2025 first quarter financial report

FocalTech Systems Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2025 and 2024

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.

We have reviewed the accompanying consolidated balance sheets of FocalTech Systems Co., Ltd. and its subsidiaries (collectively, the "Company") as of March 31, 2025 and 2024, the related consolidated statements of comprehensive income for the three months ended March 31, 2025 and 2024, the consolidated statements of changes in equity and of cash flows for the three months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies(collectively referred to as the "consolidated financial statements"). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

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.

As disclosed in Note 12 to the consolidated financial statements, the financial statements of non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of March 31, 2025 and 2024, combined total assets of these non-significant subsidiaries were NT$3,438,906 thousand and NT$2,989,377 thousand, respectively, representing 20% and 16%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$1,101, 491 thousand and NT$1,112,058 thousand, respectively, representing 16% and 12%, respectively, of the consolidated total liabilities; for the three months ended March 31, 2025 and 2024, the amounts of combined comprehensive income (loss) of these subsidiaries were NT$(38,532) thousand, NT$79,372 thousand respectively, representing (17%) and 31% respectively.

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries and as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not give a true and fair view of the consolidated financial position of the Group as of March 31, 2025 and 2024, its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2025 and 2024 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 Huei-Min Huang and Chih-Ming Shao.

Deloitte & Touche Taipei, Taiwan Republic of China May 09, 2025

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

-1-

(Reviewed)

(Audited)

(Reviewed)

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

-2-

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Continued)

Total other comprehensive Income 57,083 2 146,685 4

TOTAL COMPREHENSIVE INCOME FOR THE

YEAR $ 228,289 8 $ 258,222 7

NET INCOME ATTRIBUTABLE TO:

TOTAL COMPREHENSIVE INCOME

EARNINGS PER SHARE (Note 26)

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

(Concluded)

FOCALTECH SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31

(In Thousands of New Taiwan Dollars)

Equity Attributable to Owners of the Parent

Share Capital Retained Earnings Other Equity

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

March 31

CASH FLOWS FROM OPERATING ACTIVITIES

Net cash (outflow) inflow from operating activities (1,183,287) 614,868

Net cash inflow (outflow) from investing activities 360,567 (86,806)

(Continued)

March 31

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH

EQUIVALENTS 55,020 65,992

NET (DECREASE) INCREASE IN CASH AND CASH

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

(Concluded)

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. 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 27, 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 May 09, 2025.

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

   1. 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.

   2. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2026:

      New, Revised or Amended Standards and Interpretations Amendments to IFRS 9 and IFRS 7 "Amendments to the classification and Measurement of Financial Instruments" - the amendments to the application guidance of classification of financial assets Effective Date

      Announced by IASB

      January 1, 2026 (Note 1)

      Note 1: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2026. It is permitted to apply these amendments for an earlier period beginning on January 1, 2025.

      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 not have impact on the Group's financial position and financial performance.

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

      New, Revised or Amended Standards and Interpretations

      Effective Date

      Announced by IASB (Note 1)

      Annual Improvements to IFRS Accounting Standards - Volume 11 January 1, 2026

      Amendments to IFRS 9 and IFRS 7 "Amendments to the Classification and Measurement of Financial Instruments" Amendments to IFRS 9 and IFRS 7 "Contracts Referencing Nature-dependent Electricity"

      Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"

      January 1, 2026

      January 1, 2026

      To be determined by IASB

      IFRS 17 "Insurance Contracts" January 1, 2023

      Amendments to IFRS 17 January 1, 2023

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

      January 1, 2023

      IFRS 18 "Presentation and Disclosure in Financial Statements" January 1, 2027 IFRS 19 "Subsidiaries without Public Accountability: Disclosures" January 1, 2027

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

      As of the date the consolidated financial statements were authorized for issue, the 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

   1. 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.

   2. 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.

   3. 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.

   4. 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, 2024.

      1. Retirement benefits

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

      2. Taxation

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

   Critical accounting judgments, estimations and assumptions applied in these consolidated financial statements are consistent with those in the consolidated financial statements for the year ended December 31, 2024.

6. CASH AND CASH EQUIVALENTS March 31, 2025 December 31, 2024 March 31, 2024

   Cash on hand $ 4,673 $ 4,599 $ 4,726

   Cash equivalent (time deposits with original
   maturities within three months) 3,542,972		5,293,762	2,911,358
   $ 6,416,531		$ 8,247,879	$ 5,065,390
   FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
   	March 31, 2025	December 31, 2024	March 31, 2024
   Current Mandatorily measured at fair value through profit or loss (FVTPL) Government bonds	$ 282,230	$ 275,228	$ 258,814
   Structured deposit	266,357	-	-
   Beneficiary certificate	4,844	5,472	4,237
   	$ 553,431	$ 280,700	$ 263,051

   Checking accounts and demand deposits 2,868,886 2,949,518 2,149,306

7. Non - Current

   Mandatorily measured at fair value through profit

   or loss (FVTPL)
   Listed preferred shares	$ 10,557	$ 10,285	$ 10,200
   Private Funds	311,404	275,263	254,736
   Structured Investments	132,234	130,278	124,019
   	$ 454,195	$ 415,826	$ 388,955

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

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.

Gross carrying amount

The cost of goods sold were including amounts of which write-down inventory cost to net realizable value and reverse of write-down inventories due to sales. The amounts are illustrated below:

March 31

Reversal gain on write-down of inventories $ 70,251 $ 83,412

1. SUBSIDIARIES

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

   Percentage of Ownership

   Electronics (Shanghai) Co.,

   Ltd. FocalTech

   Electronics

   (Shenzhen) Co., Ltd.

   FocalTech Electronics (Shenzhen) Co.,

   Systems Co., Ltd.

   FocalTech Systems (Shenzhen) Co., Ltd.

   Hefei PineTech Electronics Co., Ltd.

   integrated circuits

   March 31,

   December 31,

   March 31,

   Investor

   Investee

   Main Businesses

   2025

   2024

   2024

   Note

   FocalTech Systems

   FocalTech Corporation,

   Investment activity

   100%

   100%

   100%

   -

   Co., Ltd.

   Ltd.

   FocalTech Systems

   FocalTech Electronics,

   Investment activity

   100%

   100%

   100%

   Note1

   Co., Ltd.

   Ltd.

   FocalTech Systems

   FocalTech Smart

   Investment activity

   66.45%

   66.45%

   66.45%

   Note1

   Co., Ltd. And

   Sensors, Ltd.

   FocalTech

   Electronics Co.,

   Ltd.

   FocalTech Smart

   FocalTech Smart Sensors

   Research, development,

   100%

   100%

   100%

   Note1

   Sensors, Ltd.

   Co., Ltd.

   manufacturing and sale of

   integrated circuits

   FocalTech

   FocalTech Systems, Inc.

   Investment activity

   100%

   100%

   100%

   -

   Corporation, Ltd.

   FocalTech Systems,

   FocalTech Systems, Ltd.

   Investment activity

   100%

   100%

   100%

   Note1

   Inc.

   FocalTech Systems,

   FocalTech Electronics

   Import and export of

   100%

   100%

   100%

   Note1

   Ltd.

   Co., Ltd.

   integrated circuits

   FocalTech

   FocalTech Electronics

   Sales support and post-sales

   100%

   100%

   100%

   Note1

   Electronics, Ltd.

   (Shanghai) Co., Ltd.

   service for IC products

   FocalTech

   FocalTech Electronics

   Research, development,

   100%

   100%

   100%

   -

   Electronics, Ltd.

   (Shenzhen) Co., Ltd.

   manufacturing and sale of

   FocalTech

   Chengdu FocalTech

   integrated circuits Design and research of

   100%

   100%

   -

   Note1&

   2

   Design and research of integrated circuits

   Research, development and sale of integrated circuits

   100% 100% 100% -

   100% 100% 100% Note1

   Ltd.

   Note 1 : Immaterial subsidiaries of the Company, whose financial statements had not been reviewed by auditors. Note 2 : Chengdu FocalTech Systems Co., Ltd. was established in August 2024.

2. PROPERTY, PLANT AND EQUIPMENT

Development

Office

Information

Leasehold

Land Buildings Equipment Equipment Equipment Improvements Total

Cost

Accumulated depreciation

Effect of foreign currency

Carrying amounts as of

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

Buildings 45-50 years

Development equipment 2-5 years

Office equipment 3-5 years

Information equipment 3-5 years

Leasehold improvements 1-5 years

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

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 2024 for related information.

1. OTHER INTANGIBLE ASSETS

   	Licenses and Franchises	Software	Patents	Trademark	Total
   Cost
   Balance, January 1, 2024	$ 125,757	$ 314,510	$ 76,706	$ 74,000	$ 590,973
   Additions	-	8,639	-	-	8,639
   Disposal	-	(24,084)	-	-	(24,084)
   Effect of foreign currency exchange differences	5,116	5,853	9	-	10,978
   Balance, March 31, 2024	$ 130,873	$ 304,918	$ 76,715	$ 74,000	$ 586,506
   Accumulated amortization
   Balance, January 1, 2024	$ 125,757	$ 214,691	$ 69,406	$ 66,600	$ 476,454
   Amortization expenses	-	24,816	1,825	1,850	28,491
   Disposal	-	(24,084)	-	-	(24,084)
   Effect of foreign currency exchange differences	5,116	5,773	9	-	10,898
   Balance, March 31, 2024	$ 130,873	$ 221,196	$ 71,240	$ 68,450	$ 491,759
   Carrying amounts as of March 31, 2024	$ -	$ 83,722	$ 5,475	$ 5,550	$ 94,747
   Cost
   Balance, January 1, 2025	$ 133,974	$ 458,546	$ 76,718	$ 74,000	$ 743,238
   Additions	-	8,314	-	-	8,314
   Effect of foreign currency exchange differences	1,660	2,367	3	-	4,030
   Balance, March 31, 2025	$ 135,634	$ 469,227	$ 76,721	$ 74,000	$ 755,582

   Accumulated amortization
   Balance, January 1, 2025	$ 133,974	$ 305,288	$ 76,718	$ 74,000	$ 589,980
   Amortization expenses	-	44,797	-	-	44,797
   Effect of foreign currency exchange differences	1,660	2,053	3	-	3,716
   Balance, March 31, 2025	$ 135,634	$ 352,138	$ 76,721	$ 74,000	$ 638,493
   Carrying amounts as of December 31, 2024 and January 1, 2025	$ -	$ 153,258	$ -	$ -	$ 153,258
   Carrying amounts as of March 31, 2025	$ -	$ 117,089	$ -	$ -	$ 117,089

   Other intangible assets were amortized on a straight-line basis over the estimated useful life as follows: Licenses and franchises 1-5 years

   Software 1-5 years

   Patents 7-10 years

   Trademark 10 years

2. REFUNDABLE DEPOSITS March 31, 2025 December 31, 2024 March 31, 2024

   Capacity guarantee deposits and others $ 312,337 $ 459,603 $ 1,372,949

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

3. BANK LOANS

b. Long-term bank loans

drawdown date. The period of loans is from September, 2021 to September, 2036. Commercial building is pledged as collateral for the long-term loans, please refer to Note 31. This loan was fully repaid early in December 2024.

(2) For unsecured bank loans, the principals will be paid according to the contract. The period of loans is from June, 2024 to September, 2025.

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.

Pension expenses under the defined benefit plans, calculated using the actuarially determined pension cost rate as of December 31, 2024 and 2023, were NT$39 thousand and NT$43 thousand for the three months ended March 31, 2025 and 2024, respectively.

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

1. EQUITY

   1. Share capital

      Ordinary shares (par value at NT$10 per share)
      	March 31,	December 31,	March 31,
      	2025	2024	2024
      Numbers of shares authorized (in thousands)	500,000	500,000	500,000
      Shares authorized Number of shares issued and fully paid (in	$ 5,000,000	$ 5,000,000	$ 5,000,000
      thousands)	219,142	219,217	217,839
      Shares issued	$ 2,191,418	$ 2,192,168	$ 2,178,390
      Capital collected in advance	$ -	$ -	$ 15,570

      The registration processes of 1,597 thousand shares of restricted stocks for employees have not been completed as of March 31, 2024. The proceeds from shares issued is accounted for capital collected in advance in $15,570 thousand.

   2. Capital surplus

      The categories of uses and the sources of capital surplus based on regulations were as follows:

      May be used to offset a deficit, distributed as cash dividends, or transferred to share

      March 31, 2025 December 31, 2024 March 31, 2024

      capital (1)
      Additional paid-in capital	$5,487,607	$5,441,496	$5,159,886
      Treasury stock	211,325	211,325	180,577
      Employee share options-expired	34,448	34,448	34,448
      May be used to offset a deficit only
      Other - unclaimed dividend	14	14	14
      Other -exercise the right of subrogation	32	32	-
      May not be used for any purpose
      Restricted stock for employees	397,971	454,651	769,593
      Employee share options	8,874	8,276	36,110
      	$6,140,271	$ 6,150,242	$6,180,628

      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).

   3. 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.

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

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

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

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

      The appropriations of earnings for 2024 and 2023 were resolved by the Board of Directors' meeting on February 21, 2025, and the annual shareholders' meeting on June 7, 2024, respectively. The details of the distribution are as follows:

      2024		2023
      Legal reserve	$ 57,634	$ 34,950
      Cash dividends	$ 378,000	$ 217,151
      Cash dividends per share	$ 1.72	$ 1.00

      The appropriations of earnings for 2024 will be resolved in annual shareholders' meeting on May 26, 2025.

   4. Treasury stock

      Shares

      (In Thousands)

      Number of shares on January 1, 2024 and March 31, 2024	1,285
      Number of shares on January 1, 2025	1,285
      Increase during the period	1,121
      Decrease during the period	(588)
      Number of shares on March 31, 2025	1,818

      The Company's Board of Directors resolved to conduct the seventh share repurchase on February 21, 2025. The planned repurchase amount is 3,000 thousand shares. As of March 31, 2025, 1,121 thousand shares had been repurchased, with a total repurchase amount of NT$83,054 thousand. In addition, from April 1 to April 17, 2025, 1,879 thousand shares were repurchased, bringing the total repurchase amount to NT$110,944 thousand. The repurchased shares are intended to be transferred to employees, with the transfer price based on the average actual repurchase price.

      The detailed information for other treasury 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.

   5. Unearned employee compensation

      For the Three Months Ended

      March 31

      2025			2024
      Balance, beginning	( $	130,869 )	( $	214,722 )
      Issuance of shares		-	(	150,118 )
      Retirement of shares		11,830		6,189
      Share-based payment expenses recognized	37,785		59,946
      Balance, ending	( $ 81,254 )		( $ 298,705 )

      The detailed information for restricted share for employees program referred to Note 27 (c).

   6. Non-controlling interests

March 31

March 31

IC for human and machine interface devices $ 2,992,570 $ 3,560,521

Contract balances

2025 2024

2024

2024

Contract liabilities (classified as current liabilities)

Sales of goods $ 114,381 $ 145,387 $ 49,152 $ 24,732

1. NET INCOME

   1. Finance costs

      For the Three Months Ended

      March 31

      2025 2024

      Interest on bank loans $ 7,089 $ 12,635

   2. Depreciation and amortization

      For the Three Months Ended

      March 31

      2025 2024

      Property, plant and equipment $ 48,869 $ 28,790

      Intangible assets 44,797 28,491

      $ 93,666 $ 57,281

      An analysis of deprecation by function

      Operating costs	$ 9,597	$ 6,343
      Operating expenses	84,069	50,938
      	$ 93,666	$ 57,281

   3. Employee benefits expense

      For the Three Months Ended

      March 31

      	2025	2024
      Post-employment benefits
      Defined contribution plans	$ 10,666	$ 8,320
      Defined benefit plans (see Note 20)	39	43
      Share-based payments (see Note 27)
      Cash-settled	953	-
      Equity-settled	39,434	64,842
      Other employee benefits	523,978	473,069
      	$ 575,070	$ 546,274
      An analysis of employee benefits expense by function
      Operating costs	$ 47,660	$ 41,731
      Operating expenses	527,410	504,543
      	$ 575,070	$ 546,274

   4. 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 ended March 31, 2025 and 2024 are as follows:

      Amount

      For the Three Months Ended

      March 31

      	2025	2024
      Employees' compensation	$ 1,632	$ 1,140
      Remuneration of directors	$ 86	$ 60

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

      The board of directors resolved the remuneration of employees and directors for 2024 on February 21, 2025. 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 2024 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.

2. INCOME TAXES

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

      For the Three Months Ended March 31 2025 2024

      Current income tax expense In respect of the current year	$ 62	$ 58
      Deferred income tax expense
      In respect of the current year	( 10,923 )	( 233 )
      Income tax expense recognized in profit or loss	($ 10,861)	($ 175)

   2. Income tax assessments

      The Company's tax returns through 2022, FocalTech Smart Sensors Co., Ltd., and FocalTech Electronics Co., Ltd.'s tax returns through 2023 have been examined by the tax authorities.

3. EARNINGS PER SHARE Unit: NT$ Per Share For the Three Months Ended

   March 31

   	2025	2024
   Basic earnings per share	$ 0.80	$ 0.54
   Diluted earnings per share	$ 0.79	$ 0.53

   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 For the Three Months Ended

   March 31

   2025 2024

   Earnings used in the computation of basic earnings per share $ 171,287 $ 113,848

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

   Weighted average number of ordinary shares used in the computation

   For the Three Months Ended

   March 31

   2025 2024

   of basic earnings per share 214,081 209,535 Effect of potentially dilutive ordinary shares:

   Treasury shares transferred to Employees 257 2,681

   Employee share options(share) 43 55

   Restricted stock for employees(share) 1,956 2,405 The remuneration to employees 638 475 Weighted average number of ordinary shares used in the computation

   of diluted earnings per share 216,975 215,151

4. SHARE-BASED PAYMENT ARRANGEMENTS

   1. Employee share option plan

      The Group did not have new share option plan issued for employees for the three months ended March 31, 2025 and 2024. The detailed information could be found in Note 27 of the consolidated financial statements of the year ended December 31, 2024.

      Information on outstanding options for the three months ended March 31, 2025 and 2024 were as follows:

      March 31, 2025

      Beginning Balance Options exercised Options expired Ending Balance

      Employee Stock

      Units of

      Weighted- Average

      Units of

      Weighted- Average

      Units of

      Weighted- Average

      Units of

      Weighted- Average

      Option Plan

      Option

      Exercise Price (NT$)

      Option

      Exercise Price (NT$)

      Option

      Exercise Price (NT$)

      Option

      Exercise Price (NT$)

      2015

      63,000

      12.80

      (63,000)

      12.80

      -

      -

      -

      -

      March 31, 2024

      Beginning Balance Options exercised Options expired Ending Balance

      Weighted-

      Weighted-

      Weighted-

      Weighted-

      Employee Stock

      Units of

      Average

      Units of

      Average

      Units of

      Average

      Units of

      Average

      Option Plan

      Option

      Exercise

      Option

      Exercise

      Option

      Exercise

      Option

      Exercise

      Price (NT$)

      Price (NT$)

      Price (NT$)

      Price (NT$)

      2015

      63,000

      12.80

      -

      -

      -

      -

      63,000

      12.80

   2. Treasury stock transferred to employees

      Information about treasury stock transferred to employee are as follows:

      The date of board of directors

      Buyback shares (In thousand

      Transferred shares

      (In thousand

      Transferred price

      Items approved share) share) (in dollar)

      The 6th treasury stock transferred to employee program

      The 7th treasury stock transferred to employee program

      2022/2/23 4,000 3,303 126.91

      2025/2/21 1,121 - -

      Information about treasury stock transferred to employee as of March 31, 2025 are as follows:

      The 6th treasury stock transferred to employee program

      Employee subscription base date

      Shares transferred (In Thousands)

      The fair value of the right to subscribe

      (NT$)

      2022/06/21		2,315	$ -
      2022/11/11		140	-
      2023/02/23		260
      2025/03/10		588	-
      Total		3,303

   3. Restricted stock for employees

      The Company's boards of directors' meeting proposed to issue restricted stocks for employees up to 30,000 thousand dollars on February 21, 2025, the issued price is NT$10 per share and issued 3,000 thousand shares. The proposal will be resolved in annual shareholder' meeting on May 26, 2025.

      The information of the issued restricted stock for employees as of March 31, 2025 are as follows:

      Grant

      Fair value per share

      Actual shares of issued

      Items

      date

      (in dollar) (in thousand)

      2020 restricted stocks for employee's plan	2021/04/07	$ 205.00	5,749
      2020 restricted stocks for employee's plan	2021/07/29	265.00	236
      2023 restricted stocks for employee's plan	2023/09/26	67.40	2,033
      2023 restricted stocks for employee's plan	2024/02/23	94.00	1,597
      2023 restricted stocks for employee's plan	2024/08/09	67.30	183

      2020 restricted stocks for employee's plan

      From the date when employees are granted restricted stock units, they have to fulfill the service metrics, and should not violate the company's labor contract, work rules or the company's employee management measures, etc. The vesting condition are as follows:

      1. Upon service for two years: the shares vested in 50% to employees.

      2. Upon service for three years: the shares vested in 25% to employees.

      3. Upon service for four years: the shares vested in 25% to employees.

         2023 restricted stocks for employee's plan

         From the date when employees are granted restricted stock units, they have to fulfill the service metrics, and should not violate the company's labor contract, work rules or the company's employee management measures, etc. One third of granted shares can be vested after every one year of employment, total for three years.

         The constraints of restricted stock are as follows:

         1. Employees are restricted to sell, pledge, transfer, and give to another, create any encumbrance on, or otherwise dispose of, any shares before vested.

         2. 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.

         3. Stock dividends and cash dividends yielding from restricted stock will be distributed to employees in the current year, and will not be restricted.

         4. National employee should transfer the granted shares to trustee appointed by the Company immediately. Before they are vested, the restriction 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.

         For the restricted share plan for employees with a purchase price, which was granted before October 10, 2024, the Group did not retrospectively apply the Q&A "Accounting Treatment for Restricted Share Plan for Employees" issued by the Accounting Research and Development Foundation (ARDF) on October 11, 2024 in accordance with the Q&A issued by the FSC. Therefore, the Group continuously measured the liabilities of the expected repayments to the employees leaving during the vesting period based on its estimated turnover rate.

   4. Compensation cost of aforementioned share-based payments for the three months ended March 31, 2025 and 2024 are as follows:

      For the Three Months Ended

      March 31

      2025 2024

      Shares buyback programs $ 1,649 $ 4,896

      Restricted stock for employees 37,785 59,946

      $ 39,434 $ 64,842

      Adjustment account:

      Capital surplus - employee stock options $ 1,649 $ 4,896

      Other equity - unearned employee compensation 37,785 59,946

      $ 39,434 $ 64,842

   5. Cash-settled share-base payment agreements of subsidiaries

      Focaltech Electronics (Shenzhen) Co., Ltd. granted its specific employees and employees in its subsidiaries 1,500,000 units cash-settled stock appreciation rights. The expected option life of the stock appreciation rights is 8 years. The employees could exercise the stock appreciation rights after they were granted 12 months, 24 months, 36 months and 48 months separately, and the subsidiaries will pay cash when its employees exercise the stock appreciation rights according to the agreement.

      The fair value of cash-settled share-base payment use the Black-Scholes Option Pricing Model, and assumption used in calculating the fair value are disclosed as follows:

      Stock price at measurement date (in dollars)	RMB 2.50
      Exercise Price per share	-
      Expected price volatility	36.48~37.34%
      Expected option life	8 years
      Expected dividend yield	-
      Risk-free interest rate	2.31~2.38%

      The compensation cost of the cash-settled share-base payment was NT$953 thousand for the three months ended March 31, 2025.

5. 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, 2026. 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 $8,202 thousand and

   $7,059 thousand as of March 31, 2025 and 2024.

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

   For the Three Months Ended

   March 31

   2025 2024

   Lease payment $ 2,931 $ 2,240

6. FINANCIAL INSTRUMENTS

   1. 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.

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

Financial assets at FVTOCI Investments in debt instruments

Fixed income bonds $ - $ 187,773 $ - $ 187,773

There were no transfers between Level 1 and Level 2 for the three months ended March 31, 2025 and 2024.

1. Reconciliation of Level 3 fair value measurements of financial instruments

   For the Three Months Ended

   March 31

   Financial assets at FVTPL	2025	2024
   Balance, beginning	$ 275,263	$ 238,544
   Purchases	15,000	19,255
   Disposals	(3,016)	(1,767)
   Recognized in profit or loss (other income or loss)	23,826	(2,602)
   Effect of foreign currency exchange differences	331	1,306
   Balance, ending	$ 311,404	$ 254,736

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

   The fair values of foreign government bonds, structured deposit and fixed income bonds and 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.

3. 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 net assets of investees or the market transaction prices 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.

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 loans, accounts payables, other payables, current position of long-term loans, long-term loans and guarantee deposits received.