MERRY - Interim / Quarterly Report 2021

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REVIEW REPORT MARCH 31, 2021 AND 2020

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Merry Electronics Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of Merry Electronics Co., Ltd. and subsidiaries (the “Group”) as on March 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these 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 Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. 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 explained in Notes 4 (3) and 6 (8), the financial statements of certain insignificant consolidated subsidiaries and certain investments accounted for using the equity method were not reviewed by independent auditors. Those statements reflect total assets of NT$4,270,349 thousand and NT$2,855,720 thousand, constituting 13% and 12% of the consolidated total assets, and total liabilities

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of NT$1,921,748 thousand and NT$757,959 thousand, constituting 9% and 5% of the consolidated total liabilities as at March 31, 2021 and 2020, respectively, and total comprehensive income (loss) of NT$24,280 thousand and (NT$48,961) thousand, constituting (20%) and 5% of the consolidated total comprehensive income for the three months then ended, respectively.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and certain investments accounted for using the equity method been reviewed by independent auditors, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as on March 31, 2021 and 2020, and of its consolidated financial performance and consolidated cash flows for the three months then ended in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Wang, Yu-Chuan

Liu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan April 29, 2021

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ review report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2021, DECEMBER 31, 2020 AND MARCH 31, 2020

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of March 31, 2021 and 2020 were reviewed, not audited)

Notes	December 31, 2020 AMOUNT % `$` `3,046,963` `9` `78,919` `-` `195,179` `1` `866,600` `3` `12,441,418` `36` `273,532` `1` `71,086` `-` `705,555` `2` `3,791,659` `11` `708,638` `2` `22,179,549` `65` `26,468` `-` `1,573,153` `5` `4,479,708` `13` `3,694,738` `11` `356,010` `1` `1,418,090` `4` `156,125` `-` `271,507` `1` `11,975,799` `35` `$` `34,155,348` `100`	March 31, 2020 AMOUNT % `$` `7,137,339` `29` `38,273` `-` `167,808` `1` `-` `-` `3,946,340` `16` `10,991` `-` `823,234` `3` `355,766` `2` `2,160,257` `9` `234,043` `1` `14,874,051` `61` `21,301` `-` `1,461,150` `6` `3,953,955` `16` `2,260,918` `9` `150,004` `1` `1,474,446` `6` `183,330` `1` `132,871` `-` `9,637,975` `39` `$` `24,512,026` `100`	March 31, 2020 AMOUNT % `$` `7,137,339` `29` `38,273` `-` `167,808` `1` `-` `-` `3,946,340` `16` `10,991` `-` `823,234` `3` `355,766` `2` `2,160,257` `9` `234,043` `1` `14,874,051` `61` `21,301` `-` `1,461,150` `6` `3,953,955` `16` `2,260,918` `9` `150,004` `1` `1,474,446` `6` `183,330` `1` `132,871` `-` `9,637,975` `39` `$` `24,512,026` `100`
	AMOUNT `$` `3,046,963` `78,919` `195,179` `866,600` `12,441,418` `273,532` `71,086` `705,555` `3,791,659` `708,638` `22,179,549` `26,468` `1,573,153` `4,479,708` `3,694,738` `356,010` `1,418,090` `156,125` `271,507` `11,975,799` `$` `34,155,348`	AMOUNT `$` `7,137,339` `38,273` `167,808` `-` `3,946,340` `10,991` `823,234` `355,766` `2,160,257` `234,043` `14,874,051` `21,301` `1,461,150` `3,953,955` `2,260,918` `150,004` `1,474,446` `183,330` `132,871` `9,637,975` `$` `24,512,026`
6 (1) 6 (2) 6 (3) 8 6 (4) 7 (2) 6 (2) 7 (2) 6 (6) 6 (7) 6 (2) 6 (3) 6 (8) 6 (9) 6 (10) 6 (11) 6 (30) 6 (12)			`29` `-` `1` `-` `16` `-` `3` `2` `9` `1`
			`61`
			`-` `6` `16` `9` `1` `6` `1` `-`
			`39`
			`100`

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2021, DECEMBER 31, 2020 AND MARCH 31, 2020

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of March 31, 2021 and 2020 were reviewed, not audited) March 31, 2021 December 31, 2020 March 31, 2020 Liabilities andEquity Notes AMOUNT % AMOUNT % AMOUNT % Current liabilities 2100 Short-term borrowing 6 (13) `$` `3,771,843` `12` `$` `3,271,489` `10` `$` `1,048,153` `4` 2120 Financial liabilities at fair value through profit or loss - current 6 (2) `13,054` `-` `30,047` `-` `32,797` `-` 2150 Notes payable `1` `-` `-` `-` `74` `-` 2170 Accounts payable `4,889,647` `15` `6,466,930` `19` `2,126,136` `9` 2180 Accounts payable - related parties 7 (2) `3,299,392` `10` `4,167,477` `12` `2,914,510` `12` 2200 Other payables 6 (2)(14) `2,520,990` `8` `1,601,184` `5` `3,114,286` `13` 2220 Other payables - related parties 7 (2) `83,008` `-` `54,269` `-` `115,499` `1` 2230 Current income tax liabilities 6 (30) `205,529` `1` `268,961` `1` `278,817` `1` 2300 Other current liabilities 6 (15)(16) `3,821,087` `12` `3,799,911` `11` `577,598` `2` 21XX Current Liabilities `18,604,551` `58` `19,660,268` `58` `10,207,870` `42` Non-current liabilities 2530 Bonds payable 6 (16) `-` `-` `-` `-` `2,237,492` `9` 2540 Long-term borrowings 6 (17) `1,094,735` `3` `807,419` `2` `192,640` `1` 2570 Deferred income tax liabilities 6 (30) `1,166,221` `4` `1,169,790` `4` `948,182` `4` 2580 Non-current lease liabilities `91,104` `-` `115,044` `-` `83,484` `-` 2640 Accrued pension liabilities `83,840` `-` `85,701` `-` `86,177` `-` 2670 Other non-current liabilities 6 (8) `42,972` `-` `46,383` `-` `415,902` `2` 25XX Non-current liabilities `2,478,872` `7` `2,224,337` `6` `3,963,877` `16` 2XXX Total liabilities `21,083,423` `65` `21,884,605` `64` `14,171,747` `58` Equity attributable to owners of parent Share capital 6 (20) 3110 Common stock `2,092,776` `7` `2,093,332` `6` `2,085,944` `9` Capital surplus 6 (21) 3200 Capital surplus `3,952,098` `12` `3,960,123` `11` `3,857,609` `15` Retained earnings 6 (22) 3310 Legal reserve `2,006,040` `6` `2,006,040` `6` `1,745,768` `7` 3320 Special reserve `269,144` `1` `269,144` `1` `269,144` `1` 3350 Unappropriated retained earnings `2,386,407` `7` `3,433,731` `10` `2,325,881` `9` Other equity interest 6 (23) 3400 Other equity interest `(` `135,665 )` `-` `9,326` `1 (` `98,473)` `-` 31XX Equity attributable to owners of the parent `10,570,800` `33` `11,771,696` `35` `10,185,873` `41` 36XX Non-controlling interest `532,907` `2` `499,047` `1` `154,406` `1` 3XXX Total equity `11,103,707` `35` `12,270,743` `36` `10,340,279` `42` Significant contingent liabilities and unrecognized contract commitments 9 Significant events after the balance sheet date 11 3X2X Total liabilities and equity `$` `32,187,130` `100` `$` `34,155,348` `100` `$` `24,512,026` `100`	March 31, 2020	March 31, 2020
		%
Current liabilities 2100 Short-term borrowing 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2300 Other current liabilities 21XX Current Liabilities Non-current liabilities 2530 Bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2640 Accrued pension liabilities 2670 Other non-current liabilities 25XX Non-current liabilities 2XXX Total liabilities Equity attributable to owners of parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity		`4` `-` `-` `9` `12` `13` `1` `1` `2`
		`42`
		`9` `1` `4` `-` `-` `2`
		`16`
		`58`
		`9` `15` `7` `1` `9` `-`
		`41`
		`1`
		`42`
		`100`

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except earnings per share)

(Reviewed, Unaudited)

(Expressed in thousands of New Taiwan dollars, except earnings per share)
(Reviewed, Unaudited)

Items Threemonths endedMarch31
2021
2020
Notes
AMOUNT
%
AMOUNT
%
6 (24) and 7 (2)
$
7,734,792
100
$
5,176,663
100
6 (6) and 7 (2)
(
6,951,539 ) (
90) (
4,620,309) (
89)
783,253
10
556,354
11
6 (28)(29)
(
90,211 ) (
1) (
77,350) (
2)
(
298,426 ) (
4) (
218,319) (
4)
(
470,258 ) (
6) (
311,855) (
6)
12 (2)
(
623 )
-
6,212
-
(
859,518 ) (
11) (
601,312) (
12)
(
76,265 ) (
1) (
44,958) (
1)
6 (25)
9,338
-
13,599
-
6 (26)
36,946
-
32,893
1
6 (27)
(
23,443 )
-
14,318
-
(
16,487 )
- (
14,669)
-
6 (8)
103,682
1
41,167
1
110,036
1
87,308
2
33,771
-
42,350
1
6 (30)
19,712
- (
1,786)
-
$
53,483
-
$
40,564
1

4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Expected credit impairment gain
(loss)
6000
Total operating expenses
6900
Operating loss
Non-operating income and
expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit of associates and
joint ventures accounted for
using equity method
7000
Total non-operating income
and expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year

(Expressed	in thousands of New Taiwan dollars, except earnings per share) (Reviewed, Unaudited)
Items	Threemonths endedMarch31 2021 2020 Notes AMOUNT % AMOUNT % 6 (24) and 7 (2) `$` `7,734,792` `100` `$` `5,176,663` `100` 6 (6) and 7 (2) `(` `6,951,539 ) (` `90) (` `4,620,309) (` `89)` `783,253` `10` `556,354` `11` 6 (28)(29) `(` `90,211 ) (` `1) (` `77,350) (` `2)` `(` `298,426 ) (` `4) (` `218,319) (` `4)` `(` `470,258 ) (` `6) (` `311,855) (` `6)` 12 (2) `(` `623 )` `-` `6,212` `-` `(` `859,518 ) (` `11) (` `601,312) (` `12)` `(` `76,265 ) (` `1) (` `44,958) (` `1)` 6 (25) `9,338` `-` `13,599` `-` 6 (26) `36,946` `-` `32,893` `1` 6 (27) `(` `23,443 )` `-` `14,318` `-` `(` `16,487 )` `- (` `14,669)` `-` 6 (8) `103,682` `1` `41,167` `1` `110,036` `1` `87,308` `2` `33,771` `-` `42,350` `1` 6 (30) `19,712` `- (` `1,786)` `-` `$` `53,483` `-` `$` `40,564` `1`
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment gain (loss) 6000 Total operating expenses 6900 Operating loss Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except earnings per share)

(Reviewed, Unaudited)

Items

Other comprehensive income
Components of other comprehensive income
that will not be reclassified to profit or loss
8316
Unrealized gains from investments in equity
instruments measured at fair value through
other comprehensive income, net
8320
Share of other comprehensive income of
associates and joint ventures accounted for
using equity method, components of other
comprehensive income that will not be
reclassified to profit or loss
8349
Income tax related to components of other
comprehensive income that will not be
reclassified to profit or loss
8310
Components of other comprehensive (loss) income
that will not be reclassified to profit or loss
Components of other comprehensive income
that will be reclassified to profit or loss
8361
Financial statements translation
differences of foreign operations
8367
Unrealized gains from investments in debt
instruments measured at fair value through
other comprehensive income, net
8370
Share of other comprehensive (loss) income of
associates and joint ventures accounted for using the
equity method, components of other comprehensive
income that will be reclassified to profit or loss
8399
Income tax relating to the components of other
comprehensive income
8360
Components of other comprehensive (loss) income
that will be reclassified to profit or loss
8300Total other comprehensive (loss) income for the period
8500Total comprehensive (loss) income for the period
Profit (Loss), attributable to:
8610
Owners of parent
8620
Non-controlling interest
Total Profit (Loss)
Comprehensive income (loss) attributable to:
8710
Owners of parent
8720
Non-controlling interest
Total Comprehensive Income (Loss)
Basic earnings per share
9750
Total basic earnings per share
Diluted earnings per share
9850
Total diluted earnings per share Threemonths endedMarch31
2021
2020
Notes
AMOUNT
%
AMOUNT
%
6 (3)
(23)
( $
108,920)
(
1)
( $ 1,018,771) (
20)
-
-
3,366
-
(
1,113)
-
539
-
(
110,033)
(
1)
(1,014,866) (
20)
6 (23)
(
45,166)
(
1)
(
74,261) (
1)
6 (23)
1,144
-
121
-
6 (23)
(
34,827)
-
(
41,730) (
1)
15,934
-
22,908
-
(
62,915)
(
1)
(
92,962) (
2)
( $
172,948)
(
2)
($ 1,107,828) (
22)
( $
119,465)
(
2)
($ 1,067,264) (
21)
$
20,920
(
1)
$
47,381
1
32,563
1
(
6,817)
-
$
53,483
-
$
40,564
1
( $
153,325)
(
2)
( $ 1,057,255) (
21)
33,860
-
(
10,009)
-
( $
119,465)
(
2)
($ 1,067,264) (
21)
6 (31)
$
0.10
$
0.23
6 (31)
$
0.10
$
0.23

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Notes		(Expressed in tho	usands of New Taiwan dollars, except as otherw (Reviewed, Unaudited) Equity attributable to owners of t	usands of New Taiwan dollars, except as otherw (Reviewed, Unaudited) Equity attributable to owners of t	is he		Total equity `$` `12,998,392`
	Share capital- common stock `$` `2,086,684` `-` `-` `-` `-` `( 740)` `-` `-` `-` `$ 2,085,944` `$` `2,093,332` `-` `-` `-` `-` `( 556)` `$ 2,092,776`	Capital surplus additional paid-in capital `$` `3,870,105` `-` `-` `-` `-` `( 12,524)` `-` `6` `22` `$ 3,857,609` `$` `3,960,123` `-` `-` `-` `-` `( 8,025)` `$ 3,952,098`		Retained earnings		Other equity interest `$` `1,027,834` `-` `( 1,108,002)` `( 1,108,002)` `-` `30,763` `( 49,068)` `-` `-` `($ 98,473)` `$` `9,326` `-` `( 174,245)` `( 174,245)` `-` `29,254` `($ 135,665)`
			Legal reserve `$` `1,745,768` `-` `-` `-` `-` `-` `-` `-` `-` `$ 1,745,768` `$` `2,006,040` `-` `-` `-` `-` `-` `$ 2,006,040`	Special reserve `$` `269,144` `-` `-` `-` `-` `-` `-` `-` `-` `$` `269,144` `$` `269,144` `-` `-` `-` `-` `-` `$` `269,144`	`$`
6 (22) 6 (19) 6 (3) 6 (22) 6 (19)
							`40,564` `( 1,107,828)`
							`( 1,067,264)`
							`( 1,608,376)` `17,499` `-` `6` `22`
							`$ 10,340,279`
							`$` `12,270,743`
							`53,483` `( 172,948)`
							`( 119,465)`
							`( 1,068,244)` `20,673`
							`$ 11,103,707`

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

(Reviewed, Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax

Adjustments

Adjustments to reconcile profit (loss)

Depreciation expense-property, plants and equipment
Depreciation expense - right-of-use assets

Amortization

Expected credit impairment gain (loss)

Compensation cost of employee restricted shares

Loss on financial assets or liabilities at fair value
through profit or loss

Loss on disposal of investments

Share of profit of associates and joint ventures
accounted for using equity method

Interest income

Deferred income of government's compensation

Loss on disposal of property, plant and equipment

Finance costs

Interest expense-lease liability

Unrealized foreign exchange losses (gains)

Effect of exchange rate changes

Changes in operating assets and liabilities

Changes in operating assets

Financial assets/liabilities mandatorily measured at
fair value through profit or loss

Notes receivable

Accounts receivable (including related parties)

Other receivables (including related parties)

Inventories

Other current assets

Changes in operating liabilities

Notes payable

Accounts payable

Accounts payable - related parties

Other payables

Other payables - related parties

Contract liabilities

Other current liabilities

Other non-current liabilities

Cash (outflow) inflow generated from operations
Interest received

Interest paid

Income taxes paid

Net cash flows from operating activities Three months ended March 31
Notes
2021
2020

$
33,771 $
42,350

6(9)(28)
180,218
98,353
6(10)(28)
44,836
16,488
6(11)(28)
32,723
34,822
12(2)
623 (
6,212 )
6(19)
20,673
17,537

(
213 )
(
2,701 )
6(27)
-
333
6(8)
(
103,682 )
(
41,167 )
6(25)
(
9,338 ) (
13,599 )

(
227 ) (
174 )
6(27)
1,786
528

13,825
14,035
6(10)
2,662
634

(
44,121 )
2,941

6,185
8,729

6(32)
(
3,429 )
3,489

-
451

5,071,155
1,351,798

86,783 (
23,000 )

(
649,587 ) (
80,672 )

151,542
32,144

(
1 )
-

(
1,553,752 ) (
556,027 )

(
884,995 ) (
979,968 )

(
293,277 ) (
129,466 )

28,786 (
21,897 )

61,982
183,333

(
39,099 ) (
23,042 )

878
-

2,156,707 (
69,960 )

4,367
12,855

(
13,669 ) (
5,959 )

(
44,627) (
1,949)

2,102,778 (
65,013 )

(Continued)

~9~

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

(Reviewed, Unaudited)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through other
comprehensive income

Proceeds from disposal of financial assets at fair value
through other comprehensive income

Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in other non - current assets
Increase in guarantee deposits paid
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings

Other non-current liabilities

Repayment of principal portion of lease liabilities

Proceeds from long-term borrowings
Cancellation of restricted employee shares
Net cash flows from (used in) financing activities
Effect of change in foreign currency exchange
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period Threemonths endedMarch31
Notes
2021
2020
6(32)
($
280,000 )
$
-
6(32)
-
90,660
6(32)
(
356,167 )
(
208,632 )
19,642
1,069
6(32)
(
15,516 )
(
7,588 )
35,556
(
1,372 )
(
1,747 )
(
1,945 )
(
598,232 )
(
127,808 )
6(33)
554,520
670,887
6(33)
(
5,877 )
6,313
6(10)(33)(
47,556 )
(
28,374 )
304,348
130,640
-
(
40)
805,435
779,426
(
34,962 )
(
39,129 )
2,275,019
547,476
3,046,963
6,589,863
$
5,321,982
$
7,137,339

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

~10~

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(REVIEWED, UNAUDITED)

1. HISTORY AND ORGANISATION

Merry Electronics Co., Ltd. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) on December 24, 1975. The Company and its subsidiaries (collectively referred here in as the “Group”) are primarily engaged in manufacturing, processing, repairing, sales of electric appliance and audiovisual electric products, telecommunication equipment and apparatus electronic parts and components, computers and computing peripheral equipment, restrained telecom radio frequency equipment and medical appliances; planning, design, input as well as output of service items’ equipment; production as well as marketing management consultant of service items’ relevant business; and all business items that are not prohibited or restricted by law, except those that are subject to special approval. The Company’s shares were listed on the Taipei Exchange since August 1998 and transferred to the Taiwan Stock Exchange starting September 2000 with approval from the competent authority. The Company merged with its subsidiary, Huges Hi-Tech Inc., on September 1, 2005. The Company was the surviving company while Huges Hi-Tech Inc. was the dissolved company.

THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were reported to the Board of Directors on April 29, 2021.

APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC effective from 2021 are as follows:

New standards, interpretations and amendments endorsed by FSC ollows:	effective from 2021 are as
	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 4 “Extension of the Temporary Exemption	January 1, 2021
from Applying IFRS 9”
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
“ Interest Rate Benchmark Reform— Phase 2”	January 1, 2021

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted

by the Group

None.

~11~

(3) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted

by the Group

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

IFRSs as endorsed by the FSC are as follows:
	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 3, “Reference to the conceptual framework”	January 1, 2022
Amendments to IFRS 10 and IAS 28, “Sale or contribution of	To be determined by
assets between an investor and its associate or joint venture”	International
	Accounting Standards
	Board
Amendments to IFRS 16 “COVID-19 related rent concessions
after June 30,2021”	April 1, 2021
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, “Insurance contracts”	January 1, 2023
Amendments to IAS 1, “Classification of liabilities as current or non-current”	January 1, 2023
Amendments to IAS 1, “The disclosure of accounting policies“	January 1, 2023
Amendments to IAS 8, “The definition of accounting estimates“	January 1, 2023
Amendments to IAS 16, “Property, plant and equipment:	January 1, 2022
proceeds before intended use”
Amendments to IAS 37, “Onerous contracts`-`	January 1, 2022
cost of fulfilling a contract”
Annual improvements to IFRS Standards 2018-2020	January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2020, except for the compliance statement, basis of preparation, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

A. The consolidated financial statements of the Group have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.
B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2020.

~12~

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(b) Financial assets and liabilities at fair value through other comprehensive income measured at fair value.
(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:
Basis for preparation for the current period financial statements and the 2020 consolidated financial statements is the same.
B. Subsidiaries included in the consolidated financial statements:

Name of investor MEHO MEHO MEHO MEHO MEHO MEHO	Name of subsidiary Main business Activities Merry Electronics (HK) Co., Ltd. (MEST) Sales of the same products as the Company. Merry Electronics (Thailand) Co.,Ltd. (METC) The same main business as the Company. Merry Electronics (U.S.A.) Co.,Ltd. ("MECA") Agency selling microphone and security system manufactured by affiliates. Danny Dynamics Limited ("DDBV") Equity investments. Merry Electronics (Singapore) Pte.Ltd. ("MESG") Manufacturing of other electronic components and circuit board. Merry Healthcare Co., LTD. (“MHKY”) Sales of medical device.	Ownership (%)	Ownership (%)	March 31, 2020	Description
		March 31, 2021	December 31, 2020 100.00% 99.99% 99.90% 100.00% 100.00% 100.00%
		100.00% 99.99% 99.90% 100.00% 100.00% 100.00%		100.00% 99.99% 99.90% 100.00% 100.00% 100.00%	NOTE 1 NOTE 1 NOTE 1

~13~

Name of investor MEHO MEHO MEHO MEHO MEHO DDBV DDBV INSA SOCV SOCA MHKY FUSA FUSA FUSA	Name of subsidiary Main business Activities Asian Elite International Ltd. (“MSCS”) Manufacturing and sales of speaker and amplifier. Indigo Enterprise Inc. ("INSA") Equity investments. Biotest Medical Corporation (“BTTT”) Manufacturing of medical device. MERRY & LUXSHARE (VIETNAM) CO., LTD. ("MEVN") Manufacturing of speaker system and microphone for consumer electronics used. Merry Electronics (Shenzhen)Co., Ltd. ("MECL") The same main business as the Company. Universal Capital Investment ("UCMU") Equity investments. Merrytech (HK) Co.Limited ("MTHK") Equity investments. Sonavox Canada Inc. ("SOCV") Develop-to-order and appearance design of speaker and amplifier. Sonavox Canada Holding. ("SOCA") Equity investments. Seas Fabrikker ("SENM") Manufacturing and sales of speaker monomer. Fulicare Co., Ltd. ("FUSA") Sales of medical device. Fulicare Medical Instruments (Suzhou)Co.,Ltd ("FUSZ") Sales of medical device. Fulicare Medical Instruments (Xiamen) Co.,Ltd ("FUXM") Manufacturing of medical device. Xiamen Etimbre Hearing Technology Co.LTD ("ETCX") Research and development, manufacturing as well as sales of hearing aid, hearing	Ownership (%)	Ownership (%)	March 31, 2020	Description
		March 31, 2021	December 31, 2020 70.00% 70.00% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 97.12% 100.00% 100.00% 100.00%
		70.00% 70.00% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 97.12% 100.00% 100.00% 100.00%		70.00% 70.00% 100.00% - 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 96.64% 100.00% 100.00% 100.00%	NOTE 1 NOTE 1 NOTE 2, 5 NOTE 1 NOTE 1 NOTE 1 NOTE 1, 3 NOTE 1 NOTE 1 NOTE 1, 4

~14~

Ownership (%)

Name of investor FUSZ and FUSA ASCX ASCX	Name of subsidiary Main business Activities device and acoustics equipment. Austar Hearing Science And Technology (Xiamen) Co., Ltd ("ASCX") Research and development, manufacturing as well as sales of hearing aid, hearing device and acoustics equipment. Austar Hearing Science And Technology (Zhangzhou) Co., Ltd.("ASCZ") Manufacturing of hearing aid and acoustics for rehabilitation device. Xiamen Laiyate Medical Devices Co., Ltd ("LACX") Research and development as well as technical sales of software functions for hearing aid.	March 31, 2021	December 31, 2020 99.50% 100.00% 100.00%	March 31, 2020	Description
		99.50% 100.00% 100.00%		99.50% 100.00% 100.00%	NOTE 1 NOTE 1 NOTE 1

Note 1: The financial statements of the entity as of and for the three months ended March 31, 2021 and 2020 were not reviewed by the independent auditors as the entity did not meet the definition of a significant subsidiary.
Note 2: The financial statements of the entity as of and for the three months ended March 31, 2021 were not reviewed by the independent auditors as the entity did not meet the definition of a significant subsidiary.
Note 3: In February 2020, March 2020, June 2020 and August 2020, the Group increased its capital in FUSA by cash amounting to USD 76 thousand (NTD 2,238 thousand), USD 4,000 thousand (NTD 116,400 thousand), USD 963 thousand (NTD 28,026 thousand) and USD 3,000 thousand (NTD 87,300 thousand), respectively.
Note 4: In October 2019, the Board of Directors of the Group during its meeting resolved to undergo an organizational restructuring. Fulicare CO., Ltd. acquired a 100% equity interest in ETCX from FUCS amounting to RMB 500 thousand (NTD 2,308 thousand). On June 18, 2020, Fulicare CO., Ltd. increased its capital by cash amounting to USD 566 thousand (NTD 16,748 thousand).
Note 5: On February 27, 2020, the Board of Directors of the Group approved to establish a joint venture, MERRY & LUXSHARE (VIETNAM) CO., LTD., with Luxshare-ICT through investments amounting to USD 12,240 thousand (NTD 366,710 thousand) and USD 11,760 thousand (NTD 350,860 thousand), which resulted in acquiring 51% and 49% of the joint venture equity interests, respectively. The joint venture was established on May 9, 2020.
C. Subsidiaries not included in the consolidated financial statements: None.

~15~

D. Adjustments for subsidiaries with different balance sheet dates:
- None.
E. Significant restrictions:
- None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.
(4) Employee benefits
Pensions

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.

(5) Income tax

The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

There was no significant change in the reporting period. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2020.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Short-term securities		March 31, 2021 $ 1,127 5,305,192 15,663 - $ 5,321,982	December 31, 2020 $ 1,073 3,032,069 13,821 - $ 3,046,963		March 31, 2020 $ 658 4,048,893 1,688,255 1,399,533 $ 7,137,339

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Group has no cash and cash equivalents pledged to others.
C. The Group’s time deposits with maturity over 3 months had been classified as current financial assets at amortized cost.

(2) Financial assets at fair value through profit or loss

Items Current items: Financial assets mandatorily measured at fair value through profit or loss -Funds -Non-hedging derivatives -Stocks -Call options of convertible bonds	March 31,2021 $ 50,000 12,615 - -	December 31, 2020 $ 50,000 26,316 - 446	March 31, 2020 $ - 37,325 169 458

~16~

Items -Bonds Valuation adjustment Total Non-current items: Funds Items Current items: Financial liabilities held for trading		March 31,2021 280,000 2,809 $ 345,424 $ 26,468 March 31,2021 $ 13,054	December 31, 2020 - 2,157 $ 78,919 $ 26,468 December 31, 2020 $ 30,047		March 31, 2020 - 321 $ 38,273 $ 21,301 March 31, 2020 $ 32,797

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

Net gains on financial assets (liabilities) at fair value through profit or loss	Three months ended March 31 2021 2020 $ 30,277 $ 15,529

B. The Group entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed as follows:

March 31, 2021

Contract amount

Derivative instruments rward foreign exchange ntract to sell rward foreign exchange ntract to sell rward foreign exchange ntract to buy		(Notional principal) USD 49,500 thousand USD 2,000 thousand USD 67,500 thousand	Contract period Contract price 2021/03/11~ 2021/04/29 NTD 28.113~28.584 2021/03/12~ 2021/04/07 CNY 6.493 2021/03/11~ 2021/06/30 NTD 28.017~28.696 December 31, 2020

Forward foreign exchange contract to sell

Forward foreign exchange contract to sell Forward foreign exchange contract to buy

Contract amount (Notional principal) USD 70,000 thousand USD 3,000 thousand USD 8,189 thousand USD 84,000 thousand USD 8,205 thousand	Contract period Contract price 2020/12/03~ 2021/01/29 NTD 28.105~28.487 2020/12/22~ 2021/01/07 CNY 6.541 2020/08/28~ 2021/03/01 THB 31.260 2020/12/03~ 2021/03/09 NTD 27.815~28.360 2020/08/28~ 2021/03/01 THB 31.200

Derivative instruments

Forward foreign exchange contract to sell

USD 3,000 thousand USD 8,189 thousand USD 84,000 thousand USD 8,205 thousand

Forward foreign exchange contract to sell

Forward foreign exchange contract to buy Forward foreign exchange contract to buy

~17~

Derivative instruments Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to buy Forward foreign exchange contract to buy			March 31, 2020	Contract amount (Notional principal) NTD 30.017~30.310 CNY 7.116~7.080 THB 31.173~31.150 NTD 29.835~30.220 THB 31.113~31.050
		Contract amount (Notional principal) USD 38,700 thousand USD 19,974 thousand USD 16,239 thousand USD 57,200 thousand USD 16,283 thousand	Contract period 2020/03/02~ 2020/05/29 2020/03/24~ 2020/10/12 2020/01/30~ 2020/08/03 2020/03/02~ 2020/05/29 2020/01/30~ 2020/08/03

The Group entered into forward foreign exchange contracts to hedge exchange rate risk of import and export proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

C. As of March 31, 2021, December 31, 2020 and March 31, 2020, the collectible payments for settled transactions amounted to $167,973 thousand, $0 thousand and $723,579 thousand, respectively. As of March 31, 2021, December 31, 2020 and March 31, 2020, the Group had outstanding payments for settled transactions amounting to $168,581 thousand (shown as other payables), $306 thousand and $724,729 thousand, respectively.
D. The Group has no financial assets at fair value through profit or loss pledged to others as collateral.
E. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

(3) Financial assets at fair value through other comprehensive income

Items Current items: Debt instruments Bonds Valuation adjustment Equity instruments Stocks Valuation adjustment Items Non-current items: Debt instruments Bonds Valuation adjustment	March 31, 2021 $ 89,550 (3,801) 85,749 106,080 2,848 108,928 $ 194,677 March 31, 2021 $ 144,625 3,270 147,895	December 31, 2020 $ 89,550 (3,735) 85,815 106,080 3,284 109,364 $ 195,179 December 31, 2020 $ 144,625 1,620 146,245	March 31, 2020 $ 89,550 988 90,538 76,080 1,190 77,270 $ 167,808 March 31, 2020 $ - - -

~18~

Items Equity instruments Listed stocks Unlisted stocks Valuation adjustment Total	March 31, 2021 $ 748,154 73,871 822,025 496,338 1,318,363 $ 1,466,258	December 31, 2020 $ 748,154 73,884 822,038 604,870 1,426,908 $ 1,573,153	March 31, 2020 $ 765,379 64,387 829,766 631,384 1,461,150 $ 1,461,150

A. The Group has elected to classify equity and debt investments that are considered to be strategic investments or steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $1,660,935 thousand, $1,768,332 thousand and $1,628,958 thousand as on March 31, 2021, December 31, 2020 and March 31, 2020, respectively.
B. During the three months ended March 31, 2020, the Group repurchased bond investments at fair value of $30,274 thousand due to the maturity of bonds and resulted in cumulative losses on disposal amounting to $333 thousand (shown as other gains and losses). Aiming to satisfy its capital needs, the Company sold $58,819 thousand of equity investments at fair value and resulted in cumulative gains on disposal amounting to $49,068 thousand (transferred from other equity interest to unappropriated retained earnings) during the three months ended March 31, 2020.
C. As of March 31, 2021 and 2020, the Group disposed stocks of the public companies and the amounts to be collected were $0 thousand and $2,769 thousand.
D. Amounts recognized in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through othercomprehensive income Fair value change recognized in other comprehensive income Cumulative (gains) losses reclassified to retained earnings due to derecognition Debt instruments at fair value through other comprehensive income Fair value change recognized through profit or loss Fair value change recognized in other comprehensive income Cumulative other comprehensive (loss) income reclassified to profit or loss Reclassified due to derecognition Interest income recognized in profit or loss	Three months ended March 31 2021 2020 ($ 108,920) ($ 1,018,771) $- ($ 49,068) $ 440 $- $ 1,144 ($ 212) $- ($ 333) $ 1,648 $ 783
	2021 ($ 108,920) $- $ 440 $ 1,144 $- $ 1,648

Equity instruments at fair value through
othercomprehensive income
Fair value change recognized in other
comprehensive income
Cumulative (gains) losses reclassified to
retained earnings due to derecognition
Debt instruments at fair value through other
comprehensive income
Fair value change recognized through
profit or loss
Fair value change recognized in other
comprehensive income
Cumulative other comprehensive (loss)
income reclassified to profit or loss
Reclassified due to derecognition
Interest income recognized in profit or
loss

Three months ended March 31
2021
2020
($ 108,920)
($ 1,018,771)
$-
($ 49,068)
$ 440
$-
$ 1,144
($ 212)
$-
($ 333)
$ 1,648
$ 783

2021
($ 108,920)
$-
$ 440
$ 1,144
$-
$ 1,648

E. As on March 31, 2021, December 31, 2020 and March 31, 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group was $1,660,935 thousand, $1,768,332 thousand and $1,628,958 thousand, respectively.

~19~

F. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.
G. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12 (2).
H. The counterparties of the Company’s investments in debt instruments have good credit quality; those debt securities are all rated as investment grade.
(4) Accounts receivable

quality; those debt securities are all rated as investment grade. Accounts receivable
March 31,2021 December 31, 2020 Accounts receivable $ 7,635,916 $ 12,471,094 Less: Allowance for doubtful accounts ( 30,117) ( 29,676) $ 7,605,799 $ 12,441,418 A. The aging analysis of accounts receivable is as follows: March 31,2021 December 31, 2020 Not past due $ 7,434,773 $ 12,401,873 Up to 30 days 171,205 38,897 31 to 90 days 6,755 6,066 91 to 180 days 5,794 24,136 Over 180 days 17,389 122 $ 7,635,916 $ 12,471,094	March 31, 2020 $ 3,969,240 ( 22,900) $ 3,946,340 March 31, 2020 $ 3,742,834 200,000 10,414 673 15,319 $ 3,969,240

The above aging analysis was based on past due date.

B. As of March 31, 2021, December 31, 2020, March 31, 2020, and January 1, 2020, the balances of receivables (including notes receivable) from contracts with customers amounted to $7,635,916 thousand, $12,471,094 thousand, $3,969,240 thousand and $5,478,339 thousand, respectively.
C. The Group insured against its accounts receivable since December, 2020, which the insured amount has been reviewed and granted by the insurance company. If bad debts occur, the insurance company will settle the claim up to 90% of the insured amount. As of March 31, 2021, the balance of insured accounts receivable amounted to $4,118,346 thousand.
D. The Group does not hold any collateral as security.
E. The Company entered into a factoring agreement which has no right of recourse with Bank of America. As of March 31, 2021, there were no accounts receivable that were expected to be transferred (reclassified as financial assets at fair value through other comprehensive income). Please refer to Note 6 (5) for information on transfers of financial assets.
F. Information relating to credit risk of accounts receivable is provided in Note 12 (2).
(5) Transfer of financial assets Transferred financial assets that are derecognized in their entirety
On October 2, 2019, the Group entered into a factoring agreement with Bank of America to sell its accounts receivable. Under the agreement, the Group is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Group does not have any continuing involvement in the transferred accounts receivable. Thus, the Group derecognized the transferred accounts receivable. As of March 31, 2021, there was no amount that had been past due.

~20~

(6) Inventories

Inventories
Raw materials Work in progress Finished goods Raw materials Work in progress Finished goods Raw materials Work in progress Finished goods	March 31, 2021		Book value $ 1,743,988 807,886 1,856,594 $ 4,408,468
	Cost $ 1,815,458 815,678 1,982,729 $ 4,613,865
	Cost $ 1,748,375 543,188 1,613,403 $ 3,904,966		Book value $ 1,682,967 534,870 1,573,822 $ 3,791,659 Book value $ 999,372 431,569 729,316 $ 2,160,257
	Cost $ 1,098,064 438,662 748,603 $ 2,285,329	Allowance for valuation loss ($ 98,692) ( 7,093) ( 19,287) ($ 125,072)

The cost of inventories recognized as expense for the period:

The cost of inventories recognized as expense for	the period:
Cost of goods sold (Gain on reversal of) loss on slow-moving inventories and decline in market value Loss on scrapping inventory Loss (gain) on physical inventory	Three months	ended March 31
	2021 $ 6,848,897 92,090 10,674 ( 122)		2020 $ 4,672,171 ( 57,600) 5,197 541 $ 4,620,309

	$ 6,951,539

The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months ended March 31, 2020.

(7) Other current assets

Tax refund receivable (including input tax) Prepayment for purchases Contract assets Others	March 31, 2021 $ 310,658 20,534 70,954 155,442 $ 557,588	December 31, 2020 $ 490,909 $ 14,241 43,363 160,125 $ 708,638 $	March 31, 2020 116,849 14,917 30,494 71,783 234,043

~21~

(8) Investments accounted for using the equity method

	Three months	Three months
	2021 4,479,708 103,682 34,827) 2
$ (		$ ( $
$	4,548,565

B. Share of profit (loss) of associates accounted for using the equity method：

Investee MECE MECH MEDG LEOHAB MECS	Three months ended March 31 2021 2020 $ 36,520 $ 16,473 61,427 24,670 4,069 ( 2,745) 1,673 2,770 ( 7) ( 1) $ 103,682 $ 41,167	Three months ended March 31 2021 2020 $ 36,520 $ 16,473 61,427 24,670 4,069 ( 2,745) 1,673 2,770 ( 7) ( 1) $ 103,682 $ 41,167	Three months ended March 31 2021 2020 $ 36,520 $ 16,473 61,427 24,670 4,069 ( 2,745) 1,673 2,770 ( 7) ( 1) $ 103,682 $ 41,167
	2021
	$ 36,520 61,427 4,069 1,673 ( 7)
	$ 103,682

~22~

C. Associates

(a)	The basic information of the associates that is material to the Group is as follows: Company name Principal place of business Shareholding ratio Nature of relationship Method of measurement March 31, 2021 December 31, 2020 March 31, 2020 MECE Mainland of China 49.00% 49.00% 49.00% Holding more than 20% of voting right Equity method

(b) The summarized financial information of the associates that is material to the Group is as follows:

Balance sheet

follows: Balance sheet
Current assets Non-current assets Current liabilities Non-current liabilities Total net assets Share in associate’s net assets Realized (unrealized) gain or loss from upstream and side stream transactions Carrying amount of the associate	$ ( (	MERRY ELECTRONICS (SUZHOU) CO., LTD. March 31, 2021 December 31, 2020 March 31, 2020 4,271,535 $ 4,958,305 $ 3,588,852 6,646,335 6,448,198 6,514,002 3,840,968) ( 4,794,701) ( 4,047,465) 482,451) ( 50,495) ( 86,329) 6,594,451 $ 6,561,307 $ 5,969,060 3,231,281 $ 3,215,041 $ 2,924,839 71,729) ( 68,686) ( 97,229) 3,159,552 $ 3,146,355 $ 2,827,610
		March 31, 2021 4,271,535 6,646,335 3,840,968) 482,451) 6,594,451 3,231,281 71,729) 3,159,552	December 31, 2020 $ 4,958,305 6,448,198 ( 4,794,701) ( 50,495) $ 6,561,307 $ 3,215,041 ( 68,686) ( $ 3,146,355
	$
	$ (
	$

Statement of comprehensive income

Revenue Profit for the period from continuing operations Total comprehensive income	MERRY ELECTRONICS (SUZHOU) CO., LTD. Three months ended March 31 2021 2020 $ 2,349,138 $ 2,279,778 $ 80,741 $ 98,868 $ 80,741 $ 98,868	MERRY ELECTRONICS (SUZHOU) CO., LTD. Three months ended March 31 2021 2020 $ 2,349,138 $ 2,279,778 $ 80,741 $ 98,868 $ 80,741 $ 98,868	MERRY ELECTRONICS (SUZHOU) CO., LTD. Three months ended March 31 2021 2020 $ 2,349,138 $ 2,279,778 $ 80,741 $ 98,868 $ 80,741 $ 98,868

		2021
		$ 2,349,138
		$ 80,741
		$ 80,741

(Remainder of page intentionally left blank)

~23~

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

Share of profit of associates and joint ventures accounted for using the equity method Other comprehensive income (loss), net of tax Total comprehensive income		Three months ended March 31 2021 2020 $ 67,162 $ 24,694 ( 9,526) ( 4,471) $ 57,636 $ 20,223	Three months ended March 31 2021 2020 $ 67,162 $ 24,694 ( 9,526) ( 4,471) $ 57,636 $ 20,223
		2021
		$ 67,162 ( 9,526)
		$ 57,636

Note: Partial investments accounted for using the equity method are share of profit (loss) of associates and joint ventures recognized based on financial statements prepared by associates and not reviewed by independent auditors.

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(9) Property, plant and equipment

			Three	months ended March 31, 2021	months ended March 31, 2021	months ended March 31, 2021
Cost Land Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Unfinished construction Total Accumulated depreciation Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Total	Opening balance $ 794,952 621 1,284,577 2,366,092 30,451 279,929 247,668 272,471 $ 5,276,761 ($ 621) ( 467,206) ( 811,707) ( 20,392) ( 171,656) ( 110,441) ($ 1,582,023) $ 3,694,738	$ $ $ ( ( ( ( (		$ ( ( ( ( (	Transfers $ - - 34,405 205 - - - ( 34,610) $- $ - - - - - - $-	Effect of foreign currency exchange difference	Ending balance $ 793,445 595 1,307,909 2,461,904 28,933 278,061 267,605 295,970 $ 5,434,422 ($ 595) ( 477,452) ( 846,070) ( 19,577) ( 175,721) ( 118,475) ($ 1,637,890) $ 3,796,532
						($ 1,507) ( 26) ( 12,948) ( 26,610) ( 217) ( 2,211) ( 1,755) 500 ($ 44,774) $ 26 6,170 9,356 139 1,281 718 $ 17,690

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			Three	months ended March 31, 2020	months ended March 31, 2020	months ended March 31, 2020
Cost Land Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Unfinished construction Total Accumulated depreciation Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Total	Opening balance $ 596,275 656 1,016,760 1,472,017 30,774 242,600 136,073 132,528 $ 3,627,683 ($ 580) ( 439,193) ( 636,595) ( 17,024) ( 161,280) ( 87,918) ($ 1,342,590) $ 2,285,093	$ $		$ ( ( ( ( (	Transfers $ - - ( 51,400) 71 - ( 71) - ( 37,896) ($ 89,296) $ - 51,400 - - - - $ 51,400	Effect of foreign currency exchange difference	Ending balance $ 593,210 603 969,986 1,538,591 29,651 253,252 139,818 89,119 $ 3,614,230 ($ 562) ( 423,994) ( 658,754) ( 17,141) ( 163,516) ( 89,345) ($ 1,353,312) $ 2,260,918
						($ 3,065) ( 53) ( 28,295) ( 30,785) ( 429) ( 3,673) ( 3,288) ( 5,513) ($ 75,101) $ 49 7,529 12,072 273 2,177 2,016 $ 24,116

A. The Group has no property, plant and equipment that apply to capitalization of borrowing costs.
B. The Group has no property, plant and equipment pledged to others as collateral.

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(10) Leasing arrangements - lessee
A. The Group leases various assets including land, buildings, machinery and equipment as well as business vehicles. Rental contracts are typically made for periods of 1 to 30 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

used as security for borrowing purposes.	used as security for borrowing purposes.	used as security for borrowing purposes.	used as security for borrowing purposes.	used as security for borrowing purposes.
B. The carrying amount of right-of-use assets and the depreciation charge					are	as follows:
		March 31, 2021	December	31, 2020		March 31, 2020
	Carrying amount		Carrying	amount	Carrying amount
Land	$	91,811	$	92,481	$	33,439
Buildings and structures		218,521		254,778		107,546
Machinery and equipment		5,430		5,810		5,917
Transportation equipment		2,356		2,701		2,626
Office equipment		166		220		476
Other equipment		-		20		-
	$	318,284	$	356,010	$	150,004

Land Buildings and structures Machinery and equipment Transportation equipment Office equipment Other equipment	Three months ended March 31 2021 2020 Depreciation charge Depreciation charge $ 1,220 $ 849 42,810 14,916 380 324 353 335 53 64 20 - $ 44,836 $ 16,488
	2021 Depreciation charge $ 1,220 42,810 380 353 53 20 $ 44,836

C. For the three months ended March 31, 2021 and 2020, the additions to right-of-use assets were $7,415 thousand and $22,968 thousand, respectively.
D. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities	Three months ended March 31 2021 2020 $ 2,662 $ 634
	2021 $ 2,662

E. For the three months ended March 31, 2021 and 2020, the Group’s total cash outflow for leases were $47,556 thousand and $28,374 thousand, respectively.

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(11) Intangible assets

	Three months ended March 31, 2021	Three months ended March 31, 2021	Three months ended March 31, 2021	Ending balance $ 937,379 511,892 326,550 61,481 115,748 42,885 $ 1,995,935 ($ 369,438) ( 120,455) ( 14,747) ( 63,661) ( 30,184) ($ 598,485) $ 1,397,450
Cost Goodwill Computer software Customer relationship Trademarks Know-how Others Total Accumulated amortization Computer software Customer relationship Trademarks Know-how Others Total	Opening balance $ 937,379 500,570 326,550 61,481 115,748 41,805 $ 1,983,533 ($ 356,307) ( 109,439) ( 13,367) ( 57,874) ( 28,456) ($ 565,443) $ 1,418,090	Additions $ - 11,257 - - - 1,040 $ 12,297 ($ 12,822) ( 11,016) ( 1,380) ( 5,787) ( 1,718) ($ 32,723)	Effect of foreign currency exchange difference
			$ - 65 - - - 40 $ 105 ($ 309) - - - ( 10) ($ 319)

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	Three months ended March 31, 2020	Three months ended March 31, 2020	Three months ended March 31, 2020	Ending balance $ 937,379 463,067 326,550 61,481 115,748 37,841 $ 1,942,066 ($ 317,890) ( 76,391) ( 9,228) ( 40,512) ( 23,599) ($ 467,620) $ 1,474,446
Cost Goodwill Computer software Customer relationship Trademarks Know-how Others Total Accumulated amortization Computer software Customer relationship Trademarks Know-how Others Total	Opening balance $ 937,379 457,428 326,550 61,481 115,748 37,295 $ 1,935,881 ($ 304,302) ( 65,679) ( 7,598) ( 34,671) ( 20,855) ($ 433,105) $ 1,502,776	Additions $ - 6,082 - - - 776 $ 6,858 ($ 13,862) ( 11,016) ( 1,380) ( 5,787) ( 2,777) ($ 34,822)	Effect of foreign currency exchange difference
			$ - ( 443) - - - ( 230) ($ 673) $ 274 304 ( 250) ( 54) 33 $ 307

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A. Details of amortization on intangible assets are as follows:

Operating costs Selling expenses Administrative expenses Research and development expenses
			2021
		$ 3,417 3,047 16,424 9,835 $ 32,723	$ 3,417 3,047 16,424 9,835

B. As of September 1, 2005, the Group merged with Huges Hi-Tech Inc. Thus, the transaction generated goodwill in the amount of $139,735 thousand. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

The recoverable amount of all cash-generating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired. The key assumptions used for value-in-use calculations are as follows:

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking blue tooth orders, it expects 10%, 10%, 10%, 10% and 10% year-on-year growth in sales from 2020 to 2024 through the launching of new products and improving its technologies during this period.

Management determined budgeted gross margin based on past performance and their expectations of market development. The weighted average growth rate used is consistent with the projection included in industry reports. The discount rate of 8.43% used was pre-tax and reflected specific risks relating to the relevant operating segments.

C. As of March 31, 2021, the goodwill arose from acquiring Asian Elite International Ltd. and Indigo Enterprise Inc. amounting to $581,644 thousand due to the benefits from production technology and market channel such as smart speakers of the companies that are expected to be merged. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking smart speaker orders, it expects 14%, 64%, 39%, 17% and 12% year-on-year growth in sales from 2021 to 2025 through the launching of new products and improving its technologies during this period.

Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rate used is consistent with the projection included

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in industry reports. The discount rate of 17.48% used was pre-tax and reflected specific risks relating to the relevant operating segments.

D. As of March 31, 2021, the goodwill arose from acquiring Austar Hearing Science and Technology (Xiamen) Co. , Ltd. amounting to $210,299 thousand due to the benefits from production technology and market channel such as hearing-aids of the company that are expected to be merged. The goodwill from business combination shall be tested for impairment at least annually in accordance with IAS 36.

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking hearing-aids orders, it expects 15%, 12%, 10%, 9% and 3% year-on-year growth in sales from 2021 to 2025 through the launching of new products and improving its technologies during this period.

Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rate used is consistent with the projection included in industry reports. The discount rate of 16.17% used was pre-tax and reflected specific risks relating to the relevant operating segments.

(12) Other non-current assets

Other non-current assets
Prepayments for property, plant and equipment (including intangible asset) Refundable deposits Others hort-term borrowings Type of borrowings Bank borrowings Credit loan Type of borrowings Bank borrowings Credit loan Type of borrowings Bank borrowings Credit loan	March 31, 2021 $ 131,369 72,950 40,517 $ 244,836 March 31, 2021 $ 3,771,843 December 31, 2020 $ 3,271,489 March 31, 2020 $ 1,048,153	December 31, 2020 $ 121,924 71,625 77,958 $ 271,507 Interest rate range 0%~4.35% Interest rate range 0%~4.35% Interest rate range 1.46%~4.57%	March 31, 2020 $ 101,469 19,354 12,048 $ 132,871 Collateral None Collateral None Collateral None

(13) Short-term borrowings

A. Interest expense recognized in profit or loss amounted to $6,719 thousand and $6,502 thousand

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for the three months ended March 31, 2021 and 2020, respectively.

B. The Group provided endorsements and guarantees for the credit loans as of March 31, 2021 and December 31, 2020.

(14) Other payables

Dividend payable Payables on equipment (Including intangible assets) Payroll and bonus payable Other payables - financial liabilities Employee compensation payable Directors’ remuneration payable Others	March 31, 2021 $ 1,068,244 341,521 338,313 168,581 102,108 25,984 476,239 $ 2,520,990	December 31, 2020 $ - 360,938 466,806 306 127,027 25,575 620,532 $ 1,601,184	March 31, 2020 $ 1,608,376 23,961 184,131 724,729 209,094 69,698 294,297 $ 3,114,286

Please refer to Note 6 (2) for the above-mentioned other payables - financial liabilities.

(15) Other current liabilities

Bonds payable-expiring within one year Contract liability Agreed liabilities on acquisition ofsubsidiaries (Note) Refund liabilities Current lease liability Other current liabilities - others	March 31, 2021 $ 2,210,906 688,726 402,072 313,981 134,018 71,384 $ 3,821,087	December 31, 2020 $ 2,203,801 627,002 402,072 343,164 146,612 77,260 $ 3,799,911	March 31, 2020 $ - 439,956 - 65,745 30,557 41,340 $ 577,598

Note: On July 1, 2018, the Group agreed to pay contract liabilities 3 years after the date of settlement. In accordance with the relevant contracts, the Group had recognized 30% of subsequent equity investment obligations.

(16) Bonds payable

Bonds payable Less: Discount on bonds payable Sub-total Less: Expiring within one year	March 31, 2021 $ 2,231,900 (20,994) 2,210,906 (2,210,906) $-	December 31, 2020 $ 2,231,900 (28,099) 2,203,801 (2,203,801) $-	March 31, 2020 $ 2,289,500 (52,008) 2,237,492 - $ 2,237,492

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A. The details of the second domestic unsecured convertible bonds issued by the Company on December 11, 2018 are as follows:
(a) The terms of the second domestic unsecured convertible bonds issued by the Company are as follows:
i. The competent authority has approved the Company’s second issuance of domestic unsecured corporate bonds. The bonds are for a total issuance amount of $3,015,000 thousand and a coupon rate of 0%, cover a 3-year period of issuance and a circulation period from December 11, 2018 to December 11, 2021, and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on December 11, 2018.
ii. The creditors have the right to ask for conversion of the bonds into common shares of the Company by Taiwan Depository & Clearing Corporation through Securities Firms during the period from the date after three months of the bonds issue to the maturity date, except for (i) the stop transfer period for common shares as specified in the terms of the bonds or the laws/regulations; (ii) the Company’s book closure date of stock dividends, book closure date of cash dividends, the period between the date that is 15 business days before the book closure date of a capital increase to the ex-right date; (iii) the period between the record date of a capital reduction and the prior day before the commencement of share trading after shares are repurchased. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.
iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms. As of March 31, 2021, the conversion price of convertible bonds was $132.8 per share.
iv. The Company may repurchase all the bonds outstanding in cash at the bonds’ face value, based on the Company’s redemption rights to the bonds under Article 18 of the terms of issuance and conversion, after the following events occur: (i) the closing price of the Company common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after three month of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after three months of the bonds issue to 40 days before the maturity date.
v. Under the terms of issuance and conversion, all bonds redeemed (including bonds repurchased from the securities trading markets), matured and converted are retired and not to be sold or reissued; the conversion rights attached to the bonds are also extinguished.
(b) As of March 31, 2021, the bonds amounting to $768,100 thousand (face value) had been converted into 5,299 thousand shares of common stock. After the issuance of the convertible bonds, if the number of common shares increases, the Company shall adjust the conversion price to $132.8 per share in line with the formula of the issuance article.
B. Regarding the issuance of convertible bonds, the equity conversion options amounting to $99,191

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thousand were separated from the liability component and were recognized in ‘capital surplus - share options’ in accordance with IAS 32 as of March 31, 2021. The call options embedded in bonds payable were separated from their host contracts and were recognized in ‘financial assets at fair value through profit or loss’ in net amount in accordance with IFRS 9 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts.

- (17) Long term borrowings

ong-term borrowings
Type of borrowings Long-term bank borrowings Credit loan Credit loan Less: Expiring within one year or one operating cycle Type of borrowings Long-term bank borrowings Credit loan Credit loan	Borrowing period and repayment term Borrowing period is from 2020/2/20 to 2025/2/20; interest is repayable monthly; principal is repayable starting from 2023 Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly; principal is repayable starting from 2023 Borrowing period and repayment term Borrowing period is from 2020/2/20 to 2025/2/20; interest is repayable monthly Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly	Interest rate range 0.30%~0.40% 0.35%~1.20% Interest rate range 0.30%~0.40% 0.35%~0.50%	Collateral None None Collateral None None

				$ 320,000 487,419 $ 807,419

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Type of borrowings Long-term bank borrowings Credit loan Secured loan	Borrowing period and repayment term Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly; principal is repayable starting from 2023 Borrowing period is from 2019/12/30 to 2027/2/20; interest is repayable monthly; principal is repayable starting from 2022	Interest rate range Collateral 0.30%~0.65% None 0.37%~0.90% Promissory Note (Note)

A. In November 2019, the Company entered into a long-term loan contract with Taipei Fubon Bank for the total amount of $400,000 thousand. As of March 31, 2021, the drawn amount was $220,000 thousand.

Aforementioned contract conditions:

During the credit period, the following financial ratios shall be maintained and the audited / reviewed

financial statements by independent auditors shall be checked semi-annually:

(a) Current ratio shall not be lower than 100%;
(b) Debt ratio shall not be higher than 160%;
(c) Interest coverage ratio shall not be lower than 10.
B. In February 2020, the Company entered into a long-term loan contract with JIHSUN BANK for the total amount of $300,000 thousand. As of March 31, 2021, the drawn amount was $100,000 thousand. Aforementioned contract conditions:
During the credit period, the following financial ratios shall be maintained and the audited / reviewed financial statements by independent auditors shall be checked semi-annually:
(a) Current ratio shall not be lower than 100%;
(b) Debt ratio shall not be higher than 250%;
(c) Tangible assets shall be maintained at least $8 billion.

The compliance with the above financial ratio has no significant influence on the Company after the Company’s confirmation with the banks and evaluation.

Note: The above-mentioned secured borrowings were guaranteed by the Company’s parent company.

(18) Pensions
A. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the

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enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 5.1% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions for the deficit by next March.

(b) The pension costs under defined contribution pension plans of the Group for the three months ended March 31, 2021 and 2020 were $170 thousand and $290 thousand, respectively.
(c) The Company expects to pay contribution for pension plan amounting to $7,685 thousand in 2022.
B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The subsidiaries, MECL, MSCS, ASCX, ETCX, ASCZ, LACX, FUXM and FUSZ, in Mainland China have set up a defined contribution plan. Monthly contribution to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.
(c) The subsidiary, METC, in Thailand is required to pay pension of up to 10 months of employee salaries to the employees upon their retirement. The pension liability is estimated annually based on the employees’ total salaries and expected service years in accordance with the regulations of the Thailand government.
(d) The pension costs under defined contribution pension plans of the Group for the three months ended March 31, 2021 and 2020 were $36,727 thousand and $20,021 thousand, respectively.

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(19) Share-based payment

A. For the three months ended March 31, 2021 and 2020, the Group’s share-based payment arrangements were as follows:

Type of arrangement The 2~~nd~~restricted stocks to employees in 2016 The 1strestricted stocks to employees in 2017 The 2ndrestricted stocks to employees in 2017 The 1strestricted stocks to employees in 2019 The 2ndrestricted stocks to employees in 2019	Grand date 2017/06/16 2017/12/29 2018/10/26 2019/11/02 2020/08/05	Quantity granted 458 units 196 units 878 units 813 units 387 units	Contract period 3 years 3 years 3 years 3 years 3 years	Vesting condition Note Note Note Note Note

Note: Depending on the employee’s tenure in the Company (1 to 3 years), the employees can vest stocks at the ratio of 30%, 30% and 40% in three years based on the number of stocks written on the notification. The conditions for vesting restricted stocks are as follows:
(a) For the employees who are currently working in the Company, whose services have reached 1 year and achieved the performance of the most recent year’s consolidated financial statements and the target personal performance, the ceiling of vested share ratio is 30%.
(b) For the employees who are currently working in the Company, whose services have reached 2 years and achieved the performance of the most recent year’s consolidated financial statements and the target personal performance, the ceiling of accumulated vested share ratio is 60%.
(c) For the employees who are currently working in the Company, whose services have reached 3 years and achieved the performance of the most recent year’s consolidated financial statements and the target personal performance, the ceiling of accumulated vested share ratio is 100%.
(d) The Company will repurchase and retire the stocks that do not meet the conditions of vesting for the employees who resign during the vesting period or do not meet the condition of vesting by the issuance price.

The aforementioned restricted stocks issued by the Company cannot be transferred during the vesting period and the commissioned trust custodians execute the shareholders’ rights on behalf of the employees.

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B. Details of the share-based payment arrangements are as follows:
(a) The second restricted stocks to employees in 2016

At January 1 Restricted stocks retired At March 31		2021 No. of share (in thousands) Weighted-average exercise price (in dollars) 4 $ 10 - 10 4 10		2020 No. of share (in thousands) Weighted-average exercise price (in dollars) 160 $ 10 ( 4) 10 156 10
		No. of share (in thousands) 4 - 4		No. of share (in thousands) 160 ( 4) 156

(b) The first restricted stocks to employees in 2017

			2021			2020	2020
			Weighted-average				Weighted-average
	No. of share		exercise price		No. of share			exercise price
	(in thousands)			(in dollars)	(in thousands)			(in dollars)
At January 1	1		$	-		108	$	-
Restricted stocks	( 1)			-		-		-
vested
Restricted
stocks retired		-		-	(	50)		-
At March 31		-		-		58		-

At January 1 Restricted stocks vested Restricted stocks retired At March 31 The first restricted At January 1 Restricted stocks retired At March 31		2021 No. of share (in thousands) Weighted-average exercise price (in dollars) 318 $ - ( 5) - ( 13) - 300 - stocks to employees in 2019 2021 No. of share (in thousands) Weighted-average exercise price (in dollars) 545 $ - ( 22) - 523 -		2020 No. of share (in thousands) Weighted-average exercise price (in dollars) 598 $ - ( 5) - ( 20) - 573 - 2020 No. of share (in thousands) Weighted-average exercise price (in dollars) 813 $ - - - 813 -

		No. of share (in thousands) 545 ( 22) 523		No. of share (in thousands) 813 - 813

(d) The first restricted stocks to employees in 2019

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(e) The second restricted stocks to employees in 2019

At January 1 Restricted stocks retired At March 31		2021 No. of share (in thousands) Weighted-average exercise price (in dollars) 382 $ - ( 20) - 362 -		2020 No. of share (in thousands) Weighted-average exercise price (in dollars) - $ - - - - -
		No. of share (in thousands) 382 ( 20) 362		No. of share (in thousands) - - -

C. The fair value of stock options granted on grant date is measured using the closing price on the grant date. Relevant information is as follows:

Type of arrangement The 2~~nd~~restricted stocks to employees in 2016 The 1strestricted stocks to employees in 2017 The 2ndrestricted stocks to employees in 2017 The 1strestricted stocks to employees in 2019 The 2ndrestricted stocks to employees in 2019	Grand date 2017/06/16 2017/12/29 2018/10/26 2019/11/02 2020/08/05	Stock price 187.0 194.5 139.5 150.0 169.0	Exercise price 10 0 0 0 0	Fair value per unit 177 194.5 139.5 150 169.0

D. Expenses incurred on share-based payment transactions are shown below:

Equity-settled	Three months ended March 31 2021 2020 $ 20,673 $ 17,537
	2021 $ 20,673

(20) Share capital

A. As of March 31, 2021, the Company’s authorized capital was $4,000,000 thousand, consisting of 400,000 thousand shares of ordinary stock (including 5,000 thousand shares reserved for employee stock options), and the paid-in capital was $2,093,332 thousand with a par value of $10 (in dollars) per share.

Movements in the number of the Company’s ordinary shares outstanding are as follows (in thousands):

At January 1 Employee restricted shares retired At March 31	2021 209,333 ( 55) 209,278	2020 208,668 ( 74)
		208,594

(a) The Company retired 55,000 employee restricted shares as resolved at the meeting of the Board of Directors on April 29, 2021 with the capital reduction effective date set on May 3, 2021.

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(b) The Company retired 18,000 employee restricted shares as resolved at the meeting of the Board of Directors on February 25, 2021 with the capital reduction effective date set on March 8, 2021. The capital reduction through retirement of employee restricted shares was completed.
(c) The Company retired 642,000 employee restricted shares as resolved at the meeting of the Board of Directors on February 27, 2020 and July 30, 2020 with the capital reduction effective date set on February 29, 2020 and August 4, 2020. The capital reduction through retirement of employee restricted shares was completed.
(d) On December 11, 2018, the Company issued the 2[nd] unsecured convertible bonds. As of March 31, 2021, the face value of those convertible bonds amounted to $768,100 thousand, which had been converted into 5,299 thousand common shares. Please refer to Note 6 (16) for further information.
(e) On April 25, 2019, the Board of Directors of the Company resolved to issue employee restricted shares (please refer to Note 6 (19)). The issuance was approved by the Competent Authority on September 16, 2019. The Company issued 1,200 thousand common shares with the effective date set on November 2, 2019 and August 5, 2020. The subscription price is $0 per share and the registration was completed on November 29, 2019 and August 27, 2020. The employee restricted shares issued are subject to certain transfer restrictions before their vesting conditions are qualified. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares.
(21) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

2021

At January 1 Restricted stocks vested Restricted stocks retired At March 31	Share premium $ 3,665,902 784 - $ 3,666,686	Share option $ 99,191 - - $ 99,191	Employee restricted stocks $ 170,825 ( 784) ( 8,025) $ 162,016	Others $ 24,205 - - $ 24,205	Total $ 3,960,123 - ( 8,025) $ 3,952,098

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2020

At January 1 Restricted stocks vested Restricted stocks retired Recognition of change in equity of associates in proportion to the Company’s ownership Changes in ownership interests in subsidiaries At March 31	Share premium $ 3,501,426 628 - - - $ 3,502,054	Share option $101,750 - - - - $101,750	Employee restricted stocks $ 236,457 ( 628) ( 12,524) - - $ 223,305	Others $ 30,472 - - 6 22 $ 30,500	Total $ 3,870,105 - ( 12,524) 6 22 $ 3,857,609

(22) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, after deduction of mandatory income tax, shall first be used to offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. After the provision or reversal of special reserve, the appropriation of the remaining earnings along with the unappropriated earnings of prior years shall be proposed by the Board of Directors and approved by the shareholders. According to the dividend policy adopted by the Board of Directors, 30% to 80% of the Company’s accumulated distributable earnings shall be appropriated as dividends, and cash dividends shall account for at least 5% of the total dividends distributed.
B. The Company’s dividend policy is summarized below: as the Company operates in a volatile business environment and is in the stable growth stage, the residual dividend policy is adopted taking into consideration the Company’s financial structure, operating results and future expansion plans. In order to encourage employees and operation team, if the Company has any profit for the current year, the Company shall set aside 5% to 10% as employees’ compensation and no more than 2% as directors’ remuneration. The employees’ compensation shall be distributed in the form of stock and cash by a resolution adopted by a majority vote at a meeting of Board of Directors attended by twothirds of the total number of directors and report it in the shareholders’ meeting. Employees entitled to receive stock or cash as compensation include employees of subsidiaries of the company meeting certain specific requirement.

C. The Board of Directors may fully or partially appropriate dividends and bonuses in the form of cash by a resolution adopted by the majority vote at its meeting attended by two-thirds of the total number of directors, and then reported to the shareholders. Situations other than that shall be approved by the shareholders at their meeting.

D. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal

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reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

E. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate- 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land. As of March 31, 2021, the balance of capital surplus as aforementioned was $269,144 thousand.
F. The Company distributed cash dividends amounting to $7.7 (in dollars) per share as resolved at the meeting of Board of Directors on June 19, 2020. The abovementioned distribution of earnings for the years ended December 31, 2019 was in agreement with those amounts proposed by the Board of Directors on February 27, 2020.
G. The appropriation of cash dividends of 2020 as resolved by the Board of Directors on February 25, 2021 amounted to $5.16, but have not yet been approved by the shareholders at their meeting.
- (Remainder of page intentionally left blank)

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(23) Other equity items

ther equity items
2021 At January 1 Amortization of employee restricted stocks Restricted stocks retired Revaluation – gross Revaluation – tax Currency translation differences: -Group -Tax on Group -Associates -Tax on associates At March 31 2020 At January 1 Amortization of employee restricted stocks Restricted stocks retired Revaluation – gross Revaluation – tax Revaluation transferred to profit or loss – gross Revaluation transferred to retained earnings – gross Currency translation differences: -Group -Tax on Group -Associates -Tax on associates At March 31	Exchange differences on translation of foreign financial statements ($ 438,569) - - - - ( 46,463) 9,293 ( 34,827) 6,641 ($ 503,925) Exchange differences on translation of foreign financial statements ($ 456,833) - - - - - - ( 71,069) 14,213 ( 41,730) 8,695 ($ 546,724)	Unrealized gain (loss) from investments in debt instruments measured at fair value through other comprehensive income $ 4,220 - - 1,144 - - - - - $ 5,364 Unrealized gain (loss) from investments in debt instruments measured at fair value through other comprehensive income $ 867 - - ( 212) - 333 - - - - - $ 988	Unrealized gain (loss) from investments in equity instruments measured at fair value through other comprehensive income $ 601,816 - - ( 108,920) ( 1,113) - - - - $ 491,783 Unrealized gain (loss) from investments in equity instruments measured at fair value through other comprehensive income $ 1,688,726 - - ( 1,018,771) 539 - ( 49,068) - - - - $ 621,426	Cost of unearned employee compensation ($ 158,141) 20,673 8,581 - - - - - - ($ 128,887) Cost of unearned employee compensation ($ 204,926) 17,537 13,226 - - - - - - - - ($ 174,163)		Total
						$ 9,326 20,673 8,581 ( 107,776) ( 1,113) ( 46,463) 9,293 ( 34,827) 6,641 ($ 135,665) Total
					$ 1,027,834 17,537 13,226 ( 1,018,983) 539 333 ( 49,068) ( 71,069) 14,213 ( 41,730) 8,695 ($ 98,473)

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(24) Operating revenue

erating revenue
Revenue from contracts with customers	Three months ended March 31 2021 2020 $ 7,734,792 $ 5,176,663
	2021 $ 7,734,792

A. Disaggregation of revenue from contracts with customers

. Disaggregation of revenue from contracts with customers	. Disaggregation of revenue from contracts with customers	. Disaggregation of revenue from contracts with customers	. Disaggregation of revenue from contracts with customers	. Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services over time and at time in the following major product lines and geographical regions: Three months ended March 31, 2021					a point in Total $ 11,445,589 ( 3,710,797) 7,734,792 4,199,049 2,576,413 720,361 207,239 31,730 $ 7,734,792 Total $ 6,421,518 ( 1,244,855) 5,176,663 1,816,628 2,870,024 169,069 162,720 158,222 $ 5,176,663
Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others		Electronic	devices	Others $ 1,857,815 ( 1,552,754) 305,061 76,011 129,962 92,036 1,634 5,418 $ 305,061
	Taiwan Shenzhen Singapore $ 5,478,149 $ 2,649,230 $ 1,460,395 ( 55,674) ( 2,102,369) - 5,422,475 546,861 1,460,395 2,758,027 36,542 1,328,469 2,321,479 247 124,725 118,427 509,898 - 205,431 174 - 19,111 - 7,201 $ 5,422,475 $ 546,861 $ 1,460,395 Three months ended March 31, 2020
Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others		Electronic	devices	Others $ 482,851 ( 298,005) 184,846 72,796 47,662 56,023 6,769 1,596 $ 184,846
	Taiwan $ 4,130,445 ( 2,672) 4,127,773 1,120,469 2,671,771 84,534 155,859 95,140 $ 4,127,773	Shenzhen $ 989,473 ( 934,596) 54,877 24,835 - 28,512 92 1,438 $ 54,877	Singapore $ 818,749 ( 9,582) 809.167 598,528 150,591 - - 60,048 $ 809,167

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B. Contract assets and liabilities：
(a) The Group has recognized the following revenue-related contract assets (shown in other current assets) and liabilities (shown in other current liabilities):

Contract assets Contract liabilities Refund liabilities		March 31, 2021 $ 70,954	December 31, 2020 $ 43,363 $ 627,002 $ 343,164	March 31, 2020 $ 30,494 $ 439,956 $ 65,745	January 1, 2020
					$ 31,585 $ 256,623 $ 81,791
		$ 688,726
		$ 313,981

(b) Revenue recognized that was included in the contract liability balance at the beginning of the period：

the period：
Revenue recognized that was included in the contract liability balance at the beginning of the period	Three months ended March 31 2021 2020 $ 54,720 $ 142,633
	2021 $ 54,720

(25) Interest income

income
Interest income from bank deposits Interest income from financial assets at fair value through other comprehensive income	Three months ended March 31 2021 2020 $ 7,690 $ 12,816 1,648 783 $ 9,338 $ 13,599
	2021 $ 7,690 1,648 $ 9,338

(26) Other income

ncome
Rent income Sample income Government grants Other income	Three months ended March 31 2021 2020 $ 1,912 $ 1,948 2,457 11,832 22,238 11,437 10,339 7,676 $ 36,946 $ 32,893
	2021 $ 1,912 2,457 22,238 10,339 $ 36,946

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(27) Other gains and losses

ains and losses
Losses on disposals of property, plant and equipment Loss on disposals of investments Foreign exchange (loss) gain Gains on financial assets / liabilities at fair value through profit or loss Other gains and losses	Three months ended March 31 2021 2020 ($ 1,786) ($ 528) - ( 333) ( 48,579) 1,969 30,277 15,529 ( 3,355) ( 2,319) ($ 23,443) $ 14,318
	2021 ($ 1,786) - ( 48,579) 30,277 ( 3,355) ($ 23,443)

(28) Expenses by nature

es by nature
Employee benefit expense Depreciation charge - property, plant and equipment Depreciation charge - right-of-use assets Amortization charge	Three months ended March 31 2021 2020 $ 907,859 $ 529,065 180,218 98,353 44,836 16,488 32,723 34,822 $ 1,165,636 $ 678,728
	2021 $ 907,859 180,218 44,836 32,723 $ 1,165,636

(29) Employee benefit expense

ee benefit expense
Wages and salaries Share-based payments Labor and health insurance fees Pension costs Other personnel expenses	Three months ended March 31 2021 2020 $ 783,755 $ 449,296 21,846 17,537 19,416 16,791 36,897 20,311 45,945 25,130 $ 907,859 $ 529,065
	2021 $ 783,755 21,846 19,416 36,897 45,945 $ 907,859

Note: For the three months ended March 31, 2021 and 2020, the Group had 9,157 and 7,288 employees, respectively. For the three months ended March 31, 2021 and 2020, there were 5 and 6 non-employee directors.
A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees ‘compensation and directors’ remuneration. The ratio shall not be lower than 5~10% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.
B. The details of employees’ compensation and directors’ and supervisors’ remuneration of the Company are as follows:

ompany are as follows:
Employees’ compensation Directors’ and supervisors’ remuneration	Three months ended March 31 2021 2020 $ 1,773 $ 3,918 409 1,306 $ 2,182 $ 5,224
	2021 $ 1,773 409 $ 2,182

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The abovementioned amounts were recognized in wages and salaries based on profit status of the current year. Employees’ compensation was estimated at 6.5% and 6% of the profit for the three months ended March 31, 2021 and 2020, respectively. Directors’ remuneration was estimated at 1.5% and 2% of the profit for the three months ended March 31, 2021 and 2020, respectively.

Employees’ compensation and directors’ remuneration of 2020 as resolved at the Board of Directors’ meeting were in agreement with those amounts recognized in the profit or loss of 2020.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(30) Income tax

A. Income tax expense

(a) Components of income tax expense:

me tax come tax expense ) Components of income tax expense:
Current tax: Current tax on profits for the period Prior year income tax underestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax (gain) expense	Three months ended March 31 2021 2020 ($ 19,421) $ 19,195 3,314 1,407 ( 16,107) 20,602 ( 3,605) ( 18,816) ($ 19,712) $ 1,786
	2021 ($ 19,421) 3,314 ( 16,107) ( 3,605) ($ 19,712)

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

follows:
Exchange differences changes on translation of foreign financial statements - the Group Exchange differences changes on translation of foreign financial statements - associates Changes in fair value of financial assets at fair value through other comprehensive income	Three months ended March 31 2021 2020 ($ 9,293) ($ 14,213) ( 6,641) ( 8,695) 1,113 ( 539) ($ 14,821) ($ 23,447)
	2021 ($ 9,293) ( 6,641) 1,113 ($ 14,821)

B. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.
C. Merry Healthcare Co., Ltd. Taiwan Branch (CAYMAN) income tax returns through 2019 have been assessed and approved by the Tax Authority.
D. Fulicare Co., Ltd. Taiwan Branch (SAMOA) income tax returns through 2019 have been assessed and approved by the Tax Authority.
E. Biotest Medical Corporation’s income tax returns through 2019 have been assessed and approved by the Tax Authority.

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(31) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Three	months ended March 31, 2021 Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) 207,683 $ 0.10 207,683 511 - 244 208,438 $ 0.10 months ended March 31, 2020 Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) 206,589 $ 0.23 206,589 927 - 628 208,144 $ 0.23
	Amount after tax $ 20,920 20,920 - - - $ 20,920 Three
	Amount after tax $ 47,381 47,381 - - - $ 47,381	Weighted average number of ordinary shares outstanding (share in thousands) 206,589 206,589 927 - 628 208,144

A. The number of weighted-average outstanding shares is included for assumed conversion of all dilutive potential ordinary shares at the calculation of diluted earnings per share, based on the assumption that employees’ compensation will be all distributed in the form of shares.
B. The Group’s convertible bonds have an antidilutive effect on the earnings per share for the three months ended March 31, 2021 and 2020. Accordingly, the diluted earnings per share were

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not calculated.

(32) Supplemental cash flow information

A. Investing activities with partial cash payments

		Three months ended March 31	Three months ended March 31	Three months ended March 31
		2021		2020
Purchase of property, plant and
equipment	$	330,524	$	126,760
Add: Beginning balance of payable on
equipment		356,594		77,958
Ending balance of prepayments
for equipment		93,013		68,631
Less: Beginning balance of
prepayments for equipment	(	84,488)	(	41,911)
Ending balance of payable on
equipment	(	339,476)	(	22,806)
Cash paid during the period	$	356,167	$	208,632
		Three months ended March 31
		2021		2020
Purchase of intangible assets	$	12,297	$	6,858
Add: Beginning balance of payable		4,344		-
Ending balance of prepayments		38,356		32,838
Less: Beginning balance of
prepayments	(	37,436)	(	30,953)
Ending balance of payable	(	2,045)	(	1,155)
Cash paid during the period	$	15,516	$	7,588
inancial assets at fair value through profit or loss
		Three months ended March 31
		2021		2020
Change in financial assets at fair value
through profit or loss	$	283,731	($	2,339)
Add: Uncollected proceeds from
disposal during the period		167,973		723,579
Payment for prior period purchase		306		-
Less: Unpaid purchases during the
period	(	168,581)	(	724,729)
Net cash flows used (provided) during
the period	$	283,429	($	3,489)

B. Financial assets at fair value through profit or loss

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C. Financial assets at fair value through other comprehensive income Transaction for the three months ended March 31, 2020: None.

			Three months ended	Three months ended
				March, 31
				2020
Disposal of financial assets at fair
value through other comprehensive
income			($	89,093)
Add: Uncollected proceeds from
disposal during the period				2,769
Less: Collected proceeds from prior
period disposal			(	4,336)
Net cash flows provided during the
period			($	90,660)
inancing activities with no cash flow	effects:
		Three months ended		March 31
		2021		2020
Dividend payable	$	1,068,244	$	1,608,376

D. Financing activities with no cash flow effects:

(33) Changes in liabilities from financing activities

At January 1, 2021 Changes in cash flow from financing Additions Impact of changes in foreign exchange rate Changes in other non- cash items At March 31, 2021	Short-term borrowings $3,271,489 554,520 - (54,166) - $3,771,843	Lease liabilities $261,656 (47,556) - 945 10,077 $225,122	Convertible bonds $2,203,801 - - - 7,105 $2,210,906	Long-term borrowings $ 807,419 304,348 - ( 10,920) ( 6,112) $1,094,735	Dividends payables $ - - 1,068,244 - - $1,068,244	Other non- current liabilities $ 36,449 ( 5,877) - 159 ( 226) $ 30,505	Liabilities from financing activities- gross
							$ 6,580,814 805,435 1,068,244 ( 63,982) 10,844 $8,401,355

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At January 1, 2020 Changes in cash flow from financing Additions Impact of changes in foreign exchange rate Changes in other non- cash items At March 31, 2020	Short-term borrowings $ 470,890 670,887 - (93,624) - $1,048,153	Lease liabilities $118,813 (28,374) - - 23,602 $114,041	Convertible bonds $2,229,959 - - - 7,533 $2,237,492	Long-term borrowings $ 62,000 130,640 - - - $ 192,640	Dividends payables $ - - 1,608,376 - - $1,608,376	Other non- current liabilities $ 496,302 6,313 - ( 362) ( 174) $ 502,079	Liabilities from financing activities- gross
							$ 3,377,964 779,466 1,608,376 ( 93,986) 30,961 $5,702,781

(34) Government grants

A. The subsidiary, MECL, applied for the first batch of the Longhua District Enterprise R&D Investment Funding from Longhua District Science and Technology Innovation Bureau and received the final subsidies amounting to RMB 1,313 thousand (NTD 5,587 thousand) in January 2020.
B. The subsidiary, MECL, received the electricity subsidy for enterprises in advanced and hightech manufacturing amounting to RMB 182 thousand (NTD 744 thousand) from Economy, Trade and Information Commission of Shenzhen Municipality in January 2020.
C. The subsidiary, MECL, received the patent subsidy amounting to RMB 440 thousand (NTD 11,872 thousand) from Market Supervision Administration of Shenzhen Municipality in March 2020.
D. The subsidiary, MECL, received the electricity subsidy for enterprises in advanced and hightech manufacturing amounting to RMB 293 thousand (NTD 1,279 thousand) from Economy, Trade and Information Commission of Shenzhen Municipality in January 2021.
E. The subsidiary, MECL, received the foreign invention expenditure subsidy amounting to RMB 450 thousand (NTD 1,964 thousand) from Longhua Branch, Market Supervision Administration of Shenzhen Municipality in February 2021.
F. The subsidiary, MECL, received the business intellectual property management subsidy amounting to RMB 300 thousand (NTD 1,309 thousand) from Longhua Branch, Market Supervision Administration of Shenzhen Municipality in February 2021.
G. The subsidiary, MECL, received the employment subsidy amounting to RMB 845 thousand (NTD 3,688 thousand) from Longhua Branch, Human Resource Bureau of Shenzhen Municipality in March 2021.
H. The subsidiary, MECL, received the bank loan and interest subsidy amounting to RMB 700 thousand (NTD 3,055 thousand) from Culture, Radio and Television and Sports Bureau of Shenzhen Municipality in March 2021.
I. The subsidiary, MECA, applied for “Paycheck Protection Program” subsidy from local government amounting to USD 262 thousand (NTD 7,449 thousand) in 2020 and received the subsidy in January 2021.

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  - J. The subsidiary, MESG, applied for “Jobs Support Scheme” subsidy from local government amounting to SGD 565 thousand (NTD 12,025 thousand) in 2020 and received the subsidy amounting to SGD 62 thousand (NTD 1,298 thousand) in March 2021.

  - K. The subsidiary, SOCV, applied for “Emergency Wage Subsidy Program” subsidy from local government amounting to CAD 374 thousand (NTD 8,368 thousand) in 2020 and received the subsidy amounting to CAD 59 thousand (NTD 1,322 thousand) in March 2021.

RELATED PARTY TRANSACTIONS
(1) Names of related parties and relationship

Name Relationship Merry Electronics (Suzhou) Co., Ltd. (MECE) Affiliated company Merry Electronics (Huizhou) Co., Ltd. (MECH) Affiliated company Merry Electronics (Shanghai) Co., Ltd. (MECS) Affiliated company Guangdong Luxshare & Merry Electronics Co., Affiliated company Ltd. (MEDG) Leohab Enterprise Co., Ltd. (LEOHAB) Affiliated company Merry Fuling Co., Ltd. Taiwan Branch Other related party (MHNCTW) BESKYTTE HUANG & CO Other related party Luxshare Precision Limited Other related party (Note 1) Luxshare Precision Industry Co., Ltd Other related party (Note 1) Luxshare-ICT (Vietnam) Limited Other related party (Note 1) (Luxshare-ICT (Vietnam)) Luxshare Electronic Technology (Kunshan) Co., Other related party (Note 1) Ltd. Lanto Electronic Limited Other related party (Note 1) Dongguan Luxshare Precision Industry Co., Ltd. Other related party (Note 1) Luxshare Precision Limited (HK) Other related party (Note 1)

Other related party (Note 1) Other related party (Note 1) Other related party (Note 1)

Note 1: A corporate director of the Group’s subsidiary, MEVN, and the entity both belong to Luxshare Group.

(2) Significant related party transactions

A. Operating revenue

icant related party transactions erating revenue
Sales of goods MECH MECE Others	Three months ended March 31 2021 2020 $ 35,206 $ 6,157 848 811 675 619 $ 36,729 $ 7,587
	2021 $ 35,206 848 675 $ 36,729

The prices of goods sold to related parties are based on the different product’s profitability and adjusted annually as there is no comparable transaction for the goods sold to the third parties, and the prices of purchases on behalf of related parties are based on the cost plus mark-ups of 2~ 3%. The credit terms to related parties are 60 days end of month and 30 to 120 days end of month to the third parties.

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B. Purchases

chases
Purchases of goods MECH MECE Others		Three months ended March 31 2021 2020 $ 2,210,403 $ 2,161,845 1,356,613 783,881 50,077 - $ 3,617,093 $ 2,945,726
		2021 $ 2,210,403 1,356,613 50,077 $ 3,617,093

The associates are manufacturers for the Group’s products and the prices are based on the different product’s profitability and adjusted annually as there is no comparable transaction for the goods purchased from the third parties. The payment terms are 60 days end of month and 30 to 120 days end of month to the third parties.

C. Receivables from related parties

Accounts receivable: Luxshare Precision Limited (HK) MECH MECE Others Total Other receivable: MECH MECE Others Total		March 31, 2021 $ - 48,126 9,690 26 $ 57,842 $ 590,132 - 217 $ 590,349	December 31, 2020 $ 214,473 46,822 10,276 1,961 $ 273,532 $ 703,400 2,155 - $ 705,555		March 31, 2020
					$ - - 10,129 862 $ 10,991 $ 315,485 39,847 434 $ 355,766

Other receivables as of March 31, 2021, December 31, 2020 and March 31, 2020 mainly were the purchases of raw materials on behalf of MECH, MECE and MEDG.

D. Payables to related parties

yables to related parties
Accounts payable: MECE MECH Others Total Other payable: MECE MECH Others Total		March 31, 2021 $ 2,131,378 1,061,852 106,162 $ 3,299,392 $ 82,983 - 25 $ 83,008	December 31, 2020 $ 2,505,588 1,469,889 192,000 $ 4,167,477 $ 54,169 - 100 $ 54,269		March 31, 2020
					$ 2,171,985 742,519 6 $ 2,914,510 $ 64,777 50,722 - $ 115,499

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Other payables mainly were mold developing expense that MECE paid on behalf of the parent company.

E. Contract liabilities (shown as other current liabilities)

MECH		March 31, 2021 $-	December 31, 2020 $-		March 31, 2020
					$ 25,372

F. Property transactions
(a) Acquisition of property, plant and equipment:

MECH MECE		Three months ended March 31 2021 $ 1,423 977 $ 2,400

No acquisition of property, plant and equipment for the three months ended March 31, 2020.

(b) Disposal of property, plant and equipment:

b) Disposal of property, plant and equipment:	b) Disposal of property, plant and equipment:
Three months ended March 31 2021 2020 Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal MECH $ 158 $ - $ 4,632 $ 386 her current assets-temporary debits of other expenses March 31, 2021 December 31, 2020 March 31, 2020 BESKYTTE HUANG & CO $- $ 1,066 $-
BESKYTTE HUANG & CO	March 31, 2021 $-

G.Other current assets - temporary debits of other expenses

Other current assets mainly were temporary debits of brand royalties.

(3) Key management compensation

management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments		Three months ended March 31 2021 2020 $ 7,661 $ 9,048 126 123 5,935 5,492 $ 13,722 $ 14,663
		2021 $ 7,661 126 5,935 $ 13,722

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8. PLEDGED ASSETS

Book value Pledged asset March 31, 2021 December 31, 2020 March 31, 2020 Purpose Time deposits (pledged) (as financial assets at Project amortized cost – current) $ 12,200 $ 12,200 $ - guarantee

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

COMMITMENTS
Capital expenditures contracted	for	at the balance sheet	date but not yet incurred is as follows:
		March 31, 2021	December 31, 2020		March 31, 2020
Property, plant and equipment	$	381,424	$ 350,813	$	170,154
Intangible assets		4,060	7,412		178,844
	$	385,484	$ 358,225	$	348,998

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

(1) For the enrichment of working capital, repayment of debts, exploration of the opportunities for consolidation, or other business needs for future business development, Merry Corporation’s Board resolved on 2021/4/29 to run capital increase not exceeding 40,000 thousand shares of common stocks, through one of the following or combined manner: issuance of new common shares, the sponsor of issuance of GDR, or issuance of foreign or domestic convertible bonds through private placement.

(2) Merry Corporation’s Board resolved on 2021/4/29 to issue 2,000 thousand new common shares of the restricted stocks to employees amounting to NT$20,000 thousand, with par value $10 per share. The purposes are to attract and retain the required professionals, inspire the employees and enhance internal cohesion.

12. OTHERS

(1) Capital management

Due to the nature of the Group’s operating industry and the Group’s future development, and the consideration of the changing outside environment, the Company’s capital management is to ensure it has sufficient financial resource and operating plans to meet operational capital for future needs, capital expenditure, research and development expense, obligation repayment and dividend distribution within the next year.

The Company monitors capital by reassessing debt ratios periodically. The debt ratios as on March 31 2021, December 31, 2020 and March 31, 2020 were as follows:

Total debts Total assets Debt ratio	March 31, 2021 $ 21,083,423 32,187,130 66%	December 31, 2020 March 31, 2020 $ 21,884,605 $ 14,171,746 34,155,348 24,512,026 64% 58%

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(2) Financial instruments

A. Financial instruments by category

Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Qualifying equity instrument Financial assets at amortized cost/ Loans and receivables Cash and cash equivalents Financial assets at amortized at cost Accounts receivable (including due from related parties) Other receivables (including due from related parties) Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Short-term borrowings Notes payable Accounts payable (including payable to related parties) Other accounts payable (including payable to related parties) Lease liability Corporate bonds payable (including maturing within one year or one operating cycle)	March 31, 2021 $ 371,892 $ 1,427,291 233,644 $ 1,660,935 $ 5,321,982 868,250 7,663,641 857,935 72,950 $ 14,784,758 March 31, 2021 $ 13,054 3,771,843 1 8,189,039 2,603,998 225,122 2,210,906	December 31, 2020 $ 105,387 $ 1,536,272 232,060 $ 1,768,332 $ 3,046,963 866,600 12,714,950 776,641 71,625 $ 17,476,779 December 31, 2020 $ 30,047 3,271,489 - 10,634,407 1,655,453 261,656 2,203,801	March 31, 2020 $ 59,574 $ 1,538,420 90,538 $ 1,628,958 $ 7,137,339 - 3,957,331 1,179,000 19,354 $ 12,293,024 March 31, 2020 $ 32,797 1,048,153 74 5,040,646 3,229,785 114,041 2,237,492

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Long-term borrowings (including maturing within one year or one operating cycle) Guarantee deposits received	March 31, 2021 1,100,847 24,016 $ 18,138,826	December 31, 2020 807,419 29,329 $ 18,893,601	March 31, 2020 192,640 3,086 $ 11,898,714

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.
(b) Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. Such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
(c) Information about derivative financial instruments that are used to hedge certain exchange rate risk was provided in Note 6 (2).
C. Significant financial risks and degrees of financial risks

There was no significant change in the reporting period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2020, except for the items explained below:

(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currencies, primarily with respect to the USD, RMB and HKD. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities.
ii. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, RMB, HKD and CAD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB RMB : HKD Receivables USD : HKD USD : NTD USD : RMB SGD : USD Non-monetary items Current financial assets at fair value through other comprehensive income USD : NTD Current financial assets at amortized cost USD : NTD Investments accounted for under equity method USD : NTD HKD : NTD RMB : NTD				March 31, 2021	March 31, 2021
	Foreign currency amount (In thousands) $ 58,104 20,453 8,480 201 6,317 2,536 $ 1,265 212,003 36,769 3,178 $ 8,000 $ 30,000 $ 110,725 262,669 86,114	Exchange rate	Book value (NTD) $ 1,657,998 88,848 241,977 738 180,256 11,016 $ 36,097 6,049,506 1,049,203 67,405 $ 228,280 $ 856,050 $ 3,159,552 963,997 374,078		Sensitivity analysis
				Degree of variation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
		28.54 4.34 7.78 3.67 6.57 1.18 7.78 28.54 6.57 0.74 28.54 28.54 28.54 3.67 4.34			$ 49,740 2,665 7,259 22 5,408 330 $ 1,083 181,485 31,476 2,022 ($ 440) $ 25,682 $ - - -


under equity method USD : NTD HKD : NTD RMB : NTD

~58~

			March 31, 2021	March 31, 2021
Foreign currency amount (In thousands) $ 48,000 60,283 2,600 4,500 $ 187 190,584 151,921 38,021	Exchange rate	Book value (NTD) $ 1,369,680 1,720,175 74,191 19,548 $ 686 827,897 4,335,066 1,084,929		Sensitivity analysis
			Degree of variation 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
	28.54 6.57 0.79 4.34 0.84 4.34 28.54 6.57			$ 41,090 51,605 2,226 586 $ 21 24,837 130,052 32,548

~59~

(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD : HKD USD : NTD USD : RMB USD : THB SGD : USD Non-monetary items Current financial assets at fair value through other comprehensive income USD : NTD Current financial assets at amortized cost USD : NTD Investments accounted for under equity method USD : NTD HKD : NTD RMB : NTD				December 31, 2020	December 31, 2020
	Foreign currency amount (In thousands) $ 11,164 2,882 8,736 201 9,412 1,390 2,534 $ 1,321 366,711 115,742 5,126 - $ 8,000 $ 3,000 $ 110,476 247,654 85,181	Exchange rate	~60~ Book value (NTD) $ 317,951 12,615 248,801 738 268,054 39,587 11,091 $ 37,622 10,443,929 3,296,332 145,988 - $ 227,840 $ 85,440 $ 3,146,355 909,632 372,839		Sensitivity analysis
				Degree of variation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
		28.48 4.38 7.75 3.67 6.51 29.80 1.19 7.75 28.48 6.51 29.80 0.76 28.48 28.48 28.48 3.67 4.38			$ 9,539 378 7,464 22 8,042 1,188 333 $ 1,129 313,318 98,890 4,380 - $ 6,335 $ 2,563 $ - - -


under equity method USD : NTD HKD : NTD RMB : NTD

			December 31, 2020	December 31, 2020
Foreign currency amount (In thousands) $ 48,000 42,815 2,600 4,500 $ 234 213,075 230,702 61,494	Exchange rate	Book value (NTD) $ 1,367,040 1,219,371 74,048 19,697 $ 859 932,629 6,570,393 1,751,349		Sensitivity analysis
			Degree of variation 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
	28.48 6.51 0.78 4.38 0.84 4.38 28.48 6.51			$ 41,011 36,581 2,221 591 $ 26 27,979 197,112 52,540

~61~

(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD : HKD USD : NTD USD : RMB USD : THB SGD : USD Non-monetary items Current financial assets at fair value through other comprehensive income USD : NTD Investments accounted for under equity method USD : NTD HKD : NTD RMB : NTD				March 31, 2020	March 31, 2020
	Foreign currency amount (In thousands) $ 79,213 28,716 9,446 1,060 12,127 1,380 1,613 $ 634 114,391 15,452 6,545 2,591 $ 3,033 $ 93,552 175,105 86,842	Exchange rate	Book value (NTD) $ 2,394,213 122,187 285,505 4,132 366,539 41,711 6,863 $ 19,163 3,457,468 467,037 197,823 55,007 $ 91,672 $ 2,827,610 682,558 369,513		Sensitivity analysis
				Degree of variation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
		30.2250 4.2550 7.7540 3.8980 7.1034 32.6052 1.0916 7.7540 30.2250 7.1034 32.6052 0.7024 30.2250 30.2250 3.8980 4.2550			$ 71,826 3,666 8,565 124 10,996 1,251 206 $ 575 103,724 14,011 5,935 1,650 $ - $ - - -


under equity method USD : NTD HKD : NTD RMB : NTD

~62~

			March 31, 2020	March 31, 2020
Foreign currency amount (In thousands) $ 23,000 7,809 2,600 9,550 $ 2,825 123,922 106,254 19,917	Exchange rate	Book value (NTD) $ 695,175 236,020 78,585 40,635 $ 11,012 527,288 3,211,527 601,991		Sensitivity analysis
			Degree of variation 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
	30.2250 7.1034 0.7050 4.2550 0.9161 4.2550 30.2250 7.1034			$ 20,855 7,081 2,358 1,219 $ 330 15,819 96,346 18,060

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Total exchange gain (loss), including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the three months ended March 31, 2021 and 2020 amounted to a loss of $48,579 thousand and a gain of $1,969 thousand, respectively.

Price risk

i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 3% with all other variables held constant, post-tax profit for the three months ended March 31, 2021 and 2020 would have increased/decreased by $794 thousand and $654 thousand, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $42,819 thousand and $46,153 thousand, respectively, as a result of other comprehensive income classified as available-for-sale equity investment and equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Group’s borrowings are measured at amortized cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.
ii. If the borrowing interest rate had increased/decreased by 0.25% with all other variables held constant, profit (loss), net of tax for the three months ended March 31, 2021 and 2020 would have increased/decreased by $2,436 thousand and $620 thousand, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost, at fair value through profit or loss and at fair value through other comprehensive income.
ii. For banks and financial institutions, the Group transacts with a variety of banks and financial institutions, mainly domestic and overseas well-known financial institutions, to avoid concentration in any single counterparty and to minimize credit risk. The Group can only enter into the financial services and loan agreement provided by banks and financial institutions after being approved by the Board of Directors or authorized management according to the Company’s delegation of authorization policy. To prevent legal risks, all the Group signs with banks and financial institutions after all documents are examined by counsel or legal advisor profession. The Group periodically checks the credit rating, conditions and quality of service as well as transactions. According to the Group’s operating condition, the credit limits and utilization of credit limits are monitored on a regular basis and maintained within a reasonable range to ensure it meets the needs of the operation.
iii. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.

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iv.The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
(i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
(ii) For investments in bonds that are traded over the counter, if any external credit rating agency rates these bonds as investment grade, the credit risk of these financial assets is low.
v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
(ii) The disappearance of an active market for that financial asset because of financial difficulties;
(iii) Default or delinquency in interest or principal repayments;
(iv) Adverse changes in national or regional economic conditions that are expected to cause a default.
vi.The Group classifies customers’ accounts receivable, contract assets in accordance with geographic area. The Group applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis.
vii.The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.
viii. The Group used the forecastability of adjust historical and timely information to assess the default possibility of accounts receivable, contract assets and lease payments receivable. As of March 31, 2021, December 31, 2020 and March 31, 2020, the provision matrix is as follows:

March 31, 2021 Expected loss rate Total book value Loss allowance December 31, 2020 Expected loss rate Total book value Loss allowance March 31, 2020 Expected loss rate Total book value Loss allowance		Not past due 0.04% $ 7,434,773 ($ 2,845) 0.02% $ 12,401,873 ($ 3,038) 0.13% $ 3,742,834 ($ 4,685)	Up to 30 days 1.03% $ 171,205 ($ 1,763) 2.13% $ 38,897 ($ 828) 0.41% $ 200,000 ($ 821)	31 to 90 days 34.43% $ 6,755 ($ 2,326) 25.59% $ 6,066 ($ 1,552) 13.46% $ 10,414 ($ 1,402)	Over 90 days 100% $ 23,183 ($ 23,183) 100% $ 24,258 ($ 24,258) 100% $ 15,992 ($ 15,992)	Total $ 7,635,916 ($ 30,117) $ 12,471,094 ($ 29,676) $ 3,969,240 ($ 22,900)

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ix.Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable are as follows:

allowance for accounts receivable are as follows:
At January 1 Provision for impairment Effect of foreign exchange At March 31 At January 1 Reversal of impairment loss Effect of foreign exchange At March 31		2021
		Accounts receivable
	(	$ 29,676 623 182) $ 30,117 2020 Accounts receivable
		$ 29,507 ( 6,212) ( 395) $ 22,900

For provisioned loss during the three months ended March 31, 2021 and 2020, the (reversal of) impairment losses arising from customers’ contracts were a loss of $623 thousand and a gain of $6,212 thousand, respectively.

x. For the three months ended March 31, 2021 and 2020, there was no loss allowance for investments in debt instruments at fair value through other comprehensive income.
xi.For investments in debt instruments at fair value through other comprehensive income, the credit rating levels are presented below:

Financial assets at fair value through other comprehensive income Group 1		March 31, 2021	Total $ 85,749
	12 months $ 85,749	Lifetime Significant increase in Credit risk Impairment of credit $ - $ -
		Significant increase in Credit risk $ -

Financial assets at fair value through other comprehensive income Group 1		December 31, 2020
	12 months $ 85,815	Lifetime Significant increase in Credit risk Impairment of credit $ - $ -	Total $ 85,815
		Significant increase in Credit risk $ -

~66~

Financial assets at fair value through other comprehensive income Group 1		March 31, 2020	Total $ 90,538
	12 months $ 90,538	Lifetime Significant increase in Credit risk Impairment of credit $ - $ -
		Significant increase in Credit risk $ -

Group 1: Debt instruments designated as investment grade.

(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
iv. The Group has $6,916,236 thousand, $7,597,976 thousand and $1,165,309 thousand in undrawn borrowing facilities as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

Non-derivative financial liabilities

March 31, 2021 Less than 3 months Short-term borrowings $ 1,898,694 Notes payable 1 Accounts payable 4,599,696 Accounts payable - related parties 3,099,983 Other payables (including related parties) 2,515,692 Lease liabilities 38,039 Other current liabilities 65,167 Bonds payable - Long-term borrowings 1,652 Derivative financial liabilities Forward exchange contracts 13,054	Between 3 months and 1 year $1,912,537 - 289,951 199,409 88,306 99,928 105 2,231,900 11,039 -	Between 1 and 2 years $ - - - - - 31,960 - - 207,543 -	Between 2 and 5 years $ - - - - - 23,909 - - 831,988 -	Over 5 years $ - - - - - 33,406 - - 68,888 -	Total $ 3,811,231 1 4,889,647 3,299,392 2,603,998 227,242 65,272 2,231,900 1,121,110 13,054

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Non-derivative financial liabilities

Non-derivative financial liabilities
December 31, 2020 Less than 3 months Between 3 months and 1 year Short-term borrowings $ 2,591,817 $ 681,792 Accounts payable 6,062,301 404,629 Accounts payable - related parties 4,043,135 124,342 Other payables (including related parties) 1,588,845 66,608 Lease liabilities 39,865 110,075 Other current liabilities 76,729 531 Bonds payable - 2,231,900 Long-term borrowings 828 10,001 Derivative financial liabilities Forward exchange contracts 30,047 - Non-derivative financial liabilities March 31, 2020 Less than 3 months Between 3 months and 1 year Short-term borrowings $ 1,015,086 $ 36,158 Notes payable 74 - Accounts payable 1,709,280 416,856 Accounts payable - related parties 2,864,249 50,261 Other payables (including related parties) 3,210,553 19,232 Lease liabilities 9,449 23,626 Other current liabilities 40,641 699 Bonds payable - - Long-term borrowings 209 614 Derivative financial liabilities Forward exchange contracts 32,797 -	Between 1 and 2 years $ - - - - 57,231 - - 84,284 - Between 1 and 2 years $ - - - - - 24,891 - 2,289,500 6,540 -	Between 2 and 5 years $ - - - - 24,612 - - 635,779 - Between 2 and 5 years $ - - - - - 29,693 - - 169,193 -	Over 5 years $ - - - - 35,049 - - 87,718 - Over 5 years $ - - - - - 35,033 - - 19,243 -	Total $ 3,273,609 6,466,930 4,167,477 1,655,453 266,832 77,260 2,231,900 818,610 30,047 Total $ 1,051,244 74 2,126,136 2,914,510 3,229,785 122,692 41,340 2,289,500 195,799 32,797
March 31, 2020 Less than 3 months Short-term borrowings $ 1,015,086 Notes payable 74 Accounts payable 1,709,280 Accounts payable - related parties 2,864,249 Other payables (including related parties) 3,210,553 Lease liabilities 9,449 Other current liabilities 40,641 Bonds payable - Long-term borrowings 209 Derivative financial liabilities Forward exchange contracts 32,797

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(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, and derivative instruments with quoted market prices is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in certain derivative instruments and equity instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in certain derivative instruments, equity investment without active market and is included in Level 3.
B. Financial instruments not measured at fair value Financial instruments not measured at fair value include the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term and long-term borrowings, notes payable, accounts payable and other payables.
C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

March 31, 2021 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Forward exchange contracts -Fund -Bonds investments Financial liabilities at fair value through other comprehensive income - Equity securities - Debt securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts	Level 1 $ - - 52,809 - 1,287,727 233,644 $ 1,574,180 $-	Level 2 $ - 12,615 - 280,000 - - $ 292,615 $ 13,054	Level 3 $ 26,468 - - - 139,564 - $ 166,032 $-	Total $ 26,468 12,615 52,809 280,000 1,427,291 233,644 $ 2,032,827 $ 13,054

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December 31, 2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Forward exchange contracts -Fund -Call options of convertible bonds Financial liabilities at fair value through other comprehensive income - Equity securities - Debt securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts March 31, 2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Forward exchange contracts -Call options of convertible bonds Financial liabilities at fair value through other comprehensive income - Equity securities - Debt securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts	Level 1 $ - - 52,157 - 1,402,262 232,060 $ 1,686,479 $- Level 1 $ 490 - - 1,413,097 90,538 $ 1,504,125 $-	Level 2 $ - 26,316 - - - - $ 26,316 $ 30,047 Level 2 $ - 37,325 - - - $ 37,325 $ 32,797	Level 3 $ 26,468 - - 446 134,010 - $ 160,924 $- Level 3 $ 21,301 - 458 125,323 - $ 147,082 $-	Total $ 26,468 26,316 52,157 446 1,536,272 232,060 $ 1,873,719 $ 30,047 Total $ 21,791 37,325 458 1,538,420 90,538 $ 1,688,532 $ 32,797

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D. The methods and assumptions the Group used to measure fair value are as follows:
i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Open-end fund Closing price at Net asset value at Market quoted price evaluation date evaluation date

ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods.
iii. Forward exchange contracts are usually valued based on the current forward exchange rate.
iv. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
E. For the three months ended March 31, 2021 and 2020, there was no transfer between Level 1 and Level 2.
F. The following chart is the movement of Level 3 for the three months ended March 31, 2021 and 2020:

20:
At January 1 Losses recognized in profit or loss Gains (losses) recognized in other comprehensive income At March 31	Three months ended March 31 2021 2020 $ 160,924 $ 152,921 ( 446) ( 1,832) 5,554 ( 4,007) $ 166,032 $ 147,082
	2021 $ 160,924 ( 446) 5,554 $ 166,032

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G. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

value measurement:
Equity securities Private equity funds in venture capital Equity securities Private equity funds in venture capital Call options of convertible bonds Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at March 31, 2021 $ 139,564 26,468 Fair value at December 31, 2020 $ 134,010 26,468 446 Fair value at March 31, 2020 $ 77,818 21,791 458	Valuation technique Market comparable companies Net asset value Valuation technique Market comparable companies Net asset value Binary tree convertible bond valuation model Valuation technique Market comparable companies Net asset value Binary tree convertible bond valuation model	Significant unobservable input	Range (weighted average) $ 15,818 26,468 Range (weighted average) $ 15,818 26,468 0.0544% Range (weighted average) $ 16,051 21,791 0.4001%	Relationship of inputs to fair value The higher the multiplier, the higher the fair value N/A Relationship of inputs to fair value The higher the multiplier, the higher the fair value N/A The higher the risk-free interest rate, the lower the fair value Relationship of inputs to fair value The higher the multiplier, the higher the fair value N/A The higher the risk-free interest rate, the lower the fair value
			Price to book ratio multiple N/A Significant unobservable input
			Price to book ratio multiple N/A Risk-free interest rate Significant unobservable input
			Price to book ratio multiple N/A Risk-free interest rate

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H. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

Equity securities Financial assets Call options of convertible bonds Equity securities Financial assets Call options of convertible bonds Equity securities	Input Cash flow Input Risk-free interest rate Stock price Volatility Cash flow Risk-free interest rate Stock price Volatility Cash flow	Change ±10% Change ±20bp ±10% ±5% ±10% ±20bp ±10% ±5% ±10%	March	March	March

			Favorable change $-
			Recognized in profit or loss Favorable change Unfavorable change $ - $ - 446 ( 223) 223 ( 223) - - $ 669 ($ 446) March
			Favorable change $ - 446 223 - $ 669
			Recognized in profit or loss $ - $ - 458 ( 229) 687 ( 1,145) - - $ 1,145 ($ 1,374)
			$ - 458 687 - $ 1,145		$ - - - 7,782 $ 7,782

(4) Assessment of impact of COVID-19

The Group’s business operation has taken the impact of COVID-19 into consideration. As a result, production of some of the Group’s factories came to a halt. As of March 31, 2021, all factories have resumed operations, and do not cause any default risk. Additionally, although the Group’s sales orders from certain areas have declined because of the said pandemic, the Group’s overall business and financial position were not significantly impacted based on the Group’s assessment.

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.
B. Provision of endorsements and guarantees to others: Please refer to table 1.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 3.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6 (2).
J. Significant inter-company transactions during the reporting periods: Purchases or sales of goods from or to related parties reaching $100 million or more: Please refer to table 6.
(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

(3) Information on investments in Mainland China
A. Basic information: Please refer to table 8.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in Mainland China: Please refer to table 9.
(4) Major shareholders information

Major shareholders information: None.

14. SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions. Business organization is divided into Taiwan, Shenzhen, Singapore and other segments based on the operating regions.

The Company’s revenue is mainly from manufacturing and sales of microphones, receivers, speakers and other electronic components.

(2) Measurement of segment information

The Group evaluates the performance of the operating segments based on post-tax profit or loss.

(3) Information about segment profit or loss, assets and liabilities

A. The segment information provided to the chief operating decision-maker for the reportable

~74~

segments for the three months ended March 31, 2021 is as follows:

Taiwan Shenzhen Singapore Others Total

Revenue Revenue from external customers $ 5,422,475 $ 546,861 $ 1,460,395 $ 305,061 $ 7,734,792 Inter-segment revenue 55,674 2,102,369 - 1,552,754 3,710,797 Total revenue $ 5,478,149 $ 2,649,230 $ 1,460,395 $ 1,857,815 $ 11,445,589 Segment profit (loss) $ 39,294 ($ 204,586) $ 60,756 $ 125,456 $ 20,920

Note: The Group does not use segment information relating to assets and liabilities to evaluate segment performance. As a result, such assets and liabilities to be disclosed amounted to $0.

B. The segment information provided to the chief operating decision-maker for the reportable segments for the three months ended March 31, 2020 is as follows:

Taiwan Shenzhen Singapore Others Total Revenue Revenue from external customers $ 4,127,773 $ 54,877 $ 809,167 $ 184,846 $ 5,176,663 Inter-segment revenue 2,672 934,596 9,582 298,005 1,244,855 Total revenue $ 4,130,445 $ 989,473 $ 818,749 $ 482,851 $ 6,421,518 Segment profit (loss) $ 47,381 ($ 113,229) $ 77,005 $ 36,224 $ 47,381

Note: The Group does not use segment information relating to assets and liabilities to evaluate segment performance. As a result, such assets and liabilities to be disclosed amounted to $0.

C. The Group’s reportable operating segments are classified based on the operating regions.
D. The accounting policies of the operating segments are in agreement with the significant accounting policies summarized in Note 4. The Group’s segment profit (loss) is measured with the current profit (loss), which is used as a basis for the Group in assessing the performance of the operating segments.

~75~

(4) Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.

A. A reconciliation of income after adjustment and total segment income from continuing operations is provided as follows:

operations is provided as follows:
Adjusted revenue from reportable segments Elimination of inter-segment revenue Total consolidated revenues	Three months	ended March 31 2020 $ 6,421,518 ( 1,244,855) $ 5,176,663
	2021 $ 11,445,589 ( 3,710,797) $ 7,734,792

B. A reconciliation of adjusted current income before tax and the income before tax from
continuing operations is provided as follows:

continuing operations is provided as follows:
Adjusted income from reportable segments after income tax Elimination of inter-segment income Income from continuing operations after income tax	Three months	ended March 31 2020 $ 175,595 ( 128,214) $ 47,381
	2021 $ 223,853 ( 202,933) $ 20,920

~76~

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others Three months ended March 31, 2021

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Party being Endorsed/guaranteed

Ratio of accumulated endorsement/ Limit on Maximum guarantee Ceiling on total Provision of Provision of Provision of endorsements/ outstanding Outstanding Amount of amount to net amount of endorsements endorsements endorsements/ Relationship guarantees endorsement/ endorsement/ endorsements/ asset value of endorsements/ / guarantees / guarantees guarantees to with the the endorser/ endorser/ provided for a guarantee guarantee Actual guarantees guarantees by parent by subsidiary the party in Number Endorser/ Company guarantor single party amount as of amount as of amount secured with guarantor provided company to to parent Mainland (Note 1) guarantor name (Note 2) (Note 3) March, 2021 March 31, 2021 drawn down collateral company (Note 4) subsidiary company China Footnote 0 MEHO SOCV 2 $ 8,456,640 $ 99,890 $ 99,890 $ 74,204 $ - 0.94% $ 10,570,800 Y N N 0 MEHO SENM 2 8,456,640 28,540 28,540 - - 0.27% 10,570,800 Y N N

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

(1) The Company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/ guaranteed is classified into the following six categories; fill in the number of category each case belongs to: (1) Having business relationship.
(2) The Company holds over 50% of the voting rights directly or indirectly.
(3) This company holds over 50% of the voting rights of the Company directly or indirectly.
(4)The Company holds over 90% of the voting rights directly or indirectly.

Note 3: The guarantees and endorsements for a single party should not exceed 80% of the Company’s net assets.

Note 4: The ceiling on total amount of endorsements/guarantees provided to others by the Company is 100% of the Company's net assets.

Table 1, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) March 31, 2021

			March 31, 2021
Table 2 Securities held by The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company MEST MEST	Marketable securities (Note 1) 76324296A KGI Taiwan Multi-Asset Income Fund A TWD SYNergy Private Placement (YDB8AA) JAFCO 2881B.TW 2882B.TW 5871A P18QNBF3F10306 Stock - 4943.TW Stock - 3290.TW Stock - FUJITER Semiconductor CO.,LTD. Stock - NETVOX TECHNOLOGY CO., LTD Stock - -EVER THAI AGRI-PRODUCT CO.,LTD. Stock - -SUNSINO SME Development Co., Ltd. Stock - -LINSATION Intelligent Technology Limited Stock - MERRY FULING CO., LTD., TAIWAN BRANCH (SAMOA) Bond - XS218687550 Stock - Perfect Fortune Inc Stock - LOYAL WIRE& CABLE COMPANY LTD	Relationship with the securities issuer - - - - - - - - - - - - - - - - - -	General ledger account Financial assets mandatorily measured at fair value through profit or loss Valuation adjustment Financial assets mandatorily measured at fair value through profit or loss Non-current financial assets mandatorily measured at fair value through profit or loss Equity instruments measured at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income Valuation adjustment Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Valuation adjustment		Expressed in thousands of NTD (Except as otherwise indicated) As of March 31, 2021 Book value (in thousands) Ownership (%) Fair value (in thousands) Note $ 50,000 - $ 52,809 2,809 $ 52,809 $ 280,000 - $ 280,000 $ 26,468 0.71% $ 26,468 $ 40,980 - $ 42,482 35,100 - 36,446 30,000 - 30,000 89,550 - 85,749 195,630 $ 194,677 ( 953) $ 194,677 $ 648,164 8.84% $ 1,091,523 99,990 5.75% 87,276 27,811 9.79% 16,563 2,976 1.32% - 6,425 5.17% 6,425 2,123 0.36% 2,123 8,772 6.35% 8,772 10,437 19.00% 10,437 144,625 - 147,895 951,323 $ 1,371,014 419,691 $ 1,371,014 $ 7,804 18.33% $ 64,520 7,523 18.33% 30,724 15,327 $ 95,244 79,917 $ 95,244
				Number of shares 5,015 280,000 875 683 585 300 3,000 13,905 5,723 2,126 324 683 169 75 356 5,000 2,126 1,159	Book value (in thousands) $ 50,000 2,809 $ 52,809 $ 280,000 $ 26,468 $ 40,980 35,100 30,000 89,550 195,630 ( 953) $ 194,677 $ 648,164 99,990 27,811 2,976 6,425 2,123 8,772 10,437 144,625 951,323 419,691 $ 1,371,014 $ 7,804 7,523 15,327 79,917 $ 95,244	Ownership (%) - - 0.71% - - - - 8.84% 5.75% 9.79% 1.32% 5.17% 0.36% 6.35% 19.00% - 18.33% 18.33%

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9.

Table 2, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Acquisition of real estate reaching $300 million or 20% of the Company's paid-in capital Three months ended March 31, 2021

Table 3

Expressed in thousands of NTD

(Except as otherwise indicated)

Real estate acquired by MEVN	Real estate acquired Plant	Date of the event May 11, 2020	Transaction amount $ 483,488	Status of payment $ 443,827	Counterparty HOP LUC CONSTRUCTION JOINT STOCK COMPANY	Relationship with the counterparty None	If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below Original owner who sold the real estate to the counterparty Relationship between the original owner and the acquirer Date of the original transaction Amount - - - -	If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below Original owner who sold the real estate to the counterparty Relationship between the original owner and the acquirer Date of the original transaction Amount - - - -	If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below Original owner who sold the real estate to the counterparty Relationship between the original owner and the acquirer Date of the original transaction Amount - - - -	Basis or reference used in setting the price Reason for acquisition of real estate and status of the real estate - For business use	Other commitment
							Original owner who sold the real estate to the counterparty -	Relationship between the original owner and the acquirer -	Date of the original transaction -
											-

Table 3, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more Three months ended March 31, 2021

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

Purchase/seller The Company The Company The Company The Company METC MESG MESG MESG	Counterparty MECE MECL MEVN MECH The Company MECH METC MECL	Relationship with the counterparty Investment accounted for using the equity method A subsidiary of the Company A subsidiary of the Company Investment accounted for using the equity method Parent company Investment accounted for using the equity method A subsidiary of the Company A subsidiary of the Company		Transaction	Transaction	Credit term 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable		Differences in transaction terms compared to third party transactions (Note 1) Unit price Credit term (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties	Notes/accounts receivable (payable) Balance (Note 2) Percentage of total notes/ accounts receivable payable ($ 2,109,482) 26% ( 1,533,827) 19% ( 764,554) 9% ( 397,144) 5% ( 379,065) 5% ( 663,057) 8% ( 387,867) 5% ( 246,113) 3%	Note
			Purchases (sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	Amount $ 2,177,679 1,856,975 758,994 693,573 301,190 659,959 520,208 244,964	Percentage of total purchases (sales) 28% 24% 10% 9% 4% 9% 7% 3%			Unit price (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	Balance (Note 2) ($ 2,109,482) ( 1,533,827) ( 764,554) ( 397,144) ( 379,065) ( 663,057) ( 387,867) ( 246,113)
										(Note 3) (Note 3) (Note 3) (Note 3) (Note 3)

Note 1: For purchase transactions with related parties, the price is based on the profitability of the product and will be adjusted annually. Note 2: The balance is the net amount after offsetting accounts receivable and payable due from/ to related parties. Note 3: Inter-company transactions between companies within the Group are eliminated.

Table 4, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Receivables from related parties reaching $100 million or 20% of paid-in capital or more March 31, 2021

Table 5


Table 5 Creditor The Company MECL MECL METC MEVN MECL	Counterparty METC The Company MESG MESG The Company MECH	Relationship with the counterparty A subsidiary of the Company Parent Company A subsidiary of the Company A subsidiary of the Company Parent Company Investment accounted for using the equity method	Balance of accounts receivable due from related party General ledger account Amount Accounts receivable $ 379,065 Accounts receivable 1,533,827 Accounts receivable 246,113 Accounts receivable 387,867 Accounts receivable 764,554 Other receivable 590,132	Turnover rate 3.71 2.80 2.93 7.56 6.42 -	Overdue receivables Amount Action taken $ - - - - - - - - - - - -		Expressed in thousands of NTD (Except as otherwise indicated) Amount collected subsequent to the balance sheet date (Note2) Allowance for doubtful accounts Note $ - $ - (Note 1) 762,721 - (Note 1) 170,596 - (Note 1) 181,887 - (Note 1) 228,204 - (Note 1) 164,342 -
			General ledger account Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Other receivable		Amount $ - - - - - -
						- - - - - -

Note 1: Inter-company transactions between companies within the Group are eliminated. Note 2: The balance was as at April 29, 2021.

Table 5, Page 1

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Significant inter-company transactions during the reporting periods Three months ended March 31, 2021

Number (Note 1) 0 0 0 0 1 1 2 2 2 2	Company name MEHO MEHO MEHO MEHO METC METC MESG MESG MESG MESG	Counterparty MECL MECL MEVN MEVN MEHO MEHO MECL MECL METC METC	Relationship (Note 2) 1 1 1 1 2 2 3 3 3 3	General ledger account Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable		Transaction	Percentage of consolidated total operating revenues or total assets (Note 3) 24% 5% 10% 2% 4% 1% 3% 1% 7% 1%
					Amount $ 1,856,975 1,533,827 758,994 764,554 301,190 379,065 244,964 246,113 520,208 387,867	Transaction terms The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

Parent company is ‘0’.
The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counter party is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

Parent company to subsidiary.
Subsidiary to parent company.
Subsidiary to subsidiary.
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Table 6, Page 1

Table 7

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Information on investees Three months ended March 31, 2021

Expressed in thousands of NTD (Except as otherwise indicated)

Investor The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company DDBV DDBV MHKY INSA SOCV SOCA	Investee MEST DDBV LEOHAB ENTERPRISE CO.,LTD. MECA MESG METC MHKY INSA BTTT MEVN UCMU MTHK FUSA SOCV SOCA SENM	Location HONG KONG British Virgin IS. Taichung City U.S.A. SINGAPORE THAILAND CAYMAN SAMOA Taichung City VIETNAM MAURITIUS HONG KONG SAMOA CANADA CANADA NORWAY	Main business activities Sales of microphone, receiver and speaker General investment business Plastic injection molding and metal stamping Technique, marketing and after service Sales of microphone, receiver and speaker Microphone, components and product and sale of other electric products Sales of medical device General investment business Sales of medical device Manufacture of microphone and speaker General investment business General investment business General investment business Sale and development of speaker and power amplifier General investment business Manufacture and sales of speaker monomer	Initial investment amount Balance as on March 31, 2021 Balance as on December 31, 2020 $ 981,113 $ 981,113 1,479,925 1,479,925 96,666 96,666 28,887 28,887 92,132 92,132 484,358 484,358 887,287 887,287 865,832 865,832 14,640 14,640 366,710 366,710 151 151 1,392,956 1,392,956 818,916 818,916 30 30 11,112 11,112 23 23	Shares held as on March 31, 2021 Number of shares (in thousand shares) Ownership (%) Book value 25,658 100.00 $ 3,922,816 48,005 100.00 3,159,636 4,986 21.00 49,866 999 99.90 34,817 800 100.00 1,191,353 5,060 99.99 541,325 24,979 100.00 684,583 - 70.00 741,907 9,000 100.00 22,246 - 51.00 407,551 5 100.00 - 48,000 100.00 3,159,552 - 97.12 694,600 - 100.00 33,050 - 100.00 65,060 - 100.00 51,485	Shares held as on March 31, 2021 Number of shares (in thousand shares) Ownership (%) Book value 25,658 100.00 $ 3,922,816 48,005 100.00 3,159,636 4,986 21.00 49,866 999 99.90 34,817 800 100.00 1,191,353 5,060 99.99 541,325 24,979 100.00 684,583 - 70.00 741,907 9,000 100.00 22,246 - 51.00 407,551 5 100.00 - 48,000 100.00 3,159,552 - 97.12 694,600 - 100.00 33,050 - 100.00 65,060 - 100.00 51,485	Net profit (loss) of the investee for the year ended March 31, 2021 Investment income (loss) recognized by the Company for the year ended March 31, 2021 ($ 143,428) ( $139,575) 39,563 36,520 7,967 1,673 7,363 7,356 60,756 60,756 6,982 7,254 ( 29,846) ( 29,846) ( 18,104) ( 12,673) ( 2,906) ( 2,906) 79,404 40,496 - - 39,563 - ( 26,406) - ( 5,366) - ( 1,332) - ( 1,332) -	Note (Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)
				Balance as on March 31, 2021 $ 981,113 1,479,925 96,666 28,887 92,132 484,358 887,287 865,832 14,640 366,710 151 1,392,956 818,916 30 11,112 23	Number of shares (in thousand shares) 25,658 48,005 4,986 999 800 5,060 24,979 - 9,000 - 5 48,000 - - - -	Ownership (%) 100.00 100.00 21.00 99.90 100.00 99.99 100.00 70.00 100.00 51.00 100.00 100.00 97.12 100.00 100.00 100.00

Note 1: The investment income included unrealized gains or losses and realized gains arising from upstream transactions. Note 2: The investee is second subsidiary and investment income (loss) is not shown.

Table 7, Page 1

Table 8

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Information on investees in Mainland China Three months ended March 31, 2021

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China MECL MECE MECS Perfect Fortune Inc. LOYAL WIRE& CABLE COMPANY LTD. MECH FUSZ MEDG MSCS ETCX	Main business activities Microphone, receiver, speaker, security system, induction cooker and other electronic component Manufacture and sales of microphone, receiver and speaker International trade, transit trade and trading consulting; trading amongst companies in bonded area and trading agency in the area Electric wire, electric cable and other wire processing Electric wire, electric cable and other wire processing Manufacture and sales of microphone, receiver, speaker and mobile phone Manufacture of medical device Research and development of sound equipment, earphones, mobile power supply, charging box, cable, connector, electronic components, plastic hardware, mold and antenna Manufacture of speaker and amplifier Retail sales of hearing products	Paid-in capital $ 414,174 2,718,210 7,209 42,572 122,472 434,400 278,812 868,800 150,183 19,548	Investment method (Note 2) (Note 2) (Note 2) (Note 2, 4) (Note 2, 4) (Note 2) (Note 2) (Note 1) (Note 1) (Note 2)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2021 $ 453,191 1,369,285 6,055 107,624 - 420,687 310,763 452,564 79,728 19,009	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for three months ended March 31, 2021 Remitted to Mainland China Remitted back to Taiwan $ - $ - - - - - - - - - - - - - - - - - - -	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2021 $ 453,191 1,369,285 6,055 107,624 - 420,687 310,763 452,564 79,728 19,009	Net income of investee for three months ended March 31, 2021	Ownership held by the Company (direct or indirect) 100.00% 49.00% 49.00% 18.33% 18.33% 49.00% 97.12% 49.00% 70.00% 97.12%	Investment income (loss) recognized by the Company for three months ended March 31, 2021 ($ 204,586) 36,520 ( 7) - - 61,427 ( 664) 4,069 ( 349) ( 13,491)	Book value of investments in Mainland China as of March 31, 2021 (Note 5) $ 2,575,494 3,159,552 ( 1,072) 64,518 30,723 965,069 246,617 374,078 103,081 ( 5,709)	Accumulated amount of investment income remitted back to Taiwan as of March 31, 2021 $ 2,282,120 295,185 40,321 4,125 - - - - - -	Note
					Remitted to Mainland China $ - - - - - - - - - -
							($ 204,586) 80,741 ( 14) 3,662 1,896 125,621 ( 684) 8,305 ( 498) ( 1,945)					Note 3 Note 3 Note 3

Table 8, Page 1

Table 8

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Information on investees in Mainland China Three months ended March 31, 2021

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China ASCX LACX ASCZ FUXM	Main business activities Manufacture and sales of hearing aid, hearing device and acoustics equipment Research and development and technical sales of software for hearing aid use Manufacture of hearing aid and acoustics for rehabilitation device Sales of medical device	Paid-in capital 57,606 21,720 17,376 302,486	Investment method (Note 2) (Note 2) (Note 2) (Note 2)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2021 275,537 22,180 17,744 302,995	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for three months ended March 31, 2021 Remitted to Mainland China Remitted back to Taiwan - - - - - - - -	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2021 275,537 22,180 17,744 302,995 $ 3,837,362	Net income of investee for three months ended March 31, 2021	Ownership held by the Company (direct or indirect) 96.63% 96.63% 96.63% 97.12%	Investment income (loss) recognized by the Company for three months ended March 31, 2021 3,523 2,189 ( 1) ( 22,450)	Book value of investments in Mainland China as of March 31, 2021 (Note 5) 77,561 43,630 26,705 202,144	Accumulated amount of investment income remitted back to Taiwan as of March 31, 2021 - - - -	Note
					Remitted to Mainland China - - - -
							3,646 2,265 ( 1) ( 23,116)

Note 1: Reinvesting in the investee in Mainland China through the parent company. Note 2: Through investing in an existing company in the third area, which then invested in the investee in Mainland China. Note 3: The financial statements that are audited and attested by R.O.C. parent company’s CPA. Note 4: The investee is the reinvestment company of MERRY ELECTRONICS (HK) CO.,LTD. shown as non-current financial assets at fair value through other comprehensive income. Note 5: The amount in the table is translated into New Taiwan dollars at the closing exchange rates prevailing at the balance sheet date.

Investment amount Accumulated amount approved by the Ceiling on investments in of remittance from Investment Mainland China imposed Taiwan to Mainland Commission of the by the Investment China as of March Ministry of Economic Commission (MOEA) Company name 31, 2021 Affairs (MOEA) (Note 1) Merry Electronics Co., Ltd. $ 3,837,362 $ 3,727,090 $ 6,342,480

Note 1: (2001) Tai-Cai-Zheng (1) Letter No. 006130 of Securities and Futures Commission, Ministry of Finance, R.O.C

Table 8, Page 2

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas Three Months ended March 31, 2021

Table 9

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China MECL MECL MECE MECH MECH	Counterparty MEHO MESG MEHO MEHO MESG	Sales (purchase) Amount % ($ 1,856,975) 24% ( 244,964) 3% ( 2,177,679) 28% ( 693,573) 9% ( 659,959) 9%	Property transaction Amount % - - - - - - - - - -	Accounts receivable (payable) Balance on March 31, 2021 % ( $1,533,827) 19% ( 246,113) 3% ( 2,109,482) 26% ( 397,144) 5% ( 663,057) 8%	Provision of endorsements/ guarantee or collaterals Balance on March 31, 2021 Purpose - - - - - - - - - -		Financing	Financing	Interest during the three months ended March 31, 2021 - - - - -	Others
		Amount ($ 1,856,975) ( 244,964) ( 2,177,679) ( 693,573) ( 659,959)	Amount - - - - -	Balance on March 31, 2021 ( $1,533,827) ( 246,113) ( 2,109,482) ( 397,144) ( 663,057)	Balance on March 31, 2021 - - - - -	Maximum balance during the three months ended March 31, 2021	Balance on March 31, 2021 - - - - -	Interest rate - - - - -
						- - - - -				- - - - -

Table 9, Page 1

AI assistant

MERRY — Interim / Quarterly Report 2021

52085_rns_2021-12-24_f122fcb2-9394-4e7f-99e0-7de18147c97a.pdf

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2021, DECEMBER 31, 2020 AND MARCH 31, 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2021, DECEMBER 31, 2020 AND MARCH 31, 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY THREE MONTHS ENDED MARCH 31, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2021 AND 2020

1. HISTORY AND ORGANISATION

(3) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted

by the Group

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(2) Basis of preparation

(3) Basis of consolidation

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

(2) Financial assets at fair value through profit or loss

(6) Inventories

(8) Investments accounted for using the equity method

B. Share of profit (loss) of associates accounted for using the equity method：

C. Associates

Balance sheet

Statement of comprehensive income

(9) Property, plant and equipment

(11) Intangible assets

A. Details of amortization on intangible assets are as follows:

(13) Short-term borrowings

(14) Other payables

(15) Other current liabilities

(16) Bonds payable

- (17) Long term borrowings

(19) Share-based payment

(e) The second restricted stocks to employees in 2019

(20) Share capital

(22) Retained earnings

(23) Other equity items

(24) Operating revenue

A. Disaggregation of revenue from contracts with customers

(25) Interest income

(26) Other income

(27) Other gains and losses

(28) Expenses by nature

(29) Employee benefit expense

(30) Income tax

A. Income tax expense

(31) Earnings per share

not calculated.

(32) Supplemental cash flow information

A. Investing activities with partial cash payments

B. Financial assets at fair value through profit or loss

D. Financing activities with no cash flow effects:

(33) Changes in liabilities from financing activities

(34) Government grants

(2) Significant related party transactions

A. Operating revenue

B. Purchases

C. Receivables from related parties

D. Payables to related parties

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

10. SIGNIFICANT DISASTER LOSS

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

12. OTHERS

(1) Capital management

(2) Financial instruments

MERRY Interim / Quarterly Report 2021