FocalTech - Interim / Quarterly Report 2023

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2023 and 2022

Notice to Readers

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

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

INDEPENDENT AUDITORS’ REVIEW REPORT

To 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 June 30, 2023 and 2022, the related consolidated statements of comprehensive income for the three months ended June 30, 2023 and 2022 and for the six months ended June 30, 2023 and 2022, 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 the Standards on Review Engagements of the Republic of China “Review of Interim 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 June 30, 2023 and 2022, combined total assets of these non-significant subsidiaries were NT$2,155,998 thousand and NT$2,077,258 thousand, respectively, representing 12% and 8%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$858,278 thousand and NT$971,170 thousand, respectively, representing 9% and 7%, respectively, of the consolidated total liabilities; for the three months and six months ended June 30, 2023 and 2022, the amounts of combined comprehensive income (loss) of these subsidiaries were NT$36,071 thousand, NT$56,649 thousand, NT$4,021 thousand and NT$(64,798) thousand ,respectively, representing 34%, 40%, 3%, (6%).

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 June 30, 2023 and 2022, its consolidated financial performance and its consolidated cash flows for the three months ended June 30, 2023 and 2022 and for the six months ended June 30, 2023 and 2022 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 Yu-Hong Kuo and Chih-Ming Shao.

Deloitte & Touche Taipei, Taiwan Republic of China August 11, 2023

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

-1-

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED 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) 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 (Note 4) Current position of long-term borrowings (Note 17) 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 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		June 30, 2023 (Reviewed) Amount % $ 5,363,649 30 124,807 1 1,179,869 6 3,593,162 20 535,247 3 222,631 1 11,019,365 61 516,519 3 180,807 1 2,456,871 14 1,237,268 7 71,244 - 223,765 1 2,418,643 13 18,679 - 7,123,796 39 $ 18,143,161 100 $ 516,513 3 1,387,760 8 1,441,700 8 108,000 - 403,460 2 129,288 1 161,447 1 4,148,168 23 786,840 4 220,196 1 13,331 - 3,931,728 22 - - 4,952,095 27 9,100,263 50 2,159,300 12 5,900,050 33 712,562 4 - - 565,045 3 1,277,607 7 (141,928) (1) (163,060) (1) 9,031,969 50 10,929 - 9,042,898 50 $ 18,143,161 100		December 31, 2022 (Audited) Amount % $ 5,674,470 27 - - 1,148,471 6 5,753,731 28 517,464 2 258,794 1 13,352,930 64 467,143 2 179,137 1 2,514,208 12 1,237,268 6 60,549 - 306,129 2 2,654,474 13 25,347 - 7,444,255 36 $ 20,797,185 100 $ 3,070,806 15 929,492 4 1,653,776 8 - - 629,303 3 25,000 - 81,038 - 6,389,415 30 961,840 5 216,757 1 13,560 - 4,369,353 21 - - 5,561,510 27 11,950,925 57 2,161,107 11 6,041,988 29 712,562 3 211,479 1 196,847 1 1,120,888 5 (296,495) (1) (196,057) (1) 8,831,431 43 14,829 - 8,846,260 43 $ 20,797,185 100	December 31, 2022 (Audited) Amount % $ 5,674,470 27 - - 1,148,471 6 5,753,731 28 517,464 2 258,794 1 13,352,930 64 467,143 2 179,137 1 2,514,208 12 1,237,268 6 60,549 - 306,129 2 2,654,474 13 25,347 - 7,444,255 36 $ 20,797,185 100 $ 3,070,806 15 929,492 4 1,653,776 8 - - 629,303 3 25,000 - 81,038 - 6,389,415 30 961,840 5 216,757 1 13,560 - 4,369,353 21 - - 5,561,510 27 11,950,925 57 2,161,107 11 6,041,988 29 712,562 3 211,479 1 196,847 1 1,120,888 5 (296,495) (1) (196,057) (1) 8,831,431 43 14,829 - 8,846,260 43 $ 20,797,185 100		June 30, 2022 (Reviewed)	June 30, 2022 (Reviewed)
		Amount $ 5,363,649 124,807 1,179,869 3,593,162 535,247 222,631 11,019,365 516,519 180,807 2,456,871 1,237,268 71,244 223,765 2,418,643 18,679 7,123,796 $ 18,143,161 $ 516,513 1,387,760 1,441,700 108,000 403,460 129,288 161,447 4,148,168 786,840 220,196 13,331 3,931,728 - 4,952,095 9,100,263 2,159,300 5,900,050 712,562 - 565,045 1,277,607 (141,928) (163,060) 9,031,969 10,929 9,042,898 $ 18,143,161		Amount $ 5,674,470 - 1,148,471 5,753,731 517,464 258,794 13,352,930 467,143 179,137 2,514,208 1,237,268 60,549 306,129 2,654,474 25,347 7,444,255 $ 20,797,185 $ 3,070,806 929,492 1,653,776 - 629,303 25,000 81,038 6,389,415 961,840 216,757 13,560 4,369,353 - 5,561,510 11,950,925 2,161,107 6,041,988 712,562 211,479 196,847 1,120,888 (296,495) (196,057) 8,831,431 14,829 8,846,260 $ 20,797,185			Amount $ 5,092,965 23,075 1,875,211 8,066,294 2,726,810 240,147 18,024,502 474,689 179,864 2,484,591 1,237,268 65,683 12,639 2,911,003 57,830 7,423,567 $ 25,448,069 $ 649,951 2,474,372 1,395,473 3,400,000 867,958 - 65,291 8,853,045 786,840 50,459 21,847 4,431,227 10,400 5,300,773 14,153,818 2,163,617 6,076,459 712,562 211,479 2,920,459 3,844,500 (594,368) (213,824) 11,276,384 17,867 11,294,251 $ 25,448,069	%
								20 - 7 32 11 1 71 2 1 10 5 - - 11 - 29 100 3 10 6 13 3 - - 35 3 - - 18 - 21 56 8 24 3 1 11 15 (2) (1) 44 - 44 100

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.

-2-

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 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 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 INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET INCOME OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss: Exchange differences from translating the financial statements of foreign operations		For the Three Months EndedJune 30	For the Three Months EndedJune 30	For the Three Months EndedJune 30		For theSix Months EndedJune 30	For theSix Months EndedJune 30	For theSix Months EndedJune 30	For theSix Months EndedJune 30
		2023		2022		2023			2022
		Amount % $ 3,112,352 100 (2,474,171) (79) 638,181 21 (81,527) (3 ) (109,017 ) (4 ) (410,156) (13) (600,700) (20) 37,481 1 (11,988) - 61,017 2 23,226 1 12,558 - 14,552 - 99,365 3 136,846 4 (34,150) (1) 102,696 3 3,141 -		Amount % $ 3,327,292 100 (2,200,307) (66) 1,126,985 34 (132,400) (4 ) (148,789 ) (4 ) (823,399) (25) (1,104,588) (33) 22,397 1 (6,372) - 16,704 - (64,769 ) (2 ) 115,838 3 124,898 4 186,299 5 208,696 6 (125,638) (4) 83,058 2 61,508 2		Amount $ 6,337,630 (5,092,268) 1,245,362 (158,856) (214,894) (798,682) (1,172,432) 72,930 (32,409) 111,258 31,472 17,369 (1,564) 126,126 199,056 (46,344) 152,712 (5,372)	% 100 (80) 20 (3 ) (3 ) (13) (19) 1 (1 ) 2 1 - - 2 3 (1) 2 -		Amount % $ 7,219,974 100 (4,551,392) (63) 2,668,582 37 (261,477) (4 ) (292,138) (4 ) (1,419,834) (20) (1,973,449) (28) 695,133 9 (10,158) - 26,660 1 (51,255) (1 ) 149,065 2 294,134 4 408,446 6 1,103,579 15 (297,935) (4) 805,644 11 211,856 3 (Continued)

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

-3-

For the Three Months EndedJune 30	For the Three Months EndedJune 30	For theSix Months EndedJune 30	For theSix Months EndedJune 30
2023	2022	2023	2022
Amount % (454) - 2,687 - 2,687 - $ 105,383 3 $ 105,062 3 (2,366) - $ 102,696 3 $ 107,578 3 (2,195) - $ 105,383 3 $ 0.51 $ 0.49	Amount % (1,536) - 59,972 2 59,972 2 $ 143,030 4 $ 89,612 2 (6,554) - $ 83,058 2 $ 144,861 4 (1,831) - $ 143,030 4 $ 0.44 $ 0.42	Amount % 1,897 - (3,475) - (3,475) - $ 149,237 2 $ 156,719 2 (4,007) - $ 152,712 2 $ 153,137 2 (3,900) - $ 149,237 2 $ 0.76 $ 0.74	Amount % (9,101) - 202,755 3 202,755 3 $ 1,008,399 14 $ 818,875 11 (13,231) - $ 805,644 11 $ 1,012,832 14 (4,433) - $ 1,008,399 14 $ 4.02 $ 3.83


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

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.

-4-

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

(Reviewed, Not Audited)

			Equity Attributable	Equity Attributable	to Owners of the Parent	to Owners of the Parent			Total Equity
Share Capital Ordinary Shares $ 2,162,367 - - - - - - - - - 2,230 (980) - $ 2,163,617 $ 2,161,107 - - - - - - - 463 - (2,270) - $ 2,159,300	Capital Surplus $ 6,062,869 - - - - - - 32,089 - - 1,591 (20,090) - $ 6,076,459 $ 6,041,988 - - - - (108,000) (1,781) 14,350 508 - (47,015) - $ 5,900,050		Retained Earnings	Undistributed Earnings $ 6,202,079 (611,332) (89,163) (3,400,000) 818,875 - 818,875 - - - - - - $ 2,920,459 $ 196,847 211,479 156,719 - 156,719 - - - - - - - $ 565,045		Other Equity	Unearned employee compensation $ (813,720) - - - - - - - - - - 20,090 216,784 $ (576,846) $ (335,829) - - - - - - - - 111,134 47,015 - $ (177,680)	Treasury Shares $ - - - - - - - - (507,621) 293,797 - - - $ (213,824) $ (196,057) - - - - - - - - - - 32,997 $ (163,060)
		Legal Reserve $ 101,230 611,332 - - - - - - - - - - - $ 712,562 $ 712,562 - - - - - - - - - - - $ 712,562	Special Reserve $ 122,316 - 89,163 - - - - - - - - - - $ 211,479 $ 211,479 (211,479) - - - - - - - - - - $ -		Exchange Differences from Translating the Financial Statement of Foreign Operations $ (211,648) - - - - 203,058 203,058 - - - - - - $ (8,590) $ 52,472 - - (5,479) (5,479) - - - - - - - $ 46,993	Unrealized Gain (Loss) on Financial Assets at Fair Value through Other Comprehensive Income $ 169 - - - - (9,101) (9,101) - - - - - - $ (8,932) $ (13,138) - - 1,897 1,897 - - - - - - - $ (11,241)
									$ 13,647,962 - - (3,400,000) 805,644 202,755 1,008,399 32,089 (507,621) 293,797 3,821 (980) 216,784 $ 11,294,251 $ 8,846,260 - 152,712 (3,475) 149,237 (108,000) (1,781) 14,350 971 111,134 (2,270) 32,997 $ 9,042,898

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

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

-5-

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Net (gain) loss on financial assets at fair value through profit or loss Finance costs Interest income Compensation cost of employee share options Loss on disposal of property plant and equipment Compensation cost of restricted stock to employees Gain on disposal of investments (Reversal gain) loss on write-down of inventories Unrealized (gain) loss on foreign exchange Changes in operating assets and liabilities Financial assets mandatorily measured at fair value through profit or loss Accounts receivables Inventories Other current assets Accounts payables Other payables Other current liabilities Net defined benefit liabilities Cash generated (used) from operations Interest paid Income tax paid Net cash inflow (outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial asset at fair value through other comprehensive income Acquisition of property, plant and equipment Acquisition of intangible assets (Increase) decrease in other financial assets Decrease (increase) in refundable deposits Decrease (increase) in other non-current assets Interest received Net cash inflow from investing activities		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ 199,056 57,245 37,893 (31,472) 32,409 (111,258) 14,350 170 111,134 - (616,609) 20,629 (138,237) (33,233) 2,747,444 30,587 464,707 (219,377) 83,307 (229) 2,648,516 (33,404) (190,301) 2,424,811 - (27,353) (48,640) (13,337) 235,740 6,330 117,680 270,420		2022
				$ 1,103,579 54,718 26,802 51,255 10,158 (26,660) 32,089 220 216,784 (83,302) 20,663 89,634 75,807 1,386,860 (4,241,713) 306,584 (152,473) (270,339) (47,251) (293) (1,446,878) (10,108) (1,244,214) (2,701,200) 57,449 (45,283) (45,196) 1,205,246 (68,792) (47,133) 26,885 1,083,176

(Continued)

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

-6-

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 (Decrease) increase in short-term borrowings Decrease in long-term borrowings (Decrease) increase in guarantee deposits Retirement of restricted stock employees Exercise of employee share options Treasury shares acquired Treasury shares transferred to employees Other Net cash (outflow) inflow financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ (2,542,856) (67,657) (437,543) (2,270) 971 - 32,997 (1,781) (3,018,139) 12,087 (310,821) 5,674,470 $ 5,363,649		2022
				$ 342,504 - 33,526 (980) 3,821 (507,621) 293,797 - 165,047 88,954 (1,364,023) 6,456,988 $ 5,092,965

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.

-7-

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (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 August 11, 2023.

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

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” Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements” Amendments to IAS 12 “International Tax Reform - Pillar Two Model Rules”	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 January 1, 2024 (Note 3)

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”
Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”
Amendments to IAS 12 “International Tax Reform - Pillar Two Model
Rules”

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
January 1, 2024
(Note 3)

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

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

-8-

Note3: The requirement that the Company applies the exception and the requirement to disclose that fact is applied immediately upon issuance of the amendments retrospectively in accordance with IAS 8. The remaining disclosure requirements are applied for annual reporting periods beginning on or after January 1, 2023, but not for any interim period ending on or before December 31, 2023.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The present Consolidated Financial Report has been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by Financial Supervisory Commission.

b. Basis of Preparation

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

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

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

The detail information, holding percentages, and main business of the subsidiaries could be found in Note 12, TABLE 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, 2022.

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.

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

-9-

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, 2022.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent (time deposits with original maturities within three months)	June 30, 2023 December 31, 2022 $ 9,947 $ 15,560 2,440,066 1,855,151 2,913,636 3,803,759 $ 5,363,649 $ 5,674,470	June 30, 2022 $ 5,308 4,389,695 697,962
		$ 5,092,965

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

Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed ordinary shares Beneficiary Certificate Non–Current Mandatorily measured at fair value through profit or loss (FVTPL) Listed preferred shares Private Funds Structured Investments	June 30, 2023 December 31, 2022 $ - $ - 124,807 - $ 124,807 $ - $ 148,807 $ 147,391 253,409 207,977 114,303 111,775 $ 516,519 $ 467,143	June 30, 2022 $ 23,075 - $ 23,075 $ 149,902 217,883 106,904 $ 474,689

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

-10-

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

9. 10.	Investments in debt instruments Non–Current Foreign investments Fixed income bonds OTHER FINANCIAL ASSETS Time deposits with original maturities more than three months ACCOUNTS RECEIVABLES, NET Accounts receivables	June 30, 2023 December 31, 2022 $ 180,807 $ 179,137 June 30, 2023 December 31, 2022 $ 535,247 $ 517,464 June 30, 2023 December 31, 2022 $ 1,179,869 $ 1,148,471	June 30, 2022 $ 179,864 June 30, 2022 $ 2,726,810 June 30, 2022 $ 1,875,211

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.

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

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

-11-

June 30, 2023

Non Past Due Expected credit loss rate 0% Gross carrying amount and Amortized cost $ 1,171,168 December 31, 2022 Non Past Due Expected credit loss rate 0% Gross carrying amount and Amortized cost $ 1,102,087 June 30, 2022 Non Past Due Expected credit loss rate 0% Gross carrying amount and Amortized cost $ 1,810,907 INVENTORIES Finished goods Work in process Raw materials and supplies		Overdue 1-60 Days 0% $ 8,701 Overdue 1-60 Days 0% $ 15,049 Overdue 1-60 Days 0% $ 64,304	Overdue 61-180 Days 0% $ - Overdue 61-180 Days 0% $ 31,335 Overdue 61-180 Days 0% $ - June 30, 2023 $ 1,212,204 1,114,456 1,266,502 $ 3,593,162	Overdue 61-180 Days 0% $ - Overdue 61-180 Days 0% $ 31,335 Overdue 61-180 Days 0% $ - June 30, 2023 $ 1,212,204 1,114,456 1,266,502 $ 3,593,162	Overdue Over 180 Days Total 0% 0% $ - $ 1,179,869 Overdue Over 180 Days Total 0% 0% $ - $ 1,148,471 Overdue Over 180 Days Total 0% 0% $ - $ 1,875,211 December 31, 2022 June 30, 2022 $ 1,020,143 $ 2,381,272 2,073,643 3,547,964 2,659,945 2,137,058 $ 5,753,731 $ 8,066,294



				$ 3,593,162

11. INVENTORIES

The cost of goods sold were NT$2,474,171 thousand and NT$2,200,307 thousand, including reverse of write-down inventories of NT$252,188 thousand and NT$1,378 thousand for the three months ended June 30, 2023 and 2022. The cost of goods sold were NT$5,092,268 thousand and NT$4,551,392 thousand, including reverse of write-down inventories of NT$616,609 thousand and the write-down inventories of NT$(20,663) thousand for the six months ended June 30, 2023 and 2022. 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-

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
			June 30, 2023	December 31, 2022	June 30, 2022
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-

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2022 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance, June 30, 2022 Accumulated depreciation Balance, January 1, 2022 Depreciation Disposals Effect of foreign currency exchange differences Balance, June 30, 2022 Carrying amounts as of June 30, 2022 Cost Balance, January 1, 2023 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance, June 30, 2023 Accumulated depreciation Balance, January 1, 2023 Depreciation Disposals Effect of foreign currency exchange differences Balance, June 30, 2023 Carrying amounts as of December 31, 2022 and January 1, 2023 Carrying amounts as of June 30, 2023		Land		Buildings	Development Equipment		Office Equipment	Information Equipment	Leasehold Improvements	Leasehold Improvements	Construction Inprogress	Total
		$ - - - 557,110 - $ 557,110 $ - - - - $ - $ 557,110 $ 557,110 - - - - $ 557,110 $ - - - - $ - $ 557,110 $ 557,110		$ 1,336,121 - - 500,183 25,961 $ 1,862,265 $ 156,566 18,106 - 2,991 $ 177,663 $ 1,684,602 $ 1,856,612 - - - ( 29,849) $ 1,826,763 $ 199,720 18,429 - ( 4,548) $ 213,601 $ 1,656,892 $ 1,613,162	$ 434,688 3,808 ( 11,117 ) - 11,595 $ 438,974 $ 240,423 34,795 ( 11,117 ) 9,214 $ 273,315 $ 165,659 $ 476,829 10,233 ( 2,562 ) - ( 1,270) $ 483,230 $ 292,528 30,759 ( 2,520 ) 438 $ 321,205 $ 184,301 $ 162,025	$ 12,349 223 - - 175 $ 12,747 $ 10,107 304 - 132 $ 10,543 $ 2,204 $ 60,977 17,120 ( 49 ) 56,640 ( 206) $ 134,482 $ 12,980 6,817 ( 44 ) ( 164) $ 19,589 $ 47,997 $ 114,893		$ 44,540 1,449 ( 2,183 ) - 799 $ 44,605 $ 32,127 1,513 ( 1,963 ) 552 $ 32,229 $ 12,376 $ 43,345 - ( 1,225 ) - ( 848) $ 41,272 $ 32,077 1,240 ( 1,102 ) ( 624) $ 31,591 $ 11,268 $ 9,681		$ 38,530 - - - 278 $ 38,808 $ 38,530 - - 278 $ 38,808 $ - $ 21,869 - - - ( 319) $ 21,550 $ 21,869 - - ( 319) $ 21,550 $ - $ -	$ 1,080,130 39,803 - ( 1,057,293 ) - $ 62,640 $ - - - - $ - $ 62,640 $ 56,640 - - ( 56,640 ) - $ - $ - - - - $ - $ 56,640 $ -	$ 2,946,358 45,283 ( 13,300 ) - 38,808 $ 3,017,149 $ 477,753 54,718 ( 13,080 ) 13,167 $ 532,558 $ 2,484,591 $ 3,073,382 27,353 ( 3,836 ) - ( 32,492) $ 3,064,407 $ 559,174 57,245 ( 3,666 ) ( 5,217) $ 607,536 $ 2,514,208 $ 2,456,871

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-

14. GOODWILL

Ending balance	June 30, 2023 December 31, 2022 $ 1,237,268 $ 1,237,268	June 30, 2022 $ 1,237,268

Considering the synergy of integration of LCD driver and touch controller under the industry trend, the reverse merger was triggered by FocalTech Corporation, Ltd. on January 2, 2015, 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 2022 for related information.

15. OTHER INTANGIBLE ASSETS

Cost Balance, January 1, 2022 Additions Effect of foreign currency exchange differences Balance, June 30, 2022 Accumulated amortization Balance, January 1, 2022 Amortization expenses Effect of foreign currency exchange differences Balance, June 30, 2022 Carrying amounts as of June 30, 2022 Cost Balance, January 1, 2023 Additions Disposal Effect of foreign currency exchange differences Balance, June 30, 2023		Licenses and Franchises $ 128,012 - 8,059 $ 136,071 $ 128,012 - 8,059 $ 136,071 $ - $ 144,432 - (18,656) 1,700 $ 127,476		Software $ 135,839 45,196 8,957 $ 189,992 $ 132,792 19,371 8,896 $ 161,059 $ 28,933 $ 229,600 48,640 (60,784) 1,723 $ 219,179		Patents $ 76,707 - 4 $ 76,711 $ 54,726 3,731 4 $ 58,461 $ 18,250 $ 76,710 - - (5) $ 76,705	Trademark $ 74,000 - - $ 74,000 $ 51,800 3,700 - $ 55,500 $ 18,500 $ 74,000 - - - $ 74,000		Total
									$ 414,558 45,196 17,020 $ 476,774 $ 367,330 26,802 16,959 $ 411,091 $ 65,683 $ 524,742 48,640 (79,440) 3,418 $ 497,360

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

-15-

Accumulated amortization Balance, January 1, 2023 Amortization expenses Disposal Effect of foreign currency exchange differences Balance, June 30, 2023 Carrying amounts as of December 31, 2022 and January 1, 2023 Carrying amounts as of June 30, 2023	$ 142,207 2,225 (18,656) 1,700 $ 127,476 $ 2,225 $ -	$ 200,676 28,318 (60,784) 1,775 $ 169,985 $ 28,924 $ 49,194	$ 62,110 3,650 - (5) $ 65,755 $ 14,600 $ 10,950	$ 59,200 3,700 - - $ 62,900 $ 14,800 $ 11,100	$ 464,193 37,893 (79,440) 3,470 $ 426,116 $ 60,549 $ 71,244

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

Licenses and franchises Software Patents Trademark REFUNDABLE DEPOSITS Capacity guarantee deposits and others	1-5 years 1-5 years 7-10 years 10 years June 30, 2023 December 31, 2022 June 30, 2022 $ 2,418,643 $2,654,474 $ 2,911,003

16. REFUNDABLE DEPOSITS

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

17. BORROWINGS

a. Short-term borrowings

Unsecured bank loans Annual interest rate Unsecured bank loans	June 30, 2023 December 31, 2022 $ 516,513 $ 3,070,806 2.80-3.80% 1.30-4.20%	June 30, 2022 $ 649,951 2.3~4.25%

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

-16-

b. Long-term borrowings

Secured bank loans (1) Unsecured bank loans (2) Unsecured bank loans (3) Less: reclassification to Current position of long-term borrowings Annual interest rate Unsecured bank loans Secured bank loans	June 30, 2023 December 31, 2022 $ 786,840 $ 786,840 129,288 - - 200,000 916,128 986,840 (129,288) (25,000) $ 786,840 $ 961,840 3.65% 1.65% 1.75-1.875% 1.625~1.75%	June 30, 2022 $ 786,840 - - 786,840 - $ 786,840 - 1.00%

(1) For secured bank loans, the principals will be paid monthly or quarterly after three years from drawdown date. The period of borrowings is from September, 2021 to September, 2036. Commercial building is pledged as collateral for the long-term loans, please refer to Note 32.
(2) For unsecured bank loans, the principals will be paid according to the contract. The period of borrowings is from March, 2023 to June, 2024.
(3) For unsecured bank loans, the principals will be paid monthly after one year from drawdown date. The period of borrowings is from September, 2022 to September, 2025. The borrowing was settled in March, 2023.

18. ACCOUNTS PAYABLES

Accounts payables	June 30, 2023 December 31, 2022 $ 1,387,760 $ 929,492	June 30, 2022 $ 2,474,372

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.

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

-17-

19. OTHER PAYABLES

Payable for rebates Payable for salaries and bonus Payable for labor, health and social insurance Reserve for litigations Payable for professional services and others	June 30, 2023 December 31, 2022 June 30, 2022 $ 825,514 $ 870,372 $ 697,620 360,887 584,170 467,889 15,236 14,276 13,677 51,584 51,325 49,671 188,479 133,633 166,616 $1,441,700 $1,653,776 $1,395,473

20. RETIREMENT BENEFIT

Pension expenses under the defined benefit plans, calculated using the actuarially determined pension cost rate as of December 31, 2022 and 2021, were NT$41 thousand, NT$36 thousand, NT$82 thousand and NT$71 thousand for the three months ended and the six months ended June 30, 2023 and 2022, respectively.

21. GUARANTEE DEPOSITS RECEIVED

Capacity guarantee deposits and others	June 30, 2023 December 31, 2022 June 30, 2022 $ 3,931,728 $4,369,353 $ 4,431,227

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

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

-18-

22. EQUITY

a. Share capital

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

	June 30,	December 31,	June 30,
	2023	2022	2022
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)	215,930	216,111	216,362
Shares issued	$ 2,159,300	$ 2,161,107	$ 2,163,617
company has issued 46 thousand shares of	exercised employees’ share option and redeemed 22
usand shares of issued restricted stocks for employees during the year ended June 30, 2023. Th
istration processes of 47 thousand shares of restricted stocks for emploeyys have not			been completed
August 11, 2023.
Capital surplus
The categories of uses and the sources of capital surplus based on regulations were as follows:
	June 30,	December 31,	June 30,
	2023	2022	2022
May be used to offset a deficit, distributed as
cash dividends, or transferred to share
capital(1)
Additional paid-in capital	$5,129,503	$4,753,839	$4,742,334
Treasury stock	162,095	125,381	119,477
Employee share options-expired	34,448	34,448	34,448
Maybe used to offset a deficit only
Other – unclaimed dividend	6	-	-
Maynot be used for any purpose
Restricted stock for employees	534,892	1,066,015	1,125,465
Employee share options	39,106	62,305	54,735
	$5,900,050	$6,041,988	$6,076,459

The company has issued 46 thousand shares of exercised employees’ share option and redeemed 227 thousand shares of issued restricted stocks for employees during the year ended June 30, 2023. The registration processes of 47 thousand shares of restricted stocks for emploeyys have not been completed as of August 11, 2023.

b. Capital surplus

(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).

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

-19-

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

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

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

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

-20-

d. Special reserve

For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
2023 $ 211,479 ( 211,479) $ -	2022
	$ 122,316 89,163 $ 211,479 Shares (In Thousands)

		- 4,000 (2,315) 1,685 1,545 (260) 1,285

e. Treasury stock

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

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

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

e. Unearned employee compensation

Balance, beginning Retirement of shares Share-based payment expenses recognized Balance, ending		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ 335,829 ) 47,015 111,134 $ 177,680)		2022
	( (		( (	$ 813,720 ) 20,090 216,784 $ 576,846)

The issuance of employee restricted share plan has been approved by shareholders’ meeting held on June 20, 2020. Please refer Note 27 (c) for the detailed information.

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

-21-

f. Non-controlling interests

Balance, beginning Net loss Other comprehensive income (loss) Exchange differences from translating the financial statements of foreign operations Balance, ending REVENUE For the Three Months Ended June 30 2023 2022 IC for human and machine interface devices $ 3,112,352 $ 3,327,292 Contract balances June 30, 2023 Contract liabilities(classified as current liabilities) Sales of goods $ 131,401	Balance, beginning Net loss Other comprehensive income (loss) Exchange differences from translating the financial statements of foreign operations Balance, ending REVENUE For the Three Months Ended June 30 2023 2022 IC for human and machine interface devices $ 3,112,352 $ 3,327,292 Contract balances June 30, 2023 Contract liabilities(classified as current liabilities) Sales of goods $ 131,401		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
			2023 2022 $ 14,829 $ 22,300 ( 4,007) ( 13,231) 107 8,798 $ 10,929 $ 17,867 For the Six Months Ended June 30	2022
$		2023 $ 6,337,630 December 31, 2022 $ 56,455		$	2022 7,219,974 June 30, 2022

	$ 131,401				$ 21,841

23. REVENUE

24. NET INCOME

a. Finance costs

For the Three Months Ended June 30 2023 2022 Interest on bank loans $ 11,988 $ 6,372 Interest on deposits - - $ 11,988 $ 6,372 b. Depreciation and amortization For the Three Months Ended June 30 2023 2022 Property, plant and equipment $ 27,533 $ 27,434 Intangible assets 21,608 22,884 $ 49,141 $ 50,318		For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 2022 $ 32,342 $ 10,158 67 - $ 32,409 $ 10,158 For the Six Months Ended June 30
		2023 $ 57,245 37,893 $ 95,138	2022 $ 54,718 26,802 $ 81,520

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

-22-

An analysis of deprecation by function Operating costs $ 6,294 $ 6,676 Operating expenses 42,847 43,642 $ 49,141 $ 50,318 c. Employee benefits expense For the Three Months Ended June 30 2023 2022 Post-employment benefits Defined contribution plans $ 7,902 $ 7,946 Defined benefit plans (Note 20) 41 36 Share-based payments (Note 27) 39,974 117,457 Other employee benefits 343,826 747,596 Total employee benefits expense $ 391,743 $ 873,035 An analysis of employee benefits expense by function Operating costs $ 28,726 $ 72,495 Operating expenses 363,017 800,540 $ 391,743 $ 873,035			$ 12,595 $ 13,270 82,543 68,250 $ 95,138 $ 81,520 For the Six Months Ended June 30	$ 12,595 $ 13,270 82,543 68,250 $ 95,138 $ 81,520 For the Six Months Ended June 30
		2023 $ 16,397 82 125,484 645,708 $ 787,671 $ 62,136 725,535 $ 787,671		2022 $ 15,593 71 248,873 1,311,172 $ 1,575,709 $ 145,098 1,430,611 $ 1,575,709

d. The remuneration of employees and directors

According to the Company’s Articles of Incorporation, the distributable compensation to employees and remuneration to directors shall not be less than 1% and not more than 1.5%, respectively, of net profit before income tax. The accrued employees’ compensation and remuneration of directors for the three months and six months ended June 30, 2023 and 2022 are as follows:

Amount

For the Three Months Ended June 30 2023 2022 Employees’ compensation $ 1,332 $ 2,113 Remuneration of directors $ 70 $ 111	For the Six Months Ended June 30 2023 2022 $ 1,807 $ 92,304 $ 95 $ 4,858

If there is any change in the proposed amounts after the annual consolidated financial statements were

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

-23-

authorized for issue, the differences are recorded as a change in accounting estimate. There were no employees’ compensation and remuneration of directors accrued due to loss before income tax for the year ended December 31, 2022.

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

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

25. INCOME TAXES

a. Major components of tax 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 expense recognized in profit or loss		For the Three Months Ended June 30 2023 2022 $ 239 $ 23,782 - 81,702 263 36,675 502 142,159 33,648 (16,521) $ 34,150 $ 125,638		For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ 239 - 263 502 33,648 $ 34,150		2023 $ 239 - 263 502 45,842 $ 46,344	2022 $ 183,408 81,702 36,675 301,785 ( 3,850) $ 297,935

b. Income tax assessments

The Company’s tax returns through 2020, FocalTech Smart Sensors Co., Ltd., and FocalTech Electronics Co., Ltd.’s tax returns through 2021 have been examined by the tax authorities.

26. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share		For the Three Months Ended June 30 2023 2022 $ 0.51 $ 0.44 $ 0.49 $ 0.42		For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ 0.51 $ 0.49		2023 $ 0.76 $ 0.74	2022 $ 4.02 $ 3.83

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

-24-

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

Net Profit for the Period

Earnings used in the computation of basic earnings per share Weighted Average Number Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Treasure share issued to employee Employees stock options (share) Restricted stock for employees( share) The compensation to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share		For the Three Months Ended June 30 For the Six Months Ended June 30 2023 2022 2023 2022 $ 105,062 $ 89,612 $ 156,719 $ 818,875 of Ordinary Shares Outstanding (In Thousand Shares) For the Three Months Ended June 30 For the Six Months Ended June 30 2023 2022 2023 2022 207,992 203,209 206,161 203,793 3,695 7,724 4,414 7,101 85 356 64 169 1,296 582 1,886 861 17 23 23 1,661 213,085 211,894 212,548 213,585		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 207,992 3,695 85 1,296 17 213,085			2023 206,161 4,414 64 1,886 23 212,548	2022 203,793 7,101 169 861 1,661 213,585

27. SHARE-BASED PAYMENT ARRANGEMENTS

The Group did not have new share option plan issued for employees for the six months ended June 30, 2023 and 2022. The detailed information could be found in Note 27 of the consolidated financial statements of the year ended December 31, 2022.

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

-25-

a. Employee share option plan

Information on outstanding options for the six months ended June 30, 2023 and 2022 were as follows:

June 30, 2023

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$)	Units of Option - 63,000	Weighted- Average Exercise Price (NT$)
		$29.68 12.80	( 22,399) $29.68 ( 24,000) 12.80	- -	$ - -		$ - 12.80

Employee Stock Option Plan	BeginningBalance	BeginningBalance	Options exercised	Options	expired	EndingBalance	EndingBalance
	Units of Option 198,399 209,000	Weighted- Average Exercise Price (NT$)	Units of Option Weighted- Average Exercise Price (NT$)	Units of Option	Weighted- Average Exercise Price (NT$)	Units of Option 42,399 106,000	Weighted- Average Exercise Price (NT$)
2006 2015		$19.86 15.60	( 120,000) $18.45 ( 103,000) 15.60	( 36,000) -	$ 5.37 -		$36.17 15.60

b. Treasure stock transferred to employees

Information about treasure stock transferred to employee are as follows:

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

Information about treasure stock transferred to employee for the six months ended June 30, 2023 are as follows:

The 6th treasury stock transferred to employee program

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

c. Restricted stock for employees

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

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

-26-

The information of the issued restricted stock for employees are 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.
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.

d. Compensation cost of aforementioned share-based payments for the six months ended June 30, 2023 and 2022 are as follows:

Shares buyback programs Restricted stock for employees Adjustment account: Capital surplus - employee stock options Other equity - unearned employee compensation	For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ 14,350 111,134 $ 125,484 $ 14,350 111,134 $ 125,484		2022
				$ 32,089 216,784 $ 248,873 $ 32,089 216,784 $ 248,873

28. NON-CASH TRANSATION

The cash dividends resolved by the annual shareholders’ meeting was not distributed as of June 30,2022 and 2023. (Referring to Note 22)

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

-27-

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 March, 2024. 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 $4,804 thousand and $6,104 thousand as of June 30, 2023 and 2022.

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

lease payment		For the Three Months Ended June 30 2023 2022 $ 2,847 $ 8,963		For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ 2,847		2023 $ 5,188	2022 $ 18,067

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

June 30, 2023 Financial assets at FVTPL Listed preferred shares Private funds Beneficiary certificate Structured Investments Total Financial assets at FVTOCI Investments in debt instruments Fixed income bonds December 31, 2022 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 $ 148,807 - 124,807 - $ 273,614 $ - Level 1 $ 147,391 - - $ 147,391 $ -		Level 2 $ - - - 114,303 $ 114,303 $ 180,807 Level 2 $ - - 111,775 $ 111,775 $ 179,137		Level 3 $ - 253,409 - - $ 253,409 $ - Level 3 $ - 207,977 - $ 207,977 $ -		Total
								$ 148,807 253,409 124,807 114,303 $ 641,326 $ 180,807 Total
								$ 147,391 207,977 111,775 $ 467,143 $ 179,137

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

-28-

June 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	Level 1 $ 172,977 - - $ 172,977 $ -	Level 2 $ - - 106,904 $ 106,904 $ 179,864	Level 3 $ - 217,883 - $ 217,883 $ -	Total $ 172,977 217,883 106,904
				$ 497,764
				$ 179,864

There were no transfers between Level 1 and Level 2 for the six months ended June 30, 2023 and 2022.

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 Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ 207,977 17,500 (1,707) 29,115 524 $ 253,409		2022
				$ 156,075 38,540 - 21,280 1,988 $ 217,883

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

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

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

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

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

-29-

c. Categories of financial instruments

		June 30,	December 31,	December 31,		June 30,
		2023		2022		2022
Financial assets
Fair value through profit or loss (FVTPL)
Mandatorily at FVTPL	$	641,326	$	467,143	$	497,764
Amortized cost (Note 1)		9,497,408		9,994,879		12,605,989
Financial assets at FVTOCI
Investments in debt instruments		180,807		179,137		179,864
Financial liabilities
Amortized cost (Note 2)	$	8,301,829	$	11,010,267	$	13,137,863

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

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

-30-

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.

Profit or loss/ equity		USD Impact	USD Impact
		For the Six Months Ended June 30
		2023 $ 54,537(i)	2022 $ 91,726(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 time deposits, bonds, short-term borrowings with fixed-rate interest, and demand deposits, structured investments, current position of long-term borrowings and long-term borrowings with floating-rate interest. The time deposits were at fixed interest rates, and bonds were at fixed rates or with guaranteed minimal interest rates and carried. Therefore, changes in interest rates would not affect estimated profit or loss regarding to the financial instruments above.

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	June 30, 2023 December 31, 2022 $ 3,629,690 $ 4,500,360 $ 516,513 $ 3,070,806 $ 2,550,911 $ 1,963,302 $ 916,128 $ 986,840	June 30, 2022 $ 3,604,636 $ 649,951 $ 4,491,033 $ 786,840

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

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

-31-

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 six months ended June 30, 2023 and 2022 would increase/ decrease by NT$2,043 thousand and NT$4,630 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 June 30, 2023, accounts receivables from top 5 customers represented 66% of total accounts receivables. The credit concentration risk of other accounts receivables was insignificant.

Credit risk management for investments in debt instruments

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

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

Category Performing	Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss	Expected Credit Loss Ratio 0%	Carrying Amount as of June 30, 2023	Carrying Amount as of June 30, 2023
				$ 180,807

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

-32-

Category Performing Category Performing	Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss Description Basis for Recognizing Expected Credit Loss The debtor with low credit risk and fully capable of paying off contractual cash flows 12 months expected credit loss	Expected Credit Loss Ratio	Carrying Amount as of December 31, 2022	Carrying Amount as of December 31, 2022
		0% Expected Credit Loss Ratio	$ 179,137 Carrying Amount as of June 30, 2022	$ 179,137
		0%		$ 179,864

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.

June 30, 2023

Non-interest bearing Fixed interest rate liabilities Floating interest rate liabilities	On Demand or Less than 1 Year $ 2,937,106 516,867 129,288 $ 3,583,261		1-5 Years $ 3,931,728 - 252,917 $ 4,184,645		More than 5 Years
					$ - - 533,923 $ 533,923

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

-33-

December 31, 2022

Non-interest bearing Fixed interest rate liabilities Floating interest rate liabilities June 30, 2022 Non-interest bearing Fixed interest rate liabilities Floating interest rate liabilities	On Demand or Less than 1 Year $ 2,581,919 3,072,155 25,000 $ 5,679,074 On Demand or Less than 1 Year $ 7,269,569 650,227 - $ 7,919,796		1-5 Years $ 4,369,353 - 395,556 $ 4,764,909 1-5 Years $ 4,431,227 - 188,194 $ 4,619,421		More than 5 Years
					$ - - 566,284 $ 566,284 More than 5 Years
					$ - - 598,646 $ 598,646

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 June 30 2023 2022 $ - $ 29,784 15,053 32,377 135 135 9,576 19,157 $ 24,764 $ 81,453		For the Six Months Ended June 30	For the Six Months Ended June 30
		2023 $ - 15,053 135 9,576 $ 24,764		2023 $ 19,705 29,389 270 19,152 $ 68,516	2022 $ 29,784 56,323 270 38,313 $ 124,690

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

-34-

32. PLEDGED ASSETS

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

Property, plant and equipment – Net of buildings Properties, plants and equipment – Land Property, plant and equipment –Construction in progress Pledge deposits (categorized in other non-current assets)	June 30, 2023 December 31, 2022 $ 490,179 $ 495,182 557,110 557,110 - - 4,000 4,000 $ 1,051,289 $ 1,056,292	June 30, 2022 $ 1,014,813 557,110 - 4,000 $ 1,575,923

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 parties have reached a settlement agreement after the both parties have withdrawn all civil and administrative actions against the other party in April 2023. It does not have material impact on the Company’s operation and finance.

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:

June 30, 2023

Financial assets Monetary items USD USD Financial liabilities Monetary items USD USD	Foreign Currencies (thousand) $ 226,022 8,001 180,031 18,964	Exchange Rate 31.14 (USD:NTD) 7.2258 (USD:RMB) 31.14 (USD:NTD) 7.2258 (USD:RMB)	NT$(thousand)
			$ 7,038,321 249,158 5,606,179 590,554

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

-35-

December 31, 2022

Financial assets Monetary items USD USD Financial liabilities Monetary items USD USD June 30, 2022 Financial assets Monetary items USD USD Financial liabilities Monetary items USD USD	Foreign Currencies (thousand) $ 219,107 16,780 183,023 18,896 Foreign Currencies (thousand) $ 332,995 11,681 251,500 31,449	Exchange Rate 30.71 (USD:NTD) 6.9646 (USD:RMB) 30.71 (USD:NTD) 6.9646 (USD:RMB) Exchange Rate 29.72 (USD:NTD) 6.7114 (USD:RMB) 29.72 (USD:NTD) 6.7114 (USD:RMB)	NT$(thousand)
			$ 6,728,783 515,311 5,620,630 580,291 NT$(thousand) $ 9,896,616 347,156 7,474,583 934,675

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

-36-

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

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

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.

-37-

TABLE 1

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

FOR THE SIX MONTHS ENDED JUNE 30, 2023

(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	$ 1,868,400 (USD 60,000)	$ 934,200 (USD 30,000)	$ -	-	The need for short-term financing	$ -	Operating capital	$ -	-	-	$ 1,996,283	$ 1,996,283	Note 3
1	FocalTech Systems, Ltd.	FocalTech Electronics (Shenzhen) Co.,Ltd.	Other receivables from related parties	Yes	311,400 (USD 10,000)	311,400 (USD 10,000)	-	-	The need for short-term financing	-	Operating capital	-	-	-	1,996,283	1,996,283	Note 3
2	FocalTech Electronics, Ltd.	FocalTech Electronics (Shenzhen) Co.,Ltd.	Other receivables from related parties	Yes	778,500 (USD 25,000)	778,500 (USD 25,000)	-	-	The need for short-term financing	-	Operating capital	-	-	-	1,522,192	1,522,192	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: 31.14 NTD as of June 30, 2023.

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

-- 38 --

TABLE 2

FocalTech Systems Co., Ltd. and Subsidiaries ENDORSEMENTS/GUARANTEES PROVIDED FOR THE SIX MONTHS ENDED JUNE 30, 2023

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

No. (Note1)	Endorsement/ Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party (Note 2)	Maximum Balance for the Period	Ending Balance	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	FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd.	FocalTech Systems, Ltd. FocalTech Electronics, Ltd. Hefei PineTech Electronics Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Smart Sensors, Ltd.	The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company. The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/ guaranteed company.	$ 4,515,985 4,515,985 4,515,985 4,515,985 4,515,985 4,515,985	$ 1,401,300 ( USD 45,000 ) 1,420,117 ( USD 45,604 ) 1,774,980 ( USD 57,000 ) 2,148,660 ( USD 69,000 ) 108,990 ( USD 3,500 ) 108,990 ( USD 3,500 )	$ 1,401,300 ( USD 45,000 ) 1,420,117 ( USD 45,604 ) 1,774,980 ( USD 57,000 ) 2,148,660 ( USD 69,000 ) 108,990 ( USD 3,500 ) 108,990 ( USD 3,500 )	$ - - 12,063 48,112 - -	$ - - - - - -	15.51% 15.72% 19.65% 23.79% 1.21% 1.21%	$ 4,515,985 4,515,985 4,515,985 4,515,985 4,515,985 4,515,985	Yes Yes Yes Yes Yes Yes	No No No No No No	No No Yes Yes No No	(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.
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$0, and NT$ 47,698 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: 31.14 NTD as of June 30, 2023.

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

-- 39 --

TABLE 3

FocalTech Systems Co., Ltd. and Subsidiaries MARKETABLE SECURITIES HELD JUNE 30, 2023

(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		June 30,2023	June 30,2023		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 Beneficiary certificate UBS Monetary Fund 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 profit or loss - 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$ 10,183 NT$ 138,624 NT$ 27,836 NT$ 30,692 NT$ 59,574 NT$ 99,387 NT$ 57,248 ( USD 1,838 ) NT$ 57,055 ( USD 1,832 ) NT$ 124,807 ( USD 4,008 ) NT$ 130,505 ( USD 4,191 ) NT$ 50,302 ( USD 1,615 ) NT$ 35,920 (USD 1,154)	0.03 2.13 0.96 0.66 4.37 24.59 4.83	NT$ 10,183 NT$ 138,624 NT$ 27,836 NT$ 30,692 NT$ 59,574 NT$ 99,387 NT$ 57,248 ( USD 1,838 ) NT$ 57,055 ( USD 1,832 ) NT$ 124,807 ( USD 4,008 ) NT$ 130,505 ( USD 4,191 ) NT$ 50,302 ( USD 1,615 ) NT$ 35,920 (USD 1,154)

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: 31.14 NTD as of June 30, 2023.

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

-- 40 --

TABLE 4

FocalTech Systems Co., Ltd. and Subsidiaries

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2023 (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 1 2 3 3 3	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 Electronics, 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.	1 2 2 2 2 2 2 2	Accounts Payables Other Receivables Other Receivables Other Payables Other Prepayment Research and development expenses Other Payables Sellingand marketingexpenses	$ 462,701 91,864 313,589 213,990 396,345 109,523 31,064 37,758	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2	2.55% 0.51% 1.73% 1.18% 2.18% 1.73% 0.17% 0.60%

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.

-- 41 --

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 SIX MONTHS ENDED JUNE 30, 2023

(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 June 30,2023	Balance as of June 30,2023	Balance as of June 30,2023	Net Income (Losses) of the Investee (Note 4)	Share of Profits/Losses of Investee (Note 4)	Note
				June 30,2023 (Note 2)	December 31,2022 (Note 3)	Shares	Percentage of Ownership	Carrying Value (Note 2)
FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Systems Co., Ltd. FocalTech Electronics Co., Ltd. FocalTech Smart Sensors, Ltd. FocalTech Corporation, Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd.	FocalTech Corporation, Ltd. FocalTech Electronics, Ltd. FocalTech Smart Sensors, Ltd. Vitrio Technology Corporation FocalTech Smart Sensors, Ltd. FocalTech Smart Sensors Co., Ltd. FocalTech Systems, Inc. FocalTech Systems, Ltd. FocalTech Electronics Co., Ltd.	Cayman Islands Cayman Islands Cayman Islands Taiwan Cayman Islands Taiwan U.S.A Cayman Islands Taiwan	Investment activity Investment activity Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Research, development, manufacturing and sale of integrated circuits Investment activity Investment activity Import and export of integrated circuits	NT$ 7,059,264 NT$ 3,114 (USD 100 ) NT$ 85,350 NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 3,185,399 (USD 102,293 ) NT$ 727,121 (USD 23,350 ) NT$ 20,000	NT$ 7,059,264 NT$ 3,071 (USD 100 ) NT$ 85,350 NT$ 4,970 NT$ 238,821 NT$ 11,990 NT$ 3,141,414 (USD 102,293 ) NT$ 717,080 (USD 23,350 ) NT$ 20,000	5,491,200 2 3,000,000 - 18,813,050 17,417,000 100 2 2,000,000	100% 100% 9.14% - 57.31% 100% 100% 100% 100%	NT$ 2,040,881 (USD 65,539 ) NT$ 1,522,192 (USD 48,882 ) NT$ 2,977 (USD 96 ) NT$ - NT$ 18,669 (USD 600 ) NT$ 9,259 NT$ 1,918,960 (USD 61,624 ) NT$ 1,996,283 (USD 64,107 ) NT$ 102,547 (USD 3,293)	(NT$ 146,705) (USD 4,802) NT$ 32,022 (USD 1,048) (NT$ 11,948 ) (USD 391 ) (NT$ 71 ) (NT$ 11,948 ) (USD 391 ) (NT$ 12,431 ) (NT$ 145,413 ) (USD 4,760 ) (NT$ 140,822 ) (USD 4,610 ) (NT$ 4,896 ) (USD 160 )	(NT$ 146,705) (USD 4,802) NT$ 32,022 (USD 1,048) (NT$ 1,092 ) (USD 36 ) NT$ - (NT$ 6,847 ) (USD 224 ) (NT$ 12,431 ) (NT$ 145,413 ) (USD 4,760 ) (NT$ 140,822 ) (USD 4,610 ) (NT$ 4,896 ) (USD 160 )	Subsidiary Subsidiary Subsidiary Joint Venture (Note 5) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

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

Note 2: Using the exchange rate of 1 USD: 31.14 NTD as of June 30, 2023.

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

Note 4: Using the average exchange rate of 1 USD: 30.55 NTD for the six months ended June 30, 2023.

Note 5: Vitrio Technology Corporation has been dissolved on April 18, 2023 ,and submitted liquidation tax return on June 8,2023.The liquidation will end in finishing the Court’s process.

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

-- 42 --

TABLE 6

FocalTech Systems Co., Ltd. and Subsidiaries INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2023

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

Investee company	Main businesses and products	Total amount of paid-in capital (Note 1)	Method of investment	Accumulated outflow of investment from Taiwan as of January 1,2023(Note 1)	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of June 30, 2023 (Note 1)	Net income (loss) of investee company (Note 2)	Percentage of ownership	Investment income (loss) recognized (Note 2)	Carrying amount as of June 30, 2023 (Note 1)	Accumulated inward remittance of earnings as of June 30, 2023	Note
					Outflow	Inflow
FocalTech Electronics (Shanghai) Co., Ltd. FocalTech Electronics (Shenzhen) Co., Ltd. FocalTech Systems (Shenzhen) Co., Ltd. Hefei PineTech Electronics Co., Ltd.	Sales support and post-sales service for affiliates’ IC products Research, development, manufacturing and sale of integrated circuits Design and research of integrated circuits Research, development and sale of integrated circuits	NT$ 62,280 (USD 2,000) NT$ 289,602 (USD 9,300) NT$ 1,152,185 (USD 37,000) NT$ 129,288 (RMB 30,000)	(Note 3 and 4) (Note 3) (Note 4) (Note 4)	NT$ 31,140 (USD 1,000) NT$ 31,140 (USD 1,000) - -	$ - - - -	$ - - - -	NT$ 31,140 (USD 1,000) NT$ 31,140 (USD 1,000) - -	NT$ 2,980 (USD 98) NT$ 20,628 (USD 675) (NT$ 160,022) (USD 5,238) (NT$ 20,289) (USD 664)	100% 100% 100% 100%	NT$ 2,980 (USD 98) NT$ 20,628 (USD 675) (NT$ 160,022) (USD 5,238) (NT$ 20,289) (USD 664)	NT$ 36,552 (USD 1,174) NT$ 477,474 (USD 15,333) NT$ 717,168 (USD 23,030) NT$ 222,792 (USD 7,155)	$ - - - -	- - - -

Accumulated Investment in Mainland China as of June 30,2023	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
$62,280 (USD2,000)	$1,882,946 (USD60,467)	$5,419,182

Note 1: Using the exchange rate of 1 USD: 31.14 NTD and 1 RMB :4.3096 NTD as of June 30, 2023. Note 2: Using the average exchange rate of 1 USD: 30.55 NTD and 1 RMB :4.4114 NTD for six months ended June 30, 2023. Note 3: Indirect investment in Mainland China through a holding company established in other countries. Note 4: The investment is through the foreign subsidiaries, has not been remitted from Taiwan.

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

-- 43 --

AI assistant

FocalTech — Interim / Quarterly Report 2023

52342_rns_2023-11-14_df3ccd70-42c5-481a-8970-ac94e0c5aa3d.pdf

FocalTech Systems Co., Ltd. and Subsidiaries

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

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

2) Taxation

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

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

June 30, 2023

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

a. Share capital

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

b. Capital surplus

c. Retained earnings and dividend policy

d. Special reserve

f. Non-controlling interests

23. REVENUE

24. NET INCOME

a. Finance costs

Amount

25. INCOME TAXES

26. EARNINGS PER SHARE

Net Profit for the Period

27. SHARE-BASED PAYMENT ARRANGEMENTS

June 30, 2023

b. Treasure stock transferred to employees

The 6th treasury stock transferred to employee program

c. Restricted stock for employees

28. NON-CASH TRANSATION

29. OPERATING LEASE ARRANGEMENTS

The Group as Lessee

30. FINANCIAL INSTRUMENTS

c. Categories of financial instruments

1) Market risk

Sensitivity analysis

b) Interest rate risk

Sensitivity analysis

Credit risk management for investments in debt instruments

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

December 31, 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

June 30, 2023

December 31, 2022

35. ADDITIONAL DISCLOSURES

FocalTech Interim / Quarterly Report 2023