31, 2021 and 2020, 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	March 31, 2021 December 31, 2020 500,000 500,000 $ 5,000,000 $ 5,000,000 210,528 210,353 $ 2,105,279 $ 2,103,532	March 31, 2020 500,000 $ 5,000,000 299,907 $ 2,999,069

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

b. Capital surplus

BALANCE, JANUARY 1, 2020 Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options BALANCE, MARCH 31, 2020 BALANCE, JANUARY 1, 2021 Employee treasury share vested Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options BALANCE, MARCH 31, 2021		Additional Paid-in Capital (1) $5,037,671 - 7,813 $ 5,045,484 $4,725,445 - - 5,716 $ 4,731,161		Treasury Shares (1) $ 48,662 - - $ 48,662 $ 69,361 8,654 - - $ 78,015		Employee Share Options (3) $ 25,510 2,978 (4,392) $ 24,096 $ 14,903 (8,654 ) 4,838 (3,086) $ 8,001	Employee Share Options -Expired (2) $ 33,534 - - $ 33,534 $ 33,933 - - - $ 33,933		Total
									$5,145,377 2,978 3,421 $ 5,151,776 $4,843,642 - 4,838 2,630 $ 4,851,110

• 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 (at a certain percentage of the Company’s capital surplus annually).

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

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

• c. Retained earnings and dividend policy

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

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

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

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

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

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

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

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

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

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

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

The board of directors proposed the earnings distribution on April, 4, 2021 as follows;

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

The earnings distribution will be resolved in annual shareholders’ meeting on June, 24, 2021.

• d. Treasury stock

	Shares
	(In Thousands)
Number of shares on January 1, 2020	10,978
Decrease during the period	(9,247)
Number of shares on March 31, 2021	1,731
Number of shares on January 1, 2020 and March 31, 2021	778

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

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

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

e. Non-controlling interests

Balance, beginning Net loss Other comprehensive income (loss) Exchange differences from translating the financial statements of foreign operations Non-controlling interests subscribing subsidiary new shares issuing for cash Changes in ownership interests in subsidiaries Balance, ending REVENUE IC for portable devices Contract balances March 31, 2021 Contract liabilities Sales of goods $ 249,907 NET INCOME a. Finance costs Interest on bank loans Interest on deposits	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
	2021 2020 ($ 1,383) $ 30,692 ( 8,789) ($ 6,788) 187 623 42,759 - 257 - 33,031 24,527 For the Three Months Ended March 31
		2021 2020 $ 4,349,854 $ 2,909,637 December 31, 2020 March 31, 2020 $ 149,430 $ 128,154 **For the Year Ended March 31 **
			2021 $ 1,911 440 $ 2,351	2020 $ - 1,078 $ 1,078

21. REVENUE

22. NET INCOME

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

b. Depreciation and amortization

Property, plant and equipment Intangible assets An analysis of deprecation by function Operating costs Operating expenses		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 19,160 3,997 $ 23,157 $ 135 23,022 $ 23,157	2020 $ 19,659 22,991 $ 42,650 $ 196 42,454 $ 42,650

c. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) Share-based payments (Note 25) Other employee benefits Total employee benefits expense		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 6,994 46 4,838 493,822 $ 505,700	2020 $ 7,013 91 2,978 356,565 $ 366,647

An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Months Ended March 31	For the Three Months Ended March 31
		2020 $ 37,817 467,883 $ 505,700	2019 $ 29,245 337,402 $ 366,647

d. The remuneration of 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. Due to the net loss before tax for the three months ended March 31, 2020, there was no accrual for any remuneration of employees and directors. The accrued employees’ compensation and remuneration of directors for the three months and three months ended March 31, 2021 are as follows:

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

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Three Months Ended March 31,2021	For the Three Months Ended March 31,2021
	9.45% 0.55% For the Three Months Ended March 31,2021
		Cash $ 103,514 $ 6,024

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.

The board of directors resolved the remuneration of employees and directors on February 4[th] ,2021 as follows;

Employees’ compensation Remuneration of directors	Cash $ 123,450
	$ 7,214

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

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

23. INCOME TAXES

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

Current tax In respect of the current year Deferred tax In respect of the current year Income tax expense (benefit) recognized in profit or loss		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 133,308 8,154 $ 141,462	2020 $ 31,081 12,329 $ 43,410

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

b. Income tax assessments

The Company’s tax returns until 2018, FocalTech Smart Sensors Co., Ltd., and FocalTech Electronics Co., Ltd.’s tax returns until 2019 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Three Months Ended March 31	Unit: NT$ Per Share For the Three Months Ended March 31	Unit: NT$ Per Share For the Three Months Ended March 31
		2021 $ 4.24 $ 4.01	2020 $ 0.24 $ 0.23

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

Net Profit for the Period

Earnings used in the computation of basic earnings per share	F	or the Three Months Ended March 31	or the Three Months Ended March 31
		2021 $ 845,740	2020 $ 66,186

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

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee share option Employees’ compensation or bonus issue to employees The remuneration to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 199,649 10,047 551 572 210,819	2020 278,833 10,921 484 - 290,238

25. SHARE-BASED PAYMENT ARRANGEMENTS

The Group did not have new share option plan issued for employees for the three months ended March 31, 2021 and 2020. The detailed information could be found in Note 25 of the consolidated financial statements of the year ended December 31, 2020.

The Company’s shareholders’ meeting resolved to issue restricted stocks for employees up to 6,000 thousand shares on June 20, 2020. There was no restricted stock granted to employees by the end of March, 2021 while the restricted stocks plan was approved by Financial Supervisory Commission on August 12, 2020.

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

a. Employee share option plan

Information on outstanding options for the three months ended March 31, 2021 and 2020 is as follows: March 31, 2021

Employee Share Option Plan	BeginningBalance	BeginningBalance	Options exercised	Options exercised	EndingBalance	EndingBalance
	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option	Weighted- Average Exercise Price (NT$)
2006 2015	398,199 397,500	$ 26.25 15.90	( 81,200) (93,500 )	$ 35.59 15.90	316,999 304,000	$ 24.36 15.90

March 31, 2020

Employee Share Option Plan	BeginningBalance	BeginningBalance	Options exercised	Options exercised	EndingBalance	EndingBalance
	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option	Weighted- Average Exercise Price (NT$)
2006 2015	805,599 677,500	$ 23.49 12.20	(196,000) (35,000 )	$ 27.06 12.20	609,599 642,500	$ 22.35 12.20

b. Shares Buyback Program

Information about the Company buyback its shares as follows:

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

Information about Shares Buy Back Programs for the three months ended March 31, 2021s as follows:

The 4th Shares Buy Back Program The 5th Shares Buy Back Program

Employee subscription base date 2020/03/20 Total	Shares transferred (In Thousands) 7,848 7,848	The fair value of the right to subscribe (NT$) $ 3.30	Employee subscription base date 2019/05/07 2019/11/08 2020/03/20 2020/11/16 Total	Shares transferred (In Thousands) 4,651 60 1,399 434 6,544	The fair value of the right to subscribe (NT$)
					$ - - 3.70 1.90

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

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

Shares buyback programs Adjustment account: Capital surplus - employee share options		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 4,838 $ 4,838	2020 $ 2,978 $ 2,978

26. OPERATING LEASE ARRANGEMENTS

The Group as Lessee

The Company and its subsidiaries have lease contracts in relation to office, plant and part of office equipment, and they would expire by February, 2022. 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 $16,169 thousand and $17,060 thousand as of March 31, 2021 and 2020.

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

lease payment		For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 8,530	2020 $ 8,743

27. FINANCIAL INSTRUMENTS

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

The Group’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 March 31, 2021 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds	Level 1 $ 303,266 - - $ 303,266 $ -	Level 2 $ - - 110,978 $ 110,978 $ 247,252	Level 3 $ - 52,291 - $ 52,291 $ -	Total $ 303,266 52,291 110,978 $ 466,535 $ 247,252

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

December 31, 2020 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds March 31, 2020 Financial assets at FVTPL Listed preferred shares Private funds Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds	Level 1 $ 72,186 - - $ 72,186 $ - Level 1 $ 10,336 - $ 10,336 $ -	Level 2 $ - - 109,897 $ 109,897 $ 247,974 Level 2 $ - - $ - $ 174,907	Level 3 $ - 52,579 - $ 52,579 $ - Level 3 $ - 43,846 $ 43,846 $ -	Total $ 72,186 52,579 109,897
				$ 234,662
				$ 247,974
				Total $ 10,336 43,846
				$ 54,182
				$ 174,907

There were no transfers between Level 1 and Level 2 for the three months ended March 31, 2021 and 2020.

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

Financial assets at FVTPL Balance, beginning of period Purchases Disposals Recognized in profit or loss(other income or loss) Effect of foreign currency exchange differences Balance, end of period	For the Three Months Ended March **31 **	For the Three Months Ended March **31 **	For the Three Months Ended March **31 **
		2021 $ 52,579 522 (181) (679) 50 $ 52,291	2020 $ 45,423 362 - (2,166) 227 $ 43,846

• 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 Group 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

	March 31,	March 31,	December 31,	December 31,	March 31,	March 31,
		2021		2020		2020
Financial assets
Fair value through profit or loss (FVTPL)
Mandatorily at FVTPL	$	466,535	$	234,662	$	54,182
Amortized cost (Note 1)		8,391,202		7,203,983		6,487,846
Financial assets at FVTOCI
Investments in debt instruments		247,252		247,974		174,907
Financial liabilities
Amortized cost (Note 2)		4,427,228		3,782,549		3,416,455

• 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 short-term borrowing, trade payables, other payables and guarantee deposits received.

• d. Financial risk management objectives and policies

The Group’s major financial instruments include cash and cash equivalents, trade receivable, other financial assets, financial assets at FVTPL, financial assets at FVTOCI, trade and other payables. The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including 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 Group. The chairman is authorized by the board of directors to develop and monitor the risk management policy of the Group with the operation center of the Group, and regularly reported the situation to the board of directors.

The Group’s financial risk management policies are established for identifying and analyzing the financial risks to the Group, 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 Group 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 Group’s management oversees the Group 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 Group’s operations were foreign currency exchange risk (referred to a) and interest rate risk (referred to b).

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

a) Foreign currency risk

The carrying amounts of the Group’s monetary assets and monetary liabilities denominated in foreign currency at the end of the reporting period are shown in Note 30.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar. The following table details the Group’s sensitivity to a 5% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation 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 New Taiwan Dollar against the U.S. dollar.

Profit or loss/ equity	USD Impact	USD Impact	USD Impact
	For the Three Months Ended March 31
		2021 $ 61,724(i)	2020 $ (18,831)(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 Group 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 estimated profit or loss regarding to the financial instruments above.

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets	March 31, 2021 December 31, 2020 $ 2,954,762 $ 1,975,397 $ 566,848 $ 523,648 $ 3,796,191 $ 3,777,910	March 31, 2020 $ 2,805,507 $- $ 2,198,323

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 three months ended March 31, 2021 and 2020 would increase/ decrease by NT$2,373 thousand and NT$1,374 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 could arise from the carrying amounts of the financial assets as recognized in the balance sheets.

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 March 31, 2021, trade receivables from top 5 customers represented 62% 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	Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss	Expected Credit Loss Ratio 0% Expected Credit Loss Ratio 0%	Carrying Amount as of March 31, 2021	Carrying Amount as of March 31, 2021
			$ 247,252 Carrying Amount as of December 31, 2020	$ 247,252
				$ 247,252

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

Category Performing	Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss	Expected Credit Loss Ratio 0%	Carrying Amount as of March 31, 2020	Carrying Amount as of March 31, 2020
				$ 174,907

• 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.

As of March 31, 2021, December 31, 2020, and March 31, 2020, 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 Group’s financial liabilities based on contractual undiscounted payments, including principal and interest.

March 31, 2021

On Demand or Less than 1 Year Non-interest bearing $ 3,260,124 Fixed interest rate liabilities 566,951 $ 3,827,075 December 31, 2020	1-5 Years $ 600,153 - $ 600,153

On Demand or Less than 1 Year Non-interest bearing $ 2,768,322 Fixed interest rate liabilities 523,866 $ 3,292,188 March 31, 2020 On Demand or Less than 1 Year Non-interest bearing $ 3,040,818	1-5 Years $ 490,361 - $ 490,361 1-5 Years $ 357,637

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

b) Financing credit line

Unsecured bank line of credit Amount used Amount unused Secured bank loans credits Amount used Amount unused	March 31, 2021 December 31, 2020 $ 495,665 $ 495,665 204,335 204,335 $ 700,000 $ 700,000 $ 86,848 $ 43,648 347,392 392,832 $ 434,240 $ 436,480	March 31, 2020 $ - 800,000 $ 800,000 $ - - $ -

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 **March 31 **	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2020 $ 12,771 14,001 126 700 $ 27,598	2019 $ 21,870 10,774 135 777 $ 33,556

29. PLEDGED ASSETS

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

Properties, plants and equipments – net of buildings Pledge deposits (categorized in other non-current assets)	March 31, 2021 December 31, 2020 $ 518,937 $ 524,487 4,000 4,000 $ 522,937 $ 528,487	March 31, 2020 $ - 4,000 $ 4,000

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Group entities and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

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

March 31, 2021

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	172,762	28.535(USD:NTD)	$ 4,929,769
USD		9,618	6.5713 (USD:RMB)	274,451
Financial liabilities
Monetary items
USD		121,302	28.535 (USD:NTD)	3,461,352
USD		17,817	6.5713 (USD:RMB)	508,392
December 31, 2020
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	147,429	28.48 (USD:NTD)	$ 4,198,767
USD		2,459	6.5249 (USD:RMB)	70,018
RMB		12,369	0.1533 (RMB:USD)	53,988
Financial liabilities
Monetary items
USD		105,765	28.48 (USD:NTD)	3,012,178
USD		2,354	6.5249 (USD:RMB)	67,049
March 31, 2020
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	87,902	30.225(USD:NTD)	$ 2,656,834
USD		5,246	7.0851 (USD:RMB)	158,562
Financial liabilities
Monetary items
USD		101,135	30.225 (USD:NTD)	3,056,805
USD		4,473	7.0851 (USD:RMB)	135,211

32. SEGMENT INFORMATION

Segment information is provided to business decision makers to allocate resources and assesse segment performance. The Company operates the business of the sales and development of human and machine interface devices related IC under a single operation unit. Thus, the information of separate operating segments is not applicable.

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