FocalTech - Interim / Quarterly Report 2022

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2022 and 2021

Notice to Readers

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

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

INDEPENDENT AUDITORS’ REVIEW REPORT

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

Introduction

We have reviewed the accompanying consolidated balance sheets of FocalTech Systems Co., Ltd. and its subsidiaries (collectively, the “Company”) as of September 30, 2022 and 2021, the related consolidated statements of comprehensive income for the three months ended September 30, 2022 and 2021 and for the nine months ended September 30, 2022 and 2021, the consolidated statements of changes in equity and of cash flows for the six months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies(collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

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

Basis for Qualified Conclusion

As disclosed in Note 12 to the consolidated financial statements, the financial statements of non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of September 30, 2022 and 2021, combined total assets of these non-significant subsidiaries were NT$2,265,707 thousand and NT$427,255 thousand, respectively, representing 10% and 2%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$1,071,062 thousand and NT$68,590 thousand, respectively, representing 8% and 1%, respectively, of the consolidated total liabilities; for the three months and nine months ended September 30, 2022 and 2021, the amounts of combined comprehensive income (loss) of these subsidiaries were NT($7,509) thousand, NT($43,894) thousand, NT($72,307) thousand and NT($159,576) thousand ,respectively, representing 0%, (2%), 5%, (3%).

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, 2022 and 2021, its consolidated financial performance and its consolidated cash flows for the three months ended September 30, 2022 and 2021 and for the nine months ended September 30, 2022 and 2021 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 Chih-Ming Shao and Ming-Hsing Cho.

Deloitte & Touche Taipei, Taiwan Republic of China November 11, 2022

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through 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) Property, plant and equipment (Note 13) Goodwill (Notes 14) Other intangible assets (Note 15) Deferred tax assets Refundable deposits(Note 16) Other non-current assets (Note 32) 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 (Note 28) Current tax liabilities (Notes 4) Other current liabilities (Notes 23) 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(Notes 21) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Notes 22 and 27) Share capital Ordinary shares Capital surplus Additional paid-in capital Treasury shares Employee share 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 Treasury shares Equity attributable to owners of the parent NON-CONTROLLING INTERESTS (Note 22) Total equity TOTAL		September 30, 2022 (Reviewed) Amount % $ 5,651,666 25 - - - - 1,215,112 5 7,064,135 31 696,913 3 361,778 2 14,989,604 66 466,459 2 187,345 1 2,530,122 11 1,237,268 6 67,676 - 352,747 2 2,746,308 12 57,316 - 7,645,241 34 $ 22,634,845 100 $ 3,426,058 15 2,046,843 9 1,762,469 8 - - 694,543 3 67,242 - 7,997,155 35 986,840 5 238,547 1 21,682 - 4,579,403 20 10,400 - 5,836,872 26 13,834,027 61 2,162,377 9 4,751,572 21 124,926 1 59,331 - 1,095,945 5 34,448 - 6,066,222 27 712,562 3 211,479 1 159,998 1 1,084,039 5 (314,847) (1) (213,824) (1) 8,783,967 39 16,851 - 8,800,818 39 $ 22,634,845 100		December 31, 2021 (Audited) Amount % $ 6,456,988 26 119,218 1 55,590 - 3,255,081 13 3,822,218 15 3,879,862 15 536,459 2 18,125,416 72 412,779 1 178,404 1 2,468,605 10 1,237,268 5 47,228 - 9,914 - 2,841,745 11 10,575 - 7,206,518 28 $ 25,331,934 100 $ 301,712 1 2,620,160 10 1,596,958 6 - - 1,786,309 7 110,356 1 6,415,495 25 786,840 3 51,584 - 22,140 - 4,397,513 18 10,400 - 5,268,477 21 11,683,972 46 2,162,367 9 4,737,390 19 79,917 - 65,873 - 1,145,555 5 34,134 - 6,062,869 24 101,230 - 122,316 - 6,202,079 25 6,425,625 25 (1,025,199) (4) - - 13,625,662 54 22,300 - 13,647,962 54 $ 25,331,934 100	December 31, 2021 (Audited) Amount % $ 6,456,988 26 119,218 1 55,590 - 3,255,081 13 3,822,218 15 3,879,862 15 536,459 2 18,125,416 72 412,779 1 178,404 1 2,468,605 10 1,237,268 5 47,228 - 9,914 - 2,841,745 11 10,575 - 7,206,518 28 $ 25,331,934 100 $ 301,712 1 2,620,160 10 1,596,958 6 - - 1,786,309 7 110,356 1 6,415,495 25 786,840 3 51,584 - 22,140 - 4,397,513 18 10,400 - 5,268,477 21 11,683,972 46 2,162,367 9 4,737,390 19 79,917 - 65,873 - 1,145,555 5 34,134 - 6,062,869 24 101,230 - 122,316 - 6,202,079 25 6,425,625 25 (1,025,199) (4) - - 13,625,662 54 22,300 - 13,647,962 54 $ 25,331,934 100		September 30, 2021 (Reviewed)	September 30, 2021 (Reviewed)
		Amount $ 5,651,666 - - 1,215,112 7,064,135 696,913 361,778 14,989,604 466,459 187,345 2,530,122 1,237,268 67,676 352,747 2,746,308 57,316 7,645,241 $ 22,634,845 $ 3,426,058 2,046,843 1,762,469 - 694,543 67,242 7,997,155 986,840 238,547 21,682 4,579,403 10,400 5,836,872 13,834,027 2,162,377 4,751,572 124,926 59,331 1,095,945 34,448 6,066,222 712,562 211,479 159,998 1,084,039 (314,847) (213,824) 8,783,967 16,851 8,800,818 $ 22,634,845		Amount $ 6,456,988 119,218 55,590 3,255,081 3,822,218 3,879,862 536,459 18,125,416 412,779 178,404 2,468,605 1,237,268 47,228 9,914 2,841,745 10,575 7,206,518 $ 25,331,934 $ 301,712 2,620,160 1,596,958 - 1,786,309 110,356 6,415,495 786,840 51,584 22,140 4,397,513 10,400 5,268,477 11,683,972 2,162,367 4,737,390 79,917 65,873 1,145,555 34,134 6,062,869 101,230 122,316 6,202,079 6,425,625 (1,025,199) - 13,625,662 22,300 13,647,962 $ 25,331,934			Amount $ 8,028,997 118,195 56,302 2,575,410 2,493,821 963,546 486,573 14,722,844 336,632 181,941 1,325,179 1,237,268 51,214 42,188 2,481,317 1,089,813 6,745,552 $ 21,468,396 $ 859,664 2,166,241 1,319,945 700,000 1,327,561 117,312 6,490,723 786,840 59,531 23,015 1,902,874 10,400 2,782,660 9,273,383 2,165,215 4,736,211 ` 79,963 45,871 1,212,385 34,134 6,108,564 101,230 122,316 4,873,886 5,097,432 (1,193,149) (371) 12,177,691 17,322 12,195,013 $ 21,468,396	%
								37 1 - 12 12 5 2 69 2 1 6 6 - - 11 5 31 100 4 10 6 3 6 1 30 4 - - 9 - 13 43 10 22 1 - 6 - 29 - 1 23 24 (6) - 57 - 57 100

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

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

REVENUE (Note 23) COSTS OF SALES (Note 11 and 24) GROSS (LOSS) PROFIT OPERATING EXPENSES (Note 24, 27, 29 and 31) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING (LOSS) INCOME NON-OPERATING INCOME AND EXPENSES Finance costs(Note 24) Interest income Gain (loss) on financial assets and liabilities at fair value through profit or loss Other gains and losses - net Gain (loss) on foreign exchange Total non-operating income and expenses (LOSS) INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (BENEFIT) (Note 25) NET (LOSS) 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
		2022		2021		2022			2021
		Amount % $ 2,370,317 100 (4,369,610) (184) (1,999,293) (84) (137,921) (6 ) (145,431 ) (6 ) (671,579) (28) (954,931) (40) (2,954,224) (124) (15,025) (1 ) 18,807 1 (28,213 ) (1 ) 25,155 1 (14,956) (1) (14,232) (1) (2,968,456) (125 ) 198,222 8 (2,770,234) (117) 168,225 7		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 $ 9,590,291 (8,921,002) 669,289 (399,398) (437,569) (2,091,413) (2,928,380) (2,259,091) (25,183) 45,467 (79,468) 174,220 279,178 394,214 (1,864,877 ) (99,713) (1,964,590) 380,081	% 100 (93) 7 (4 ) (5 ) (22) (31) (24) - - (1 ) 2 3 4 (20 ) (1) (21) 4		Amount % $ 16,394,543 100 (8,442,986) (51) 7,951,557 49 (398,136) (2 ) (449,917) (3 ) (1,721,637) (11) (2,569,690) (16) 5,381,867 33 (7,481) - 23,647 - 80,219 - 347,445 2 (41,160) - 402,670 2 5,784,537 35 (1,021,027) (6) 4,763,510 29 (95,003) (1 ) (Continued)

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

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
2022		2021	2022		2021
Amount (3,314) 164,911 164,911 $ (2,605,323) $ (2,760,461) (9,773) $ (2,770,234) $ (2,604,307) (1,016) $ (2,605,323) $ (13.57)	% - 7 7 (110 ) (117 ) - (117) (110 ) - (110)	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 (12,415) 367,666 367,666 $ (1,596,924) $ (1,941,586) (23,004) $ (1,964,590) $ (1,591,475) (5,449) $ (1,596,924) $ (9.53)	% - 4 4 (17 ) (20 ) - (20) (17 ) - (17)	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


		$			$
		$			$
		$			$
		$			$
		$			$

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

(Concluded)

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

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

(Reviewed, Not Audited)

		Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent			Total Equity
Share Capital Ordinary Shares $ 2,103,532 - - - - - - - - - - 3,233 58,450 - $ 2,165,215 $ 2,162,367 - - - - - - - - - 2,430 (2,420) - $ 2,162,377	Capital Surplus $ 4,843,642 - - - - - - 45,261 1,948 - - 5,328 1,212,385 - $ 6,108,564 $ 6,062,869 - - - - - - 42,511 - - 10,452 (49,610) - $ 6,066,222	Retained Earnings Legal Reserve Special Reserve Undistributed Earnings $ - $ - $ 1,012,301 101,230 - (101,230) - 122,316 (122,316) - - (700,000) - - 4,785,388 - - - - - 4,785,388 - - - - - - - - - - - (257) - - - - - - - - - $ 101.230 $ 122,316 $ 4,873,886 $ 101,230 $ 122,316 $ 6,202,079 611,332 - (611,332) - 89,163 (89,163) - - (3,400,000) - - (1,941,586) - - - - - (1,941,586) - - - - - - - - - - - - - - - - - - $ 712,562 $ 211,479 $ 159,998			Other Equity	Unearned employee compensation $ - - - - - - - - - - - - (1,212,385) 235,000 $ (977,385) $ (813,720) - - - - - - - - - - 49,610 310,631 $ (453,479)	Treasury Shares $ (24,316) - - - - - - - 23,945 - - - - - $ (371) $ - - - - - - - - (507,621) 293,797 - - - $ (213,824)
		Legal Reserve $ - 101,230 - - - - - - - - - - - - $ 101.230 $ 101,230 611,332 - - - - - - - - - - - $ 712,562	Special Reserve $ - - 122,316 - - - - - - - - - - - $ 122,316 $ 122,316 - 89,163 - - - - - - - - - - $ 211,479	Exchange Differences from Translating the Financial Statement of Foreign Operations $ (125,038) - - - - (92,570) (92,570) - - - - - - - $ (217,608) $ (211,648) - - - - 362,526 362,526 - - - - - - $ 150,878	Unrealized Gain (Loss) on Financial Assets at Fair Value through Other Comprehensive Income $ 2,722 - - - - (878) (878) - - - - - - - $ 1,844 $ 169 - - - - (12,415) (12,415) - - - - - - $ (12,246)
								$ 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 $ 13,647,962 - - (3,400,000) (1,964,590) 367,666 (1,596,924) 42,511 (507,621) 293,797 12,882 (2,420) 310,631 $ 8,800,818

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

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES (Loss) 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 Loss on disposal of property plant and equipment Gain on disposal of investments Loss (reversal gain) on write-down of inventories Unrealized loss on foreign exchange Compensation cost of restricted stock to employees Changes in operating assets and liabilities Financial assets mandatorily measured at fair value through profit or loss Accounts receivables Inventories Other current assets Accounts payables Other payables Other current liabilities Net defined benefit liabilities Cash (used) generated from operations Interest paid Income tax paid Net cash (outflow) inflow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial asset at fair value through other comprehensive income Acquisition of property, plant and equipment Increase (decrease) in refundable deposits Acquisition of intangible assets Decrease in other financial assets Increase in other non-current assets Interest received Net cash inflow (outflow) from investing activities		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2022 $ (1,864,877) 86,332 48,369 79,468 25,183 (45,467) 42,511 265 (97,765) 2,518,144 176,784 310,631 102,575 2,049,694 (5,719,297) 179,114 (583,028) 22,976 (46,775) (458) (2,715,621) (24,282) (1,392,777) (4,132,680) 58,569 (109,565) 96,163 (54,825) 3,263,993 (46,444) 42,213 3,250,104		2021
				$ 5,784,537 59,929 11,933 (80,219) 7,481 (23,647) 45,261 - (183,272) (177,808) (20,626) 235,000 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) (2,309,367) - 401,101 (1,078,451) 26,384 (3,044,061) (Continued)

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Increase in long-term borrowings Increase in guarantee deposits Dividends paid to owners of the Company Exercise of employee share options Treasury shares acquired Treasury shares transferred to employees Increase in non-controlling interests Issuance of restricted stock employees Retirement of restricted stock employees Net cash (outflow) inflow financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET (DECREASE) 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	For the Nine Months Ended September 30
		2022 $ 3,105,555 200,000 181,641 (3,400,000) 12,882 (507,621) 293,797 - - (2,420) (116,166) 193,420 (805,322) 6,456,988 $ 5,651,666		2021
				$ 339,139 786,840 1,412,648 - 8,561 - 25,893 42,759 58,450 - 2,674,290 (36,023) 4,017,315 4,011,682 $ 8,028,997

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

(Concluded)

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

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (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 November 11, 2022.

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

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

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

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2023

Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 1) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 2) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities January 1, 2023 (Note 3) arising from a Single Transaction”

Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: 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.
Note 3: 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.

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

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

The IFRSs issued by International Accounting Standards Board (IASB), into effect by the Financial Supervisory Commission (FSC):	but not yet endorsed and issued
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” Amendments to IFRS 16” Lease liabilities in a sale and leaseback” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17-Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Noncurrent liabilities with contractual terms”	Effective Date Announced by IASB (Note )
	To be determined by IASB January 1, 2024 (Note 2) January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2024 January 1, 2024

The IFRSs issued by International Accounting Standards Board (IASB),
into effect by the Financial Supervisory Commission (FSC):

but not yet endorsed and issued

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”

Amendments to IFRS 16” Lease liabilities in a sale and leaseback”

IFRS 17 “Insurance Contracts”

Amendments to IFRS 17

Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS
17-Comparative Information”

Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”

Amendments to IAS 1 “Noncurrent liabilities with contractual terms”

Effective Date
Announced by IASB (Note )

To be determined by IASB
January 1, 2024 (Note 2)
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

b. Basis of Preparation

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

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

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

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

c. Basis of consolidation

The detail information, holding percentages, and main business of the subsidiaries could be found in Note 12, TABLE 5 and TABLE 6.

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, 2021.

1) Retirement benefits

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

2) Taxation

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Critical accounting judgments, estimations and assumptions applied in these consolidated financial statements are consistent with those in the consolidated financial statements for the year ended December 31, 2021.

6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2022		2021		2021
Cash on hand	$	8,809	$	24,233	$	3,401
Checking accounts and demand deposits		1,469,762		4,141,003		5,329,409
Cash equivalent (time deposits with original
maturities within three months)		4,173,095		2,291,752		2,696,187
	$	5,651,666	$	6,456,988	$	8,028,997

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

	September	September	30,	December 31,	September 30,
		2022		2021	2021
Current
Mandatorily measured at fair value through profit
or loss (FVTPL)
Listed ordinary shares	$		-	$ 119,218	$ 118,195
Non–Current
Mandatorily measured at fair value through profit
or loss (FVTPL)
Listed preferred shares	$	148,637		$ 151,801	$ 149,088

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

8.
9.
10.

Private Funds
205,102
156,075
80,002
Structured Investments
112,720
104,903
107,542
$ 466,459
$ 412,779
$ 336,632
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
September 30,
2022
December 31,
2021
September 30,
2021
Investments in debt instruments
Current
Foreign investments
Fixed income bonds
$ -
$ 55,590
$ 56,302
Non–Current
Foreign investments
Fixed income bonds
$ 187,345
$ 178,404
$ 181,941
OTHER FINANCIAL ASSETS
September 30,
2022
December 31,
2021
September 30,
2021
Time deposits with original maturities more than
three months
$ 696,913
$ 3,879,862
$ 963,546
ACCOUNTS RECEIVABLES, NET
September 30,
2022
December 31,
2021
September 30,
2021
Accounts receivables
$ 1,215,112
$ 3,255,081
$ 2,575,410

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 accounts 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 accounts receivables. The expected credit losses on accounts 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 accounts receivable.

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

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

September 30, 2022

Expected credit loss rate Gross carrying amount and Amortized cost December 31, 2021 Expected credit loss rate Gross carrying amount and Amortized cost September 30, 2021 Expected credit loss rate Gross carrying amount and Amortized cost	Non Past Due 0% $ 1,174,955 Non Past Due 0% $ 3,023,207 Non Past Due 0% $ 2,481,578		Overdue 1-60 Days 0% $ 31,072 Overdue 1-60 Days 0% $ 231,874 Overdue 1-60 Days 0% $ 93,832	Overdue 61-180 Days 0% $ 9,085 Overdue 61-180 Days 0% $ - Overdue 61-180 Days 0% $ -	Overdue Over 180 Days 0% $ - Overdue Over 180 Days 0% $ - Overdue Over 180 Days 0% $ -		Total
							0% $ 1,215,112 Total
							0% $ 3,255,081 Total
							0% $ 2,575,410

11. INVENTORIES

	September 30,	December 31,	September 30,	September 30,
	2022	2021		2021
Finished goods	$ 1,641,247	$ 1,233,626	$	747,063
Work in process	2,834,302	1,622,781		1,194,552
Raw materials and supplies	2,588,586	965,811		552,206
	$ 7,064,135	$ 3,822,218	$	2,493,821

The cost of goods sold were NT$4,369,610 thousand and NT$2,857,205 thousand, including write-down inventories of NT$(2,497,481) thousand and reverse of write-down inventories of NT$84,207 thousand for the three months ended September 30, 2022 and 2021. The cost of goods sold were NT$8,921,002 thousand and NT$8,442,986 thousand, including the write-down inventories of NT$(2,518,144) thousand and reverse of write-down inventories of NT$177,808 thousand for the nine months ended September 30, 2022 and 2021. Above mentioned gains from price recovery of inventory are resulted from sales of slow moving inventory.

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

12. SUBSIDIARIES

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

Investor	Investee	Main Businesses	Percentage of Ownership	Percentage of Ownership	Percentage of Ownership	Note
			September 30, 2022	December 31, 2021	September 30, 2021
FocalTech Systems Co., Ltd. FocalTech Systems Co.,Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd.	Investment activity Investment activity	100% 100%	100% 100%	100% 100%	- Note
FocalTech Systems Co., Ltd. And FocalTech Electronics Co., Ltd.	FocalTech Smart Sensors, Ltd.	Investment activity	66.45%	66.45%	66.45%	Note
FocalTech Smart Sensors, Ltd.	FocalTech Smart Sensors Co., Ltd.	Research, development, manufacturing and sale of integrated circuits	100%	100%	100%	Note
FocalTech Corporation,Ltd.	FocalTech Systems, Inc.	Investment activity	100%	100%	100%	-
FocalTech Systems, Inc.	FocalTech Systems, Ltd.	Investment activity	100%	100%	100%	Note
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%	- Note
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%	Note - Note

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

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

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2022 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance, September 30, 2022 Accumulated depreciation Balance, January 1, 2022 Depreciation Disposals Effect of foreign currency exchange differences Balance, September 30, 2022 Carrying amounts as of December 31, 2021 and January 1, 2022 Carrying amounts as of September 30, 2022 Cost Balance, January 1, 2021 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance, September 30, 2021 Accumulated depreciation Balance, January 1, 2021 Depreciation Disposals Effect of foreign currency exchange differences Balance, September 30, 2021 Carrying amounts as of September 30, 2021		Land		Buildings	Development Equipment		Office Equipment	Information Equipment	Leasehold Improvements	Construction Inprogress	Total
		$ - - - 557,110 - $ 557,110 $ - - - - $ - $ - $ 557,110 $ - - - - - $ - $ - - - - $ - $ -		$ 1,336,121 - - 500,183 39,032 $ 1,875,336 $ 156,566 29,702 - 4,717 $ 190,985 $ 1,179,555 $ 1,684,351 $ 1,343,090 - - - ( 21,116) $ 1,321,974 $ 121,696 26,598 - ( 2,144) $ 146,150 $ 1,175,824	$ 434,688 57,824 ( 19,383 ) - 22,425 $ 495,554 $ 240,423 53,535 ( 19,383 ) 18,621 $ 293,196 $ 194,265 $ 202,358 $ 292,977 77,932 ( 5,041 ) ( 158 ) ( 4,209) $ 361,501 $ 203,722 30,952 ( 5,041 ) ( 2,841) $ 226,792 $ 134,709		$ 12,349 16,181 - - 265 $ 28,795 $ 10,107 899 - 200 $ 11,206 $ 2,242 $ 17,589 $ 11,557 731 - 105 ( 138) $ 12,255 $ 9,574 431 - ( 101) $ 9,904 $ 2,351	$ 44,540 1,757 ( 2,344 ) - 1,195 $ 45,148 $ 32,127 2,196 ( 2,079 ) 830 $ 33,074 $ 12,413 $ 12,074 $ 38,869 5,065 - 53 ( 606) $ 43,381 $ 29,561 1,948 - ( 423) $ 31,086 $ 12,295	$ 38,530 - ( 6,479) - 417 $ 32,468 $ 38,530 - ( 6,479 ) 417 $ 32,468 $ - $ - $ 38,604 - - - ( 226) $ 38,378 $ 38,604 - - ( 226) $ 38,378 $ -	$ 1,080,130 33,803 - ( 1,057,293 ) - $ 56,640 $ - - - - $ - $ 1,080,130 $ 56,640 $ - - - - - $ - $ - - - - $ - $ -	$ 2,946,358 109,565 ( 28,206 ) - 63,334 $ 3,091,051 $ 477,753 86,332 ( 27,941 ) 24,785 $ 560,929 $ 2,468,605 $ 2,530,122 $ 1,725,097 83,728 ( 5,041 ) - ( 26,295) $ 1,777,489 $ 403,157 59,929 ( 5,041 ) ( 5,735) $ 452,310 $ 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 32.

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

14. GOODWILL

	September 30,	December 31,	September 30,
	2022	2021	2021
Ending balance	$ 1,237,268	$ 1,237,268	$ 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 consolidated financial statements in 2021 for related information.

15. OTHER INTANGIBLE ASSETS

Cost Balance, January 1, 2022 Additions Reclassification Effect of foreign currency exchange differences Balance, September 30, 2022 Accumulated amortization Balance, January 1, 2022 Amortization expenses Effect of foreign currency exchange differences Balance, September 30, 2022 Carrying amounts as of December 31, 2021and January 1, 2022 Carrying amounts as of September 30, 2022 Cost Balance, January 1, 2021 Effect of foreign currency exchange differences Balance, September 30, 2021		Licenses and Franchises $ 128,012 4,451 - 16,079 $ 148,542 $ 128,012 1,113 16,079 $ 145,204 $ - $ 3,338 $ 122,262 (2,293) $ 119,969		Software $ 135,839 50,374 13,904 17,810 $ 217,927 $ 132,792 36,150 17,722 $ 186,664 $ 3,047 $ 31,263 $ 148,247 (3,023) $ 145,224		Patents $ 76,707 - - 6 $ 76,713 $ 54,726 5,556 6 $ 60,288 $ 21,981 $ 16,425 $ 76,708 (4) $ 76,704	Trademark $ 74,000 - - - $ 74,000 $ 51,800 5,550 - $ 57,350 $ 22,200 $ 16,650 $ 74,000 - $ 74,000		Total
									$ 414,558 54,825 13,904 33,895 $ 517,182 $ 367,330 48,369 33,807 $ 449,506 $ 47,228 $ 67,676 $ 421,217 (5,320) $ 415,897

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

Accumulated amortization Balance, January 1, 2021 Amortization expenses Effect of foreign currency exchange differences Balance, September 30, 2021 Carrying amounts as of September 30, 2021	$ 122,130 119 (2,293) $ 119,956 $ 13	$ 144,543 425 (2,968) $ 142,000 $ 3,224	$ 46,942 5,839 (4) $ 52,777 $ 23,927	$ 44,400 5,550 - $ 49,950 $ 24,050	$ 358,015 11,933 (5,265)
					$ 364,683
					$ 51,214

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

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

16. REFUNDABLE DEPOSITS

			September 30,	December 31,	September 30,
			2022	2021	2021
Capacity	guarantee	deposits and others	$ 2,746,308	$2,841,745	$2,481,317

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

17. BORROWINGS

a. Short-term borrowings

	September 30,	December 31,	December 31,	September 30,
	2022		2021	2021
Unsecured bank loans	$ 3,426,058	$	-	$ 580,000
Secured bank loans	-		301,712	279,664
	$ 3,426,058	$	301,712	$ 859,664
Annual interest rate
Unsecured bank loans	1.2~4.25%		-	0.88-0.92%
Secured bank loans	-	1.74`～`1.81%		1.73-4.52%

Property, plant and equipment are pledged as collateral for the bank loans, please refer to Note 32.

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

b. Long-term borrowings

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2022		2021		2021
Unsecured bank loans	$	200,000	$	-	$	-
Secured bank loans		786,840		786,840		786,840
	$	986,840	$	786,840	$	786,840

For secured bank loans, the principals will be paid monthly or quarterly after three years from drawdown date. The period of borrowings is from September, 2021 to September, 2036, and the interest rate are 1.5% on September 30, 2022 and 1% on December 31, 2021 and September 30, 2021.

For unsecured bank loans, the principals will be paid monthly after one year from drawdown date. The period of borrowings is from September, 2022 to September, 2025, and the interest rate are 1.51% on September 30, 2022.

Commercial building is pledged as collateral for long-term loans, please refer to Note 32.

18. ACCOUNTS PAYABLES

	September 30,	December 31,	September 30,
	2022	2021	2021
Accounts payables	$ 2,046,843	$ 2,620,160	$ 2,166,241

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. OTHER PAYABLES

		September 30,	December 31,	September 30,
		2022	2021	2021
Payable	for rebates	$ 863,405	$ 610,291	$ 549,142
Payable	for salaries and bonus	654,714	777,747	590,683
Payable	for labor, health and social insurance	17,856	15,913	13,592
Reserve	for litigations	53,064	46,261	46,545
Payable	for professional services and others	173,430	146,746	119,983
		$1,762,469	$1,596,958	$1,319,945

20. RETIREMENT BENEFIT

Pension expenses under the defined benefit plans, calculated using the actuarially determined pension cost rate as of December 31, 2021 and 2020, were NT$23 thousand, NT$46 thousand, NT$94 thousand and NT$138 thousand for the three months ended September 30, 2022 and 2021, and nine months ended September 30, 2022 and 2021, respectively.

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

21. GUARANTEE DEPOSITS RECEIVED

			September 30,	December 31,	September 30,
			2022	2021	2021
Capacity	guarantee	deposits and others	$ 4,579,403	$4,397,513	$ 1,902,874

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

22. EQUITY

a. Share capital

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

	September 30,	December 31,	September 30,
	2022	2021	2021
Numbers of shares authorized (in thousands)	500,000	500,000	500,000
Shares authorized	$ 5,000,000	$ 5,000,000	$ 5,000,000
Number of shares issued and fully paid (in
thousands)	216,238	216,237	216,522
Shares issued	$ 2,162,377	$ 2,162,367	$ 2,165,215

The company has redeemed 226 thousand shares of issued restricted stocks for employees during the year ended September 30, 2022. The registration processes have not been completed as of September 30, 2022.

b. Capital surplus

BALANCE, JANUARY 1, 2022 Employee treasury share vested Compensation cost of employee share options Issuance of ordinary shares from exercise of employee share options Employee share options expired Retirement of restricted stock employees BALANCE, September 30, 2022 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) $ 4,737,390 - - 14,182 - - $ 4,751,572 $ 4,725,445 - - - 10,766 - - $ 4,736,211	Treasury Shares (1) $ 79,917 45,009 - - - - $ 124,926 $ 69,361 1,948 8,654 - - - - $ 79,963	Restricted stock for employees (2) $ 1,145,555 - - - - (49,610) $ 1,095,945 $ - - - - - - 1,212,385 $ 1,212,385	Employee Share Options (2) $ 65,873 (45,009) 42,511 (3,730) (314) - $ 59,331 $ 14,903 - (8,654 ) 45,261 (5,438 ) (201 ) - $ 45,871	Employee Share Options -Expired (1) $ 34,134 - - - 314 - $ 34,448 $ 33,933 - - - - 201 - $ 34,134	Total
						$ 6,062,869 - 42,511 10,452 - (49,610)
						$ 6,066,222
						$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 cannot be used for any purposes.

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

c. Retained earnings and dividend policy

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

See Note 24(d) for policy stipulated in the Articles of Incorporation regarding to the remuneration for employees and directors.

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

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

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

The appropriations of earnings for 2021 and 2020 were approved in annual shareholder’s meeting held on June 9, 2022, and August 19, 2021, respectively, were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share	2021 $ 611,332 $ 89,163 $3,400,000 $ 15.71	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	For the Nine Months Ended September 30
		2022 $ 122,316 89,163 $ 211,479	2021 $ - 122,316 $ 122,316

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

e. Treasury stock

	Shares
	(In Thousands)
Number of shares on January 1, 2021	778
Decrease during the period	(766)
Number of shares on September 30, 2021	12
Number of shares on January 1, 2022	-
Increase during the period	4,000
Decrease during the period	(2,315)
Number of shares on September 30, 2022	1,685

On February 23, 2022, the board of directors resolved the 6th treasure stock transferred to employees program no more than 4,000,000 shares for transferring to employees. From April 6 to April 19, 2021, 4,000,000 shares had been bought back, and it amount was $507,621 thousand. The transferring price to employees would be the average purchase price.

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

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

f. Unearned employee compensation

Balance, beginning ( Retirement (issuance) of shares Share-based payment expenses recognized Balance, ending (	For the Nine Months Ended September 30 2022 2021 $ 813,720 ) $ - 49,610 ( 1,212,385) 310,631 235,000 $ 453,479) ($ 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 thousand and 236 thousand shares on April 7, 2021 and July 29, 2021, respectively. Please refer Note 27 (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
	2022 $ 22,300 ( 23,004) 17,555 - - $ 16,851	2021 ($ 1,383) ( 21,878) ( 2,433) 42,759 257 $ 17,322

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

23. REVENUE

	For the Nine Months Ended September 30	For the Nine Months Ended September 30
$	2022 2021 9,590,291 $ 16,394,543 December 31, 2021 September 30, 2021 $ 49,099 $ 46,386 For the Nine Months Ended September 30

	2022 2021 $ 25,183 $ 7,041 - 440 $ 25,183 $ 7,481 For the Nine Months Ended September 30
	2022 $ 86,332 48,369 $ 134,701 $ 20,091 114,610 $ 134,701	2021 $ 59,929 11,933 $ 71,862 $ 2,280 69,582 $ 71,862

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

c. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans (Note 20) Share-based payments (Note 27) Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Months Ended September 30 2022 2021 $ 8,662 $ 8,483 23 46 104,269 155,644 588,637 617,038 $ 701,591 $ 781,211 $ 65,557 $ 68,646 636,034 712,565 $ 701,591 $ 781,211		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2022 $ 8,662 23 104,269 588,637 $ 701,591 $ 65,557 636,034 $ 701,591		2022 $ 24,255 94 353,142 1,899,809 $ 2,277,300 $ 210,655 2,066,645 $ 2,277,300	2021 $ 22,689 138 280,261 1,590,232 $ 1,893,320 $ 156,268 1,737,052 $ 1,893,320

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. There were no employees’ compensation accrued due to loss before income tax for the nine months ended September 30, 2022. The accrued employees’ compensation and remuneration of directors for the three months and nine months ended September 30, 2022 and 2021 are as follows:

Amount

	For the	Three	For the Nine
	Months	Ended	Months Ended
	September 30		September 30
	2021		2021
Employees’ compensation	$	22,778	$ 126,292
Remuneration of directors	$	1,199	$ 7,223

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 for 2021 and 2020 had been approved by the Board of Directors of the Company, as illustrated follows:

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

Resolution Date of the Company’s Board of Directors in its meeting Employees’ compensation Remuneration of directors	2021 February23,2022 $ 316,730 $ 30,000	2020	2020
		February4,2021
			$ 123,450 $ 7,214

There is no difference between the actual amount of remuneration to employees and directors resolved and the amount of remuneration to employees and directors accounted for in 2021 and 2020 consolidated financial statements.

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

25. INCOME TAXES

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

Current income tax expense In respect of the current year Income tax on undistributed earnings Other income tax adjustments Deferred income tax expense In respect of the current year Income tax (benefit) expense recognized in profit or loss	For the Three Months Ended September 30 2022 2021 $ 35,500 $ 558,953 ( 81,702) - - - (46,202) 558,953 (152,020) 18,680 ($198,222) $ 577,633		For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2022 $ 35,500 ( 81,702) - (46,202) (152,020) ($198,222)		2022 $ 218,908 - 36,675 255,583 (155,870) $ 99,713	2021 $ 971,866 - - 971,866 49,161 $1,021,027

b. Income tax assessments

The Company’s tax returns through 2019, FocalTech Smart Sensors Co., Ltd., and FocalTech Electronics Co., Ltd.’s tax returns through 2020 have been examined by the tax authorities.

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

26. (LOSS) EARNINGS PER SHARE

Unit: NT$ Per Share

Basic (loss) earnings per share Diluted earnings per share	For the Three Months Ended September 30 2021 2020 ($ 13.57) $ 9.02 $ 8.58	For the Three Months Ended September 30 2021 2020 ($ 13.57) $ 9.02 $ 8.58	For the Nine Months Ended September 30 2021 2020 ($ 9.53) $ 23.73 $ 22.52	For the Nine Months Ended September 30 2021 2020 ($ 9.53) $ 23.73 $ 22.52	For the Nine Months Ended September 30 2021 2020 ($ 9.53) $ 23.73 $ 22.52
		2021 ($ 13.57)		2021 ($ 9.53)	2020 $ 23.73 $ 22.52

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

Net (Loss) Profit for the Period

(Loss) earnings used in the computation of basic (loss) earnings per share		For the Three Months Ended September 30 2022 2021 ($2,760,461) $1,833,297	For the Three Months Ended September 30 2022 2021 ($2,760,461) $1,833,297		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2022 ($2,760,461	)		2022 ($1,941,586)	2021 $4,785,388

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

Weighted average number of ordinary shares in computation of basic (loss) 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 2022 2021 203,387 203,235 - 7,376 - 438 - 2,498 - 147 203,387 213,694		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2022 203,387 - - - - 203,387		2022 203,656 - - - - 203,656	2021 201,648 8,604 507 780 999 212,538

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

Note: There is no diluted effectiveness for the nine months ended September 30, 2022 due to operating loss.

27. SHARE-BASED PAYMENT ARRANGEMENTS

The Group did not have new share option plan issued for employees for the nine months ended September 30, 2022 and 2021. The detailed information could be found in Note 27 of the consolidated financial statements of the year ended December 31, 2021.

a. Employee share option plan

Information on outstanding options for the nine months ended September 30, 2022 and 2021 is as follows:

September 30, 2022

Employee Stock Option Plan	BeginningBalance	BeginningBalance	Options exercised	Options	expired	EndingBalance	EndingBalance
		Weighted- Average Exercise Price (NT$)	Units of Option Weighted- Average Exercise Price (NT$)	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option 22,399 106,000	Weighted- Average Exercise Price (NT$)
		$19.86 15.60	( 140,000) $20.98 ( 103,000) 15.60	( 36,000) -	$ 5.37 -		$29.68 12.80

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		$26.65 15.90	( 199,800) $33.04 (123,500) 15.86	- ( 12,000)	$ - 15.90		$19.86 15.60

b. Treasure stock transferred to employees

The Company acquired 4,000 thousand shares treasury stock for the nine months ended September 30, 2022.

Information about treasury stock transferred to employee is as follows:

Items The 4th treasure stock transferred to employee program The 5th treasure stock transferred to employee program The 6th treasure stock transferred to employee program	The date of board of directors approved 2018/7/26 2018/8/23 2022/2/23	Buyback shares (In thousand share) 8,000 7,689 4,000	Transferred shares (In thousand share) 7,952 7,206 2,315	Adjustment due to capital reduction (In thousand share) (46) (473) -	Shares not transferred yet (In thousand share) 2 10 -	Transferred price (in dollar)
						33.69 (Adjusted) 32.93 (Adjusted) 126.91

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

Information about treasury stock transferred to employee for the nine months ended September 30, 2022 is as follows:

The 4th treasury stock transferred to employee program Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) 2020/03/20 7,848 $ 3.30 2021/04/07 104 181.40 Total 7,952	The 4th treasury stock transferred to employee program Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) 2020/03/20 7,848 $ 3.30 2021/04/07 104 181.40 Total 7,952	The 5th treasury stock transferred to employee program	The 5th treasury stock transferred to employee program	The 5th treasury stock transferred to employee program
Employee subscription base date 2020/03/20 2021/04/07 Total	Shares transferred (In Thousands) 7,848 104 7,952	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$)
				$ - - 3.70 1.90 181.20 242.20

The 6th treasury stock transferred to employee program Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) 2022/06/21 2,315$ - Total 2,315	The 6th treasury stock transferred to employee program Employee subscription base date Shares transferred (In Thousands) The fair value of the right to subscribe (NT$) 2022/06/21 2,315$ - Total 2,315
Employee subscription base date 2022/06/21 Total	Shares transferred (In Thousands) 2,315 2,315

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 follows:

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

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 are restricted to sell, pledge, transfer, and give to another, create any encumbrance on, or otherwise dispose of, any shares before vested.
b. The rights of restricted stock are same as ordinary share including attendance, propose, speak, voting right and so on at the Company’s shareholders’ meeting. The exercise of such rights shall be performed in accordance with the trust agreement or the securities custodies by the Company’s prescribed.
c. Stock dividends and cash dividends yielding from restricted stock will be distributed to employees in the current year, and will not be restricted.

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

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, 2022 and 2021 are 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	For the Nine Months Ended September 30
		2022 $ 42,511 310,631 $ 353,142 $ 42,511 310,631 $ 353,142		2021
				$ 45,261 235,000 $ 280,261 $ 45,261 235,000 $ 280,261

28. NON-CASH TRANSATION

The cash dividends of 2020 resolved by the annual shareholders’ meeting on August 19,2021 was NT$700,000 thousand. and was not distributed as of September 30,2021. (Referring to Note 22)

29. 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, 2023. 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 NT$3,304 thousand and NT$16,405 thousand as of September 30, 2022 and 2021.

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

lease payment		For the Three Months Ended September 30 2022 2021 $ 3,747 $ 8,811		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2022 $ 3,747		2022 $ 21,814	2021 $ 25,763

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

30. 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, 2022 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds December 31, 2021 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds September 30, 2021 Financial assets at FVTPL Listed preferred shares Private funds Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds	Level 1 $ 148,637 - - $ 148,637 $ - Level 1 $ 271,019 - - $ 271,019 $ - Level 1 $ 267,283 - - $ 267,283 $ -	Level 2 $ - - 112,720 $ 112,720 $ 187,345 Level 2 $ - - 104,903 $ 104,903 $ 233,994 Level 2 $ - - 107,542 $ 107,542 $ 238,243	Level 3 $ - 205,102 - $ 205,102 $ - Level 3 $ - 156,075 - $ 156,075 $ - Level 3 $ - 80,002 - $ 80,002 $ -	Total $ 148,637 205,102 112,720
				$ 466,459
				$ 187,345
				Total $ 271,019 156,075 104,903
				$ 531,997
				$ 233,994
				Total $ 267,283 80,002 107,542
				$ 454,827
				$ 238,243

There were no transfers between Level 1 and Level 2 for the nine months ended September 30, 2022 and 2021.

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

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

Financial assets at FVTPL Balance, beginning of period Purchases Disposals Recognized in profit or loss(other income or loss) Effect of foreign currency exchange differences Balance, end of period		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2022 $ 156,075 38,540 (2,330) 8,911 3,906 $ 205,102	2021 $ 52,579 24,937 (181) 3,274 (607) $ 80,002

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

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2022		2021		2021
Financial assets
Fair value through profit or loss (FVTPL)
Mandatorily at FVTPL	$	466,459	$	531,997	$	454,827
Amortized cost (Note 1)		10,309,999		16,433,676		14,049,270
Financial assets at FVTOCI
Investments in debt instruments		187,345		233,994		238,243
Financial liabilities
Amortized cost (Note 2)	$	12,801,613	$	9,703,183	$	7,735,564

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 payable, long-term borrowing and guarantee deposits received.

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

d. Financial risk management objectives and policies

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

The board of directors is solely responsible for establishing and monitoring the framework of risk management of the Group. The chairman is authorized by the board of directors to develop and monitor the risk management policy of the Group with the operation center of the Group, and regularly reported the situation to the board of directors.

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

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

1) Market risk

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

a) Foreign currency risk

The carrying amounts of the Group’s monetary assets and monetary liabilities denominated in foreign currency at the end of the reporting period are shown in Note 34.

Sensitivity analysis

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

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

Profit or loss/ equity		USD Impact	USD Impact
		For the Nine Months Ended September 30
		2022 ($ 9,142)(i)	2021 $ 289,333(i)

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

b) Interest rate risk

The Group was exposed to interest rate risk primarily related to its investments in fixed-rate time deposits, bonds, borrowings, 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:

	September 30,	December 31,	September 30,
	2022	2021	2021
Fair value interest rate risk
Financial assets	$ 5,057,353	$ 6,405,608	$ 3,897,976
Financial liabilities	$ 4,412,898	$ 1,088,552	$ 1,646,504
Cash flow interest rate risk
Financial assets	$ 1,577,080	$ 4,241,431	$ 5,431,511

Sensitivity analysis

The below sensitivity analysis was determined based on the Company’s exposure to interest rates for non-derivative instruments as of the end of the reporting period. An increase or a decrease of 25 basis points was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/ lower and all other variables were held constant, the Company’s pre-tax profit for the nine months ended September 30, 2022 and 2021 would increase/ decrease by NT$2,957 thousand and NT$10,184 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 accounts receivables mainly came from its top 5 customers. Ongoing credit evaluation of the financial condition of the customers is performed.

As of September 30, 2022, accounts receivables from top 5 customers represented 68% of total accounts receivables. The credit concentration risk of other accounts receivables was insignificant.

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

Credit risk management for investments in debt instruments

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

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

Category Performing Category Performing Category Performing	Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss	Expected Credit Loss Ratio 0% Expected Credit Loss Ratio 0% Expected Credit Loss Ratio 0%	Carrying Amount as of September 30, 2022	Carrying Amount as of September 30, 2022
			$ 187,345 Carrying Amount as of December 31, 2021	$ 187,345
			$ 233,994 Carrying Amount as of September 30, 2021	$ 233,994
				$ 238,243

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

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. The Company relies on bank borrowings as a significant source of liquidity.

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.

September 30, 2022

Non-interest bearing Fixed interest rate liabilities December 31, 2021 Non-interest bearing Fixed interest rate liabilities September 30, 2021 Non-interest bearing Fixed interest rate liabilities	On Demand or Less than 1 Year $ 3,808,185 3,427,185 $ 7,235,370 On Demand or Less than 1 Year $ 4,216,894 301,936 $ 4,518,830 On Demand or Less than 1 Year $ 4,185,866 859,984 $ 5,045,850		1-5 Years $ 4,579,403 404,375 $ 4,983,778 1-5 Years $ 4,397,513 155,832 $ 4,553,345 1-5 Years $ 1,902,874 140,083 $ 2,042,957		More than 5 Years
					$ - 582,465 $ 582,465 More than 5 Years
					$ - 631,008 $ 631,008 More than 5 Years
					$ - 646,757 $ 646,757

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

31. 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 2022 2021 $ (1,224) $ (31) 6,658 7,767 54 92 15,155 15,665 $ 20,643 $ 23,493		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2022 $ (1,224) 6,658 54 15,155 $ 20,643		2022 $ 28,560 62,981 324 53,468 $ 145,333	2021 $ 12,682 61,363 353 35,854 $ 110,252

32. PLEDGED ASSETS

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

	September	September	30,	December	December	31,	September	September	30,
		2022			2021			2021
Property, plant and equipment – net of buildings	$	497,682		$	510,257		$	507,524
Property, plant and equipment – land		557,110				-			-
Property, plant and equipment –Construction in
progress			-		1,071,400				-
Prepayments on commercial building
(categorized in other non-current assets)			-			-		1,080,130
Pledge deposits (categorized in other non-current
assets)		4,000			4,000			4,000
	$	1,058,792		$	1,585,657		$	1,591,654

33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACTUAL COMMITMENTS

NOVATEK MICROELECTRONICS CORP. (“NOVATEK”) filed five patent infringement actions with Intellectual Property and Commercial Court on August 9, 2021, asking the court to prohibit the Company from manufacturing, offering for sale, selling, utilizing or importing, for the aforementioned purposes, products infringing on such patents and asking for indemnification for any losses. The litigations are still in the preliminary stages of the Intellectual Property and Commercial Court, and the result could not be inferred. The Company does not expect any material operations and financial impact of the Company resulting from this case.

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

34. 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 are as follows:

September 30, 2022

		Foreign
	Currencies
	(thousand)		Exchange Rate	NT$(thousand)
Financial assets
Monetary items
USD	$	225,808	31.75 (USD:NTD)	$ 7,169,399
USD		18,828	7.0998 (USD:RMB)	597,805
Financial liabilities
Monetary items
USD		231,767	31.75 (USD:NTD)	7,358,595
USD		18,629	7.0998 (USD:RMB)	591,455
December 31, 2021
		Foreign
	Currencies
	(thousand)		Exchange Rate	NT$(thousand)
Financial assets
Monetary items
USD	$	494,679	27.68(USD:NTD)	$ 13,692,701
USD		16,817	6.3757 (USD:RMB)	465,507
Financial liabilities
Monetary items
USD		279,278	27.68 (USD:NTD)	7,730,402
USD		35,727	6.3757 (USD:RMB)	988,917
September 30, 2021
		Foreign
	Currencies
	(thousand)		Exchange Rate	NT$(thousand)
Financial assets
Monetary items
USD	$	394,682	27.85(USD:NTD)	$ 10,991,894
USD		16,728	6.4854 (USD:RMB)	465,863
Financial liabilities
Monetary items
USD		171,186	27.85 (USD:NTD)	4,767,528
USD		32,444	6.4854 (USD:RMB)	903,562

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

35. ADDITIONAL DISCLOSURES

(1)Information about significant transactions and investees:
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 property at costs of at least NT$300 million or 20% of the paid-in capital: None;
f. Disposal of individual real estate property 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 4 attached;
(2) Names, locations, and related information of investees over which the Company exercises significant influence (excluding information on investment in mainland China): See Table 5 attached;
(3) Information on investment in Mainland China:
a. 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 6 attached.
b. 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 4 attached.
(4) Information of major shareholders: There are no shareholders holding more than 5% of the Company’s shares for the month ended September 30, 2022.

36. 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.

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

TABLE 1

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

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

(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	$ 1,905,000 (USD 60,000)	$ 1,905,000 (USD 60,000)	$ -	-	The need for short-term financing	$ -	Operating capital	$ -	-	-	$ 2,172,899	$ 2,172,899	Note 3
1	FocalTech Systems, Ltd.	FocalTech Electronics (Shenzhen) Co.,Ltd.	Other receivables from related parties	Yes	317,500 (USD 10,000)	317,500 (USD 10,000)	-	-	The need for short-term financing	-	Operating capital	-	-	-	2,172,899	2,172,899	Note 3
2	FocalTech Electronics, Ltd.	FocalTech Electronics (Shenzhen) Co.,Ltd.	Other receivables from related parties	Yes	793,750 (USD 25,000)	793,750 (USD 25,000)	-	-	The need for short-term financing	-	Operating capital	-	-	-	1,396,493	1,396,493	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: 31.75 NTD as of September 30, 2022.

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

TABLE 2

FocalTech Systems Co., Ltd. and Subsidiaries ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

(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 Property	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.	$ 4,391,983 4,391,983 4,391,983 4,391,983 4,391,983 4,391,983 871,322	$ 1,428,750 ( USD 45,000 ) 1,447,936 ( USD 45,604 ) 1,809,750 ( USD 57,000 ) 2,190,750 ( USD 69,000 ) 111,125 ( USD 3,500 ) 111,125 ( USD 3,500 ) 447,200 ( CNY 100,000 )	$ 1,428,750 ( USD 45,000 ) 1,447,936 ( USD 45,604 ) 1,809,750 ( USD 57,000 ) 2,190,750 ( USD 69,000 ) 111,125 ( USD 3,500 ) 111,125 ( USD 3,500 ) 447,200 ( CNY 100,000 )	$ - - 6,295 76,857 - - -	$ - - - - - - -	16.27% 16.48% 20.6% 24.94% 1.27% 1.27% 51.32%	$ 4,391,983 4,391,983 4,391,983 4,391,983 4,391,983 4,391,983 871,322	Yes Yes Yes Yes Yes Yes No	No No No No No No No	No No Yes Yes No No Yes	(Note 3) (Note 3) (Note 3 and 5) (Note 3 and 5) (Note 4) (Note 4) -

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

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

Note 2: Limits on Endorsement/ Guarantee Amount

1) The ceilings on the amount of endorsements/guarantees due to business transaction are as below:
2) The total amount of endorsements/guarantees and the amount of endorsements/guarantees for any single entity shall not exceed 50% of the net worth of the Company.
3) The total amount of endorsements/guarantees between the Company owns directly or indirectly 100% voting shares shall not exceed 100% of the net worth of the 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.

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

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$0, and NT$ 74,666 thousand respectively.

Note 4: FocalTech Systems Co., Ltd. provided USD 3,500 thousand of endorsements/guarantees for FocalTech Smart Sensors Ltd. and FocalTech Smart Sensors Co., Ltd. for the purchases, the amount actually drawn during the period is NT$ 0. Note 5: FocalTech Systems Co., Ltd. provided USD 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$ 0. Note 6: Using the exchange rate of 1 USD: 31.75 NTD and 1 RMB: 4.472 NTD as of September 30, 2022.

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

TABLE 3

FocalTech Systems Co., Ltd. and Subsidiaries MARKETABLE SECURITIES HELD SEPTEMBER 30, 2022

(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		March 31,2022	March 31,2022		Note
						Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value
FocalTech Systems Co., Ltd. FocalTech Systems, Ltd. FocalTech Electronics, Ltd.		Stock 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 Cathay Private Equity Smart Tech Limited Partnership Structured product CLN Link HSBC SUB CLN Link Barclays SUB Fixed income bond 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 - non current `〃` Financial assets at fair value through profit or loss - non current `〃` `〃` `〃` Financial assets at fair value through profit or loss - non current `〃` Financial assets at fair value through other comprehensive income - non current `〃` Financial assets at fair value through profit or loss - non current	170,000 2,882,000 - - - - - - - - -	NT$ 10,013 NT$ 138,624 NT$ 15,054 NT$ 32,302 NT$ 34,245 NT$ 90,811 NT$ 56,491 ( USD 1,779 ) NT$ 56,229 ( USD 1,771 ) NT$ 135,099 ( USD 4,255 ) NT$ 52,246 ( USD 1,646 ) NT$ 32,690 (USD 1,030)	0.03 2.13 0.96 0.66 4.37 24.59 4.83	NT$ 10,013 NT$ 138,624 NT$ 15,054 NT$ 32,302 NT$ 34,245 NT$ 90,811 NT$ 56,491 ( USD 1,779 ) NT$ 56,229 ( USD 1,771 ) NT$ 135,099 ( USD 4,255 ) NT$ 52,246 ( USD 1,646 ) NT$ 32,690 (USD 1,030)

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: 31.75 NTD as of September 30, 2022.

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

TABLE 4

FocalTech Systems Co., Ltd. and Subsidiaries

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 (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 1 2 3 3 3 4	FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics, Ltd. FocalTech Systems, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Smart Sensors,Ltd.	FocalTech Electronics, Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd. FocalTech Electronics (Shanghai) Co., Ltd. FocalTech Smart Sensors Co.,Ltd.	1 1 2 2 2 2 2 2 2 2 2	Accounts Payables Cost of revenue Other Receivables Other Receivables Accounts Payables Research and development expenses Other Payables Research and development expenses Other Payables Selling and marketing expenses Other Receivables	$ 601,644 10,156 89,320 319,363 222,787 82,733 228,986 112,978 20,018 81,272 384,988	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2	2.66% 0.11% 0.39% 1.41% 0.98% 0.86% 1.01% 1.18% 0.09% 0.85% 1.7%

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.

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

TABLE 5

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 THE NINE MONTHS ENDED SEPTEMBER 30, 2022

(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 30,2022	Balance as of September 30,2022	Balance as of September 30,2022	Net Income (Losses) of the Investee (Note 4)	Share of Profits/Losses of Investee (Note 4)	Note
				September 30,2022 (Note 2)	December 31,2021 (Note 3)	Shares	Percentage of Ownership	Carrying Value (Note 2)
FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics Co., Ltd. FocalTech Smart Sensors, Ltd. FocalTech Corporation, Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. Vitrio Technology Corporation FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd. FocalTech Electronics Co., Ltd.	Cayman Islands Cayman Islands Cayman Islands Taiwan Cayman Islands Taiwan U.S.A Cayman Islands Taiwan	Investment activity Investment activity Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Investment activity Import and export of integrated circuits	NT$ 7,059,264 NT$ 3,175 (USD 100 ) NT$ 85,350 NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 3,247,798 (USD 102,293 ) NT$ 741,364 (USD 23,350 ) NT$ 20,000	NT$ 7,059,264 NT$ 2,768 (USD 100 ) NT$ 85,350 NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 2,831,466 (USD 102,293 ) NT$ 646,330 (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% 57.31% 100% 100% 100% 100%	NT$ 2,202,185 (USD 69,360 ) NT$ 1,396,493 (USD 43,984 ) NT$ 4,590 (USD 145 ) NT$ - NT$ 28,784 (USD 907 ) (NT$ 357,998 ) NT$ 2,074,990 (USD 65,354 ) NT$ 2,172,899 (USD 68,438 ) NT$ 111,422 (USD 3,509 )	(NT$ 579,044) (USD 19,773) (NT$ 282,228) (USD 9,637) (NT$ 68,565 ) (USD 2,341 ) (NT$ 372 ) (NT$ 68,565 ) (USD 2,341 ) (NT$ 68,649 ) (NT$ 574,398 ) (USD 19,614 ) (NT$ 556,842 ) (USD 19,614 ) (NT$ 28,869 ) (USD 986 )	(NT$ 579,044 ) (USD 19,773 ) (NT$ 282,228 ) (USD 9,637 ) (NT$ 6,267 ) (USD 214 ) NT$ - (NT$ 39,295 ) (USD 1,342 ) (NT$ 68,649 ) (NT$ 574,398 ) (USD 19,614 ) (NT$ 556,842 ) (USD 19,015 ) (NT$ 28,869 ) (USD 986 )	Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

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

Note 2: Using the exchange rate of 1 USD: 31.75 NTD as of September 30, 2022.

Note 3: Using the exchange rate of 1 USD: 27.68 NTD as of December 31, 2021.

Note 4: Using the average exchange rate of 1 USD: 29.2846 NTD for the nine months September 30, 2022.

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

TABLE 6

FocalTech Systems Co., Ltd. and Subsidiaries INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

(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 1,2022(Note 1)	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of September 30, 2022 (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, 2022 (Note 1)	Accumulated inward remittance of earnings as of September 30, 2022	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$ 63,500 (USD 2,000) NT$ 295,275 (USD 9,300) NT$ 1,174,755 (USD 37,000) NT$ 134,160 (RMB 30,000)	(Note 3 and 4) (Note 3) (Note 4) (Note 4)	NT$ 31,750 (USD 1,000) NT$ 31,750 (USD 1,000) - -	$ - - - -	$ - - - -	NT$ 31,750 (USD 1,000) NT$ 31,750 (USD 1,000) - -	NT$ 3,308 (USD 113) (NT$ 125,531) (USD 4,287) (NT$ 504,083) (USD 17,213) NT$ 21,244 (USD 725)	100% 100% 100% 100%	NT$ 3,308 (USD 113) (NT$ 125,531) (USD 4,287) (NT$ 504,083) (USD 17,213) NT$ 21,244 (USD 725)	NT$ 33,745 (USD 1,063) NT$ 344,923 (USD 10,864) NT$ 871,322 (USD 27,443) NT$ 257,652 (USD 8,115)	$ - - - -	- - - -

Accumulated Investment in Mainland China as of September 30,2022	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
$63,500 (USD2,000)	$1,919,831 (USD60,467)	$5,270,380

Note 1: Using the exchange rate of 1 USD: 31.75 NTD and 1 RMB :4.472 NTD as of September 30, 2022. Note 2: Using the average exchange rate of 1 USD: 29.2846 NTD and 1 RMB :4.4389 NTD for nine months ended September 30, 2022. Note 3: Indirect investment in Mainland China through a holding company established in other countries. Note 4: The investment is through the foreign subsidiaries, has not been remitted from Taiwan.

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

AI assistant

FocalTech — Interim / Quarterly Report 2022

52342_rns_2022-11-14_6b593ce8-b10a-4a87-9de6-79907d57d0a3.pdf

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2022 and 2021

Notice to Readers

INDEPENDENT AUDITORS’ REVIEW REPORT

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

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

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

c. Basis of consolidation

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 - NON-CURRENT

September 30, 2022

11. INVENTORIES

12. SUBSIDIARIES

13. PROPERTY, PLANT AND EQUIPMENT

14. GOODWILL

15. OTHER INTANGIBLE ASSETS

16. REFUNDABLE DEPOSITS

17. BORROWINGS

b. Long-term borrowings

18. ACCOUNTS PAYABLES

19. OTHER PAYABLES

20. RETIREMENT BENEFIT

21. GUARANTEE DEPOSITS RECEIVED

22. EQUITY

b. Capital surplus

c. Retained earnings and dividend policy

e. Treasury stock

g. Non-controlling interests

23. REVENUE

c. Employee benefits expense

d. The remuneration of employees and directors

Amount

25. INCOME TAXES

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

b. Income tax assessments

26. (LOSS) EARNINGS PER SHARE

Unit: NT$ Per Share

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

27. SHARE-BASED PAYMENT ARRANGEMENTS

September 30, 2022

b. Treasure stock transferred to employees

28. NON-CASH TRANSATION

29. OPERATING LEASE ARRANGEMENTS

The Group as Lessee

30. FINANCIAL INSTRUMENTS

d. Financial risk management objectives and policies

1) Market risk

a) Foreign currency risk

Sensitivity analysis

b) Interest rate risk

Sensitivity analysis

2) Credit risk

Credit risk management for investments in debt instruments

3) Liquidity risk

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

September 30, 2022

31. TRANSACTIONS WITH RELATED PARTIES

32. PLEDGED ASSETS

33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACTUAL COMMITMENTS

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

September 30, 2022

FocalTech Interim / Quarterly Report 2022