2480

Stark Technology Inc. and Subsidiaries

Consolidated Financial Statements and Independent Auditors' Report For the Years Ended December 31, 2021 and 2020

Company address: 12F-1, No. 83, Section 2, Dongda Road, Hsinchu City TEL: (03)542-5566

==> picture [483 x 61] intentionally omitted <==

Consolidated Financial Statements

Item	Page
I Cover Page	1
II Table of Contents	2
III Declaration	3
IV Independent Auditor's Audit Report	4-7
V Consolidated Balance Sheet	8-9
VI Consolidated Statement of Comprehensive Income	10
VII Consolidated Statement of Changes in Equity	11
VIII Consolidated Statement of Cash Flow	12
IX Notes to Consolidated Financial Statements
(I) Organization and Operations	13
(II) Financial Statement Approval Date and Procedures	13
(III) Application of new standards, amendments, and interpretations	13-18
(IV) Summary of Significant Accounting Policies	18-41
(V) Sources of Uncertainty to Significant Accounting Judgments, Estimates,and Assumptions	41-43
(VI) Notes to Major Accounts	43-74
(VII) Related party transactions	74
(VIII) Pledged assets	74
(IX) Significant contingent liabilities and unrecognized contract commitments	74
(X) Losses from Major Disasters	75
(XI) Significant Subsequent Events	75
(XII) Others	75-85
(XIII) Other Disclosures
1. Information related to significant transactions	86-91
2. Information on business investments	92-93
3. Information relating to investments in the Mainland China	94-95
4. Information on major shareholders	96
(XIV) Segment Information	96

Declaration

Affiliated enterprises subject to the preparation of combined financial statements under the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises were identical to the affiliated companies subject to the preparation of consolidated financial statements under the International Financial Reporting Standards (IFRS) 10 for the year 2021 (from January 1 to December 31, 2021). All mandatory disclosures of the combined financial statements have been disclosed in the consolidated financial statements; therefore, no separate set of combined financial statements were prepared.

Hereby declare

Stark Technology Inc.

Chairman: Liang, Hsiu-Chung

February 25, 2022

Independent Auditors’ Report

To stakeholders of Stark Technology Inc.:

Opinion

We have audited the consolidated balance sheet of Stark Technology Inc. and subsidiaries as at December 31, 2021 and 2020, and the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flow, and the accompanying footnotes (including summary of key accounting policies) for the periods January 1 to December 31, 2021 and 2020.

We found that none of the material disclosures of the consolidated financial statements mentioned above exhibited any misstatement that did not conform with Regulations Governing the Preparation of Financial Reports by Securities Issuers and the version of IFRS, IAS, IFRIC and interpretations thereof approved and effected by the Financial Supervisory Commission, or compromised the fair view of the consolidated financial position of Stark Technology Inc. and subsidiaries as at December 31, 2021 and 2020, or the consolidated financial performance or consolidated cash flow for the periods January 1 to December 31, 2021 and 2020.

Basis for Opinion

We conducted our audits in accordance with Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing principles. Our responsibilities as an auditor under the abovementioned standards are explained in the Responsibilities paragraph. All relevant personnel of the accounting firm have followed CPA code of ethics and maintained independence from Stark Technology Inc. and subsidiaries when performing their duties. We believe that the evidence obtained provide an adequate and appropriate basis for our opinion.

Key Audit Matters

Key audit matters are matters that we considered to be the most important, based on professional judgment, when auditing the 2021 consolidated financial statements of Stark Technology Inc. and subsidiaries. These issues have already been addressed when we audited and formed our opinions on the consolidated financial statements. Therefore, we do not provide opinions separately for individual matters.

Recognition of service income

Stark Technology Inc. and subsidiaries reported NT$1,951,042 thousand of service income in 2021, representing 30% of total operating revenues and is considered material to the consolidated financial statements. This income is mostly the result of consultation and maintenance services rendered, and given the complexity of contract terms, income is recognized based on the extent of service rendered over the contract tenor. It is therefore necessary to exercise judgment over the scope of performance obligations and the timing of fulfillment, and we consider the amount of income recognized and the recognition approach taken to be key audit issues. Audit procedures that we have taken for the key audit issue mentioned above included (but were not limited to): evaluating the appropriateness of accounting policy on service income recognition, testing the effectiveness of the internal control system that the management has created for recognizing service income, analyzing gross profit margin by service category, executing transaction detail tests including sample examination of service contracts and invoices, and identifying performance obligations, cost-sharing arrangements, and timing of fulfillment for the contracts involved. These actions enabled us to determine whether transactions were recognized at the correct timing. We also reviewed the appropriateness of revenue disclosure mentioned in Notes (IV) and (VI) of the consolidated financial statements.

Responsibilities of the Management and Those Charged with Governance for the Consolidated Financial Statements

Responsibilities of the management were to prepare and ensure fair presentation of consolidated financial statements in accordance with "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and the version of IFRS, IAS, IFRIC and interpretations thereof approved and effected by the Financial Supervisory Commission, and to exercise proper internal control practices that are relevant to the preparation of consolidated financial statements so that the consolidated financial statements are free of material misstatements, whether caused by fraud or error.

The management's responsibilities when preparing consolidated financial statements also involved: assessing the ability of Stark Technology Inc. and subsidiaries to operate, disclose information, and account for transactions as a going concern unless the management intends to liquidate or cease business operations, or is compelled to do so with no alternative solution.

The governance body of Stark Technology Inc. and subsidiaries (including the Audit Committee) is responsible for supervising the financial reporting process.

Auditors’ Responsibilities for the Audit of Consolidated Financial Statements

The purposes of our audit were to obtain reasonable assurance of whether the consolidated financial statements were prone to material misstatements, whether caused by fraud or error, and to issue a report of our audit opinions. We considered assurance to be reasonable only if it is highly credible. However, audit tasks conducted in accordance with generally accepted auditing principles do not necessarily guarantee detection of all material misstatements within the consolidated financial statements. Misstatements can arise from fraud or error. Misstatements are considered material if the individual amount or aggregate total is reasonably expected to affect economic decisions of the financial statement user.

When conducting audits in accordance with generally accepted auditing principles, we exercised judgments and raised doubts as deemed professionally appropriate. We also performed the following tasks as an auditor:

Identifying and assessing risks of material misstatement within the consolidated financial statements that are attributed to fraud or error; designing and executing appropriate response measures for the identified risks; and obtaining adequate and appropriate audit evidence to support audit opinions. Fraud may involve conspiracy, forgery, intentional omission, untruthful declaration, or breach of internal control, and our audit did not find any material misstatement where the risk of fraud is greater than the risk of error.
Obtaining necessary understanding on relevant internal controls and designing audit procedures that are appropriate under the prevailing circumstances, but without providing opinion on the effectiveness of internal control system of Stark Technology Inc. and subsidiaries.
Assessing the appropriateness of accounting policies adopted by the management, and the rationality of accounting estimates and related disclosures made.
Forming conclusions regarding the appropriateness of management's decision to account for the business as a going concern, and whether there are doubts or uncertainties about the ability of Stark Technology Inc. and subsidiaries to operate as a going concern, based on the audit evidence obtained. We are bound to remind consolidated financial statement users and make related disclosures if material uncertainties exist in regards to the aforementioned events or circumstances, and amend audit opinions when the disclosures are no longer appropriate. Our conclusions are based on the audit evidence obtained up to the date of audit report. However, future events or change of circumstances may still render Stark Technology Inc. and subsidiaries no longer capable of operating as a going concern.
Assessing the overall presentation, structure, and contents of the consolidated financial statements (including related footnotes), and whether certain transactions and events are presented appropriately in the financial statements.
Obtaining sufficient and appropriate audit evidence on financial information of entities within the group, and expressing opinions on consolidated financial statements. Our responsibilities as auditor are to instruct, supervise, and execute audits and form audit opinions on the group.

We have communicated with the governance body about the scope, timing, and significant findings (including significant defects identified in internal control) of our audit.

We have also provided the governance body with a declaration of independence stating that all relevant personnel of the accounting firm have complied with CPA code of ethics, and communicated with the governance body on all matters that may affect the auditor's independence (including protection measures).

We have identified the key audit matters after communicating with the governance body regarding the 2021 consolidated financial statements of Stark Technology Inc. and subsidiaries. These issues have been addressed in our audit report except for: 1. Certain topics that are prohibited by law from disclosing to the public; or 2. Under extreme circumstances, topics that we decide not to communicate in the audit report because of higher negative impacts they may cause than the benefits they bring to public interest.

Others

Stark Technology Inc. has prepared parent company only financial statements for the years ended December 31, 2021 and 2020, to which we issued an independent auditors' report with unqualified opinion.

Ernst & Young Release of public company financial statements has been approved by the authority Approval reference: (96)-Jin-Guan-Zheng-(VI)0960002720 (103)-Jin-Guan-Zheng-Shen1030025503

Hsu, Hsin-Min

CPA:

Cheng, Ching-Piao

February 25, 2022

==> picture [443 x 145] intentionally omitted <==

Stark Technology Inc. and Subsidiaries

Consolidated Balance Sheet

As at December 31, 2021 and December 31, 2020

(All amounts in NTD thousands)

Asset	Asset	Asset	December 31,2021		December 31,2020	December 31,2020
Code	Item	Notes	Amount	%	Amount	%
1100 1140 1150 1172 1173 1200 130x 1410 1476 1478 1479 11xx 1510 1517 1600 1755 1780 1840 1920 1933 1980 1990 15xx 1xxx	Current assets Cash and cash equivalents Contract assets - current Notes receivable, net Accounts receivable Installment accounts receivable Other receivables Inventories Prepayments Other financial assets - current Refundable deposits Other current assets Total current assets Non-current assets Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income -non -current Property, plant and equipment Right-of-use assets Intangible asset Deferred income tax assets Refundable deposits Long-term installment accounts receivable Other financial assets - non-current Other non-current assets Total non-current assets Total assets	(IV), (VI). 1and (XII) (IV), (VI).15 and (VI).16 (IV), (VI).4, (VI).16, and (XII) (IV), (VI).5, (VI).16, and (XII) (IV), (VI).5, (VI).16, and (XII) (XII) (IV) and (VI).6 (IV) and (VI).7 (IV), (VIII) and (XII) (XII) (IV), (VI).2 and (XII) (IV), (VI).3 and (XII) (IV), and (VI).8 (III), (IV), and (VI).17 (IV) and (VI).9 (IV) and (VI). 21 (XII) (IV), (VI).5, (VI).16, and (XII) (IV), (VIII) and (XII) (VI).10	$ 1,450,910 204,391 5,759 621,152 55,912 5,402 1,991,209 493,274 9,013 149,443 1,394 4,987,859 - 144,213 446,238 23,799 7,998 17,497 81,143 70,001 6,842 1,279 799,010 $ 5,786,869	25 4 - 11 1 - 34 8 - 3 - 86 - 3 8 1 - - 1 1 - - 14 100	$ 1,348,404 338,698 2,829 630,958 45,634 2,689 1,957,859 462,614 8,433 113,305 3,550 4,914,973 12,590 92,570 453,651 35,197 6,711 22,851 102,292 87,317 9,092 5,803 828,074 $ 5,743,047	24 6 - 11 1 - 34 8 - 2 - 86 - 2 8 - - - 2 2 - - 14 100

(Please refer to notes to consolidated financial statements)

Chairman: Liang, Hsiu-Chung

Manager: Liang, Hsiu-Chung

Head of Accounting: Tseng, Shu-Chen

Stark Technology Inc. and Subsidiaries (Continued) Consolidated Balance Sheet

As at December 31, 2021 and December 31, 2020

(All amounts in NTD thousands)

Liabilities and equity	Liabilities and equity	Liabilities and equity	December 31,2021		December 31,2020
Code	Item	Notes	Amount	%	Amount	%
2100 2130 2150 2170 2200 2230 2250 2280 2399 21xx 2570 2580 2640 2645 25xx 2xxx 31xx 3100 3110 3200 3300 3310 3320 3350 3400 3xxx	Current liabilities Short-term loans Contract liabilities - current Notes payable Accounts payable Other payables Current income tax liabilities Provisions Lease liabilities - current Other current liabilities Total current liabilities Non-current liabilities Deferred income tax liabilities Lease liabilities - non-current Net defined benefit liabilities - non-current Guarantee deposits Total non-current liabilities Total liabilities Equity attributable to owners of the parent company Share capital Ordinary share Capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Total retained earnings Other equity interests Total equity Total liabilities and equity	(IV), (VI).11 and (XII) (IV) and (VI).15 (XII) (XII) (XII) (IV) and (VI).21 (VI).12 (III), (IV), and (VI).17 (IV) and (VI).21 (III), (IV), and (VI).17 (IV) and (VI).13 (XII) (VI).14 (VI).20	$ 70,000 1,173,794 963 928,812 261,730 126,837 14,720 12,101 76,524 2,665,481 51,797 12,343 34,237 3,138 101,515 2,766,996 1,063,603 166,514 879,312 144 873,169 1,752,625 37,131 3,019,873 $5,786,869	1 20 - 16 5 2 - - 2 46 1 - 1 - 2 48 18 3 15 - 15 30 1 52 100	$ - 1,229,208 2,746 1,117,006 268,272 97,375 42,171 14,957 36,149 2,807,884 47,489 20,927 34,914 2,821 106,151 2,914,035 1,063,603 166,514 833,911 62,079 675,258 1,571,248 27,647 2,829,012 $5,743,047	- 21 - 19 5 2 1 - 1 49 1 - 1 - 2 51 19 3 14 1 12 27 - 49 100

Chairman: Liang, Hsiu-Chung

(Please refer to notes to consolidated financial statements) Manager: Liang, Hsiu-Chung

Head of Accounting: Tseng, Shu-Chen

Stark Technology Inc. and Subsidiaries Consolidated Statement of Comprehensive Income For the years ended December 31, 2021 and 2020

(All amounts are in NTD thousands, except for earnings per share)

Code	Item	Notes	2021	2021	2020	2020
			Amount	%	Amount	%
4000 5000 5900 6000 6200 6300 6450 6900 7000 7100 7010 7020 7050 7900 7950 8200 8300 8310 8311 8316 8349 8360 8361 8500 8600 8610 8620 8700 8710 8720 9750 9710 9850 9810	Net operating revenue Operating cost Operating margin Operating expenses Administrative expenses Research and development expenses Expected credit impairment reversal gain Total operating expenses Operating income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Total non-operating income and expenses Income before income tax Income tax expenses Net income Other comprehensive income Items not reclassified into profit or loss Remeasurement of defined benefit obligation Unrealized gains on investments in equity instruments at fair value through other comprehensive income Income tax benefit (expense) related to items that are not reclassified into profit or loss Items likely to be reclassified into profit or loss Exchange differences on translation of foreign operations Other comprehensive income for the current period (net of income tax) Total comprehensive income for the period Net income attributable to: Owners of the parent company Non-controlling interest Comprehensive income attributable to: Owners of the parent company Non-controlling interest Earnings per share (NTD) Basic earnings per share Net income Diluted earnings per share Net income	(IV) and (VI).15 (VI).6 and (VI).18 (VI).17 and (VI).18 (VI).16 (VI).19 (IV) and (VI).21 (VI).20 (VI).20 (VI).22 (VI).22 (VI).22	$ 6,579,554 (4,980,918) 1,598,636 (749,602) (91,040) 2,539 (838,103) 760,533 12,889 23,877 2,499 (1,451) 37,814 798,347 (160,185) 638,162 944 7,717 (189) 1,576 10,048 $648,210 $ 638,162 - $638,162 $ 648,210 - $648,210 $6.00 $5.97	100 (76) 24 (11) (2) - (13) 11 - 1 - - 1 12 (2) 10 - - - - - 10	$ 5,542,811 (4,165,184) 1,377,627 (747,545) (93,676) 7,015 (834,206) 543,421 13,290 42,071 3,396 (1,669) 57,088 600,509 (102,891) 497,618 (4,921) 13,773 984 (2,867) 6,969 $504,587 $ 497,618 - $497,618 $ 504,587 - $504,587 $4.68 $4.65	100 (75) 25 (13) (2) - (15) 10 - 1 - - 1 11 (2) 9 - - - - - 9

(Please refer to notes to consolidated financial statements) Chairman: Liang, Hsiu-Chung Manager: Liang, Hsiu-Chung Head of Accounting: Tseng, Shu-Chen

Stark Technology Inc. and Subsidiaries Consolidated Statement of Changes in Equity For the years ended December 31, 2021 and 2020 (All amounts in NTD thousands)

	Item			Equityattributable to owner	Equityattributable to owner	s of theparent company				Total equity
		Share capital	Capital surplus		Retained earnings		Other equityitems		Total
				Legal reserve	Special reserve	Unappropriated retained earnings	Exchange differences on translation of foreign operations	Unrealized gains (losses) on financial assets at fair value through other comprehensive income
Code		3100	3200	3310	3320	3350	3410	3420	31XX	3XXX
A1 B1 B3 B5 D1 D3 D5 Q1 Z1 A1 B1 B3 B5 D1 D3 D5 Q1 Z1	Balance as at January 1, 2020 Appropriation and distribution of 2019 earnings Appropriation of legal reserve Reversal of special reserve Cash dividends on ordinary shares Net income for 2020 Other comprehensive income for 2020 Total comprehensive income for the period Disposal of equity instruments at fair value through other comprehensive income Balance as at December 31, 2020 Balance as at January 1, 2021 Appropriation and distribution of 2020 earnings Appropriation of legal reserve Reversal of special reserve Cash dividends on ordinary shares Net income for 2021 Other comprehensive income for 2021 Total comprehensive income for the period Disposal of equity instruments at fair value through other comprehensive income Balance as at December 31, 2021	$ 1,063,603 - - - - - - - $1,063,603 $ 1,063,603 - - - - - - - $1,063,603	$ 166,514 - - - - - - - $166,514 $ 166,514 - - - - - - - $166,514	$ 781,998 51,913 - - - - - - $833,911 $ 833,911 45,401 - - - - - - $879,312	$ 88,196 - (26,117) - - - - - $62,079 $ 62,079 - (61,935) - - - - - $144	$ 759,497 (51,913) 26,117 (473,303) 497,618 (3,937) 493,681 (78,821) $675,258 $ 675,258 (45,401) 61,935 (457,349) 638,162 755 638,917 (191) $873,169	$ (22,931) - - - - (2,867) (2,867) - $ (25,798) $ (25,798) - - - - 1,576 1,576 - $ (24,222)	$ (39,149) - - - - 13,773 13,773 78,821 $53,445 $ 53,445 - - - - 7,717 7,717 191 $61,353	$ 2,797,728 - - (473,303) 497,618 6,969 504,587 - $2,829,012 $ 2,829,012 - - (457,349) 638,162 10,048 648,210 - $3,019,873	$ 2,797,728 - - (473,303) 497,618 6,969 504,587 - $2,829,012 $ 2,829,012 - - (457,349) 638,162 10,048 648,210 - $3,019,873

Chairman: Liang, Hsiu-Chung

(Please refer to notes to consolidated financial statements) Manager: Liang, Hsiu-Chung

Head of Accounting: Tseng, Shu-Chen

Stark Technology Inc. and Subsidiaries Consolidated Statement of Cash Flow

For the years ended December 31, 2021 and 2020

(All amounts in NTD thousands)

Code	Item	2021	2020	Code	Item	2021	2020
		Amount	Amount			Amount	Amount
AAAA A10000 A20000 A20010 A20100 A20200 A20300 A20400 A20900 A21200 A21300 A22500 A31000 A31125 A31130 A31150 A31180 A31200 A31230 A31240 A32125 A32130 A32150 A32180 A32200 A32230 A32240 A33000 A33100 A33200 A33300 A33500 AAAA	Cash flow from operating activities: Income before income tax Adjustments: Income, expenses and losses: Depreciation expenses Amortization expenses Expected credit impairment reversal gain Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Loss (gain) on disposal of property, plant and equipment Changes in assets/liabilities that are related to operating activities: Contract assets Notes receivable Accounts receivable Other receivables Inventories Prepayments Other current assets Contract liabilities - current Notes payable Accounts payable Other payables Provisions Other current liabilities Net defined benefit liabilities Cash inflow from operations Interests received Dividend received Interests paid Income tax paid Net cash inflow from operating activities	$ 798,347 34,070 8,331 (2,539) (2,577) 1,451 (12,889) (3,839) 2 135,583 (2,930) 21,320 (2,728) (34,752) (30,660) 2,156 (55,414) (1,783) (188,194) (6,562) (27,451) 40,375 267 669,584 9,688 3,839 (804) (121,250) 561,057	$ 600,509 34,501 3,244 (7,015) (2,590) 1,669 (13,290) (4,555) (124) (79,561) 3,152 (142,722) (1,104) (490,464) (98,586) (263) 298,122 2,171 348,953 1,846 19,227 13,468 (65) 486,523 6,568 4,555 (1,094) (52,578) 443,974	BBBB B00010 B00020 B00030 B00100 B00200 B02700 B02800 B03700 B04500 B06600 B06800 BBBB CCCC C00200 C03000 C04020 C04500 CCCC DDDD EEEE E00100 E00200	Cash flow from investing activities: Acquisition of financial assets at fair value through other comprehensive income Disposal of financial assets at fair value through other comprehensive income Capital reduction of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Disposal of property, plant and equipment Increase in refundable deposits Acquisition of intangible assets Decrease in other financial assets Decrease in other non-current assets Net cash outflow from investing activities Cash flow from financing activities: Increase (decrease) in short-term loans Increase (decrease) in guarantee deposits Repayment of lease principal Distribution of cash dividends Net cash outflow from financing activities Effect of exchange rate variation on cash and cash equivalents Net increase (decrease) in cash and cash equivalents for the current period Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	(44,021) - 95 - 15,167 (8,859) 4 (14,989) (9,618) 1,670 4,524 (56,027) 70,000 317 (17,024) (457,349) (404,056) 1,532 102,506 1,348,404 $1,450,910	(13,863) 31,522 - (10,000) - (15,205) 666 (25,788) (3,939) 518 623 (35,466) (130,190) (2,206) (18,755) (473,303) (624,454) (2,827) (218,773) 1,567,177 $1,348,404

Chairman: Liang, Hsiu-Chung

(Please refer to notes to consolidated financial statements) Manager: Liang, Hsiu-Chung

Head of Accounting: Tseng, Shu-Chen

Stark Technology Inc. and Subsidiaries

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2021 and 2020

(All amounts in NTD thousands unless otherwise specified)

(I). Organization and Operations

Stark Technology Inc. (the "Company") was incorporated on March 24, 1993. Its main business activities include distribution and maintenance of computers and peripherals; research, design, development, and sale of computer software/hardware, computer system design, and import/export trade for the Company's own products.

Shares of the Company have been listed for trading on "Taiwan Stock Exchange Corporation" since September 2001. The Company's place of registration and main business location is 12F-1, No. 83, Section 2, Dongda Road, Hsinchu City.

(II). Financial Statement Approval Date and Procedures

Consolidated financial statements of the Company and subsidiaries (collectively referred to as the "Group") for the years ended December 31, 2021 and 2020 were approved by the board of directors on February 25, 2022.

(III). Application of new standards, amendments, and interpretations

Change of accounting policy resulting from first-time adoption of International Financial Reporting Standards (IFRS)

The Group has adopted the version of IFRS, IAS, IFRIC and interpretations thereof that approved and effected by Financial Supervisory Commission (FSC) for accounting periods on and after January 1, 2021. First-time adoption of the new standards and amendments has had no material impact on the Group.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

The Group has not adopted the following IASB-announced and FSC-approved new standards, amendments, guidance, and interpretation:

Item No.	New Standards, Interpretations and Amendments	Effective Date by International Accounting Standards Board
1	Narrow-scope amendments to IFRSs, including amendments to IFRS 3,IAS 16,and IAS 37 and annual improvements	January 1, 2022

Narrow-scope amendments to IFRSs, including amendments to IFRS 3, IAS 16, and IAS 37 and annual improvements

A. Updating a Reference to the Conceptual Framework (IFRS 3 amendment)
This amendment supersedes old references of conceptual framework for financial reporting, and updates IFRS 3 with the latest references announced in March 2018. The amendment also introduces one exception to the recognition principles that can be adopted to avoid "second day" gains or losses from liabilities or contingent liabilities. Furthermore, the amendment clarifies existing references for contingent assets that are not affected by the superseding reference.
B. Property, Plant and Equipment: Proceeds before Intended Use (IAS 16 amendment) This amendment aims to prohibit enterprises from deducting the proceeds from the cost of property, plant and equipment for items generated from such assets reaching the intended use. On the contrary, enterprises shall account for such sales proceeds and associated costs in profit or loss.
C. Onerous Contracts - Cost of Fulfilling a Contract (IAS 37 amendment) This amendment clarifies how onerous contract is determined, and the amount of cost to be recognized.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

D. IFRS improvements for years 2018-2020

Amendments to IFRS 1

This amendment simplifies measurement of aggregate adjustment under IFRS 1 when a subsidiary adopts IFRS for the first time after its parent company.

Amendments to IFRS 9 - "Financial Instruments"

This amendment clarifies the fees to be included when assessing material differences between existing and new financial liabilities, in the case of new contract clause or modification to existing clauses.

Amendments to interpretations of IFRS 16 - "Leases"

This amendment addresses how a lessee should account for leasehold improvement incentives in Example 13.

Amendments to IAS 41

This amendment removes a requirement to exclude cash flows from taxation when measuring fair value, so that the fair value measurement rules stated in IAS 41 are consistent with other IFRSs.

The above is the newly issued, revised and amended standards or interpretations that have been issued by the International Accounting Standards Board, approved by the Financial Supervisory Commission and applicable for fiscal years after January 1, 2022. They have no significant impact on the Group.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

As of the publication date of financial statements, the Group had not adopted the following IASB-announced new standards, amendments, guidance, and interpretation that were not approved by FSC:

Item No.	New Standards, Interpretations and Amendments	Effective Date by International Accounting Standards Board
1	Amendments to IFRS 10 - "Consolidated Financial Statements" and IAS 28 - "Investments in Associates and Joint Ventures" regarding "Sale or Contribution of Assets Betweenan InvestorandItsAssociate orJoint Venture"	To be determined by International Accounting Standards Board
2	IFRS 17,“Insurance Contracts”	January 1, 2023
3	Classification of Liabilities as Current or Non-current (IAS 1 amendment)	January 1, 2023
4	Disclosure initiative - Accounting policies (IAS 1 amendment)	January 1, 2023
5	Definitionof AccountingEstimates (IAS 8 amendment)	January1,2023
6	Deferred income tax related to assets and liabilities arising froma single transaction(Amendment toIAS No.12)	January 1, 2023

(1) Amendments to IFRS 10 - "Consolidated Financial Statements" and IAS 28 - "Investments in Associates and Joint Ventures" regarding "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture"

This amendment is intended to address the inconsistent treatments between IFRS 10 - "Consolidated Financial Statements" and IAS 28 - "Investments in Associates and Joint Ventures" in cases where a company loses control in a subsidiary when ownership of that subsidiary is offered as consideration for investing into an associated company or joint venture. IAS 28 states that, when a company contributes nonmonetary asset in exchange for equity interest in an associated company or joint venture, the transaction shall be treated as a downstream transaction and any share of gains or losses that arises as a result is eliminated. IFRS 10, however, requires the entirety of gains or losses to be recognized when a company loses control in a subsidiary. This amendment limits the IAS 28 treatment mentioned above, and requires all gains or losses to be recognized when the assets sold or contributed constitute a business defined under IFRS 3.

Meanwhile, IFRS 10 was amended so that, when an investor sells or contributes a subsidiary that does not constitute a business defined under IFRS 3 with its associated company or joint venture, gains or losses that arise as a result shall be recognized only for the share that is not attributed to the investor.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(2) IFRS 17, “Insurance Contracts”

This standard provides a comprehensive model for the treatment of insurance contracts, including accounting practices (from recognition, measurement, presentation to disclosure). The standard uses a general model at its core, and under this model, a group of insurance contracts shall be recognized at initiation as the sum of fulfillment cash flows and contractual service margin; thereafter, book value for the group of insurance contracts shall be presented as the sum of liability for remaining coverage and liability for incurred claims as at each balance sheet date.

In addition to the general model, the standard also introduces treatment for insurance contract with direct participation features (the Variable Fee Approach) and simplified approach for short-term contracts (the Premium Allocation Approach).

This standard was first published in May 2017 and later amended in 2020 and 2021, which postponed the effective date stated in the transition clause by 2 years (from January 1, 2021 to January 1, 2023), introduced additional exemptions, and reduced cost of adoption through the simplified approach. The amendment also made some circumstances easier to interpret. This standard will supersede the transitional standard (i.e. IFRS 4 - "Insurance Contracts") once effected

(3) Classification of Liabilities as Current or Non-current (IAS 1 amendment)

This amendment concerns the classification of liabilities between current and noncurrent, as stated in paragraphs 69-76 of IAS 1 - "Presentation of Financial Statements."

(4) Disclosure initiative - Accounting policies (IAS 1 amendment)

This amendment is intended to improve disclosure of accounting policy, and provide more useful information to investors and other financial statement users.

(5) Definition of Accounting Estimates (IAS 8 amendment)

This amendment directly defines an accounting estimate, and introduces other amendments to IAS 8 - "Accounting Policies, Changes in Accounting Estimates and Errors" to help businesses distinguish between change of accounting policy and change of accounting estimate.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(6) Deferred income tax related to assets and liabilities arising from a single transaction (Amendment to IAS No. 12)

This amendment restricts the scope of the deferred income tax recognition exemption in paragraphs 15 and 24 of IAS No. 12 "Income Tax". The exemption does not apply to transactions that produce the same amount of taxable and deductible temporary differences at the time of original recognition.

All above standards and interpretations announced by IASB but not yet approved by FSC shall become effective on dates announced by FSC. The Group is currently evaluating the potential impacts of newly announced/amended standards and interpretations listed in (1), and is unable to provide reasonable estimate of how the above standards or interpretations may affect the Group. Aside from the above, other newly announced/amended standards and interpretations have no material impact on the Group.

(IV). Summary of Significant Accounting Policies

1. Compliance statement

The consolidated financial statements of the Group for the years ended December 31, 2021 and 2020 have been prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and the version of IFRS, IAS, IFRIC and interpretations thereof approved and effected by the FSC.

2. Basis of Preparation

The consolidated financial statements have been prepared based on historical cost, except for financial instruments carried at fair value. Unless otherwise specified, all amounts in the consolidated financial statements are presented in NTD thousands.

3. Consolidation overview

Basis of preparation for consolidated financial statements

The Company is considered to exercise control if it is exposed or entitled to variable returns generated by an investee and has the power to influence such return through control over the investee. Specifically, the Company considers itself to exercise control over an investee when all three conditions below are satisfied:

(1) Power over the investee (i.e. existing rights that give the current ability to direct the

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

relevant activities of the investee)

(2) Exposure or entitlement to variable returns due to involvement in the investee's operation, and
(3) Ability to influence returns by exercising authority over the investee

If the Company directly or indirectly holds less-than-majority voting rights (or rights of similar nature) in an investee, the Group would evaluate whether it has power over the investee after taking into consideration all relevant facts and circumstances, including:

(1) Agreement with other voting right holders in the investee
(2) Power given rise through other agreement
(3) Voting rights and potential voting rights

When facts or circumstances indicate change in one or several of the three control elements above, the Company would immediately evaluate whether it still exercises control over the investee.

A subsidiary is consolidated into the consolidated financial statements from the day of acquisition (i.e., the day the Company gains control), until the day control is lost on the subsidiary. All subsidiaries adopt accounting periods and accounting policies that align with those of the parent company. All intra-group account balances, transactions, dividends, and unrealized gains or losses on intra-group transactions are eliminated upon consolidation.

Changes in shareholding of subsidiary without losing control are treated as equity transactions.

Total comprehensive income produced by subsidiaries is divided into amounts that are attributable to owners of the Company and amounts that are attributable to non-controlling shareholders, even if the allocation would put non-controlling equity in negative balance.

When the Company loses control in a subsidiary

(1) All assets (including goodwill) and liabilities of the subsidiary are removed;
(2) Book value of any non-controlling equity is removed;
(3) Fair value of consideration received is recognized;
(4) Fair value of any investment retained is recognized;
(5) Any gains or losses are recognized in current profit or loss;

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(6) Amounts previously recognized by the parent company as other comprehensive income are reclassified into current profit or loss;

This consolidated financial statement encompasses the following:

Name of the investor	Name of subsidiary	Main business activities Trading of computer- related products General investment General investment Trading of computer equipment and software General investment Trading of computer- related products General electronics trading General investment General electronics trading	Ownership	percentage
			December 31, 2021	December 31, 2020
The Company The Company The Company The Company SRAIN Investment Co., Ltd. SRAIN Investment Co., Ltd. S-Rain Investment Ltd. Pacific Ace Holding International Ltd. Profit Reap International Limited	Stark Technology Inc. (USA) Pacific Ace Holding International Ltd. SRAIN Investment Co., Ltd. Stark Information (Hong Kong) Limited (Note) S-Rain Investment Ltd. Stark Inforcom Inc. Shanghai Stark Technology Inc. Profit Reap International Limited STARK (NINGBO) Technology Inc.		100% 100% 100% 100% 100% 100% 100% 100% 100%	100% 100% 100% - 100% 100% 100% 100% 100%

Note: Stark Information (Hong Kong) Limited was registered on January 14, 2021.

4. Foreign currency transactions

The Group’s consolidated financial statements are presented in the Company's functional currency (NTD). Each entity within the Group determines its own functional currency, and prepares financial statements using their respective functional currencies.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Foreign currency transactions by entities of the Group are converted into the functional currency using exchange rates as of the date of transaction. Foreign currency monetary items are converted using closing exchange rate at the end of each reporting period. Foreign currency-denominated non-monetary items measured at fair value are converted using exchange rate as of the valuation date. Foreign currency-denominated non-monetary items carried at historical cost are converted using exchange rate as of the initial transaction date.

Exchange differences arising from settlement or translation of monetary accounts are recognized in profit and loss in the period occurred, except in the following circumstances.

(1) For foreign currency loans that are undertaken for the purpose of acquiring a qualifying asset, the exchange difference would form part of the borrowing cost if it is treated as an adjustment to interest cost, and capitalized into the cost of the asset.
(2) Foreign currency items subject to IFRS 9 - "Financial Instruments" are treated using accounting policy on financial instruments.
(3) For monetary items that make up a part of the reporting entity's net investments in foreign operation, exchange difference is recognized as other comprehensive income at initiation, and subsequently reclassified from equity into profit or loss upon disposal of net investments.

Non-monetary accounts that have gains and losses recognized as other comprehensive income shall also have any exchange component of that gain or loss recognized as other comprehensive income. Non-monetary accounts that have gains and losses recognized in profit and loss shall also have any exchange component of that gain or loss recognized in profit and loss.

5. Translation of foreign currency financial statements

When preparing consolidated financial statements, assets and liabilities of foreign operations are converted into NTD using closing exchange rate as at the balance sheet date, whereas income, expenses, and losses are converted using average exchange rate for the current period. Exchange differences arising from financial statement translation are recognized as other comprehensive income; upon disposal of foreign operations, exchange differences previously recognized as other comprehensive income and accumulated under equity from the separate parts are reclassified from equity to profit or loss when recognizing gain/loss on disposal. In a partial disposal of subsidiary containing foreign operation that results in a loss of control, and partial disposal of equity in an associated company or joint agreement containing foreign operation, the disposal treatment shall also

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

apply if the remaining equity can be regarded as a financial asset containing foreign operation.

In a partial disposal of subsidiary containing foreign operation that does not result in a loss of control, cumulative exchange differences previously recognized in other comprehensive income are re-attributed to non-controlling equity of such foreign operation, instead of being recognized in profit or loss. In a partial disposal of associated company or joint agreement containing foreign operation where significant influence or joint control is not lost, cumulative exchange differences are reclassified into profit or loss proportionally.

Goodwill arising from acquisition of foreign operations and fair value adjustments to the book value of assets and liabilities are accounted as assets and liabilities of the respective foreign operations, and presented in the functional currency.

6. Classification of current and non-current assets and liabilities

Assets that satisfy any of the following criteria are classified as current assets; assets that are not classified as current are classified as non-current assets:

(1) Assets that are expected to be realized, or intended to be sold or consumed, in the Group's normal operating cycle.
(2) Assets that are held mainly for the purpose of trading.
(3) Assets that are expected to be realized within 12 months after the end of the reporting period.
(4) Cash or cash equivalents, except those are restricted from being swapped or used to repay liabilities beyond 12 months after the end of the reporting period, and those with restricted uses.

Liabilities that satisfy any of the following criteria are classified as current liabilities; liabilities that are not classified as current are classified as non-current liabilities:

(1) Liabilities that are expected to be repaid in the Group's normal business cycle.
(2) Liabilities that are held mainly for the purpose of trading.
(3) Liabilities that are expected to be repaid within 12 months after the end of the reporting period.
(4) Liabilities where the repayment terms cannot be unconditionally beyond 12 months after the end of the reporting period. Liabilities with terms that give counterparties the option to be repaid by the issue of equity instruments do not affect their classification.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

7. Cash and cash equivalents

Cash and cash equivalent refer to cash on hand, demand deposit, and short-term and highly liquid time deposits or investments (including time deposits with terms equal to or less than 12 months) that are readily convertible into known amounts of cash, and are subject to an insignificant risk of changes in value.

8. Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to a financial instrument contract.

Financial assets and liabilities subject to IFRS 9 - "Financial Instruments" are measured at fair value at initiation. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and liabilities (except for financial assets and liabilities at fair value through profit or loss) are added to or deducted from the fair value of the respective asset/liability.

(1) Recognition and measurement of financial assets

Regular transactions of financial asset are recognized and derecognized using trade date accounting.

The Group classifies financial assets into those that are carried at amortized cost, at fair value through other comprehensive income, and at fair value through profit or loss based on the two considerations below:

A. Business model for managing the financial assets
B. Characteristics of contractual cash flow for the financial assets

Financial assets at amortized costs

Financial assets that simultaneously satisfy the two conditions below are carried at amortized cost and presented on balance sheet as notes receivable, accounts receivable, installment accounts receivable, long-term installment accounts receivable, and other receivables:

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

A. Business model for managing the financial assets: financial asset is held for the purpose of collecting contractual cash flow
B. Characteristics of contractual cash flow for the financial assets: cash flow is solely used to pay principal and interests on outstanding principal

These financial assets (excluding those that are associated with hedge) are subsequently carried at amortized cost {i.e., the initial amount less principals repaid, plus/less cumulative amortization of differences between the initial amount and the maturity amount (calculated using the effective interest method), and adjusted for loss provisions}. Upon derecognition, amortization, or recognition of impairment gains/losses, the gains or losses are recognized in profit or loss.

Interests calculated using the effective interest method (i.e., by multiplying the book value of financial asset with effective interest rate) or under the following circumstances are recognized in profit or loss:

A. Purchased or originated credit-impaired financial assets, where interest is calculated by multiplying the cost of financial assets after amortization with credit-adjusted effective interest rate.
B. Subsequent impairment of financial asset that does not meet the above description, where interest is calculated by multiplying the cost of financial assets after amortization with effective interest rate.

Financial assets at fair value through other comprehensive income

Financial assets that simultaneously satisfy the two criteria below are measured at fair value through other comprehensive income, and presented on the balance sheet as financial assets at fair value through other comprehensive income.

A. Business model for managing the financial assets: financial asset is held for collecting contractual cash flow and sale
B. Characteristics of contractual cash flow for the financial assets: cash flow is solely used to pay principal and interests on outstanding principal

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Gains and losses associated with this type of financial assets are recognized in the following manner:

A. Prior to derecognition or reclassification, gains and losses are recognized in other comprehensive income, except for impairment gains/losses and foreign exchange gains/losses, which are recognized in profit or loss
B. Upon derecognition, all cumulative gains/losses previously recognized in other comprehensive income are reclassified from equity to profit or loss and treated as a reclassification adjustment
C. Interests calculated using the effective interest method (i.e., by multiplying the book value of financial asset with effective interest rate) or under the following circumstances are recognized in profit or loss:
(a) Purchased or originated credit-impaired financial assets, where interest is calculated by multiplying the cost of financial assets after amortization with credit-adjusted effective interest rate.
(b) Subsequent impairment of financial asset that does not meet the above description, where interest is calculated by multiplying the cost of financial assets after amortization with effective interest rate.

For equity instruments that are subject to IFRS 9 but are neither held for trading nor recognized as acquirer's contingent consideration under IFRS 3 - Business Combinations, a (irrevocable) choice can be made at initial recognition to account for subsequent fair value changes in other comprehensive income. Amounts presented in other comprehensive income cannot be subsequently reclassified into profit or loss (upon disposal of the equity instrument, amounts previously accumulated under other equity item are reclassified directly into retained earnings); these instruments are presented on balance sheet as financial assets at fair value through other comprehensive income. Dividends from investments are recognized in profit or loss, unless the dividends clearly represent a partial recovery of the investment cost.

Financial assets at fair value through profit or loss

With the exception of financial assets that are carried at amortized cost or measured at fair value through other comprehensive income for satisfying the special criteria mentioned above, all other financial assets are measured at fair value through profit or loss, and presented on balance sheet at fair value through profit or loss.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

This category of financial assets is measured at fair value. Gains or losses arising from remeasurement are recognized in profit or loss. The amount of gains and losses recognized in profit or loss includes all dividends or interests collected on the financial asset.

(2) Impairment of financial assets

The Group recognizes and measures the loss provisions for debt instrument investments held at fair value through other comprehensive income and financial assets carried at amortized cost at an amount equal to expected credit loss. Loss provisions on debt instrument investments held at fair value in other comprehensive income are recognized through other comprehensive income and do not reduce the book value of investment.

The Group measures expected credit losses after taking into account of the following:

A. An unbiased and probability-weighted amount determined after assessing the possible outcomes
B. Time value of monetary
C. Rational and verifiable information about past event, current situation, and future economic forecast (that can be obtained on the balance sheet date without incurring excessive cost or input)

Loss provisions are measured using the methods explained below:

A. At an amount equal to 12-month expected credit loss: applies to financial assets that exhibit no significant increase in credit risk since initial recognition, or those that are considered to be of low credit risk as at the balance sheet date. This method also applies to accounts that had loss provisions measured based on lifetime expected credit losses in the previous reporting period, but no longer meets the condition of having exhibited significant increase in credit risk since initial recognition as at the current balance sheet date.
B. At an amount equal to lifetime expected credit losses: applies to financial assets that exhibit significant increase in credit risk since initial recognition, or purchase or originated credit-impaired financial assets.
C. For accounts receivable or contract assets that arise from the transactions defined in IFRS 15, the Group measures loss provisions at an amount equal to lifetime expected credit losses.
D. For lease receivable that arises from the transactions defined in IFRS 16, the Group

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

measures loss provisions at an amount equal to lifetime expected credit losses.

On each balance sheet date, the Group examines financial instruments for any change in default risk between the balance sheet date and the date of initial recognition, and in doing so evaluates whether there is significant increase in the credit risk of financial instrument since initial recognition. Please see Note (XII) for credit risk-related information.

(3) Derecognition of financial assets

Financial assets that satisfy any of the following criteria are derecognized:

A. When contractual entitlement to receive cash flow from the asset has ended.
B. When the financial asset has been transferred along with virtually all risks and returns associated with the ownership of the asset.
C. When control of the asset has been transferred, even if the Group does not transfer or retain virtually all risks and returns associated with the asset.

When a financial asset is derecognized, the difference between book value and the sum of consideration received/receivable plus any cumulative gains or losses previously recognized in other comprehensive income is recognized in profit or loss.

(4) Financial liabilities and equity instruments

Classification of liability and equity

Debt and equity instruments issued by the Group are classified into financial liabilities or equity based on the essence of the contract agreement and definitions of financial liabilities and equity instrument.

Equity instrument

Equity instrument refers to any contract that represents residual interests after the Group deducts all of its liabilities from its assets. Equity instruments issued by the Group are recognized at the amount of proceeds received net of direct issuing costs.

Financial liabilities

Financial liabilities subject to IFRS 9 are classified as financial liabilities at fair value

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

through profit or loss or financial liabilities at amortized cost at initiation.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities that are held for trading and designated to be measured at fair value through profit or loss.

Financial liabilities are classified as held for trading if it satisfies any of the following criteria:

A. Acquired mainly for the purpose of being sold in the short term.
B. Having been recognized at initiation as part of a portfolio of identifiable financial instruments under collective management, and there is evidence to suggest that the portfolio is being traded for short-term profits; or
C. Exhibits the characteristics of a derivative instrument (except for financial guarantee contracts or derivative instruments designated for effective hedge).

Contracts that contain one or multiple embedded derivative instruments can be designated as hybrid (combined) contracts, and presented as financial liabilities at fair value through profit or loss. These instruments are designated to be measured at fair value through profit or loss at initiation if more relevant information can be obtained in one of the following situations:

A. Designation would eliminate or significantly reduce discrepancies arising from measurement or recognition; or
B. A group of financial liabilities or a group of financial assets and liabilities that are managed and evaluated performance based on fair value, as per risk management guidelines or investment strategy that are in written form, and that information of the investment portfolio provided internally to the management of the Group is also based on fair value.

Gains and losses arising from remeasurement of this category of financial liabilities are recognized in profit or loss. The amount of gains and losses recognized in profit or loss includes all interests paid on the financial liability.

Financial liabilities at amortized costs

Financial liabilities at amortized costs include payables and loans, which are subsequently measured using the effective interest rate method after initial recognition. When financial liabilities are derecognized from balance sheet and when amortization

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

is provided using the effective interest rate method, the corresponding gains, losses, and amortizations are recognized in profit or loss.

Calculation of amortized costs takes into consideration discounts or premiums at the time of acquisition and transaction costs.

Derecognition of financial liabilities

Financial liabilities are derecognized from balance sheet when obligations have been relieved, canceled, or voided.

When the Group engages a creditor in a swap of debt instruments with significant discrepant terms, or makes significant modification to some or all terms of existing financial liability (whether due to financial distress or not), the effects are accounted by derecognizing the original liability and recognizing the new liability at the same time. When derecognizing financial liability, differences between the book value and the considerations paid/payable (including non-cash assets transferred or liabilities assumed) are recognized in profit or loss.

(5) Offset of financial assets and liabilities

Financial assets and financial liabilities may be offset against each other and reported in the balance sheet in net amount only when the entity is legally entitled to do so and has the intention to settle assets and liabilities in net amount or to realize the asset and settle the liability at the same time.

9. Fair value assessment

Fair value refers to the price that market participants are able to receive for selling an asset, or the price that has to be paid to transfer a liability, in an orderly transaction on the measurement date. Fair value assessment assumes that the asset/liability is sold/transferred in one of the following markets:

(1) The principal market for the asset or liability; or
(2) The most advantageous market for the asset or liability, if the principal market does not exist

The principal or most advantageous market must be one that the Group has access to and is able to transact in.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Common assumptions that market participants adopt for pricing assets or liabilities are used when assessing fair value of an asset or liability. These assumptions assume that market participants all act in their best economic interest.

Fair value assessment of non-financial assets takes into consideration market participants' intent to make the highest and best use of the asset, or their intent to sell the asset to another market participant that will make the highest and best use in order to generate economic benefits.

The Group assesses fair value by adopting valuation techniques that are appropriate for the given circumstance and for which data can be obtained, while maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

10. Inventories

Accounted at acquisition cost; the cost of inventory is calculated using the weighted average method. Inventory is subsequently measured at the lower of cost or net realizable value item by item. Net realizable value refers to the balance of estimated selling price less any costs required to sell inventory under normal circumstances. Allowance for losses on inventory devaluation and obsolescence is made for any inventory that is considered slowmoving or obsolete.

11. Property, plant and equipment

Property, plant and equipment are recognized at acquisition cost and presented net of accumulated depreciation and accumulated impairment. The abovementioned cost includes the cost of uninstalling, removing, and restoring property, plant and equipment at the given location, and any interest costs incurred on construction-in-progress. Significant compositions of property, plant, and equipment are depreciated separately. When making regular replacements for major component of property, plant, and equipment, the Group treats the replacement as a separate asset and recognizes depreciation based on the specified useful life and depreciation method. Book values of replaced assets are derecognized from balance sheet in accordance with IAS 16 - "Property, plant and equipment." Major repair costs that satisfy the recognition criteria are treated as replacement costs and recognized as part of the book value of property, plant and equipment. All other repair and maintenance expenditures are recognized in profit or loss.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Depreciation is provided on a straight-line basis over the estimated useful lives mentioned below:

Buildings	51-56 years
Accessory equipment of buildings	6 years
Transportation equipment	6 years
Office equipment	4-6 years
Right-of-use assets/lease assets	The lower between lease tenor and useful life
Lease improvements	The lower between lease tenor and useful life
Other equipment	2-6 years

The entity derecognizes property, plant and equipment or any of its major components from balance sheet and recognizes in profit or loss when it disposes the asset or expects no further inflow of economic benefits from utilization or disposal of the asset.

Residual value, useful life, and depreciation method of property, plant and equipment are evaluated at the end of each financial year. If the expected value differs from previous estimates, the difference is treated as a change in accounting estimate.

12. Lease

The Group evaluates whether a contract meets the criteria of (or contains) lease on the day of establishment. A contract is considered as (or contains) lease if it involves a transfer of control over identified assets for a period of time in exchange for consideration. To determine whether a contract transfers the right to control the use of an identified asset for a period of time, the Group evaluates whether the following two conditions are met throughout the entire period of use:

(1) The user has the right to obtain substantially all of the economic benefits from using the identified asset; and
(2) The user has the right to determine how identified asset is used.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

For contracts that meet the criteria of (or contain) lease, the Group treats every lease component in the contract as a standalone lease, and accounts for non-lease components separately. For a contract that contains a lease component and one or multiple additional lease or non-lease components, the Group separates relative standalone price of each lease component from total standalone price of non-lease components, and allocates consideration to lease components. Relative standalone prices of lease and non-lease components are determined based on the price received by lessor (or supplier of similar nature) for the particular component (or similar component). If observable standalone prices are not readily available, the Group will maximize the use of observable information to estimate the standalone price.

Where the Group is the lessee

Except for leases that meet the criteria for and are accounted as short-term lease or least of low-value asset, the Group recognizes right-of-use assets and lease liabilities on all lease contracts where it is the lessee.

On the commencement date, the Group measures lease liabilities at the present value of unpaid lease payments outstanding on that day. Lease payments are discounted at the implicit interest rate if it can be determined easily. If the implicit interest rate cannot be determined easily, the lessee's incremental borrowing rate is used instead. Lease payments to be included in the calculation of lease liabilities on the commencement date include the following payments outstanding on that day that are relevant to the right-of-use of the underlying asset over the lease tenor:

(1) Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(2) Variable lease payments that are determined by certain index or rate (which are initially measured using index or rate as at the commencement date);
(3) Amounts that the lessee expects to pay under guaranteed residual value;
(4) Exercise price for the purchase option, provided that the Group is reasonably certain to exercise such option; and
(5) Penalties that have to be paid upon termination of lease, if the lease term reflects the lessee's intent to exercise the termination option.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

After the commencement date, the Group measures lease liabilities at amortized cost basis and uses the effective interest method to increase the book value of lease liabilities to reflect the interest expense on lease liabilities. Lease payments reduce the book value of lease liabilities.

The Group measures right-of-use assets at cost on the commencement date; the cost of right-of-use asset includes:

(1) Initial measured amount of lease liabilities;
(2) Any lease payment made on or before the commencement date, less any lease incentive received;
(3) Any direct cost incurred by the lessee at initiation; and
(4) Estimated cost for the lessee to dismantle, remove the underlying asset, and restore its original location, or to restore the underlying asset to the state specified in the terms and conditions of the lease agreement.

Right-of-use assets are subsequently measured at cost less accumulated depreciation and accumulated impairment loss; in other words, the cost method is used to measure right-ofuse assets.

If ownership of the underlying asset is due to be transferred to the Group at the end of the lease tenor, or if the cost of right-of-use asset already reflects the Group's intent to exercise the option to purchase, the Group shall begin recognizing depreciation on right-of-use assets from the commencement date until the end of useful life. Otherwise, the Group is required to recognize depreciation from the commencement date until the end of useful life of the right-of-use asset or until the end of the lease tenor, whichever the earlier.

The Group adopts IAS 36 - "Asset impairment" to determine whether right-of-use assets exhibit signs of impairment and account for any impairment losses identified.

Except for leases that meet the criteria for and are accounted as short-term lease or lease of low-value asset, the Group recognizes both right-of-use assets and lease liabilities on the balance sheet, and lease-related depreciation and interest expenses on the statement of comprehensive income.

The Group accounts lease payments associated with short-term lease and lease of lowvalue asset as expense over the lease tenor on a straight-line basis or using an alternative systematic approach.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) Where the Group is the lessor

The Group classifies each lease arrangement into an operating lease or financing lease on the contract establishment date. A lease is classified as financial lease if virtually all risks and returns associated with ownership of the underlying asset are transferred; otherwise, the lease is classified as an operating lease. On the commencement date, the Group recognizes assets held under financial lease arrangement on balance sheet, and presents financial lease receivable at the amount of net lease investments.

For contracts that contain both lease component and non-lease component, the Group adopts IFRS 15 and allocates considerations of contracts accordingly.

The Group recognizes lease payments received from operating leases as rental income on a straight-line basis or using alternative systematic basis. In an operating lease, variable lease payments that are not derived from any particular index or rate are recognized as rental income at the time occurred.

13. Intangible asset

Intangible assets that are acquired separately are measured at cost at initiation. For intangible assets acquired through business combination, cost is determined as fair value as of the acquisition date. After initial recognition, book value of intangible assets is subsequently presented at cost less accumulated amortization and accumulated impairment loss. Intangible assets generated internally that do not meet the recognition criteria are not capitalized, but recognized in profit or loss at the time occurred.

Intangible assets are distinguished into those with finite useful lives and those with indefinite useful lives.

Finite useful life intangible assets are amortized over the number of useful years, and subjected to impairment tests if there are signs of impairment. Useful life and method of amortization for finite useful life intangible assets are reviewed at the end of each financial year. If an asset's expected useful life differs from the previous estimate or if there is a change to how future economic benefits are realized, the Group will adjust the period and method of amortization and treat the adjustment as a change in accounting estimate.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Indefinite useful life intangible assets are not amortized, but are subjected to impairment tests as a standalone asset or as part of the cash-generating unit yearly. Indefinite useful life intangible assets are evaluated each year to determine whether there are events or circumstances that continue to support the assets' useful life are indefinite. If changing from indefinite useful life to finite useful life, that apply will be postponed.

Gains or losses arising from the derecognition of intangible assets are recognized in profit or loss.

Computer software

Cost of computer software is amortized on a straight-line basis over the estimated useful life (1 to 5 years).

Useful life Amortization method Internally generated or externally acquired	Computer software
	Finite Amortized on a straight-line basis over the estimated useful life Externally acquired

14. Impairment on non-financial assets

All assets subject to IAS 36 - "Asset impairment" are evaluated whether there is a sign of impairment at the end of each reporting period. If there is a sign of impairment or impairment tests on particular asset is needed yearly, the Group will conduct the impairment tests as a standalone asset or as part of the cash-generating unit. Impairment losses are recognized if the impairment test shows book value of the asset or cashgenerating unit exceeds its recoverable amount. Recoverable amount is the higher between the net fair value and the utilization value.

For assets except for goodwill, the Group conducts regular assessments at the end of each reporting period to determine whether impairment losses recognized in previous periods have reduced or no longer exist. If so, the Group immediately estimates the recoverable amount of the asset or cash-generating unit. Impairment losses are reversed if the recoverable amount increases due to a change in estimated service potential of the underlying asset. However, the asset's book value after reversal of impairment losses cannot exceed the amount of book value less depreciation or amortization before the impairment took place.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Impairment losses and reversal gains from continuing operations are recognized in profit or loss.

15. Provisions

Provisions are recognized on current obligations (legally or constructive) given rise by a past event, for which the Group is very likely to incur an outflow of economic benefit or resource to settle such an obligation, and that the amount of obligation can be estimated reliably. When the Group expects some or all of its provisions to be reimbursed, the Group will recognize assets separately only when the reimbursement is almost confirmed. In circumstances where time value of money has a significant impact, the provision is discounted using the pre-tax interest rate that appropriately reflects the specific risk characteristics of the liability. When discounting, any increase in the amount of liability due to passage of time is recognized as borrowing cost.

Provisions for warranty

Provisions for warranty are estimated base on the terms of product sale contracts, and the management's best estimate of future economic benefit outflows of warranty obligations (based on historical warranty experience).

16. Revenue recognition

Revenue from contracts with customers mainly involves sale of merchandise and rendering of service. Accounting treatments are as explained below:

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) Sales of merchandise

The Group recognizes revenue on sale of merchandise when the promised merchandise has been delivered to the customer and that the customer has control of the merchandise (i.e. the customer is able to make use of the merchandise and access virtually all remaining benefits on the merchandise). Most of the merchandises sold are electronic equipment of high unit price, for which revenues are recognized based on prices stated in individual contracts. Other merchandises are often sold with discount (based on sales volume accumulated within a defined period), therefore revenue is recognized at prices stated in individual contracts less estimated discounts. The Group estimates how volume-based discounts affect variable consideration using previous experience and expected value. However, variable consideration is only taken into account if, and to the extent that, it is highly probable that its inclusion will not result in a significant revenue reversal in the future when the uncertainty has been subsequently resolved. Meanwhile, expected volume discount is recognized as refund liabilities in period of agreement.

Warranty represents the Group's assurance that the merchandise supplied will function within customers' expectations, and is recognized according to IAS 37.

The Group sells merchandises with a credit term of 30-120 days. For most contracts, accounts receivables are recognized when the Group transfers control of merchandise and obtains an unconditional entitlement to receive consideration. Such accounts receivable is usually short in duration and there is no significant financial component. For some contracts that merchandise is transferred to customer but does not obtain unconditional entitlement to receive consideration yet, the Group would recognize contractual assets instead. According to IFRS 9, loss provisions on contract assets should be measured based on Lifetime Expected Credit Losses.

Rendering of service

The services provided by the Group are mainly maintenance, warranty, and design. Such services are priced individually or through negotiation, and provided during the contract period. Service income is recognized over time, considering that the Group renders services in a period of time specified in contract and that customers generate benefits from product throughout contract duration, thereby the performance obligation is fulfilled progressively over time, and service income is recognized over time.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

For the majority of the Group's contracts, consideration is collected over equal installments after services are rendered. Contractual assets are recognized when services are rendered to customers without unconditional entitlement to collect consideration. However, in certain contracts where partial consideration is collected from customers in advance at the time of signing, the Group bears the obligation to provide subsequent services and therefore recognizes contractual liabilities.

In the above situation, the reclassification of contractual liabilities into income generally do not exceed one year, and hence has not given rise to significant financing component.

17. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction, or production of qualifying assets are capitalized into part of the cost of the respective assets. All other borrowing costs are expensed in the period incurred. Borrowing cost includes interest and other costs incurred in relation to the borrowing of capital.

18. Post-employment benefit plans

The Company and domestic subsidiaries’ retirement policies apply to all permanent employees. All pension contributions are placed entirely under the management of the Labor Pension Fund Supervisory Committee and deposited into a dedicated pension fund account. Since the above pension fund is being held under the name of the Labor Pension Fund Supervisory Committee, it is completely separate from the Company's and domestic subsidiaries’ assets and hence excluded from the consolidated financial statements presented above. For employees of foreign subsidiaries, retirement policy is subject to local regulations.

For employees under the post-employment benefit plans of defined contribution plan, the Company and domestic subsidiaries make monthly pension contributions totaling no less than 6% of employees' salary. The amounts contributed are recognized as current period expense.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

For employees that are subject to post-employment benefit plans of defined benefit plan, provisions are made at the end of the reporting period based on actuarial report using the Projected Unit Credit method. Remeasurement of net defined benefit liabilities (assets) includes return on plan asset and any change in the effect of asset cap, less the amount of net interest on the net defined benefit liabilities (assets) and actuarial gains/losses. Remeasurement of net defined benefit liabilities (assets) is recognized in other comprehensive income in the periods they occur, and recognized immediately into retained earnings. Service costs for the previous period represent changes in the present value of defined benefit obligations due to plan amendment or curtailment, and are recognized as expense on the earlier of the two dates below:

(1) When the plan is amended or curtailed; and
(2) When the Group recognizes related restructuring costs or termination benefits.

Net interest on net defined benefit liabilities (assets) is determined by multiplying net defined benefit liabilities (assets) with the discount rate. Both variables are determined at the beginning of annual reporting period, and changes in net defined benefit liabilities (assets) due to contributions and benefit payments during the period are evaluated thereafter.

19. Income tax

Income tax expense (benefit) is the aggregate amount included in the determination of profit or loss for the period in respect of current income tax and deferred income tax.

Current income tax

Current income tax liabilities (assets) for the current and previous periods are measured using statutory or substantively enacted tax rates and tax laws at the end of the reporting period. Current income taxes that arise in relation to accounts recognized in other comprehensive income or directly in equity are also recognized in other comprehensive income or in equity respectively, instead of profit or loss.

Additional income tax for undistributed earnings is recognized as income tax expense on the date when the distribution proposal is approved in the annual shareholders’ meeting.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Deferred income tax

Deferred income tax is recognized on temporary differences between the tax basis of assets and liabilities and book value shown in the balance sheet as of the end of the reporting period.

All taxable temporary differences are recognized as deferred income tax liabilities, except for the two circumstances below:

(1) Initial recognition of goodwill; or initial recognition of assets or liabilities that do not arise from transactions of the consolidated entity, provided that doing so affects neither accounting profit nor taxable profit (loss) at the time of transaction.
(2) Taxable temporary difference that arises from investment in subsidiaries, provided that the timing of reversal can be controlled and the difference is very unlikely to reverse in the foreseeable future.

Deferred income tax assets are recognized on deductible temporary differences, unused tax losses, and carry forward of unused tax credit to the extent that the Group is likely to earn taxable income to offset them in the future, except for the two circumstances below:

(1) Deductible temporary difference arising from initial recognition of an asset or liability that is unrelated to transactions of the consolidated entity, provided that doing so affects neither accounting profit nor taxable profit (loss) at the time of transaction;
(2) Deductible temporary difference arising from investment in subsidiaries, which is recognized only to the extent that the difference is very likely to be reversed in the foreseeable future and that sufficient taxable income can be earned to realize the temporary difference.

Deferred income tax assets and liabilities are measured using tax rate that is expected to apply in the year when the asset is realized or the liability is settled. This tax rate is determined based on the tax rate and tax laws that have been enacted of substantively enacted at the end of the reporting period. Deferred income tax liabilities and assets represent tax impacts of the method by which the entity expects to recover/settle the book value of its assets and liabilities at the end of the reporting period. Deferred income taxes unrelated to any profit or loss account are not recognized in profit or loss, but are instead recognized in other comprehensive income or directly in equity depending on the nature of the transaction. Deferred income tax asset is re-examined and recognized at the end of each reporting period.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Current portions of deferred current income tax assets and liabilities can be offset against each other only if the entity is legally entitled to do so, and that the deferred income taxes are attributed to the same taxpayer and the same tax authority.

(V). Sources of Uncertainty to Significant Accounting Judgments, Estimates, and Assumptions

When preparing consolidated financial statements, the management is required to make judgments, estimates, and assumptions as at the end of the reporting period, which will affect the amounts of income, expenses, assets, and liabilities reported and disclosure of contingent liabilities. Uncertainties associated with these significant assumptions and estimates may cause the entity to make significant adjustments to the book value of assets or liabilities in the future.

1. Judgment

When applying accounting policies for the preparation of financial statements, the management is required to make several significant judgments.

These include:

Operating lease commitments where the Group is the lessor

Lease arrangements in which the Group retains significant risk and return associated with property ownership, according to the assessments on the terms of the lease agreement, are accounted as operating leases.

2. Estimates and assumptions

Estimates and assumptions made about the future at the end of the reporting period for significant but uncertain sources of information may result in significant risks for material adjustments to the book value of assets and liabilities in the next financial year. Explanation is as follows:

(1) Fair value of financial instruments

When fair value of a financial asset and financial liability shown on balance sheet cannot be obtained through active market, the fair value will be determined using valuation technique, such as the income approach (e.g., discounted cash flow model) or market approach. Changes in the assumptions used in these models will affect the

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

fair value of financial instruments reported. Please see Note (XII) for more details.

(2) Inventories valuation

Due to the fact that inventory is valued at the lower of cost or net realizable value item by item, the Group is required to exercise judgment and make estimates in order to determine the net realizable value of inventory at the end of the reporting period.

Due to rapidly changing technologies, the Group estimates the net realizable value of inventory for normal waste, obsolescence and market value at the end of reporting period and then writes down the cost of inventories to net realizable value. Inventory valuation is estimated primarily based on inventory characteristics, utilization value, historical experience, and market price, and therefore may give rise to significant changes. See Note (VI) for more details.

(3) Post-employment benefit plans

Pension cost and present value of defined benefit obligations of post-employment benefit plans are determined using actuarial valuations. The actuarial valuation involves several different assumptions, including discount rate and expected salary changes. Please see Note (VI) for details on the assumptions used to measure pension cost and defined benefit obligations.

(4) Revenue recognition - sales return and discount

The Group estimates sales return and discount based on historical experience and other known factors, and accounts them as contra items to operating revenues when merchandise is sold. The aforementioned estimates of sales returns and discounts are based on the amount of the accumulated revenue recognized in major reversals is highly unlikely to happen based on the premise. See Note (VI) for more details.

(5) Receivables - estimation of impairment losses

The Group estimates impairment loss of receivables by measuring the lifetime expected credit losses. Credit loss is determined as the present value of differences between contractual cash flow that is due to the Group under contracts (book value) and cash flow the Group expects to receive (after evaluating forward-looking information), but considering that the effect of discounting is insignificant for shortterm receivables, credit loss is measured using the undiscounted differences.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Significant impairment losses may arise if actual cash flow is less than expectation in the future. See Note (VI) for details.

(6) Income tax

Uncertainty of income tax lies in the interpretation of complex tax laws and the amount and timing of future taxable income. Due to the wide range of international business relationships and the long-term nature and complexity of contracts, differences between the actual outcome and the assumptions made previously or future changes to such assumption may necessitate future adjustments to income tax benefits and expenses already recognized. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of provision is recognized after taking into account different factors such as: past tax audit experience and the different interpretations of tax law between the subject of tax and the applicable tax authority. Differences in interpretation may give rise to various issues depending on where the Group is located.

Unused tax losses and tax credits carried into subsequent periods and deductible temporary differences are recognized as deferred income tax assets to the extent that the entity is very likely to earn taxable income to offset against. The amount of deferred income tax assets recognizable is determined based on the timing and level of future taxable income and taxable temporary differences, as well as future tax plans and strategies. See Note (VI) for details of deferred income tax assets that the Group had not recognized as at December 31, 2021.

(VI). Notes to Major Accounts

1. Cash and cash equivalents

Cash Demand and check deposit Time deposit Total	December 31,2021	December 31,2020
	$196 1,233,979 216,735	$198 1,175,524 172,682
	$1,450,910	$1,348,404

2. Financial assets at fair value through profit or loss

December 31, 2021 December 31, 2020

Investments in equity instruments at

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

fair value through profit or loss - non-current: Fund $- $12,590

(1) The Group acquired 1 million units of Yuanta Taiwan High-yield Leading Company Fund in March 2020 at a cost of NT$10,000 thousand. 1 million units were disposed in November 2021 for a sum of NT$15,167 thousand; gains on disposal of NT$2,577 thousand for 2021 and NT$2,590 thousand for 2020 were recognized under other gains and losses.
(2) None of the Group's financial assets at fair value through profit or loss was placed as collateral.

3. Financial assets at fair value through other comprehensive income

Investments in equity instruments at fair value through other comprehensive income - non- current: TWSE/TPEX listed shares Unlisted shares Total	December 31,2021	December 31,2020
	$128,100 16,113	$78,407 14,163
	$144,213	$92,570

(1) The Group subscribed to the cash issue of LOLA Technology Inc. in October 2020, and acquired 700 thousand shares at a cost of NT$7,000 thousand.
(2) The Group sold shares of SYSAGE Technology Co., Ltd., a TWSE-listed company presented as financial assets at fair value through other comprehensive income, in 2020 as part of its investment strategy. Proceeds from the disposal amounted to NT$24,727 thousand, and unrealized gain on valuation totaling NT$11,570 thousand that the instrument had accumulated up until the time of disposal were reclassified from other equity item to retained earnings.
(3) The Group sold shares of GENIRON.COM Inc., an unlisted company presented as financial assets at fair value through other comprehensive income, in 2020 as part of

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

its investment strategy. Proceeds from the disposal amounted to NT$6,795 thousand, and unrealized gain on valuation totaling NT$599 thousand that the instrument had accumulated up until the time of disposal were reclassified from other equity item to retained earnings.

(4) The Group held shares of Solar PV Corp., an unlisted company, that underwent and completed liquidation procedures in 2020. Unrealized loss on valuation totaling NT$90,990 thousand that the instrument had accumulated up until the time of disposal were reclassified from other equity item to retained earnings.
(5) The Group subscribed to the cash issue of ITEQ Corporation in 2020, and acquired 40 thousand shares at a cost of NT$4,444 thousand.
(6) The Group acquired 47 thousand shares of Zero One Technology Co., Ltd., a TWSElisted company, in February 2021 at a cost of NT$1,775 thousand. The Group also participated in the cash issue of Zero One Technology Co., Ltd. in December 2021 and acquired 1,007 thousand shares at a cost of NT$40,296 thousand.
(7) The Group held shares of Energy Trend Co., Ltd that underwent and completed the liquidation procedures on March 8, 2021. The Group obtained the capital reduction of NT$95 thousand and the dividend income of NT$8 thousand from the distribution of its remaining surplus, and transferred the accumulated unrealized valuation loss of NT$191 thousand at the time of disposal from other equity to retained earnings.
(8) The Group acquired 195 thousand shares of Cloud Intelligent Operation Technologies Co., Inc, an unlisted company, in the third quarter of 2021, at a cost of NT$1,950 thousand.
(9) The Group recognized NT$3,839 thousand and NT$4,555 thousand of dividend income for the years ended December 31, 2021 and 2020, respectively from investments in equity instruments at fair value through other comprehensive income held in possession. This income was related to investments that remained in possession as at the balance sheet date.
(10) None of the Group's financial assets at fair value through other comprehensive income was placed as collateral.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

4. Notes receivable

Notes receivable - arising from operating activities Less: loss provisions Net amount	December 31,2021	December 31,2020
	$5,759 -	$2,829 -
	$5,759	$2,829

None of the Group's notes receivable was placed as collateral.

The Group assesses impairment according to IFRS 9. Please see Note (VI).16 for information on loss provisions and Note (XII) for credit risk-related information.

5. Accounts receivable and installment accounts receivable

Accounts receivable Installment accounts receivable Less: Unrealized interest income - installment accounts receivable Subtotal (total book value) Less: loss provisions Total	December 31,2021	December 31,2020
	$629,315 143,302 (9,295)	$642,614 152,512 (12,511)
	763,322 (16,257)	782,615 (18,706)
	$747,065	$763,909

Expected recovery of installment accounts receivable is as follows:

No more than 1 year 1 to 2 years 2 years and above Total	December 31,2021	December 31,2020
	$69,336 45,218 28,748	$58,598 37,142 56,772
	$143,302	$152,512

None of the Group's accounts receivable was placed as collateral. Credit terms granted to customers are generally 30 days to 120 days after the end of the month of acceptance inspection.

The Group had accounts receivable and installment accounts receivable balance outstanding at NT$763,322 thousand on December 31, 2021 and NT$782,615 thousand on December 31, 2020. See Note (VI).16 for information on loss provisions and Note (XII) for credit risk-related information.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

6. Inventories

Net inventory - merchandise	December 31,2021	December 31,2020
	$1,991,209	$1,957,859

Cost of inventory, consultation, and maintenance recognized as expenses for the years ended December 31, 2021 and 2020 were NT$4,980,918 thousand and NT$4,165,184 thousand respectively. These amounts included NT$1,183 thousand and NT$4,476 thousand of gain on reversal of inventory devaluation and obsolescence for the years ended December 31, 2021 and 2020, respectively. As at December 31, 2021 and 2020, the Group had provisions on inventory devaluation outstanding at NT$3,890 thousand and NT$5,074 thousand, respectively.

None of the above inventory was pledged as collateral.

7. Prepayments

Prepaid purchases Other prepaid expenses Total	December 31,2021	December 31,2020
	$450,172 43,102	$402,094 60,520
	$493,274	$462,614

8. Property, plant and equipment

Owner-occupied property, plant and equipment	December 31,2021	December 31,2020
	$446,238	$453,651

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Land	Buildings	Transportation equipment	Office equipment	Lease improvements	Other equipment	Total
$291,892 - - - -	$202,098 784 (873) - -	$4,004 3,100 (297) - 6	$45,759 4,941 (8,002) 1,192 1	$5,796 34 - - -	$323 - - 255 -	$549,872 8,859 (9,172) 1,447 7
$291,892	$202,009	$6,813	$43,891	$5,830	$578	$551,013
$291,892 - - - -	$204,388 1,053 (3,343) - -	$4,848 - (790) - (54)	$31,394 14,067 (2,301) 2,599 -	$5,711 85 - - -	$2,754 - (2,431) - -	$540,987 15,205 (8,865) 2,599 (54)
$291,892	$202,098	$4,004	$45,759	$5,796	$323	$549,872
$- - - -	$69,264 5,371 (873) -	$3,031 463 (291) 5	$21,582 10,779 (8,002) 1	$2,166 969 - -	$178 132 - -	$96,221 17,714 (9,166) 6
$-	$73,762	$3,208	$24,360	$3,135	$310	$104,775
$- - - -	$67,279 5,328 (3,343) -	$3,209 402 (527) (53)	$14,418 9,186 (2,022) -	$1,204 962 - -	$2,150 459 (2,431) -	$88,260 16,337 (8,323) (53)
$-	$69,264	$3,031	$21,582	$2,166	$178	$96,221
$291,892	$128,247	$3,605	$19,531	$2,695	$268	$446,238
$291,892	$132,834	$973	$24,177	$3,630	$145	$453,651

The Group did not capitalize any interest for the years ended December 31, 2021 and 2020.

Major components of buildings include: main structure, air conditioning, and renovation, which are depreciated over useful lives of 51-56 years, 6 years, and 6 years, respectively.

None of the above property, plant and equipment was pledged as collateral.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

9. Intangible asset

Cost: January 1, 2021 Addition - acquisition by separate purchase Addition – internal transfer Reduction - removal in the current period December 31, 2021 January 1, 2020 Addition - acquisition by separate purchase Addition – internal transfer Reduction - removal in the current period December 31, 2020 Amortization and impairment: January 1, 2021 Reduction - removal in the current period Amortization December 31, 2021 January 1, 2020 Reduction - removal in the current period Amortization December 31, 2020 Net book value: December 31, 2021 December 31, 2020	Computer software
	$12,470 9,618 - (5,201)
	$16,887
	$8,045 3,939 486 -
	$12,470
	$5,759 (5,201) 8,331
	$8,889
	$2,515 - 3,244
	$5,759
	$7,998
	$6,711

Amortization amount of intangible assets:

Operating cost	For the year ended December 31,2021	For the year ended December 31,2020
	$-	$-

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Administrative expenses Research and development expenses	$8,328	$3,240
	$3	$4

10. Other non-current assets

Other non-current assets - others	December 31,2021 $1,279	December 31,2020 $5,803

11. Short-term loans

Unsecured bank loans Interest rate range	December 31,2021	December 31,2020
	$70,000	$-
	0.85%	-%

The Group had undrawn short-term credit facilities of NT$2,144,508 thousand and NT$2,141,519 thousand as at December 31, 2021 and 2020, respectively.

12. Provisions

Beginning of period Additions in the current period Utilization in the current period Reversals in the current period End of the period	Warranty	Warranty
	For the year ended December 31,2021	For the year ended December 31,2020
	$42,171 31,849 (6,063) (53,237)	$22,944 41,278 (7,714) (14,337)
	$14,720	$42,171

Warranty

This provision was made by estimating future product warranty claims, which involved use of historical experience, the management's judgment and other known factors.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

13. Post-employment benefit plans

Defined Contribution Plans

The retirement policy that the Company and domestic subsidiaries have established in accordance with the "Labor Pension Act" introduces a defined contribution plan. According to the Labor Pension Act, the Company and domestic subsidiaries are required to make monthly pension fund contributions at an amount no less than 6% of employee's monthly salary. The Company and domestic subsidiaries have established a set of employee retirement policy according to the Labor Pension Act, and has been making monthly contributions to employees' pension fund accounts held with the Bureau of Labor Insurance at 6% of salary.

Subsidiaries located in Mainland China are bound to comply with local government regulations by making contributions equal to a certain percentage of employees' gross salary to the pension fund. These contributions are paid to relevant government departments, and are saved in dedicated accounts of each employee.

Other foreign subsidiaries of the Group are bound to make pension contributions to the appropriate pension fund management institution in accordance with local laws.

The amounts of recognized pension expenses related to defined contribution plan for the years ended December 31, 2021 and 2020 were NT$27,482 thousand and NT$26,955 thousand respectively.

Defined Benefit Plans

The pension policy that the Company and domestic subsidiaries have established in accordance with the "Labor Standards Act" introduces a defined benefit plan. Employees' pension benefits were paid based on their years of service and their average salaries during the one month when retirement is approved. Employees are awarded 2 pension basis points for every year of service under (including) 15 years, and 1 pension basis point for every year of service above 15 years, subject to a maximum of 45 pension basis points. The Company and domestic subsidiaries make monthly pension contributions equivalent to 2% of employees' monthly gross salaries in accordance with the Labor Standards Act. These contributions are deposited into the dedicated account held with the Bank of Taiwan in the name of Labor Pension Fund Supervisory Committee. The Company and subsidiaries also evaluate the balance of the above-mentioned labor pension fund account before the end of each year. In the event that the account is estimated to be short of balance to pay the amount of estimated pension benefits to workers who are expected to meet their retirement criteria in the following year, the Company and domestic subsidiaries are required to reimburse the shortfall in one contribution before the end of March the following year.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Assets are allocated according to Ministry of Labor's Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. Fund assets are managed through a combination of self-management and mandate, using both active and passive medium-to-longer term investment strategies. The Ministry of Labor has imposed risk limits and control measures on market, credit, and liquidity risks, so that fund assets are not exposed to excessive risk while being given the flexibility to achieve target returns. Plan assets can only be allocated to investments that offer annual yields higher than the 2- year time deposit rate quoted by local banks. Shortfalls may be reimbursed by the public treasury subject to approval of the authority. Since the Company is not involved in the operation and management of the fund, it is unable to disclose the fair value of plan assets according to IAS 19 Section 142.

As at December 31, 2021, the Group expected to make contributions totaling NT$3,005 thousand to the defined benefit plan in the next year.

As at December 31, 2021 and 2020, weighted average duration of the Group's defined benefit obligations was 9 years and 12 years, respectively.

A breakdown of defined benefit plan costs recognized in profit or loss is explained in the chart below:

Service costs for the current period Net interest on net defined benefit liabilities (assets) Service costs for the previous period Total	For the year ended December 31,2021	For the year ended December 31,2020
	$2,886 130 8,236	$2,752 216 5,077
	$11,252	$8,045

Reconciliation between present value of defined benefit obligations and fair value of plan assets:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities - non-current	December 31,2021	December 31,2020	January1,2020
	$159,873 (125,636)	$150,208 (115,294)	$137,419 (107,361)
	$34,237	$34,914	$30,058

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) Reconciliation of net defined benefit liabilities (assets):

Present value of defined benefit obligations	Fair value of plan assets	Net defined benefit liabilities (assets)
$137,419 2,752 989 5,077	$(107,361) - (773) -	$30,058 2,752 216 5,077
146,237	(108,134)	38,103
688 5,053 1,567	- - (2,387)	688 5,053 (820)
7,308	(2,387)	4,921
(3,337) -	3,337 (8,110)	- (8,110)
150,208 2,886 556 8,236	(115,294) - (426) -	34,914 2,886 130 8,236
161,886	(115,720)	46,166
426 (5,410) 5,036	- - (995)	426 (5,410) 4,041
52	(995)	(943)
(2,065) -	2,065 (10,986)	- (10,986)
$159,873	$(125,636)	$34,237

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Below are the main assumptions used for the Company’s defined benefit plan:

Discount rate Expected salary increase rate	December 31,2021	December 31,2020
	0.68% 1.00%	0.37% 1.00%

Sensitivity analysis per major actuarial assumption:

0.5% increase in the discount rate 0.5% decrease in the discount rate 0.5% rise in the expected salary increase rate 0.5% fall in the expected salary increase rate	For the year ended December 31,2021	For the year ended December 31,2021	For the year ended December 31,2020	For the year ended December 31,2020
	Increase in defined benefit obligations	Decrease in defined benefit obligations	Increase in defined benefit obligations	Decrease in defined benefit obligations
	$- 9,379 9,298 -	$5,396 - - 5,405	$- 10,600 10,477 -	$7,101 - - 7,093

The above-mentioned sensitivity analysis shows how reasonable changes in a single actuarial estimate (e.g.: discount rate or expected salary) may affect defined benefit obligations while other assumptions remain unchanged. However, there are limitations to this approach, as some actuarial assumptions are intercorrelated and it is rare to see only one actuarial assumption change in practice.

Methodology and assumption for sensitivity analysis of current period are consistent with those of the previous period.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

14. Equity

(1) Ordinary share

The Company had authorized capital of NT$3,400,000 thousand (20,000 thousand shares of which were reserved for the exercise of employee warrants) as at December 31, 2021 and December 31, 2020. Each share carries a face value of NT$10 and can be issued in multiple offerings. Paid-up capital amounted to NT$1,063,603 thousand and outstanding shares totaled 106,360 thousand on all dates. Each share is entitled to one voting right and the right to receive dividends.

(2) Capital surplus

Premium on consolidation Premium on conversion of convertible bonds Total	December 31,2021	December 31,2020
	$148,259 18,255	$148,259 18,255
	$166,514	$166,514

According to regulations, capital surplus cannot be used for any purpose other than reimbursing previous losses. If the Company has no cumulative losses, capital surpluses that arise from shares issued at premium and gifts received may be capitalized into share capital, up to a certain percentage of paid-in capital per year; these capital surpluses may also be distributed in cash among shareholders at the current ownership percentage.

(3) Earnings appropriation and dividend policy

According to the Articles of Incorporation, annual surpluses concluded by the Company are first subject to taxation and reimbursement of previous losses, followed by a 10% provision for legal reserve (unless legal reserves have accumulated to an amount equal to share capital). Any surpluses remaining shall then be subject to provision or reversal of special reserve, as the laws may require. The residual balance can then be added to unappropriated earnings carried from previous years and retained or distributed to shareholders as a form of profit sharing, subject to resolution in a shareholder meeting.

Shareholders' profit sharing can be paid in cash or shares; however, the cash portion shall be no less than 10% of total dividends.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

The Company operates in the high-tech industry and is susceptible to the industry's enterprise life cycle. Dividends shall be allocated after taking into consideration several factors including: current and future investment environment, capital requirement, domestic/foreign competition, capital budget, shareholders' expectations, balanced dividends, and the Company's long-term financial plan. Dividend distribution plans are to be proposed by the board of directors and presented for final resolution in shareholder meeting on a yearly basis.

The Company will be required to provide additional special reserves to make up for the shortfall between the balance of special reserves provided during the first-time adoption of IFRS and the net balance of other contra equity items in years it decides to distribute available earnings. If there is any subsequent reversal of the net decrease in other equity, the reversed part of the net decrease in other equity may be reversed to the special reserve, and be distributed to investors.

In accordance with the order via a letter issued by the FSC on March 31, 2021 referenced Jin-Guan-Zheng-Fa No. 1090150022, if the International Financial Reporting Standards is adopted for the first time, for the unrealized revaluation value addition and cumulative translation adjustment (benefit) in the account which are transferred to retained earnings due to the adoption of the exemption item of IFRS 1 "First Adoption of IFRS" on the conversion date, a special reserve shall be allocated. Subsequently, when the Company uses, disposes of, or reclassifies the relevant assets, it may reverse the proportion of the original special reserve for distribution of earnings.

As at December 31, 2021, the Company had NT$144 thousand of special reserve that were provided due to first-time adoption of IFRS.

The Company's 2021 and 2020 earnings appropriation proposal and dividends per share were proposed and resolved during the board of directors meeting held on February 25, 2022 and annual general meeting held on July 9, 2021, respectively. Details are as presented below:

Earnings appropriation plan Dividends per share (NTD)

Legal reserve Special reserve Cash dividends on ordinary shares	2021	2020	2021	2020
	$63,872 - 597,745	$45,401 (61,935) 457,349	$5.62	$4.30

Please refer to Note (VI).18 for the amount of employee remuneration and director

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) remuneration recognized and the basis of estimation.

(4) Non-controlling interests: None.

15. Operating revenue

Revenues from sale of merchandise Revenues from rendering of service Other operating revenues Total	For the year ended December 31,2021	For the year ended December 31,2020
	$4,621,922 1,951,042 6,590	$3,980,028 1,551,755 11,028
	$6,579,554	$5,542,811

Information relating to revenue from contracts with customers for the years ended December 31, 2021 and 2020:

(1) Breakdown of revenue

Sales of merchandise Rendering of service Others Total Timing of revenue recognition: At a point in time Over time Total	Operatingsegment	Operatingsegment
	For the year ended December 31,2021	For the year ended December 31,2020
	$4,621,922 1,951,042 6,590	$3,980,028 1,551,755 11,028
	$6,579,554	$5,542,811
	$4,628,512 1,951,042	$3,991,056 1,551,755
	$6,579,554	$5,542,811

(2) Contract balance
A. Contract assets - current

December 31, 2021 December 31, 2020 January 1, 2020

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Sales of merchandise and rendering of service Less: loss provisions Total	$215,639 (11,248)	$351,222 (12,524)	$271,661 (11,898)
	$204,391	$338,698	$259,763

Major changes in the balance of contract assets for the years ended December 31, 2021 and 2020 are explained below:

Amount of beginning balance reclassified into accounts receivable in the current period Changes were measured based on level of completion	2021	2020
	$(326,606)	$(246,843)
	$191,023	$326,404

The Group assesses impairment according to IFRS 9. Please see Note (VI).16 for information on loss provisions and Note (XII) for credit risk-related information.

B. Contract liabilities - current

Sales of merchandise and rendering of service	December 31,2021 $1,173,794	December 31,2020	January1,2020
		$1,229,208	$931,086

Major changes in the balance of contract liabilities for the years ended December 31, 2021 and 2020 are explained below:

Amount of beginning balance reclassified into revenue in the current period Current increase in advanced receipt (less amounts incurred and reclassified into revenue in the current period)	2021	2020
	$(969,228)	$(631,378)
	$913,814	$929,500

(3) Allocation of transaction price into unfulfilled contractual obligations

As at December 31, 2021, the Group had allocated NT$5,470,427 thousand of transaction price into unfulfilled (including partially unfulfilled) contractual

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) obligations; 69.29% of which are expected to be recognized as revenue in 2022, whereas the remainder will be recognized as revenue on and after 2023.

(4) Assets recognized from costs of acquiring and fulfilling customer contracts

None.

16. Expected credit impairment reversal gain

Expected credit impairment loss/reversal gain Contract assets Accounts receivable Installment accounts receivable Total	For the year ended December 31,2021	For the year ended December 31,2020
	$126 3,458 (1,045)	$199 6,816 -
	$2,539	$7,015

Please see Note (XII) for credit risk-related information.

All of the Group's contract assets and receivables (including notes receivable, accounts receivable, and installment accounts receivable) have loss provisions measured based on Lifetime Expected Credit Losses. Credit loss is recognized as the difference between the book value of contract assets/accounts receivable and the present value of expected cash flow (prospective information). For short-term receivables, however, credit loss is not measured using present value difference as the effect of discounting is insignificant. Loss provisions as at December 31, 2021 and December 31, 2020 are explained below:

Contract assets and accounts receivables are divided into groups based on counterparties' credit rating, location, and industry, and a provision matrix is used to measure loss provisions. Relevant details are presented below:

December 31, 2021

December	31, 2021
Group 1 Total book value Loss ratio	Not past due (Note 1)			Past due			Total
		Within 30 days	31-60 days	61-90 days	91-120 days	121 days and above
	$860,466 0.9%	$43,434 0.7%	$27,733 0.5%	$7,208 0.8%	$1,944 0.8%	$25,228 1.2%	$966,013

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(7,969)	(297)	(143)	(61)	(16)	(312)	(8,798) $957,215 Total
$852,497	$43,137	$27,590	$7,147	$1,928	$24,916
Not past due (Note 1)			Past due
	Within 30 days	31-60 days	61-90 days	91-120 days	121 days and above
$12,909 100%	$- -	$- -	$- -	$- -	$5,798 100%	$18,707 (18,707)
(12,909)	-	-	-	-	(5,798)
$-	$-	$-	$-	$-	$-	$-
31, 2020 Not past due (Note 1)			Past due			Total $1,115,431 (9,995) $1,105,436 Total
	Within 30 days	31-60 days	61-90 days	91-120 days	121 days and above
$974,799 0.9%	$82,199 0.7%	$27,313 0.5%	$9,279 0.5%	$2,891 0.9%	$18,950 2.0%
(8,843)	(561)	(147)	(46)	(25)	(373)
$965,956	$81,638	$27,166	$9,233	$2,866	$18,577
Not past due (Note 1) $12,909 100% (12,909) $-	Within 30 days 31-60 days		Past due
			61-90 days	91-120 days	121 days and above
	$- -	$- -	$- -	$- -	$8,326 100%	$21,235 (21,235)
	-	-	-	-	(8,326)
	$-	$-	$-	$-	$-	$-

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Note 1: All notes receivable and contract assets are not past due; loss provisions are measured based on Lifetime expected credit losses.

Note 2: The Group measures loss provision for individual counterparties based on Lifetime Expected Credit Losses. Credit loss is recognized as the difference between the book value of contract assets/accounts receivable and the present value of expected cash flow.

Changes in loss provisions on contract assets, accounts receivable, and installment accounts receivable for the years ended December 31, 2021 and 2020 are explained below:

Contract assets	Accounts receivable	Installment accounts receivable
$12,524 (126) (1,150) - -	$11,657 (3,458) 1,150 (1,189) 3	$7,049 1,045 - - -
$11,248	$8,163	$8,094
$11,898 (199) 825 - -	$19,676 (6,816) (825) (373) (5)	$7,049 - - - -
$12,524	$11,657	$7,049

Lease

(1) The Group as lessee

The Group leases several types of asset, including buildings, transportation equipment, and office equipment. Lease tenor of each contract is from 1 to 6 years.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Effects of leases on the Group's financial position, financial performance, and cash flow are explained below:

A. Amounts recognized in the balance sheet
(a) Right-of-use assets

Book value of right-of-use assets

Buildings Transportation equipment Office equipment Total	December 31,2021	December 31,2020
	$19,471 2,904 1,424	$27,552 4,192 3,453
	$23,799	$35,197

Right-of-use assets increased by NT$4,957 thousand and NT$8,350 thousand for the years ended December 31, 2021 and 2020, respectively.

(b) Lease liabilities

Lease liabilities Current Non - current Total	December 31,2021	December 31,2020
	$24,444	$35,884
	$12,101 12,343	$14,957 20,927
	$24,444	$35,884

Please see Note (VI).19(4) - Financial cost for interest on lease liabilities for the years ended December 31, 2021 and 2020, and Note (XII).5 - Liquidity risk management for maturity analysis of lease liabilities as at December 31, 2021.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

B. Amount recognized in statement of comprehensive income

Depreciation of right-of-use assets

Buildings Transportation equipment Office equipment Total	For the year ended December 31,2021	For the year ended December 31,2020
	$9,734 4,224 2,398	$9,722 6,545 1,897
	$16,356	$18,164

C. Income, expenses, and losses relating to lease activities as a lessee

Short-term lease expense	For the year ended December 31,2021	For the year ended December 31,2020
	$3,831	$3,561

D. Cash outflow relating to lease activities as a lessee

The Group incurred NT$20,855 thousand and NT$22,316 thousand of lease-related cash outflow for the years ended December 31, 2021 and 2020.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

18. Summary of employee benefit, depreciation, and amortization expenses by function:

By function By nature	For the year ended December 31,2021	For the year ended December 31,2021	For the year ended December 31,2021	For the year ended December 31,2020	For the year ended December 31,2020	For the year ended December 31,2020
	Classified as operating costs	Classified as operating expenses	Total	Classified as operating costs	Classified as operating expenses	Total
Employee benefit expenses	$80,226	$686,722	$766,948	$81,433	$686,338	$767,771
Wages and salaries	68,932	585,642	654,574	70,352	588,246	658,598
Labor and national health insurance expenses	5,928	47,585	53,513	5,673	44,910	50,583
Pension expenses	3,530	35,204	38,734	3,440	31,560	35,000
Other employee benefit expenses	1,836	18,291	20,127	1,968	21,622	23,590
Depreciation expenses	-	34,070	34,070	-	34,501	34,501
Amortization expenses	-	8,331	8,331	-	3,244	3,244

Pursuant to the Articles of Incorporation, profits concluded from a financial year are subject to employee remuneration of no less than 3% and director remuneration of no more than 5%. However, profits must first be taken to offset against cumulative losses if any. Distribution of employee remuneration mentioned above can be made in cash or in shares. This decision must be resolved in a board meeting with more than two-thirds of the board present, voted in favor by more than half of all attending directors, and subsequently reported in shareholder meeting. Please visit the "Market Observation Post System" for more information regarding employee/director remuneration resolved in board of director meetings.

Employee remuneration and director remuneration for the year ended December 31, 2021 were estimated at NT$ 37,100 thousand and NT$ 0 thousand, respectively, based on the Company's profitability and the percentages stated in the Articles of Incorporation. Employee remuneration and director/supervisor remuneration for the year ended December 31, 2020 were estimated at NT$ 38,900 thousand and NT$ 0 thousand, respectively, based on profitability of that particular year. The abovementioned amounts were presented under salary expense at the time of estimation, and if the actual amount resolved by the board of

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

directors differs from the estimate, the difference will be recognized as gain or loss for the next year.

The board of directors passed a resolution on February 25, 2022 to pay the 2021 employee remuneration and director remuneration at NT$37,100 thousand and NT$0 thousand, respectively, in cash; these amounts were indifferent from the expenses previously recognized in the 2021 financial statements.

The board of directors passed a resolution on February 26, 2021 to pay the 2020 employee remuneration and director/supervisor remuneration at NT$38,900 thousand and NT$0 thousand, respectively, in cash; these amounts were indifferent from the expenses previously recognized in the 2020 financial statements.

19. Non-operating income and expenses

(1) Interest income

Financial assets at amortized costs	For the year ended December 31,2021	For the year ended December 31,2020
	$12,889	$13,290

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(2) Other income

Rental income Dividend income Other income - others Total	For the year ended December 31,2021	For the year ended December 31,2020
	$11 3,839 20,027	$11 4,555 37,505
	$23,877	$42,071

(3) Other gains and losses

Gains (losses) on disposals of property, plant and equipment Net gains on currency exchange Gains on financial assets at fair value through profit or loss Others Total	For the year ended December 31,2021	For the year ended December 31,2020
	$(2) 3,124 2,577 (3,200)	$124 689 2,590 (7)
	$2,499	$3,396

(4) Finance costs

Interest expenses on bank loans Interest expenses on lease liabilities Total	For the year ended December 31,2021	For the year ended December 31,2020
	$824 627	$794 875
	$1,451	$1,669

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

20. Composition of other comprehensive income

Composition of other comprehensive income for the year ended December 31, 2021 is explained below:

Items not reclassified into profit or loss: Remeasurement of defined benefit plan Unrealized gain on investments in equity instruments at fair value through other comprehensive income Share of other comprehensive income on subsidiaries, associates and joint ventures using equity method Items likely to be reclassified into profit or loss: Exchange differences on translation of foreign operations Total other comprehensive income (loss) for the current period	Arising in the current period	Reclassification in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount after tax
	$ 944 1,501 6,216 1,576	$- - - -	$ 944 1,501 6,216 1,576	$(189) - - -	$ 755 1,501 6,216 1,576
	$10,237	$-	$10,237	$(189)	$10,048

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Composition of other comprehensive income for the year ended December 31, 2020 is explained below:

Items not reclassified into profit or loss: Remeasurement of defined benefit plan Unrealized gain on investments in equity instruments at fair value through other comprehensive income Share of other comprehensive income on subsidiaries, associates and joint ventures using equity method Items likely to be reclassified into profit or loss: Exchange differences on translation of foreign operations Total other comprehensive income for the current period	Arising in the current period	Reclassification in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount after tax $(3,937) 4,276 9,497 (2,867) $6,969
	$(4,921) 4,276 9,497 (2,867)	$- - - -	$(4,921) 4,276 9,497 (2,867)	$984 - - -
	$5,985	$-	$5,985	$984

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

21. Income tax

Compositions of income tax expenses (benefits) for the years ended December 31, 2021 and 2020, are explained below:

Income tax recognized under profit or loss

Income tax expenses (benefits) for the current period: Current income tax payable Adjustment of current income tax of previous years Deferred income tax expenses (benefits): Deferred income tax expenses (benefits) relating to the origination and reversal of temporary differences Deferred income tax relating to the origination and reversal of tax losses and income tax credits Offset (reversal of previous offset) of deferred income tax asset Deferred income taxes relating to tax rate changes Others Income tax expenses	For the year ended December 31,2021	For the year ended December 31,2020
	$157,454 (6,745) 9,473 - - - 3	$103,933 (8,274) 7,260 (328) 216 112 (28)
	$160,185	$102,891

Income tax recognized under other comprehensive income

Deferred income tax expense: Remeasurement of defined benefit plan	For the year ended December 31,2021	For the year ended December 31,2020
	$(189)	$984

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Reconciliation of income tax expense and the amount of accounting income multiplied with applicable income tax rate:

Income before income tax from continuing operations Tax amount calculated by applying the domestic statutory tax rate of related countries Tax effects of non-deductible expenses Tax effects of deferred income tax assets/liabilities Adjustment of current income tax of previous years Other income tax effects adjusted according to tax laws Deferred income taxes relating to tax rate changes Others Total income tax expense recognized under profit or loss	For the year ended December 31,2021	For the year ended December 31,2020
	$798,347	$600,509
	$220,096 (51,519) (1,650) (6,745) - - 3	$163,074 (34,992) (17,581) (8,274) 769 (112) 7
	$160,185	$102,891

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Balance of deferred income tax assets (liabilities) relating to the items below:

For the year ended December 31, 2021

Beginning ofperiod	Recognized under profit or loss	Recognized under other comprehensive income	End of period
$(518) (46,932) 4,673 6,983 (39) 3,622 7,573	$518 (4,865) (394) 53 166 238 (5,189)	$- - - (189) - - -	$- (51,797) 4,279 6,847 127 3,860 2,384
$(24,638)	$(9,473)	$(189)	$(34,300)

$22,851			$17,497
$(47,489)			$(51,797)

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) For the year ended December 31, 2020

Beginning ofperiod	Recognized under profit or loss	Recognized under other comprehensive income	End of period
$- (38,448) 4,159 6,012 (457) 4,170 6,202	$(518) (8,484) 514 (13) 418 (548) 1,371	$- - - 984 - - -	$(518) (46,932) 4,673 6,983 (39) 3,622 7,573
$(18,362)	$(7,260)	$984	$(24,638)

$20,543			$22,851
$(38,905)			$(47,489)

Unused tax loss carryforward by Group entities:

Year occurred	Unused	balance	Finalyear available
	December 31,2021	December 31,2020
2015	$120	$120	2025

Items not recognized as deferred income tax asset

As at December 31, 2021 and 2020, the Group had NT$2,878 thousand and NT$4,682 thousand, respectively, that were not recognized as deferred income tax assets.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Assessment of income tax return

Assessment of income tax filings submitted by the Company and domestic subsidiaries as at December 31, 2021 is explained below:

The Company Subsidiary - SRAIN Investment Co., Ltd. Subsidiary - Stark Inforcom Inc.	Assessment of income tax return
	Certified up to 2019 Certified up to 2019 Certified up to 2019

22. Earnings per share (EPS)

Amount of basic earnings per share is calculated by dividing current net income attributable to parent company's ordinary shareholders by weighted average outstanding ordinary shares for the current period.

Amount of diluted earnings per share is calculated by dividing current net income attributable to parent company's ordinary shareholders by weighted average outstanding ordinary shares for the current period, including all potential dilutive ordinary shares assuming total conversion.

(1) Basic earnings per share Net income attributable to parent company's ordinary shareholders (NTD thousands) Weighted average outstanding ordinary shares for basic earnings per share (shares) Basic earnings per share (NTD) (2) Diluted earnings per share Net income attributable to parent company's ordinary shareholders (NTD thousands) Weighted average outstanding ordinary shares for basic earnings per share (shares) Dilutive effect: Employee remuneration (shares) Weighted average outstanding ordinary shares after adjustment for dilutive effect (shares)	For the year ended December 31,2021	For the year ended December 31,2020
	$638,162	$497,618
	106,360,291	106,360,291
	$6.00	$4.68
	$638,162	$497,618
	106,360,291 600,043	106,360,291 684,174
	106,960,334	107,044,465

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Diluted earnings per share (NTD)	For the year ended December 31,2021	For the year ended December 31,2020
	$5.97	$4.65

There had been no other transaction that significantly changed the end of period number of outstanding ordinary shares or potential ordinary shares after the reporting date up until the publication date of financial statements.

(VII). Related party transactions

Compensation for key management of the Group

Short-term employee benefits Post-employment benefits - pension Total	For the year ended December 31,2021	For the year ended December 31,2020
	$77,003 2,673	$87,726 2,622
	$79,676	$90,348

(VIII). Pledged assets

The Group had placed the following assets as collaterals:

Item	Book	value	Details of debts secured
	December 31,2021	December 31,2020
Other financial assets - current Other financial assets - non-current Total	$9,013 6,842	$8,433 9,092	Performance guarantee Performance guarantee
	$15,855	$17,525

(IX). Significant contingent liabilities and unrecognized contract commitments

The Company had engaged financial institutions to provide NT$115,492 thousand of performance and customs guarantee for various projects.
The Company had issued NT$35,954 thousand of guaranteed notes to customers and banks to secure sales and borrowing limits.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(X). Losses from Major Disasters

None.

(XI). Significant Subsequent Events

None.

(XII). Others

1. Types of financial instrument

Financial assets Financial assets at fair value through profit or loss Mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortized costs Cash and cash equivalents (excluding cash on hand) Receivables Long-term receivables Other financial assets Refundable deposits Subtotal Total Financial liabilities Financial liabilities at amortized costs: Short-term loans Payables Lease liabilities Guarantee deposits Total	December 31,2021	December 31,2020
	$-	$12,590
	144,213	92,570
	1,450,714 688,225 70,001 15,855 230,586	1,348,206 682,110 87,317 17,525 215,597
	2,455,381	2,350,755
	$2,599,594	$2,455,915
	$70,000 1,191,505 24,444 3,138	$- 1,388,024 35,884 2,821
	$1,289,087	$1,426,729

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

2. Purpose and policy of financial risk management

The Group has set its financial risk management goals to primarily manage market risks, credit risks, and liquidity risks relating to operating activities. The abovementioned risks are identified, measured, and managed according to the Group's policies and risk preference.

The Group has implemented appropriate policies, procedures, and internal controls for the management of financial risks mentioned above. All important financial activities are subject to review by the board of directors and audit committee in accordance with rules and the internal control system. The Group is required to duly comply with its financial risk management rules when carrying out financial management activities.

3. Market risk

Changes in the market price of financial instruments is the type of market risk that the Group is most concerned with. Market risk may cause fluctuation in the fair value or cash flow of financial instruments, and mainly includes exchange rate risk, interest rate risk, and other price risk.

In practice, however, it is extremely rare to see only one risk variable changing at one time. Although risk variables tend to be correlated to some degree, the sensitivity analysis below has not taken into consideration the inter-correlation of risk variables.

Exchange rate risk

The Group’s exchange rate risk exposure is mainly associated with operating activities (when the currency of income or expense is different from the Group’s functional currency) and net investments in foreign operations.

Some of the Group's foreign currency receivables and foreign currency payables are denominated in the same currencies, which create natural hedge to some extent. However, the Group did not adopt hedge accounting as natural hedge does not conform with the requirements for hedge accounting. Meanwhile, net investments in foreign operations represent strategic investments, therefore the Group did not hedge this exposure.

Sensitivity analysis for exchange rate risk is conducted on monetary items denominated in key foreign currencies as at the balance sheet date, and the analysis evaluates how a strengthening/weakening of foreign currency affects the Group's profits and equity. Exchange rate risks of the Group are mainly attributed to the volatility of USD and RMB

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) currencies. Sensitivity analysis for the two currencies is provided below:

If NTD strengthened/weakened against USD by 1%, profits for the years ended December 31, 2021 and 2020 would have decreased/increased by NT$19 and increased/decreased by NT$78, thousand, whereas equity would have decreased/increased NT$117 thousand and NT$130 thousand, respectively.

If NTD strengthened/weakened against RMB by 1%, profits for the years ended December 31, 2021 and 2020 would have decreased/increased by NT$397 thousand and NT$449 thousand, respectively, and there would be no effect whatsoever on equity.

Interest rate risk

Interest rate risk refers to fluctuations in the fair value or future cash flow of a financial instrument due to changes in market interest rate. The Group's exposure to interest rate risk arises mainly from loans borrowed at floating rate. However, given that the Group currently has no such loan outstanding, it is not exposed to any material interest rate risk.

Equity price risk

The Group holds TWSE/TPEX listed as well as unlisted equity securities; the fair value of investments may be affected by uncertainties associated with the future value. All TWSE/TPEX listed and unlisted equity securities held by the Group are classified as equity instruments at fair value through other comprehensive income. The Group manages equity price risk of equity securities through diversified investment and by setting investment limits on single and a portfolio of instruments. Information on portfolio of equity securities has to be provided to the Group's management on a regular basis; the board of directors is required to verify and approve all decisions concerning investment of equity securities.

A 10% rise/fall in the price of TWSE/TPEX listed shares held as investments in equity instruments at fair value through other comprehensive income would have affected the Group's equity by NT$12,810 thousand and NT$7,841 thousand for the years ended December 31, 2021 and 2020, respectively.

4. Credit risk management

Credit risk refers to the possibility of financial losses suffered due to counterparties

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

becoming unable to fulfill contractual obligations. The Group's credit risk exposure mainly arises from operating activities (primarily accounts receivable and notes receivable) and financing activities (primarily bank deposits and financial instruments).

All departments of the Group manage credit risks according to prevailing policies, procedures, and controls. Counterparty credit risk is evaluated after taking into consideration each counterparty's financial position, external credit rating, historical transactions, the current economic environment, and the Group's internal rating standards, etc. The Group uses credit enhancement tools (such as advanced receipt and insurance) at appropriate times to minimize credit risk of specific counterparties.

The Group's top 10 customers accounted for 33% of total contract assets and accounts receivable balance as at December 31, 2021 and 2020. Judging by the above, there was no concentration of credit risk in the Group's contract assets and accounts receivable.

The Finance Department manages credit risk of bank deposits and other financial instruments according to group policies. All counterparties of the Group are approved according to internal control procedures, and consist entirely of reputable banks, investment-grade financial institutions, companies, and government agencies, hence no major credit risk exists.

The Group assesses expected credit losses according to IFRS 9. Information relating to credit risk assessment is presented below:

			Total bookvalue	Total bookvalue
Credit riskgrade	Indicator	Method of measuring expected credit loss
			December31,2021	December31,2020
Simplified Approach (Note)	(Note)	Lifetime Expected Credit Losses	$984,720	$1,136,666

Note: The Group adopts the Simplified Approach (loss provision is measured based on Lifetime Expected Credit Losses); the assessment covers contract assets, notes receivable, accounts receivable, and installment accounts receivable.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

5. Liquidity risk management

The Group uses cash and cash equivalents, marketable securities, bank loans, leases, and contracts to maintain financial flexibility.

The following table shows maturity of financial liabilities as stated in contract terms and conditions. The dates represent the earliest times at which the Group may be required to make repayments, whereas the amounts are undiscounted and include agreed interests. Undiscounted amounts of floating interest cash flow are estimated using yield curve as at the balance sheet date.

Non-derivative instruments

December 31, 2021 Short-term loans Payables Lease liabilities December 31, 2020 Payables Lease liabilities	Less than 1year	2 to 3years	4 to 5years	More than 5years	Total
	$70,066 1,191,505 12,501 $1,388,024 15,526	$- - 12,453 $- 19,222	$- - 64 $- 2,171	$- - - $- -	$70,066 1,191,505 25,018 $1,388,024 36,919

6. Reconciliation of liabilities relating to financing activities

Reconciliation of liabilities for the year ended December 31, 2021:

January 1, 2021 Non - cash movement Cash flow December 31, 2021	Short-term loans	Guarantee deposits	Lease liabilities	Total
	$- - 70,000	$2,821 - 317	$35,884 5,584 (17,024)	$38,705 5,584 53,293
	$70,000	$3,138	$24,444	$97,582

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) Reconciliation of liabilities for the year ended December 31, 2020:

January 1, 2020 Non - cash movement Cash flow Effect of exchange rate variation December 31, 2020	Short-term loans	Guarantee deposits	Lease liabilities	Total
	$130,190 - (130,190) -	$5,027 - (2,206) -	$45,425 9,225 (18,755) (11)	$180,642 9,225 (151,151) (11)
	$-	$2,821	$35,884	$38,705

Fair value of financial instruments

(1) Fair value assessment techniques and assumptions

Fair value refers to the price that market participants are able to receive for selling an asset, or the price that has to be paid to transfer a liability, in an orderly transaction on the measurement date. The Group has adopted the following techniques and assumptions when measuring and disclosing fair values of financial assets and liabilities:

A. Book value of cash and cash equivalents, receivables, payables, and other current liabilities closely resemble their fair value due to their short maturity.
B. Financial assets and liabilities that are traded on active markets at standard terms and conditions shall have fair value determined by market quotation (e.g. TWSE/TPEX listed shares, beneficiary certificates, and bonds).
C. Equity instruments without active market (e.g. privately placed shares of TWSE/TPEX listed companies, shares of unlisted public and private companies without active market) shall have fair value estimated using the market approach, which infers fair values from transaction price or other relevant information (such as discount for lack of liquidity, P/E and P/B ratios of similar companies etc.) of same or comparable equity instruments.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

D. For debt instruments without quotation in active market, bank loans, and other noncurrent liabilities, fair value is determined by counterparty's quotation or through the use of valuation technique. The valuation technique takes a discounted cash flow approach, and assumptions such as interest rate and discount rate are established in reference to instruments of similar nature.

(2) Fair value of financial instruments carried at cost after amortization

Book value of financial assets and liabilities carried at amortized costs closely resemble their fair value.

(3) Fair value hierarchy for financial instruments

See Note (XII).8 for information relating to fair value hierarchy for financial instruments.

8. Fair value hierarchy

(1) Definition of fair value hierarchy

For all assets and liabilities measured or disclosed at fair value, fair value measurement is categorized in their entirety in the level of the lowest level input that is significant to the entire measurement. The different levels of inputs used are explained below:

Level 1 input: Quotations that can be obtained from an active market (unadjusted) on the measurement date for asset or liability of equivalent nature. Level 2 input: Inputs that can be observed directly or indirectly on an asset or liability, except for quotations covered in level 1 input. Level 3 input: Inputs that cannot be observed for an asset or liability.

Assets and liabilities that are recognized on financial statements on a recurring basis shall have classification reassessed on each balance sheet date to determine if transfer of fair value hierarchy has taken place.

(2) Information on fair value hierarchy

The Company did not have any asset that is measured at fair value on a non-recurring basis. Hierarchy of assets and liabilities with recurring fair value measurement is

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified) explained below:

Level 1	Level 2	Level 3	Total
$128,100	$-	$16,113	$144,213
Level 1	Level 2	Level 3	Total
$12,590	$-	$-	$12,590
$78,407	$-	$14,163	$92,570

Transfer of fair value input between level 1 and level 2

There had been no transfer of fair value input between level 1 and level 2 for the years ended December 31, 2021 and 2020 that involved assets or liabilities with fair value measured on a recurring basis.

Transfer of level 3 input for fair value measured on a recurring basis

There had been no transfer of level 3 input that involved assets or liabilities with fair value measured on a recurring basis in current period.

Information on the use of significant unobservable inputs in level 3 fair value measurement

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

The following significant unobservable inputs were used for level 3 measurement of assets with fair value measured on a recurring basis:

December 31, 2021:

Valuation Significant Quantitative Relationship between Sensitivity analysis on relationship technique unobservable input information input and fair value between input and fair value

Financial assets: Financial assets at fair value through other comprehensive income Stock Asset Discount for lack of 20% The higher the lack of If P/E ratio of a similar share Approach liquidity liquidity, the lower the rises/falls by 10%, the Group's profits fair value estimate would increase/decrease by NT$16 thousand.

December 31, 2020:

Valuation Significant Quantitative Relationship between Sensitivity analysis on relationship technique unobservable input information input and fair value between input and fair value

(3) Mandatory disclosure of fair value hierarchy for items not measured at fair value: None.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

9. Significant foreign currency-denominated financial assets and liabilities

The Group had the following significant foreign currency -denominated financial assets and liabilities:

	and liabilities:	and liabilities:
Financial assets	December31,2021			Unit: thousand dollars December31,2020
	Foreign currency	Exchange rate	NTD	Foreign currency	Exchange rate	NTD
	$3,924 83,527 26,603 90 158 3,269	27.61 4.314 0.2383 20.34 27.61 4.314	$108,331 360,337 6,339 1,821 4,368 14,104	$1,580 69,574 25,613 104 650 1,624	28.04 4.286 0.2705 21.15 28.04 4.286	$44,311 298,192 6,928 2,208 18,217 6,959
Monetary items: USD CNY (RMB) JPY SGD Financial liabilities
Monetary items: USD CNY (RMB)

Due to the broad diversity of functional currencies used for transactions by members of the Group, the Group was unable to disclose exchange gains/losses on monetary financial assets and liabilities separately for each significant foreign currency. The Group incurred NT$ 3,124 thousand and NT$ 689 thousand of gains on currency exchange for the years ended December 31, 2021 and 2020, respectively.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

10. Capital management

The primary goals of the Group’s capital management are to maintain robust credit rating and sound capital ratios in ways that support business operation and maximization of shareholders' equity. The Group manages and adjusts capital structure based on changes in economic circumstances. The Group maintains and adjusts capital structure through: adjustment of dividend payment, refund of share capital, or issuance of new shares.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(XIII). Other Disclosures

1. Information related to significant transactions:

(1) Loans to external parties: None.
(2) Endorsements/guarantees provided for others:

Serial No. (Note 1)	Name of the company providing an endorsement/ guarantee	The endorsed/guaranteed	The endorsed/guaranteed	Limits on endorsement/ guarantee amount provided to a single entity (Note 3)	Maximum balance for the period (Note 4)	Outstanding endorsement/ guarantee amount at the end of the period (Note 5)	Actual amount drawn down (Note 6)	Amount of endorsement/ guarantee secured with collateral	Cumulative amount of endorsement / guarantee as a percentage of net equity stated in the latest financial statements	Maximum endorsement/ guarantee amount allowed (Note 3)	Provision of endorsement/ guarantee by parent company to subsidiary (Note 7)	Subsidiary's guarantee/ endorsement to parent company (Note 7)	Provision of endorsement/ guarantee to the party in Mainland China (Note 7)
		Name of the company	Relationship (Note 2)
0	The Company	Stark Inforcom Inc	. 2	$1,509,936	$7,163	$-	$-	-	-%	$1,509,936	Y	-	-
0	The Company	STARK (NINGBO) TechnologyInc.	2	1,509,936	129,420	-	-	-	-%	1,509,936	Y	-	Y
1	Stark Inforcom Inc.	The Company	4	257,091	38,526	19,500	19,500	-	0.65%	514,182	-	Y	-

Note 1: Explanation to the serial number column:

0 for the Company.
Investees are numbered in sequential order starting from 1; serial number should be consistent for the same company.
Note 2: The relationship between endorsement/guarantee providers and guaranteed parties are classified as follows:
Business that the Company has business dealing with.
Business in which the Company holds more than 50% direct or indirect voting interest.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Business that holds more than 50% direct or indirect voting interest in the Company.
Business in which the Company holds more than 90% direct or indirect voting rights.
Peer or partner of a construction contract that the Company is in need to provide cross guarantees for.
Investee of a joint investment arrangement for which the Company and other shareholders have issued endorsements/guarantees proportionate to ownership interest.
Peer of a property pre-sale contract for which the Company has issued performance guarantee in accordance with the Consumer Protection Act.
Note 3: According to subsidiaries' endorsement and guarantee procedures, endorsements/guarantees to a single business shall not exceed 50% of current net equity; total endorsements/guarantees to external parties shall not exceed 100% of current net equity. According to parent company's endorsement and guarantee procedures, endorsements/guarantees to any single subsidiary in which the Company holds more than 90% ownership interest shall not exceed 50% of net equity shown in the Company's latest financial statements, whereas endorsements/guarantees to other external parties shall not exceed 10% of the Company's net equity per entity or 50% of the Company's net equity on an aggregate basis, as shown in the latest financial statements.
Note 4: Represents the maximum balance of endorsement/guarantee during the year.
Note 5: Represents board of directors approved amount. If the Chairman has been authorized by the board of directors to make decisions according to Subparagraph 8, Article 12 of Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, the column shall represent Chairman-approved amount.
Note 6: Represents the actual amount utilized by the guaranteed/endorsed within the endorsement/guarantee limit.
Note 7: Specify "Y" only for: endorsement/guarantee from a TWSE/TPEX listed parent to a subsidiary, endorsement/guarantee from a subsidiary to a TWSE/TPEX listed parent, or endorsement/guarantee to the Mainland China area.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(3) Holding of marketable securities at the end of the period (not including investment in subsidiaries, associates and joint ventures):

Name of the investor	Type of marketable security	Name of marketable security	Relationship between the securities issuer and the Company	Financial statement account	End of theperiod	End of theperiod	End of theperiod
					Shares / units	Book value	Percentage of shareholding	Fair value
Stark Technology Inc.	TWSE-listed stock	ITEQ Corporation	-	Financial assets at fair value through other comprehensive income - non- current	362,829	$51,521	0.09%	$51,521
	Stock	DWINS Digital Service Corp.	-	Financial assets at fair value through other comprehensive income - non- current	1,151	-	0.04%	-
	Stock	Cloud Intelligent Operation Technology Co.,Inc	Stark Technology Inc. serves as a director for the entity	Financial assets at fair value through other comprehensive income - non- current	195,000	1,950	19.50%	1,950
SRAIN Investment Co., Ltd.	TWSE-listed stock	ITEQ Corporation	-	Financial assets at fair value through other comprehensive income - non- current	187,614	26,641	0.05%	26,641
	TWSE-listed stock	Zero One Technology Co., Ltd.	-	Financial assets at fair value through other comprehensive income - non- current	1,054,422	46,395	0.83%	46,395
	TPEX-listed stock	Genesis Technology Inc.	-	Financial assets at fair value through other comprehensive income - non- current	28,000	1,381	0.04%	1,381
	TPEX-listed stock	Dimerco Data System Corporation	-	Financial assets at fair value through other comprehensive income - non- current	30,799	2,162	0.04%	2,162
	Stock	Hua Chih Venture Capital Corp.	SRAIN Investment Co., Ltd. serves as a director for Hua Chih Venture Capital Corp.	Financial assets at fair value through other comprehensive income - non- current	16,304	163	3.26%	163
	Stock	Incomm Technologies Co., Ltd.	-	Financial assets at fair value through other comprehensive income - non- current	30	-	0.01%	-
	Stock	LOLA Technology Inc.	-	Financial assets at fair value through other comprehensive income - non- current	1,450,000	14,000	15.78%	14,000

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(4) Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of paid-in capital: None.
(5) Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
(6) Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
(7) Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.
(8) Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.
(9) Trading of derivatives: None.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

(10) Others: Major business dealings between the parent company and subsidiaries, and transactions between subsidiaries:

For the year ended December 31, 2021:

Serial No. (Note 1)	Name of transacting party	Counterparty	Relationship with the transacting party (Note 2)			Transaction summary
				Account	Amount	Transaction terms	As a percentage of consolidated net revenues or total assets(Note 3)
0	Stark Technology Inc.	Stark Technology Inc. (USA)	1	Purchase	$1,789	Purchase price is determined by applying a 5%-30% markup on cost or through negotiation. Payment term is 7- 30 days after delivery.	0.03%
				Accounts payable	183		-%
0	Stark Technology Inc.	Stark Inforcom Inc.	1	Sales revenue	13,423	Selling price is determined at 90%-99% of general selling price or through negotiation. Collection term is 30-120 days after acceptance inspection.	0.20%
				Accounts receivable	767		0.01%
				Purchase	17,019	Purchase price is determined by applying a 3%-20% markup on cost or through negotiation. Payment term is 30- 120 days after acceptance inspection.	0.26%
				Accounts payable	1,155		0.02%
				Rental income	1,753	-	0.03%
				Other income	11	-	-%
0	Stark Technology Inc.	Stark Inforcom Inc.	1	Other expense	121	-	-%
0	Stark Technology Inc.	STARK (NINGBO) Technology Inc.	1	Sales revenue	3,826	Selling price is determined by applying a 3%-20% markup on cost or through negotiation. Collection term is 30-120 days after acceptance inspection.	0.06%
				Accounts receivable	1,390		0.02%
0	Stark Technology Inc.	SRAIN Investment Co., Ltd.	1	Rental income	114	-	-%
1	Stark Inforcom Inc.	Stark TechnologyInc. (USA)	3	Purchase	387	Purchase price is determined by applying a 5%-30% markup on cost or through negotiation. Payment term is 7-30 days after delivery.	0.01%

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued)

(All amounts in NTD thousands unless otherwise specified)

Note 1: Business dealings between the parent company and subsidiaries are indicated in the serial number column. The numbering rule is explained below:

0 for parent company.
Each subsidiary is numbered in sequential order starting from 1.

Note 2: Related party transactions are distinguished into one of three categories, as shown below:

Parent to subsidiary.
Subsidiary to parent.
Subsidiary to subsidiary.

Note 3: Calculation for business dealings as a percentage of total consolidated revenues or total assets is explained as follows: for balance sheet items, percentage of period-end balance is calculated relative to consolidated total assets; for profit or loss items, percentage of end-of-period cumulative amount is calculated relative to consolidated total revenues.

Note 4: Key transactions presented in this chart are determined by the Company based on principles of materiality.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued)

(All amounts in NTD thousands unless otherwise specified)

2. Information on business investments:

Supplementary disclosure of investees in which the Company has significant influence or control for the year ended December 31, 2021 (excluding Mainland China investees)

Unit: NTD thousands/USD

Name of the investor	Name of investee	Location of the investee	Main business activities	Initial investment (Note 9)	Initial investment (Note 9)	Shares held as at end of the period	Shares held as at end of the period	Shares held as at end of the period	Current profit (loss) of the investee (Note 1)	Investment gains (losses) recognized in the current period (Note 1)	Remarks
				End of the current period	End of the previous year	Number of shares	Percentage	Book value
Stark Technology Inc.	Stark Technology Inc. (USA)	Note 2	Trading of computer- related products	$1,381 (USD50,000)	$1,381 (USD50,000)	500,000	100.00%	$11,646	$(1,085)	$(1,089)	-
Stark Technology Inc.	SRAIN Investment Co., Ltd.	Note 3	General investment	410,967	410,967	-	100.00%	626,547	128,300	128,300	-
Stark Technology Inc.	Pacific Ace Holding International Ltd.	Note 4	General investment	82,830 (USD3,000,000)	82,830 (USD3,000,000)	3,000,000	100.00%	321,252	25,449	25,449	-
Stark Technology Inc.	Stark Information (Hong Kong) Limited	Note 5	Trading of computer equipment and software	1,933 (USD70,000)	-	70,000	100.00%	1,900	(33)	(33)	-
SRAIN Investment Co., Ltd.	S-Rain Investment Ltd.	Note 6	General investment	22,088 (USD800,000)	22,088 (USD800,000)	800,000	100.00%	15,425	4,846	-	-
SRAIN Investment Co., Ltd.	Stark Inforcom Inc.	Note 7	Trading of computer- related products	370,000	370,000	37,000,000	100.00%	514,182	121,618	-	-
Pacific Ace Holding International Ltd.	Profit Reap International Limited	Note 4	General investment	82,830 (USD3,000,000) (Note 8)	82,830 (USD3,000,000) (Note 8)	3,000,000	100.00%	321,575	25,449	-	-

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Note 1: Investment gains/losses of each company is recognized as part of investment gains/losses of subsidiaries or 2nd-tier subsidiaries, and have been eliminated in the consolidated financial statements.

Note 2: 1209 Mayberry Lane San Jose, CA95131, U.S.A.

Note 3: 13F, No. 83, Section 2, Dongda Road, Hsinchu City.

Note 4: Beaufor House, P. O. Box 438, Road Town, Tortola, British Virgin Islands

Note 5: Unit 2104, No. 16, Argyle Street (Mongkok Commercial Centre), Kowloon, Hong Kong.

Note 6: Tropic Isle Building, P.O. Box 438, Road Town, Tortola, British Virgin Islands

Note 7: 11F-2, No. 83, Section 2, Dongda Road, Hsinchu City.

Note 8: Includes technology in lieu of capital - USD906,243.

Note 9: Amount of initial investment at the ends of the current and previous periods were converted using exchange rate as at December 31,

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued) (All amounts in NTD thousands unless otherwise specified)

Information relating to investments in the Mainland China

(1) Breakdown of investments:

Name of the investee in Mainland China	Name of the investee in Mainland China	Main business activities	Paid-in- capital amount	Investment method	Accumulated outflow of investment from Taiwan as beginning of current period	Investment flows of the period	Investment flows of the period	Accumulated outflow of investment from Taiwan as end of current period	Net profit (loss) of the investee of current period	Percentage of shareholding (direct or indirect)	Investment gains (losses) recognized in the current period (Note 3)	Book value of investments in Mainland China at the end of the period (Note 3)	Investment gains recovered back to Taiwan to date
						Outflow	Inflow
STARK (NINGBO) Technology Inc.		International trade, technical service and consultation, system integration, software development, and sale of computer-related equipment.	USD 3,000,000	Invested indirectly through an investee in a third location (Pacific Ace Holding International Ltd)	$82,830 (USD3,000,000)	-	-	$82,830 (USD3,000,000) (Note 1)	$25,449 (Note 4.(II).2)	100.00%	$25,449 (Note 4.(II).2)	$321,847	-
Shanghai Stark Technology Inc.		Wholesale and import/export trade of computers and peripherals, software, office equipment, and electrical/electronic equipment, computer system design, data processing service, and supply of network information.	USD 1,160,000	Invested indirectly through an investee in a third location (S-Rain Investment Ltd)	32,028 (USD1,160,000)	-	-	32,028 (USD1,160,000)	4,846 (Note 4.(II).2)	100.00%	4,846 (Note 4.(II).2)	15,414	-
Jiangxi Solar PV Corporation		Research, development, production, and sale of solar cells and components	- (Note 2)	Invested indirectly through an investee in a third location (Solar PV Corporation)	82,830 (USD3,000,000)	-	-	82,830 (USD3,000,000)	- (Note 2)	- (Note 2)	- (Note 2)	- (Note 2)	-

	Accumulated outflows of investment from Taiwan to Mainland China as end of current period				Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)				Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
	$197,688 (USD7,160,000) (Note 3)				$197,688 (USD7,160,000) (Note 3)				$1,811,924(Note 5)

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued)

(All amounts in NTD thousands unless otherwise specified)

Note 1: As at December 31, 2021, the Company had invested USD 906,243 into STARK (NINGBO) Technology Inc. including technology in lieu of capital.
Note 2: The entity was declared bankrupt by the local court, and had completed liquidation on May 22, 2020.
Note 3: Converting the original foreign currency amount using exchange rate as at December 31, 2021.
Note 4: With regards to investment gains/losses recognized in the current period:
- (I). It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit or loss during this period.
- (II). Indicate the basis for investment income (loss) recognition in the number of one of the following three categories.
  1. The financial statements were audited and attested by an international accounting firm which has a cooperative relationship with an accounting firm in R.O.C.
  2. The financial statements were audited and attested by R.O.C. parent company’s CPA
  3. Others
Note 5: Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA.
(2) Significant transactions with Mainland China investees:
A. Amount and percentage of purchases and balance and percentage of corresponding payables at the end of period: Please see Note (XIII).1(10) of the financial statements.
B. Amount and percentage of sales and balance and percentage of corresponding receivables at the end of period: Please see Note (XIII).1(10) of the financial statements.
C. Property transactions and the resulting gains or losses: None.
D. Ending balances and purposes of endorsed notes, guarantees, or pledged collaterals: Please see Note (XIII).1(2) of the financial statements.
E. Maximum balance, ending balance, interest rate range, and total interests amount of loans in the current period: None.
F. Other transactions with material impact to the current profit or loss or financial position: None.

Notes to Consolidated Financial Statements of Stark Technology Inc. and Subsidiaries (Continued)

(All amounts in NTD thousands unless otherwise specified)

Information on major shareholders: Disclosure requirements not met.

(XIV). Segment Information

The Group generates revenues mainly from distribution and maintenance of computers and peripherals; research, design, development, and sale of computer software/hardware, and computer system design. The Group's decision makers evaluate performance of the company and allocate resources accordingly. The Group has consolidated all of its operations into one single reporting segment due to the fact that they share similar economic characteristics and exhibit comparable long-term financial performance. Segment information is prepared using the same basis and significant accounting policies stated in Note (IV).

1. Regional information

(1) Income from external customers:

Taiwan Mainland China Others Total	For the year ended December 31,2021	For the year ended December 31,2020
	$6,325,312 215,967 38,275	$5,219,495 257,070 66,246
	$6,579,554	$5,542,811

Income is classified based on customers’ country of domicile.

(2) Non-current assets:

Taiwan Mainland China Total	December 31,2021	December 31,2020
	$477,723 1,591	$500,406 956
	$479,314	$501,362

AI assistant

STARK — Annual Report 2021

52113_rns_2021-12-17_ccdbede5-5cb2-45c5-b0b9-777736a17521.pdf

Consolidated Financial Statements and Independent Auditors' Report For the Years Ended December 31, 2021 and 2020

Consolidated Financial Statements

Table of Contents

Declaration

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Recognition of service income

Responsibilities of the Management and Those Charged with Governance for the Consolidated Financial Statements

Auditors’ Responsibilities for the Audit of Consolidated Financial Statements

Others

Stark Technology Inc. and Subsidiaries

Consolidated Balance Sheet

Stark Technology Inc. and Subsidiaries (Continued) Consolidated Balance Sheet

As at December 31, 2021 and December 31, 2020

Stark Technology Inc. and Subsidiaries Consolidated Statement of Comprehensive Income For the years ended December 31, 2021 and 2020

Stark Technology Inc. and Subsidiaries Consolidated Statement of Cash Flow

(I). Organization and Operations

(II). Financial Statement Approval Date and Procedures

Amendments to IFRS 1

Amendments to IFRS 9 - "Financial Instruments"

Amendments to interpretations of IFRS 16 - "Leases"

Amendments to IAS 41

(IV). Summary of Significant Accounting Policies

1. Compliance statement

2. Basis of Preparation

3. Consolidation overview

Basis of preparation for consolidated financial statements

4. Foreign currency transactions

5. Translation of foreign currency financial statements

6. Classification of current and non-current assets and liabilities

7. Cash and cash equivalents

8. Financial instruments

(1) Recognition and measurement of financial assets

Financial assets at amortized costs

Financial assets at fair value through other comprehensive income

Financial assets at fair value through profit or loss

(2) Impairment of financial assets

(3) Derecognition of financial assets

(4) Financial liabilities and equity instruments

Classification of liability and equity

Equity instrument

Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at amortized costs

Derecognition of financial liabilities

(5) Offset of financial assets and liabilities

9. Fair value assessment

10. Inventories

11. Property, plant and equipment

12. Lease

Where the Group is the lessee

13. Intangible asset

Computer software

14. Impairment on non-financial assets

15. Provisions

Provisions for warranty

16. Revenue recognition

Rendering of service

17. Borrowing costs

18. Post-employment benefit plans

19. Income tax

Current income tax

Deferred income tax

(V). Sources of Uncertainty to Significant Accounting Judgments, Estimates, and Assumptions

1. Judgment

2. Estimates and assumptions

(1) Fair value of financial instruments

(2) Inventories valuation

(3) Post-employment benefit plans

(4) Revenue recognition - sales return and discount

(5) Receivables - estimation of impairment losses

(6) Income tax

(VI). Notes to Major Accounts

1. Cash and cash equivalents

2. Financial assets at fair value through profit or loss

STARK Annual Report 2021