FocalTech - Interim / Quarterly Report 2021

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2021 and 2020

Notice to Readers

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

Independent Accountants’ Review Report

To the Board of Directors of 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 September 30, 2021 and 2020, the related consolidated statements of comprehensive income for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, as well as the consolidated statements of changes in equity and cash flows for the nine months period ended September 30, 2021 and 2020, 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 September 30, 2021 and 2020, combined total assets of these non-significant subsidiaries were NT$427,255 thousand and NT$547,314 thousand, respectively, representing 2% and 5%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$68,590 thousand and NT$173,810 thousand, respectively, representing 1% and 4%, respectively, of the consolidated total liabilities; for the three months and nine months ended September 30, 2021 and 2020, the amounts of combined comprehensive loss of these subsidiaries were NT$43,894 thousand,NT$51,964 thousand, NT$159,576 thousand and NT$136,016 thousand ,respectively, representing (2%), (22%), (3%), (41%).

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 September 30, 2021 and 2020, its consolidated financial performance and its consolidated cash flows for the for the nine months ended September 30, 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 November 10, 2021

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 profit or loss - current (Note 7) Financial assets at fair value through other comprehensive income - current (Note 8) Accounts 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) Investments accounted for using equity method Property, plant and equipment (Note 13) Goodwill (Notes 14) Other intangible assets (Note 15) Deferred tax assets Defundable deposits Other non-current assets (Note 16 and 31) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 17) Accounts payables (Note 18) Other payables (Note 19) Dividends payables Current tax liabilities (Notes 4) Other current liabilities (Notes 22) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 17) 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 4, 21 and 26) Share capital Ordinary shares Capital surplus Additional paid-in capital Treasury shares Employee stock options Restricted stock for employees Employee share options – expired Total capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity Exchange differences from translating the financial statements of foreign operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income Unearned employee compensation Total other equity Treasury shares Equity attributable to owners of the parent NON-CONTROLLING INTERESTS (Note 21) Total equity TOTAL		September 30, 2021 (Reviewed) Amount % $ 8,028,997 37 118,195 1 56,302 - 2,575,410 12 2,493,821 12 963,546 5 486,573 2 14,722,844 69 336,632 2 181,941 1 - - 1,325,179 6 1,237,268 6 51,214 - 42,188 - 2,481,317 11 1,089,813 5 6,745,552 31 $ 21,468,396 100 $ 859,664 4 2,166,241 10 1,319,945 6 700,000 3 1,327,561 6 117,312 1 6,490,723 30 786,840 4 59,531 - 23,015 - 1,902,874 9 10,400 - 2,782,660 13 9,273,383 43 2,165,215 10 4,736,211 22 79,963 1 45,871 - 1,212,385 6 34,134 - 6,108,564 29 101,230 - 122,316 1 4,873,886 23 5,097,432 24 (217,608) (1) 1,844 - (977,385) (5) (1,193,149) (6) (371) - 12,177,691 57 17,322 - 12,195,013 57 $ 21,468,396 100		December 31, 2020 (Audited) 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 1 172,465 1 11,466 - 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 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		September 30, 2020 (Reviewed)
				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 85,154 172,465 11,466 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 1,012,301 (125,038) 2,722 - (122,316) (24,316) 7,812,843 (1,383) 7,811,460 $ 12,345,053		Amount % $ 3,535,594 30 - - 17,587 - 1,486,527 12 2,266,684 19 1,260,351 11 246,938 2 8,813,681 74 55,481 - 197,314 2 4,970 - 1,310,337 11 1,237,268 10 67,117 1 105,947 1 137,634 1 12,968 - 3,129,036 26 $ 11,942,717 100 $ - - 1,832,027 15 1,836,772 16 - - 399,501 3 144,672 1 4,212,972 35 - - 30,897 - 23,796 - 407,754 4 10,400 - 472,847 4 4,685,819 39 2,100,456 18 4,714,996 39 68,133 1 15,249 - - - 33,933 - 4,832,311 40 - - - - 448,132 4 448,132 4 (90,032) (1) 497 - - - (89,535) (1) (43,074) - 7,248,290 61 8,608 - 7,256,898 61 $ 11,942,717 100

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

REVENUE (Note 22) COST OF REVENUE (Note 11 and 23) GROSS PROFIT OPERATING EXPENSES (Note 23, 26, 28 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Finance costs(Note 23) Interest income Gain on financial assets and liabilities at fair value through profit or loss Other gains and losses - net (Loss) gain on foreign exchange Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Note 24) 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		For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30		For the Nine Months	For the Nine Months	EndedSeptember 30	EndedSeptember 30	EndedSeptember 30
		2021		2020		2021			2020
		Amount % $ 6,272,422 100 (2,857,205) (46) 3,415,217 54 (153,340) (3 ) (190,348 ) (3 ) (654,004) (10) (997,692) (16) 2,417,525 38 (2,724) - 9,069 - (179,102 ) (3 ) 151,615 3 8,719 - (12,423) - 2,405,102 38 (577,633) (9) 1,827,469 29 (7,945) -		Amount % $ 3,815,809 100 (3,001,044) (79) 814,765 21 (87,234) (2 ) (97,449 ) (3 ) (391,046) (10) (575,729) (15) 239,036 6 - - 8,980 - 2,973 - 24,273 1 2,461 - 38,687 1 277,723 7 (10,014) - 267,709 7 (26,216) (1 )		Amount $ 16,394,543 (8,442,986) 7,951,557 (398,136) (449,917) (1,721,637) (2,569,690) 5,381,867 (7,481) 23,647 80,219 347,445 (41,160) 402,670 5,784,537 (1,021,027) 4,763,510 (95,003)	% 100 (51) 49 (2 ) (3 ) (11) (16) 33 - - - 2 - 2 35 (6) 29 (1 )		Amount % $ 9,493,042 100 (7,425,266) (78) 2,067,776 22 (257,800) (3 ) (267,130) (3 ) (1,125,648) (12) (1,650,578) (18) 417,198 4 (1,078) - 44,658 1 (1,619) - 43,594 - 13,738 - 99,293 1 516,491 5 (88,300) (1) 428,191 4 (96,232) (1 ) (Continued)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

For the Three Months EndedSeptember 30	For the Three Months EndedSeptember 30	For the Nine Months	EndedSeptember 30
2021	2020	2021	2020
Amount % (1,082) - (9,027) - (9,027) - $ 1,818,442 29 $ 1,833,297 29 (5,828) - $ 1,827,469 29 $ 1,824,311 29 (5,869) - $ 1,818,442 29 $ 9.02 $ 8.58	Amount % (1,793) - (28,009) (1) (28,009) (1) $ 239,700 6 $ 275,308 7 (7,599) - $ 267,709 7 $ 248,577 6 (8,877) - $ 239,700 6 $ 1.06 $ 1.00	Amount % (878) - (95,881) (1) (95,881) (1) $ 4,667,629 28 $ 4,785,388 29 (21,878) - $ 4,763,510 29 $ 4,691,940 28 (24,311) - $ 4,667,629 28 $ 23.73 $ 22.52	Amount % (1,253) - (97,485) (1) (97,485) (1) $ 330,706 3 $ 448,132 4 (19,941) - $ 428,191 4 $ 352,790 3 (22,084) - $ 330,706 3 $ 1.64 $ 1.55


$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$
$	$	$	$

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

(Concluded)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

(In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)
BALANCE, JANUARY 1, 2020 Reduction on capital surplus to offset accumulated deficits Cash distribution from additional paid-in capital Net income for the nine months ended September 30, 2020 Other comprehensive income (loss) for the nine months ended September 30, 2020, net of income tax Total comprehensive income (loss) for the nine months ended September 30, 2020 Reduction of capital (Note 21) Compensation cost of employee share options (Note 21 and 26) Treasury shares transferred to employees (Note 21 and 26) Issuance of ordinary shares from exercise of employee share options (Note 21 and 26) BALANCE, SEPTEMBER 30, 2020 BALANCE, JANUARY 1, 2021 Appropriation of 2020 earnings Legal reserve Special reserve Cash dividends Net income for the nine months ended September 30, 2021 Other comprehensive income (loss) for the nine months ended September 30, 2021, net of income tax Total comprehensive income (loss) for the nine months ended September 30, 2021 Compensation cost of employee share options (Note 21 and 26) Treasury shares transferred to employees (Note 21 and 26) Increase in non-controlling interests Changes in ownership interests in subsidiaries Issuance of ordinary shares from exercise of employee share options (Note 21 and 26) Issuance of restricted stock employees (Note 4, 21 and 26) Compensation cost of restricted stock to employees (Note 4, 21 and 26) BALANCE, SEPTEMBER 30, 2021					Equity Attributable to Owners of the Parent					Total $ 7,697,478 - (150,000) 448,132 (95,342) 352,790 (899,721) 16,049 224,084 7,610 $ 7,248,290 $ 7,812,843 - - (700,000) 4,785,388 (93,448) 4,691,940 45,261 25,893 - (257) 8,561 58,450 235,000 $ 12,177,691	Non-controlling Interests $ 30,692 - - (19,941) (2,143) (22,084) - - - - $ 8,608 $ (1,383) - - - (21,878) (2,433) (24,311) - - 42,759 257 - - - $ 17,322	Total Equity
	Share Capital Ordinary Shares $ 2,996,759 - - - - - (899,721) - - 3,418 $ 2,100,456 $ 2,103,532 - - - - - - - - - - 3,233 58,450 - $ 2,165,215	CapitalSurplus $ 5,145,377 (183,307) (150,000) - - - - 16,049 - 4,192 $ 4,832,311 $ 4,843,642 - - - - - - 45,261 1,948 - - 5,328 1,212,385 - $ 6,108,564	Retainted Earnings		Undistributed Earnings $ (183,307) 183,307 - 448,132 - 448,132 - - - - $ 448,132 $ 1,012,301 (101,230) (122,316) (700,000) 4,785,388 - 4,785,388 - - - (257) - - - $ 4,873,886		Other Equity	Unearned employee compensation $ - - - - - - - - - - $ - $ - - - - - - - - - - - - (1,212,385) 235,000 $ (977,385)	Treasury Shares $ (267,158) - - - - - - - 224,084 - $ (43,074) $ (24,316) - - - - - - - 23,945 - - - - - $ (371)
			Legal Reserve $ - - - - - - - - - - $ - $ - 101,230 - - - - - - - - - - - - $ 101,230	Special Reserve $ - - - - - - - - - - $ - $ - - 122,316 - - - - - - - - - - - $ 122,316		Exchange Differences from Translating the Financial Statement of Foreign Operations $ 4,057 - - - (94,089) (94,089) - - - - $ (90,032) $ (125,038) - - - - (92,570) (92,570) - - - - - - - $ (217,608)	Unrealized Gain (Loss) on Financial Assets at Fair Value through Other Comprehensive Income $ 1,750 - - - (1,253) (1,253) - - - - $ 497 $ 2,722 - - - - (878) (878) - - - - - - - $ 1,844
												$ 7,728,170 - (150,000) 428,191 (97,485) 330,706 (899,721) 16,049 224,084 7,610 $ 7,256,898 $ 7,811,460 - - (700,000) 4,763,510 (95,881) 4,667,629 45,261 25,893 42,759 - 8,561 58,450 235,000 $ 12,195,013

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

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 cost of employee share options Compensation cost of restricted stock to employees (Gain) 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 Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Acquisition of intangible assets Decrease in other financial assets Increase in refundable deposits Increase in other non-current assets Interest received Net cash (outflow) inflow from investing activities		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 5,784,537 59,929 11,933 (80,219) 7,481 (23,647) 45,261 235,000 (183,272) (177,808) (20,626) 40,286 (947,252) (577,197) (304,763) 443,052 299,999 (111,372) (351) 4,500,971 (7,378) (70,484) 4,423,109 - - - (83,728) - 401,101 (2,309,367) (1,078,451) 26,384 (3,044,061)	2020 $ 516,491 58,368 32,087 1,619 1,078 (44,658) 16,049 - 40,928 - (26,705) (42,487) (72,688) (711,684) 105,715 (142,024) 4,680 38,068 (282) (225,445) (1,078) (29,919) (256,442) (142,888) 101,378 (4,970) (15,907) (147) 302,476 - (15,648) 52,540 276,834

(Continued)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Increase in long-term borrowings Increase in guarantee deposits Issuance of restricted stock employees Dividends paid to owners of the Company Exercise of employee share options Treasury shares transferred to employees Increase in non-controlling interests 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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 339,139 786,840 1,412,648 58,450 - 8,561 25,893 42,759 2,674,290 (36,023) 4,017,315 4,011,682 $ 8,028,997	2020 $ - - 14,959 - (150,000) 7,610 224,084 - 96,653 (42,954) 74,091 3,461,503 $ 3,535,594

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

(Concluded)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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. (“FocalTech” or “the Company”), formerly named as Orise Technology Co., Ltd., was incorporated in the Republic of China (“ROC”) in January 2006 and moved to Hsinchu Science Park in April in the same year. The Company’s shares have been listed on the Taiwan Stock Exchange (“TWSE”) since July 2007. On January 2, 2015, the Company acquired FocalTech Corporation, Ltd. through a share swap and renamed on January 17, 2015. This acquisition was comprehensively considered as a reverse merger, where FocalTech Corporation, Ltd. was treated as the acquirer in the financial statements. The Company mainly engages in the research, development, design, manufacturing, and sales of Human-Machine Interface solutions, such as Display Driver IC, Touch Control IC and so on.

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

b.

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

— Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a January 1, 2022 (Note 4) Contract”

Note 1: The amendments to IFRS 9 will be applied prospectively to modifications or exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
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Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the 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.

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

New, Revised or Amended Standards and Interpretations 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 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”	Effective Date Announced by IASB (Note 1)
	To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 2) January 1, 2023 (Note 3) January 1, 2023 (Note 4)

New, Revised or Amended Standards and Interpretations
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 12 “Deferred Tax related to Assets and Liabilities
arising from a Single Transaction”

Effective Date
Announced by IASB (Note 1)

To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (Note 2)
January 1, 2023 (Note 3)
January 1, 2023 (Note 4)

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

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.

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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
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, TABLE 6 and TABLE 7.

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.

3) Share-based payment arrangements

Restricted shares for employees

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

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

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

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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)	September 30, 2021 $ 3,401 5,329,409 2,696,187 $ 8,028,997	December 31, 2020 $ 2,182 3,668,013 341,487 $ 4,011,682	September 30, 2020
			$ 6,727 2,847,233 681,634
			$ 3,535,594

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed ordinary shares Non–Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed preferred shares Private Funds Structured Investments		September 30, 2021 $ 118,195 $ 149,088 80,002 107,542 $ 336,632	December 31, 2020 $- $ 72,186 52,579 109,897 $ 234,662	September 30, 2020
				$-
				$ 10,625 44,856 -
				$ 55,481

12 -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

September 30, 2021 December 31, 2020 Investments in debt instruments Current Foreign investments Fixed income bonds $ 56,302 $ - Non–Current Foreign investments Fixed income bonds $ 181,941 $ 247,974 OTHER FINANCIAL ASSETS September 30, 2021 December 31, 2020 Time deposits with original maturities more than three months $ 963,546 $ 1,385,936 ACCOUNTS RECEIVABLES, NET September 30, 2021 December 31, 2020 Accounts receivables $ 2,575,410 $ 1,633,900	September 30, 2020	September 30, 2020
	$ 17,587
	$ 197,314
		September 30, 2020
$ 1,385,936		$ 1,260,351
December 31, 2020		September 30, 2020
$ 1,633,900		$ 1,486,527

9. OTHER FINANCIAL ASSETS

10. ACCOUNTS RECEIVABLES, NET

The average credit term for sales of goods was 30-120 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 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.

13 -

The following table details the loss allowance of trade receivables based on the Group’s allowance matrix. September 30, 2021

Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2020 Expected credit loss rate Gross carrying amount and Amortized cost September 30, 2020	Overdue 1-60 Days	Total
	0% $93,832	0% $2,575,410
	Overdue 1-60 Days	Total
	0% $40,401	0% $1,633,900
	Overdue 1-60 Days	Total
Expected credit loss rate Gross carrying amount and Amortized cost
	0% $ 9,980	0% $1,486,527

11. INVENTORIES

Finished goods Work in process Raw materials and supplies	September 30, 2021 $ 747,063 1,194,552 552,206 $ 2,493,821	December 31, 2020 $ 418,694 1,025,201 311,247 $ 1,755,142	September 30, 2020
			$ 481,383 1,201,434 583,867
			$ 2,266,684

The cost of goods sold were NT$2,857,205 thousand and NT$3,001,044 thousand, including reverse of write-off of inventories of NT$84,207 thousand and NT$0 thousand for the three months ended September 30, 2021 and 2020. The cost of goods sold were NT$8,442,986 thousand and NT$7,425,266 thousand, including the reverse of write-off of inventories NT$177,808 thousand and NT$0 thousand for the nine months ended September 30, 2021 and 2020. Above mentioned gains from price recovery of inventory are resulted from sales of slow moving inventory.

14 -

12. SUBSIDIARIES

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

Investor	Investee	Main Businesses	Percentage of Ownership	Percentage of Ownership	Percentage of Ownership	Note
			September 30, 2021	December 31, 2020	September 30, 2020
FocalTech Systems Co., Ltd. FocalTech Systems Co.,Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd.	Investment activity Investment activity	100% 100%	100% 100%	100% 100%	- -
FocalTech Systems Co., Ltd. And FocalTech Electronics Co., Ltd.	FocalTech Smart Sensors, Ltd.	Investment activity	66.45%	67.15%	67.15%	Note1.2
FocalTech Smart Sensors, Ltd.	FocalTech Smart Sensors Co., Ltd.	Research, development, manufacturing and sale of integrated circuits	100%	100%	100%	Note2
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, Ltd.	FocalTech Systems (Shenzhen) Co., Ltd. FocalTech Electronics Co.,Ltd.	Design and research of integrated circuits Import and export of integrated circuits	100% 100%	100% 100%	100% 100%	- Note2
FocalTech Electronics, Ltd. FocalTech Electronics, Ltd. FocalTech Electronics,Ltd.	FocalTech Electronics (Shanghai) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co.,Ltd.	Sales support and post-sales service for affiliates’ IC products Research, development, manufacturing and sale of integrated circuits Research, development and sale of integrated circuits	100% 100% 100%	100% 100% 100%	100% 100% 100%	Note2 - Note2

Note1: The changes in the shareholding ratio of FocalTech Smart Sensors, Ltd. is due to the Group did not subscribe proportionally when its cash capital was increased.

Note2: Immaterial subsidiaries of the Company, whose financial statements had not been reviewed by auditors.

15 -

13. PROPERTY, PLANT AND EQUIPMENT

Buildings	Development Equipment	Office Equipment	Information Equipment	Leasehold Improve- ments	Total
$ 1,322,961 - - (7,298)	$ 285,660 12,769 (258) (4,438)	$ 15,548 2,154 (76) (61)	$ 42,621 984 334 (215)	$ 38,388 - - (77)	$ 1,705,178 15,907 - (12,089)
$ 1,315,663	$ 293,733	$ 17,565	$ 43,724	$ 38,311	$ 1,708,996
$ 84,761 26,155 - (402)	$ 174,368 29,624 - (2,726)	$ 12,431 727 10 (43)	$ 33,752 1,862 (10) (161)	$ 38,388 - - (77)	$ 343,700 58,368 - (3,409)
$ 110,514	$ 201,266	$ 13,125	$ 35,443	$ 38,311	$ 398,659
$ 1,205,149	$ 92,467	$ 4,440	$ 8,281	$ -	$ 1,310,337
$ 1,343,090 - - - (21,116)	$ 292,977 77,932 (5,041) (158) (4,209)	$ 11,557 731 - 105 (138)	$ 38,869 5,065 - 53 (606)	$ 38,604 - - - (226)	$ 1,725,097 83,728 (5,041) - (26,295)
$ 1,321,974	$ 361,501	$ 12,255	$ 43,381	$ 38,378	$ 1,777,489
$ 121,696 26,598 - (2,144)	$ 203,722 30,952 (5,041) (2,841)	$ 9,574 431 - (101)	$ 29,561 1,948 - (423)	$ 38,604 - - (226)	$ 403,157 59,929 (5,041) (5,735)
$ 146,150	$ 226,792	$ 9,904	$ 31,086	$ 38,378	$ 452,310
$ 1,221,394	$ 89,255	$ 1,983	$ 9,308	$ -	$ 1,321,940
$ 1,175,824	$ 134,709	$ 2,351	$ 12,295	$ -	$ 1,325,179

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

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

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

16 -

14. GOODWILL

Ending balance	September 30, 2021 $ 1,237,268	December 31, 2020 $ 1,237,268	September 30, 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, September 30, 2020 Accumulated amortization Balance, January 1, 2020 Amortization expenses Effect of foreign currency exchange differences Balance, September 30, 2020 Carrying amounts as of September 30, 2020 Cost Balance, January 1, 2021 Effect of foreign currency exchange differences Balance, September 30, 2021	Licenses and Franchises $ 127,719 - (3,201) $ 124,518 $ 109,676 17,778 (3,107) $ 124,347 $ 171 $ 122,262 (2,293) $ 119,969	Software $ 154,970 147 (4,121) $ 150,996 $ 148,376 2,920 (4,083) $ 147,213 $ 3,783 $ 148,247 (3,023) $ 145,224	Patents $ 76,704 - - $ 76,704 $ 39,152 5,839 - $ 44,991 $ 31,713 $ 76,708 (4) $ 76,704	Trademark $ 74,000 - - $ 74,000 $ 37,000 5,550 - $ 42,550 $ 31,450 $ 74,000 - $ 74,000	Total
					$ 433,393 147 (7,322)
					$ 426,218
					$ 334,204 32,087 (7,190)
					$ 359,101
					$ 67,117
					$ 421,217 (5,320)
					$ 415,897

17 -

Licenses and

	Licenses and
Accumulated amortization Balance, January 1, 2021 Amortization expenses Effect of foreign currency exchange differences Balance, September 30, 2021 Carrying amounts as of December 31, 2020and January 1, 2021 Carrying amounts as of September 30, 2021	Franchises $ 122,130 119 (2,293) $119,956 $ 132 $ 13	Software $ 144,543 425 (2,968) $142,000 $ 3,704 $ 3,224	Patents $ 46,942 5,839 (4) $ 52,777 $ 29,766 $ 23,927	Trademark $ 44,400 5,550 - $ 49,950 $ 29,600 $ 24,050	Total
					$ 358,015 11,933 (5,265)
					$364,683
					$ 63,202
					$ 51,214

(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. OTHER NON-CURRENT ASSETS

Prepayments on commercial building Pledge deposits Other	September 30, 2021 $ 1,080,130 4,000 5,683 $1,089,813	December 31, 2020 $ - 4,000 7,466 $11,466	September 30, 2020
			$ - 4,000 8,968
			$12,968

Other non-current assets are pledged as collateral for the bank loans and import customs duties, please refer to Note 31.

18 -

17. BORROWINGS

a. Short-term borrowings

Unsecured bank loans Secured bank loans Annual interest rate Unsecured bank loans Secured bank loans	September 30, 2021 $ 580,000 279,664 $ 859,664 0.88-0.92% 1.73-4.52%	December 31, 2020 $ 480,000 43,648 $ 523,648 0.88-1.06% 4.1%	September 30, 2020
			$ - -
			$ -

Properties, plants and equipment are pledged as collateral for the bank loans, please refer to Note 31.

b. Long-term borrowings

Secured bank loans Annual interest rate Secured bank loans	September 30, 2021 $ 786,840 1.00%	December 31, 2020 $ - -	September 30, 2020
			$ -
			-

The Company increased 786,840 thousand long-term loans in August, 2021 to acquire the commercial building. Properties, plants and equipment are pledged as collateral for long-term loans, please refer to Note 31.

18. ACCOUNTS PAYABLES

Accounts payables	September 30, 2021 $2,166,241	December 31, 2020 $1,731,109	September 30, 2020
			$1,832,027

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.

19 -

19. 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 Payable for cash reduction of capital	September 30, 2021 $ 549,142 590,683 13,592 46,545 119,983 - $1,319,945	December 31, 2020 $ 423,800 467,979 13,977 47,598 84,077 - $1,037,431	September 30, 2020
			$ 447,450 356,477 14,613 48,634 69,877 899,721
			$1,836,772

20. 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, NT$90 thousand, NT$138 thousand and NT$272 thousand for the three months ended September 30, 2021 and 2020, and nine months ended September 30, 2021 and 2020, respectively.

21. 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, 2021 500,000 $5,000,000 216,522 $2,165,215	December 31, 2020 500,000 $5,000,000 210,353 $2,103,532	September 30, 2020
			500,000
			$5,000,000
			210,046
			$2,100,456

The company has redeemed 140 thousand shares of issued restricted stocks for employees as of September 30, 2021. The registration processes have not been completed until September 30, 2021.

b. Capital surplus

BALANCE, JANUARY 1, 2020 Capital surplus used to cover accumulated deficits Cash distribution from additional paid-in capital Treasury shares transferred to employees Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options Employee share options expired BALANCE, SEPTEMBER 30, 2020	Additional Paid-in Capital (1) $ 5,037,671 (183,307) (150,000) - - 10,632 - $ 4,714,996	Treasury Shares (1) $ 48,662 - - 19,471 - - - $ 68,133	Restricted stock for employees (3) $ - - - - - - - $ -	Employee Share Options (3) $ 25,510 - - (19,471 ) 16,049 (6,440 ) (399 ) $ 15,249	Employee Share Options -Expired (2) $ 33,534 - - - - 399 $ 33,933	Total
						$5,145,377 (183,307 ) (150,000 ) - 16,049 4,192 -
						$ 4,832,311

20 -

BALANCE, JANUARY 1, 2021 Treasury shares transferred to employees Employee treasury share vested Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options Employee share options expired Issuance of restricted stock for employees BALANCE, SEPTEMBER 30, 2021	Additional Paid-in Capital (1) $ 4,725,445 - - - 10,766 - - $ 4,736,211	Treasury Shares (1) $ 69,361 1,948 8,654 - - - - $ 79,963	Restricted stock for employees (3) $ - - - - - - 1,212,385 $ 1,212,385	Employee Share Options (3) $ 14,903 - (8,654) 45,261 (5,438) (201) - $ 45,871	Employee Share Options -Expired (2) $ 33,933 - - - - 201 - $ 34,134	Total
						$ 4,843,642 1,948 - 45,261 5,328 - 1,212,385
						$ 6,108,564

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’ meeting held on June 20, 2019, which stipulate that earnings distribution may be made on a quarterly basis after the close of each quarter.

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

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

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

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

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

21 -

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

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

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

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

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

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

d. Special reserve

Balance, beginning Special reserve appropriated Balance, ending	For the Nine Months Ended September 30
	$ - 122,316
	$ 122,316

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e. Treasury stock

Treasury stock
Number of shares on January 1, 2020 Decrease during the period Decrease due to capital reduction Number of shares on September 30, 2020 Number of shares on January 1, 2021 Decrease during the period Number of shares on September 30, 2021	Shares (In Thousands)
	10,978 (9,247) (519)
	1,212
	778 (766)
	12

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

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

f. Unearned employee compensation

Balance, beginning Issuance of shares Share-based payment expenses recognized Balance, ending	For the Nine Months Ended September 30
	$ - ( 1,212,385) 235,000
	($ 977,385)

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

g. 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	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 ($ 1,383) (21,878) (2,433) 42,759 257 $ 17,322	2020 $ 30,692 (19,941) (2,143) - -
		$ 8,608

23 -

22. REVENUE

For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 6,272,422 $ 3,815,809 $16,394,543 $ 9,493,042 September 30, 2021 December 31, 2020 September 30, 2020 $ 46,386 $ 149,430 $ 90,452	For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 6,272,422 $ 3,815,809 $16,394,543 $ 9,493,042 September 30, 2021 December 31, 2020 September 30, 2020 $ 46,386 $ 149,430 $ 90,452	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 6,272,422	$		2020 $ 9,493,042
			September 30, 2020
		$ 149,430	$ 90,452

23. NET INCOME

a. Financial costs

Interest on bank loans Interest on deposits	For the Three Months Ended September 30 2021 2020 $ 2,724 $ - - - $ 2,724 $ -	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 2,724 - $ 2,724	2021 $ 7,041 440 $ 7,481	2020 $ - 1,078
			$ 1,078

b. Depreciation and amortization

For the Three Months Ended September 30 2021 2020 $ 21,446 $ 19,379 3,941 3,959 $ 25,387 $ 23,338 $ 2,012 $ 173 23,375 23,165 $ 25,387 $ 23,338	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 21,446 3,941 $ 25,387 $ 2,012 23,375 $ 25,387	2021 $ 59,929 11,933 $ 71,862 $ 2,280 69,582 $ 71,862	2020 $ 58,368 32,087
		$ 90,455
		$ 548 89,907
		$ 90,455

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c. Employee benefits expense

For the Three Months Ended September 30 2021 2020 $ 8,483 $ 7,027 46 90 155,644 6,088 617,038 357,837 $ 781,211 $ 371,042 $ 68,646 $ 31,390 712,565 339,652 $ 781,211 $ 371,042	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 8,483 46 155,644 617,038 $ 781,211 $ 68,646 712,565 $ 781,211	2021 $ 22,689 138 280,261 1,590,232 $1,893,320 $ 156,268 1,737,052 $1,893,320	2020 $ 20,925 272 16,049 1,029,532
		$1,066,778
		$ 90,547 976,231
		$1,066,778

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. The accrued employees’ compensation and remuneration of directors for the three months and nine months ended September 30, 2021 and 2020 are as follows:

Amount

Employees’ compensation Remuneration of directors	For the Three Months Ended September 30 2021 2020 $ 22,778 $ 28,371 $ 1,199 $ 3,153	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 22,778 $ 1,199	2021 $ 126,292 $ 7,223	2020 $ 52,873
			$ 5,875

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.

25 -

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

24. INCOME TAXES

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

For the Three Months Ended September 30 2021 2020 $ 558,953 $ 14,694 18,680 (4,680) - - 18,680 (4,680) $ 577,633 $ 10,014	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 558,953 18,680 - 18,680 $ 577,633	2021 $ 971,866 49,161 - 49,161 $1,021,027	2020 $ 76,184
		10,782 1,334
		12,116
		$ 88,300

b. Income tax assessments

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

25. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Three Months Ended September 30 2021 2020 $ 9.02 $ 1.06 $ 8.58 $ 1.00	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 9.02 $ 8.58	2021 $ 23.73 $ 22.52	2020 $ 1.64
			$ 1.55

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	For the Three Months Ended September 30 2021 2020 $1,833,297 $ 275,308	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $1,833,297	2021 $4,785,388	2020 $ 448,132

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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: Treasure share issued to employee Employees stock options (share) Restricted stock for employees( share) The compensation to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Three Months Ended September 30 2021 2020 203,235 260,614 7,376 15,153 438 542 2,498 - 147 - 213,694 276,309	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 203,235 7,376 438 2,498 147 213,694	2021 201,648 8,604 507 780 999 212,538	2020 273,253 14,687 557 - -
			288,497

26. SHARE-BASED PAYMENT ARRANGEMENTS

The Group did not have stock option plan issued for employees and share buyback program for the nine months ended September 30, 2021 and 2020. The detailed information could be found in Note 25 of the consolidated financial statements of the year ended December 31, 2020.

a. Employee stock option plan

Information on outstanding options for the nine months ended September 30, 2021 and 2020 is as follows:

September 30, 2021

Employee Stock Option Plan	BeginningBalance	BeginningBalance	Options exercised	Options	expired	EndingBalance	EndingBalance
	Units of Option 398,199 397,500	Weighted- Average Exercise Price (NT$)	Units of Option Weighted- Average Exercise Price (NT$)	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option 198,399 262,000	Weighted- Average Exercise Price (NT$)
2006 2015		$26.25 15.90	( 199,800) $33.04 ( 123,500) 15.86	- ( 12,000)	$ - 15.90		$19.86 15.60

27 -

September 30, 2020

Employee Stock Option Plan	BeginningBalance	BeginningBalance	Options exercised	Options exercised	Options expired EndingBalance	Options expired EndingBalance
	Units of Option 805,599 677,500	Weighted- Average Exercise Price (NT$) $ 23.49 12.20	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option Weighted- Average Exercise Price (NT$) Units of Option - $ - 566,799 (24,000) 12.20 550,500	Weighted- Average Exercise Price (NT$)
2006 2015			(238,800) (103,000)	$ 26.60 12.20		$ 22.18 12.20

b. Treasure stock transferred to employees Information about treasure stock transferred to employees as follows:

Items	The date of board of directors approved 2018/7/26 2018/8/23	Buyback shares (In thousand share) 8,000 7,689	Transferred shares (In thousand share) 7,952 7,206	Adjustment due to capital reduction (In thousand share) (46) (473)	Shares not transferred yet (In thousand share) 2 10	Transferred price (in dollar)
The 4th treasure stock transferred to employee Program The 5th treasure stock transferred to employee Program						$33.69 (Adjusted) $32.93 (Adjusted)

Information about treasure stock transferred to employees for the nine months ended September 30, 2021 is as follows:

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

Employee subscription base date 2020/03/20 2021/04/07 Total	Shares transferred (In Thousands)	The fair value of the right to subscribe (NT$) $ 3.30 181.40	Employee subscription base date 2019/05/07 2019/11/08 2020/03/20 2020/11/16 2021/04/07 2021/07/29 Total	Shares transferred (In Thousands) 4,651 60 1,399 434 572 90 7,206	The fair value of the right to subscribe (NT$)
	7,848 104				$ - - 3.70 1.90 181.70 242.20
	7,952

c. Restricted stock for employees

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

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

28 -

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

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

The constraints of restricted stock are as follows:

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

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

Compensation cost of aforementioned share-based payments for the nine months ended September 30, 2021 and 2020 was as follows:

Shares buyback programs Restricted stock for employees Adjustment account: Capital surplus - employee stock options Other equity - unearned employee compensation	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 45,261 235,000	2020 $ 16,049 - $16,049 $ 16,049 - $16,049
	$280,261
	$ 45,261 235,000
	$280,261

27. NON-CASH TRANSACTIONS

The cash dividends of 2020 resolved by the shareholder’s meeting was NT$700,000 thousand and was not distributed as of September 30, 2020. (Referring to Note 21)

28. 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 September, 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 $16,405 thousand and $4,398 thousand as of September 30, 2021 and 2020.

29 -

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

lease payment	For the Three Months Ended September 30 2021 2020 $ 8,811 $ 8,363	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 8,811	2021 $ 25,763	2020 $ 26,079

29. 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 September 30, 2021 Financial assets at FVTPL Listed ordinary shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds December 31, 2020 Financial assets at FVTPL Listed ordinary shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds September 30, 2020 Financial assets at FVTPL Listed ordinary shares Private funds Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds	Level 1 $ 267,283 - - $ 267,283 $ - Level 1 $ 72,186 - - $ 72,186 $ - Level 1 $ 10,625 - $ 10,625 $ -	Level 2 $ - - 107,542 $ 107,542 $ 238,243 Level 2 $ - - 109,897 $ 109,897 $ 247,974 Level 2 $ - - $ - $ 214,901	Level 3 $ - 80,002 - $ 80,002 $ - Level 3 $ - 52,579 -	Total

					$ 267,283 80,002 107,542
					$ 454,827
					$ 238,243
					Total
					$ 72,186 52,579 109,897
				$ 52,579	$ 234,662
				$ - Level 3 $ - 44,856 $ 44,856 $ -	$ 247,974
					Total
					$ 10,625 44,856
					$ 55,481
					$ 214,901

There were no transfers between Level 1 and Level 2 for the nine months ended September 30, 2021 and 2020.

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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 exchange differences Balance, end of period	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 52,579 24,937 (181) 3,274 (607) $ 80,002	2020 $ 45,423 2,046 - (1,800) (813)
		$ 44,856

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.

c. Categories of financial instruments

Financial assets Fair value through profit or loss (FVTPL) Mandatorily at FVTPL Amortized cost (Note 1) Financial assets at FVTOCI Investments in debt instruments Financial liabilities Amortized cost (Note 2)	September 30, 2021 $ 454,827 14,049,270 238,243 7,735,564	December 31, 2020 $ 234,662 7,203,983 247,974 3,782,549	September 30, 2020
			$ 55,481 6,420,106 214,901 4,076,553

1) The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, accounts receivables, other financial assets and refundable deposits.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowing, accounts payables, other payables, dividends payables and guaranteed 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

31 -

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 operation 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 exchange risk (referred to a) and interest rate risk (referred to b).

a) Foreign exchange 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 32.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar. The following table details the Group’s sensitivity to a 5% appreciate and depreciate in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation value at the end of the reporting period 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
	For the Nine Months Ended September 30
	2021 $289,333 (i)	2020 $17,065
		(i)

i. This was mainly attributable to the outstanding balances of USD deposits, trade receivables, bank loans, accounts payables, other payables, other current assets, other non-current assets, refundable deposits, other current liabilities and other non-current liabilities.
32 -

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	September 30, 2021 $3,897,976 $1,646,504 $5,431,511	December 31, 2020 $1,975,397 $ 523,648 $3,777,910	September 30, 2020
			$2,156,886
			$-
			$2,847,233

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 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, 2021 and 2020 would increase/ decrease by NT$10,184 thousand and NT$5,339 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.

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, 2021, trade receivables from top 5 customers are 65% 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 institutions. 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.

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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 Description Basis for Recognizing Expected Credit Loss Performing The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Category Description Basis for Recognizing Expected Credit Loss Performing The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Category Description Basis for Recognizing Expected Credit Loss Performing 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% Expected Credit Loss Ratio 0%	Carrying Amount as of September 30, 2021
		$ 238,243
		Carrying Amount as of December 31, 2020
		$ 247,974
		Carrying Amount as of September 30, 2020
		$ 214,901

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.

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.

34 -

September 30, 2021

Non-interest bearing Fixed interest rate liabilities December 31, 2020 Non-interest bearing Fixed interest rate liabilities September 30, 2020 Non-interest bearing	On Demand or Less than 1 Year $ 4,185,866 859,984 $5,045,850 On Demand or Less than 1 Year $ 2,768,322 523,866 $3,292,188 On Demand or Less than 1 Year $3,668,799	1-5 Years	More than 5 Years $ - 646,757 $ 646,757
		$ 1,902,874 140,083
		$2,042,957
		1-5 Years	More than 5 Years $ - - $ -
		$ 490,361 -
		$ 490,361
		1-5 Years	More than 5 Years $ -
		$ 407,754

30. 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 2021 2020 $ (31) $ - 7,767 10,910 92 135 15,665 1,111 $ 23,493 $ 12,156	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ (31) 7,767 92 15,665 $ 23,493	2021 $ 12,682 61,363 353 35,854 $ 110,252	2020 $ 21,870 34,270 405 3,271
			$ 59,816

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31. PLEDGED ASSETS

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

Properties, plants and equipment – net of buildings Prepayments on commercial building (categorized in other non-current assets) Pledge deposits (categorized in other non-current assets)	September 30, 2021 $ 507,524 1,080,130 4,000 $1,591,654	December 31, 2020 $ 524,487 - 4,000 $ 528,487	September 30, 2020
			$ - - 4,000
			$ 4,000

32. 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:

September 30, 2021

Financial assets Monetary items USD USD Financial liabilities Monetary items USD USD December 31, 2020 Financial assets Monetary items USD USD RMB Financial liabilities Monetary items USD USD	Foreign Currencies (thousand) $ 394,682 16,728 171,186 32,444 Foreign Currencies (thousand) $ 147,429 2,459 12,369 105,765 2,354	Exchange Rate 27.85(USD:NTD) 6.4854 (USD:RMB) 27.85 (USD:NTD) 6.4854 (USD:RMB) Exchange Rate 28.48 (USD: NTD) 6.5249 (USD:RMB) 0.1533 (RMB:USD) 28.48 (USD: NTD) 6.5249 (USD:RMB)	NT$(thousand)
			$ 10,991,894 465,863 4,767,528 903,562 NT$(thousand)
			$ 4,198,767 70,018 53,988 3,012,178 67,049

36 -

September 30, 2020

Financial assets Monetary items USD USD RMB Financial liabilities Monetary items USD USD	Foreign Currencies (thousand) $ 114,746 2,284 31,218 102,331 2,971	Exchange Rate 29.10 (USD: NTD) 6.8101 (USD:RMB) 0.1468 (RMB:USD) 29.10 (USD: NTD) 6.8101 (USD:RMB)	NT$(thousand)
			$ 3,339,118 66,471 133,396 2,977,824 86,465

34. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the Securities and Futures Bureau for the Company:

a. Financings provided to others: See Table 1 attached;
b. Endorsement/guarantee provided: See Table 2 attached;
c. Marketable securities held (excluding investments in subsidiaries and associates): See Table 3 attached;
d. Marketable securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital: None;
e. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: See Table 4 attached;
f. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None;
g. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: None;
h. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
i. Information about the derivative financial instruments transaction: None;
j. Others: The business relationship between the parent and the subsidiaries and significant transactions between them: See Table 5 attached;
k. Names, locations, and related information of investees over which the Company exercises significant influence (excluding information on investment in mainland China): See Table 6 attached;
l. Information on investment in Mainland China:
1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 7attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in Mainland China on financial reports: See Table 5 attached.
m. Information of major shareholders: There are no shareholders holding more than 5% of the Company’s shares for the nine months ended September 30, 2021.

35. 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-Machine Interface solutions related IC under a single operation unit. Thus, the information of separate operating segments is not applicable.

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TABLE 1

FocalTech Systems Co., Ltd. and Subsidiaries FINANCINGS PROVIDED TO OTHERS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

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

No (Note 1)	Financing Company	Counterparty	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 4)	Ending Balance (Note 4)	Amount Actually Drawn (Note 4)	Interest Rate	Nature for Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 2)	Note
													Item	Value
1	FocalTech Systems, Ltd.	FocalTech Systems Co., Ltd.	Other receivables from relatedparties	Yes	$ 1,671,000 (USD 60,000)	$ 1,671,000 (USD 60,000)	$ -	-	The need for short-term financing	$ -	Operating capital	$ -	-	-	$ 2,467,011	$ 2,467,011	Note 3

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

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

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

Note 4: Using the exchange rate of 1 USD: 27.85 NTD as of September 30, 2021.

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TABLE 2

FocalTech Systems Co., Ltd. and Subsidiaries

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

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

No. (Note1)	Endorsement/ Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party (Note 2)	Maximum Balance for the Period (Note 5)	Ending Balance (Note 5)	Amount Actually Drawn	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Equity per Latest Financial Statements(%)	Maximum Endorsement/ Guarantee Amount Allowable (Note 2)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries in Mainland China	Note
		Name	Nature of Relationship
0 0 0 0 0 0 1	FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd.	FocalTech Systems, Ltd. FocalTech Electronics, Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Smart Sensors, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd.	The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/ guarantor parent company owns directly and indirectly 100% voting shares of the endorsed/guaranteed company.	$ 6,088,846 6,088,846 6,088,846 6,088,846 6,088,846 6,088,846 1,282,303	$ 1,253,250 ( USD 45,000 ) 1,270,079 ( USD 45,604 ) 1,587,450 ( USD 57,000 ) 1,838,100 ( USD 66,000 ) 197,475 97,475 ( USD 3,500 ) 429,420 ( CNY 100,000 )	$ 1,253,250 ( USD 45,000 ) 1,270,079 ( USD 45,604 ) 1,587,450 ( USD 57,000 ) 1,838,100 ( USD 66,000 ) 197,475 97,475 ( USD 3,500 ) 429,420 ( CNY 100,000 )	$ - - 17,081 76,095 714 - 279,667	$ - - - - - - 429,420	10.29% 10.43% 13.04% 15.09% 1.62% 0.8% 33.49%	$ 6,088,846 6,088,846 6,088,846 6,088,846 6,088,846 6,088,846 1,282,303	Y Y Y Y Y Y N	N N N N N N N	N N Y Y N N Y	(Note 3) (Note 3) (Note 3 and 6) (Note 3 and 6) (Note 4 and 5) (Note 4) -

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

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

Note 2: Limits on Endorsement/ Guarantee Amount

1) The ceilings on the amount of endorsements/guarantees due to business transaction are as below:
2) The total amount of endorsements/guarantees and the amount of endorsements/guarantees for any single entity shall not exceed 50% of the net worth of the Company.
3) The total amount of endorsements/guarantees between the Company owns directly or indirectly 100% voting shares shall not exceed 100% of the net worth of the Company.
4) The total amount of endorsement/guarantee provided by the Company or by the Company and its subsidiaries shall not exceed 50% of the net worth of the Company. The total amount of the endorsement/guarantee provided by the Company and the subsidiaries to any individual entity shall not exceed 50% of the net worth of the Company.
5) The net worth referred to above are based on the latest reviewed financial statements. Where the Company’s financial reports are prepared in accordance with the International Financial Reporting Standards, “net worth” in the Procedures means the equity attributable to shareholders of the parent in the balance sheet.
39 -

TABLE 2

Note 3: FocalTech Systems Co., Ltd. provided USD 45,000 thousand of endorsements/guarantees for FocalTech Electronics Ltd., FocalTech Systems, Ltd., Hefei PineTech Electronics Co., Ltd. and FocalTech Electronics (Shenzhen) Co., Ltd. for the purchases, the amount actually drawn during the period is NT$0, NT$0, NT$0, and NT$ 28,915 thousand respectively.
Note 4: FocalTech Systems Co., Ltd. provided USD 3,500 thousand of endorsements/guarantees for FocalTech Smart Sensors Ltd. and FocalTech Smart Sensors Co., Ltd. for the purchases, the amount actually drawn during the period is NT$0 and NT$ 714 thousand respectively.
Note 5: FocalTech Systems Co., Ltd. provided NT$ 100,000 thousand of endorsements/guarantees for FocalTech Smart Sensors Co., Ltd..
Note 6: FocalTech Systems Co., Ltd. provided USD 5,000 thousand of endorsements/guarantees for Hefei PineTech Electronics Co., Ltd. and FocalTech Electronics (Shenzhen) Co., Ltd. for the purchases, the amount actually drawn during the period is NT$11,772 and NT$ 0 thousand respectively.
Note 7: Using the exchange rate of 1 USD: 27.85 NTD and 1 RMB: 4.2942 NTD as of September 30, 2021.
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TABLE 3

FocalTech Systems Co., Ltd. and Subsidiaries MARKETABLE SECURITIES HELD SEPTEMBER 30, 2021

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

Held Company Name			Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		September 30,2021	September 30,2021		Note
						Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value
FocalTech Systems Co., Ltd. FocalTech Systems, Ltd. FocalTech Electronics, Ltd.		Stock Common stock of Wisdom Marine Lines Co., Ltd. (CAYMAN) Class B Preferred Stock of Fubon Financial Holding Co., Ltd. Class A Preferred Stock of WT Microelectronics Co., Ltd. Privately Offered Fund CDIB Capital Healthcare Ventures II Limited Partnership CDIB Capital Growth Partners L.P. CDIB-Innolux Limited Partnership Structured product CLN Link HSBC SUB CLN Link Barclays SUB Fixed income bond Azure Nova International Finance Limited Maturity Date`：`March 21, 2022 Bank of China Limited Maturity Date`：`November 13, 2024 Industrial and Commercial Bank of China Limited Maturity Date`：`September 21, 2025 Privately Offered Fund TIEF Fund, L.P.		- - - - - - - - - - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non current `〃` Financial assets at fair value through profit or loss - non current `〃` `〃` Financial assets at fair value through profit or loss - non current `〃` Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non current `〃` Financial assets at fair value through profit or loss - non current	1,461,000 170,000 2,882,000 - - - - - - - - -	NT$ 118,195 NT$ 10,608 NT$ 138,480 NT$ 12,727 NT$ 28,270 NT$ 12,400 NT$ 53,486 ( USD 1,921 ) NT$ 54,056 ( USD 1,941 ) NT$ 56,302 ( USD 2,022 ) NT$ 130,927 ( USD 4,701 ) NT$ 51,014 ( USD 1,832 ) NT$ 26,605 (USD 955)	0.20 0.03 2.13 0.96 0.66 4.37 4.83	NT$ 118,195 NT$ 10,608 NT$ 138,480 NT$ 12,727 NT$ 28,270 NT$ 12,400 NT$ 53,486 ( USD 1,921 ) NT$ 54,056 ( USD 1,941 ) NT$ 56,302 ( USD 2,022 ) NT$ 130,927 ( USD 4,701 ) NT$ 51,014 ( USD 1,832 ) NT$ 26,605 (USD 955)

Note 1 ： The percentage of ownership for preferred stock is the held shares divided by the number of outstanding shares. Note 2 ： Using the exchange rate of 1 USD: 27.85 NTD as of September 30, 2021.

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TABLE 4

FocalTech Systems Co., Ltd. and Subsidiaries

ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR NINE MONTHS ENDED SEPTEMBER 30, 2021

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

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

Note 1: Fill in the column the “Basis or reference used in setting the price” if an appraisal report issued by a professional appraiser shall be obtained.

Note 2: Pain-in capital means the shares that the Company issued and fully paid. In the case of the company whose shares have no par value or a par value other than NT$10, the term “20% of the company’s paid-in capital” used herein shall be calculated based on the equity attributable to shareholders of the parent in the balance sheet.
Note 3: “Date of the Event” used herein means, the contract date, the payment date, the transaction date, the title transfer date, the date of relevant board resolutions or other dates in which the transaction parties and the transaction amount can be ascertained (whichever is earlier).
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TABLE 5

FocalTech Systems Co., Ltd. and Subsidiaries

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 2021 (Amount in Thousands of New Taiwan Dollars)

No. (Note 1)	Company Name	Counterparty	Nature of Relationship (Note 3)		IntercompanyTransactions	IntercompanyTransactions
				Financial Statements Item	Amount (Note 4)	Terms	Percentage of Consolidated Net Revenue or Total Assets
0 0 0 1 1 2 2 2 3 3 4	FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics, Ltd. FocalTech Electronics, Ltd. FocalTech Systems, Ltd. FocalTech Systems, Ltd. FocalTech Systems, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Smart Sensors,Ltd.	FocalTech Systems, Ltd. FocalTech Electronics, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Electronics (Shanghai) Co., Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd. FocalTech Smart Sensors Co.,Ltd.	1 1 1 2 2 2 2 2 2 2 2 2 2	Unearned Receipts- related parties Accounts Payables Cost of Revenue Research and development expenses Other Receivables Cost of Revenue Research and development expenses Research and development expenses Other Receivables Accounts Payables Other Payables Research and development expenses Other Receivables	$ 241,793 509,002 23,319 58,850 63,484 29,159 65,601 24,626 271,327 83,782 99,022 397,190 301,493	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2	1.13% 2.37% 0.14% 0.36% 0.3% 0.18% 0.4% 0.15% 1.26% 0.39% 0.46% 2.42% 1.4%

Note 1: Number should be input in the remark column for intercompany transactions. Here illustrate how to assign numbers to transaction 1) 0 for parent company.

2) Subsidiaries are given a number in sequence starting with No. 1.

Note 2: The services of production management, sales, research and development are provided between the Company and its subsidiaries. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements. Note 3: The transaction relationships with the counterparties are as follows:

1) The Company to the consolidated subsidiary.

2) The consolidated subsidiary to another consolidated subsidiary.

Note 4: Balances, transactions, revenue and expenses between the Company and its subsidiaries have been eliminated on consolidation.

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TABLE 6

FocalTech Systems Co., Ltd. and Subsidiaries

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) (Note 1) FOR NINE MONTHS ENDED SEPTEMBER 30, 2021

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

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as of September 30,2021	Balance as of September 30,2021	Balance as of September 30,2021	Net Income (Losses) of the Investee (Note 4)	Share of Profits/Losses of Investee (Note 4)	Note
				September 30,2021 (Note 2)	December 31,2020 (Note 3)	Shares	Percentage of Ownership	Carrying Value (Note 2)
FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics Co., Ltd. FocalTech Smart Sensors, Ltd. FocalTech Corporation, Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. Vitrio Technology Corporation FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd. FocalTech Electronics Co., Ltd.	Cayman Islands Cayman Islands Cayman Islands Taiwan Cayman Islands Taiwan U.S.A Cayman Islands Taiwan	Investment activity Investment activity Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Investment activity Import and export of integrated circuits	NT$ 7,059,264 NT$ 2,785 (USD 100 ) NT$ 85,350 NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 2,848,856 (USD 102,293 ) NT$ 650,299 (USD 23,350 ) NT$ 20,000	NT$ 7,059,264 NT$ 2,848 (USD 100 ) NT$ - NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 2,913,300 (USD 102,293 ) NT$ 665,010 (USD 23,350 ) NT$ 20,000	5,491,200 2 3,000,000 142,000 18,813,050 17,417,000 100 2 2,000,000	100% 100% 9.14% 50.00% 57.31% 100% 100% 100% 100%	NT$ 2,497,203 (USD 89,666 ) NT$ 1,809,988 (USD 64,991 ) NT$ 4,719 (USD 169 ) NT$ - NT$ 29,589 (USD 1,062 ) (NT$ 264,717 ) NT$ 2,379,341 (USD 85,434 ) NT$ 2,467,011 (USD 88,582 ) NT$ 100,891 (USD 3,623 )	(NT$ 531,575 ) (USD 18,939) NT$ 282,953 USD 10,081 (NT$ 65,209 ) (USD 2,323 ) (NT$ 3,238 ) (NT$ 65,209 ) (USD 2,323 ) (NT$ 62,677 ) (NT$ 526,995 ) (USD 18,776 ) (NT$ 510,703 ) (USD 18,196 ) (NT$ 40,064 ) (USD 1,427 )	(NT$ 531,575 ) (USD 18,939 ) NT$ 282,953 USD 10,081 (NT$ 5,960 ) (USD 212 ) NT$ - (NT$ 37,371 ) (USD 1,331 ) (NT$ 62,677 ) (NT$ 526,995 ) (USD 18,776 ) (NT$ 510,703 ) (USD 18,196 ) (NT$ 40,064 ) (USD 1,427 )	Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note 1: Please refer to the table 7 for the information on investment in Mainland China.

Note 2: Using the exchange rate of 1 USD: 27.85 NTD as of September 30, 2021.

Note 3: Using the exchange rate of 1 USD: 28.48 NTD as of December 31, 2020.

Note 4: Using the average exchange rate of 1 USD: 28.0672 NTD for nine months ended September 30, 2021.

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TABLE 7

FocalTech Systems Co., Ltd. and Subsidiaries INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR NINE MONTHS ENDED SEPTEMBER 30, 2021

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

Investee company	Main businesses and products	Total amount of paid-in capital (Note 1)	Method of investment	Accumulated outflow of investment from Taiwan as of January 1,2021(Note 1)	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of September 30, 2021 (Note 1)	Net income (loss) of investee company (Note 2)	Percentage of ownership	Investment income (loss) recognized (Note 2)	Carrying amount as of September 30, 2021 (Note 1)	Accumulated inward remittance of earnings as of September 30, 2021	Note
					Outflow	Inflow
FocalTech Electronics (Shanghai) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co., Ltd.	Sales support and post-sales service for affiliates’ IC products Research, development, manufacturing and sale of integrated circuits Design and research of integrated circuits Research, development and sale of integrated circuits	NT$ 55,700 (USD 2,000) NT$ 64,055 (USD 2,300) NT$ 1,030,454 (USD 37,000) NT$ 128,826 (RMB 30,000)	(Note 3 and 4) (Note 3) (Note 4) (Note 4)	NT$ 27,850 (USD 1,000) NT$ 27,850 (USD 1,000) - -	$ - - - -	$ - - - -	NT$ 27,850 (USD 1,000) NT$ 27,850 (USD 1,000) - -	(NT$ 4,835) (USD 172) NT$ 392,988 (USD 14,002) (NT$ 84,218) (USD 3,001) NT$ 8,636 (USD 308)	100% 100% 100% 100%	(NT$ 4,835) (USD 172) NT$ 392,988 (USD 14,002) (NT$ 84,218) (USD 3,001) NT$ 8,636 (USD 308)	NT$ 30,386 USD 1,091 NT$ 446,347 (USD 16,027) NT$ 1,282,303 (USD 46,043) NT$ 222,182 (USD 7,978)	$ - - - -

Accumulated Investment in Mainland China as of September 30,2021	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
$55,700 (USD2,000)	$1,684,009 (USD60,467)	$7,306,615

Note 1: Using the exchange rate of 1 USD: 27.85 NTD and 1 RMB :4.2942 NTD as of September 30, 2021.

Note 2: Using the average exchange rate of 1 USD: 28.0672 NTD and 1 RMB :4.3381 NTD for nine months ended September 30, 2021. Note 3: Indirect investment in Mainland China through a holding company established in other countries. Note 4: The investment is through the foreign subsidiaries, has not been remitted from Taiwan.

45 -

AI assistant

FocalTech — Interim / Quarterly Report 2021

52342_rns_2021-12-29_ce0c1eec-4b7d-4c20-a300-28ae62e4cbaf.pdf

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2021 and 2020

Independent Accountants’ Review Report

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

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

b.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

b. Basis of Preparation

d. Other significant accounting policies

1) Retirement benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

9. OTHER FINANCIAL ASSETS

10. ACCOUNTS RECEIVABLES, NET

11. INVENTORIES

12. SUBSIDIARIES

13. PROPERTY, PLANT AND EQUIPMENT

14. GOODWILL

15. OTHER INTANGIBLE ASSETS

Licenses and

16. OTHER NON-CURRENT ASSETS

17. BORROWINGS

18. ACCOUNTS PAYABLES

19. OTHER PAYABLES

20. RETIREMENT BENEFIT

21. EQUITY

e. Treasury stock

g. Non-controlling interests

22. REVENUE

23. NET INCOME

a. Financial costs

b. Depreciation and amortization

c. Employee benefits expense

Amount

24. INCOME TAXES

25. EARNINGS PER SHARE

Net Profit for the Period

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

26. SHARE-BASED PAYMENT ARRANGEMENTS

September 30, 2021

September 30, 2020

c. Restricted stock for employees

27. NON-CASH TRANSACTIONS

28. OPERATING LEASE ARRANGEMENTS

The Group as Lessee

29. FINANCIAL INSTRUMENTS

1) Market risk

a) Foreign exchange risk

Sensitivity analysis

b) Interest rate risk

2) Credit risk

Credit risk management for investments in debt instruments

3) Liquidity risk

September 30, 2021

30. TRANSACTIONS WITH RELATED PARTIES

31. PLEDGED ASSETS

32. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

September 30, 2021

September 30, 2020

FocalTech Interim / Quarterly Report 2021