STARK - Interim / Quarterly Report 2021

2480

Stark Technology Inc. and Subsidiaries

Consolidated Financial Statements and Independent Auditor's Review Report

For the periods January 1 to March 31, 2021 and 2020

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

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Independent Auditor's Review Report

To stakeholders of Stark Technology Inc.:

Foreword

We have reviewed the consolidated balance sheet of Stark Technology Inc. and subsidiaries as at March 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 March 31, 2021 and 2020. It is the responsibility of the management 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 IAS 34 - "Interim Financial Reporting" approved and published by the Financial Supervisory Commission. Our responsibility as auditor is to form a conclusion based on our review.

Scope

Except for the issues discussed in the "Basis of reservation" paragraph, we, the auditors, have performed the review in accordance with Statement on Auditing Standards No. 65 - "Financial Statement Review." The procedures executed in our review of consolidated financial statements include inquiry (mainly with employees responsible for financial and accounting affairs), analysis and other review-related processes. The scope of financial statement review is significantly smaller than a financial statement audit, therefore we may not be able to detect all material issues through the steps we have taken, and are therefore unable to provide an opinion.

Basis of reservation

As mentioned in Note 4.3 of the consolidated financial statements, some of the non-material subsidiaries were consolidated using financial statements for the corresponding periods that were not reviewed by CPAs. As at March 31, 2021 and 2020, these subsidiaries aggregately reported total assets of NT$346,147 thousand and NT$314,310 thousand that represented 6.08% and 6.21% of consolidated total assets, and total liabilities of NT$21,376 thousand and NT$22,388 thousand that represented 0.67% and 0.86% of consolidated total liabilities, respectively. These subsidiaries also reported total comprehensive income of NT$5,494 thousand and NT$11,732 thousand that represented 3.75% and 9.07% of consolidated total comprehensive income for the periods January 1 to March 31, 2021 and 2020, respectively. Furthermore, information relating to the abovementioned subsidiaries, as disclosed in Note 13 of the consolidated financial statements, were not CPAreviewed.

Reservations

Based on the reports we have reviewed, 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 or the version of IAS 34 - "Interim Financial Reporting" approved by the Financial Supervisory Commission, or compromised the fair view of the consolidated financial position of Stark Technology Inc. and subsidiaries as at March 31, 2021 and 2020, or the consolidated financial performance or consolidated cash flow for the periods January 1 to March 31, 2021 and 2020, except for the issues discussed in the "Basis of reservation" paragraph, where financial statements and information of non-material subsidiaries had yet to be reviewed by CPAs, and may cause adjustments to the consolidated financial statements.

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

May 3, 2021

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Stark Technology Inc. and Subsidiaries

Consolidated Balance Sheet

As at March 31, 2021, December 31, 2020, and March 31, 2020

(Information as at March 31, 2021 and 2020, were reviewed only, and not audited in accordance with generally accepted audit principles)

							Unit: NTD thousands	Unit: NTD thousands
Asset			March 31,2021		December 31,2020		March 31,2020
Code	Item	Notes	Amount	%	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 Instalment accounts receivable Other receivables Inventories Prepayments Other financial assets - current Refundable deposits - current 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 assets Deferred income tax assets Refundable deposits - non-current Long-term installment accounts receivable Other financial assets - non-current Other non-current assets Total non-current assets Total assets	4, 6.1 and 12 4, 6.15 and 6.16 4, 6.4, 6.16, and 12 4, 6.5, 6.16, and 12 4, 6.5, 6.16, and 12 12 4 and 6.6 4 and 6.7 4, 8 and 12 12 4, 6.2 and 12 4, 6.3 and 12 4 and 6.8 3, 4 and 6.17 4 and 6.9 4 and 6.21 12 4, 6.5, 6.16 and 12 4, 8 and 12 6.10	$ 1,331,897 474,221 2,448 284,034 44,769 4,710 2,116,373 500,928 9,360 97,152 3,214 4,869,106 14,790 94,850 450,452 30,654 5,638 18,827 117,217 79,432 8,207 5,205 825,272 $ 5,694,378	24 8 - 5 1 - 37 9 - 2 - 86 - 2 8 1 - - 2 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	$ 1,534,311 328,114 6,310 335,413 38,096 958 1,454,592 428,917 1,127 80,372 2,959 4,211,169 10,000 98,325 450,891 42,494 6,297 18,158 96,168 108,312 16,592 5,781 853,018 $ 5,064,187	30 6 - 7 1 - 29 8 - 2 - 83 - 2 9 1 - 1 2 2 - - 17 100

(Please refer to notes to consolidated financial statements)

Manager: Liang, Hsiu-Chung

Head of Accounting: Tseng, Shu-Chen

Chairman: Liang, Hsiu-Chung

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

As at March 31, 2021, December 31, 2020, and March 31, 2020

(Information as at March 31, 2021 and 2020, were reviewed only, and not audited in accordance with generally accepted audit principles)

							Unit: NTD thousands	Unit: NTD thousands
Liabilities and equity			March 31,2021		December 31,2020		March 31,2020
Code	Item	Notes	Amount	%	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	4, 6.11 and 12 4 and 6.15 12 12 12 4 and 6.21 6.12 3, 4 and 6.17 4 and 6.21 3, 4 and 6.17 4 and 6.13 12 6.14 6.20	$ - 1,333,897 512 836,653 687,257 127,056 28,560 13,055 43,442 3,070,432 48,892 18,860 34,914 3,146 105,812 3,176,244 1,063,603 166,514 833,911 62,079 361,703 1,257,693 30,324 2,518,134 $5,694,378	- 23 - 15 12 2 1 - 1 54 1 - 1 - 2 56 19 3 15 1 6 22 - 44 100	$ - 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	$ 69,048 860,072 833 741,375 691,359 83,589 25,299 14,798 19,298 2,505,671 41,886 28,183 30,058 4,668 104,795 2,610,466 1,063,603 166,514 781,998 88,196 416,334 1,286,528 (62,924) 2,453,721 $5,064,187	1 17 - 15 14 2 1 - - 50 1 - 1 - 2 52 21 3 15 2 8 25 (1) 48 100

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 periods January 1 to March 31, 2021 and 2020

(Reviewed only; not audited in accordance with generally accepted audit principles)

Unit: NTD thousands

Code	Item	Notes		2021Q1	2021Q1			2020Q1	2020Q1
				Amount		%		Amount		%
4000 5000 5900 6000 6200 6300 6450 6900 7000 7100 7010 7020 7050 7900 7950 8200 8300 8310 8316 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 expense Net income Other comprehensive income Items not reclassified into profit or loss Unrealized gain on investment in equity instruments at fair value through other comprehensive income 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 interests Earnings per share (NTD) Basic earnings per share Net income Diluted earnings per share Net income	4 and 6.15 6.6 and 6.18 6.17 and 6.18 6.16 6.19 4 and 6.21 6.20 6.20 6.22 6.22 6.22		$ 1,444,341 (1,072,195) 372,146 (178,188) (20,992) 1,857 (197,323) 174,823 1,834 953 3,242 (179) 5,850 180,673 (36,879) 143,794 506 2,171 2,677 $146,471 $ 143,794 - $143,794 $ 146,471 - $146,471 $1.35 $1.35		100 (74) 26 (12) (2) - (14) 12 - - 1 - 1 13 (3) 10 - - - 10		$ 1,307,761 (974,920) 332,841 (166,265) (22,723) 11,847 (177,141) 155,700 3,571 6,042 1,896 (624) 10,885 166,585 (36,445) 130,140 1,869 (2,713) (844) $129,296 $ 130,140 - $130,140 $ 129,296 - $129,296 $1.22 $1.22		100 (74) 26 (13) (2) 1 (14) 12 - 1 - - 1 13 (3) 10 - - - 10

(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 periods January 1 to March 31, 2021 and 2020

(Reviewed only; not audited in accordance with generally accepted audit principles)

Unit: NTD thousands

	Item			Equityattributable to owner	Equityattributable to owner	s of theparent company	s of theparent company	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 B5 D1 D3 D5 Z1 A1 B5 D1 D3 D5 Z1	Balance as at January 1, 2020 Appropriation and distribution of 2019 earnings Cash dividends on ordinary shares Net income for the first quarter of 2020 Other comprehensive income for the first quarter of 2020 Total comprehensive income for the period Balance as at March 31, 2020 Balance as at January 1, 2021 Appropriation and distribution of 2020 earnings Cash dividends on ordinary shares Net income for the first quarter of 2021 Other comprehensive income for the first quarter of 2021 Total comprehensive income for the period Balance as at March 31, 2021	$ 1,063,603 - - - - $1,063,603 $ 1,063,603 - - - - $1,063,603	$ 166,514 - - - - $166,514 $ 166,514 - - - - $166,514	$ 781,998 - - - - $781,998 $ 833,911 - - - - $833,911	$ 88,196 - - - - $88,196 $ 62,079 - - - - $62,079	$ 759,497 (473,303) 130,140 - 130,140 $416,334 $ 675,258 (457,349) 143,794 - 143,794 $361,703	$ (22,931) - - (2,713) (2,713) $ (25,644) $ (25,798) - - 2,171 2,171 $ (23,627)	$ (39,149) - - 1,869 1,869 $ (37,280) $ 53,445 - - 506 506 $53,951	$ 2,797,728 (473,303) 130,140 (844) 129,296 $2,453,721 $ 2,829,012 (457,349) 143,794 2,677 146,471 $2,518,134	$ 2,797,728 (473,303) 130,140 (844) 129,296 $2,453,721 $ 2,829,012 (457,349) 143,794 2,677 146,471 $2,518,134

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 periods January 1 to March 31, 2021 and 2020

(Reviewed only; not audited in accordance with generally accepted audit principles)

							Unit: NTD thousands
Code	Item	2021Q1	2020Q1	Code	Item	2021Q1	2020Q1
		Amount	Amount			Amount	Amount
AAAA A10000 A20000 A20010 A20100 A20200 A20300 A20400 A20900 A21200 A31000 A31125 A31130 A31150 A31180 A31200 A31230 A31240 A32125 A32130 A32150 A32180 A32200 A32230 A33000 A33100 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 Changes in assets/liabilities that are related to operating activities: Contract assets Notes receivable Accounts receivable Other receivables Inventory Prepayments Other current assets Contract liabilities - current Notes payable Accounts payable Other payables Provisions Other current liabilities Cash inflow (outflow) from operations Interests received Interests paid Income tax paid Net cash inflow (outflow) from operating activities	$ 180,673 8,864 1,117 (1,857) (2,200) 179 (1,834) (136,069) 381 359,615 (2,044) (158,787) (38,314) 336 104,689 (2,234) (280,353) (38,364) (13,611) 7,293 (12,520) 316 - (1,771) (13,975)	$ 166,585 8,429 610 (11,847) - 624 (3,571) (69,151) (329) 139,553 627 15,661 (60,445) 328 (71,014) 258 (26,678) (48,720) 2,355 (3,383) 39,892 1,669 (344) (1,812) 39,405	BBBB B00010 B00100 B02000 B02700 B03800 B04500 B06500 B06800 BBBB CCCC C00200 C03000 C04020 CCCC DDDD EEEE E00100 E00200	Cash flow from investing activities: Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Increase in prepaid investments Acquisition of property, plant and equipment Decrease in refundable deposits Acquisition of intangible assets Increase (decrease) in other financial assets - current Decrease in other non-current assets Net cash outflow from investing activities Cash flow from financing activities: Decrease in short-term loans Increase (decrease) in guarantee deposits Repayment of lease principal Net cash outflow from financing activities Effect of exchange rate variation on cash and cash equivalents Net decrease in cash and cash equivalents for the current period Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	(1,774) - - (787) 1,228 (44) (42) 598 (821) - 325 (4,157) (3,832) 2,121 (16,507) 1,348,404 $1,331,897	- (10,000) (4,444) (1,845) 13,269 (1,377) 324 645 (3,428) (61,142) (359) (4,663) (66,164) (2,679) (32,866) 1,567,177 $1,534,311

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 periods January 1 to March 31, 2021 and January 1 to March 31, 2020

(Reviewed only; not audited in accordance with generally accepted audit principles) (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 12F1, 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 periods January 1 to March 31, 2021 and 2020, were approved by the board of directors on May 3, 2021.

(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.

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	Covid-19-Related Rent Concessions (IFRS 16 amendment) effected after June 30,2021	April 1, 2021

(1) Covid-19-Related Rent Concessions (IFRS 16 amendment) effected after June 30, 2021

This amendment will extend the practical expedient stated in paragraph 46A of IFRS 16 - "Leases" by one year. As per assessment, the Group expects no material impact from the above amendment for accounting periods on and after April 1, 2021.

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 Between an Investor and Its Associate or Joint Venture"	To be determined by International Accounting Standards Board
2	IFRS 17,“Insurance Contracts”	January1,2023
3	Classification of Liabilities as Current or Non-current (IAS 1 amendment)	January 1, 2023
4	Narrow-scope amendments to IFRSs, including amendments to IFRS 3, IAS 16, and IAS 37 and annual improvements	January 1, 2022
5	Disclosure initiative - Accounting policies (IAS 1 amendment)	January 1, 2023
6	Definition of AccountingEstimates(IAS 8 amendment)	January1,2023

(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 non-monetary 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.

(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 June 2020, 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) 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 address how businesses account for sale of items produced from a property, plant, or equipment while bringing the asset to its intended use, and prohibits deduction of sales proceeds from the cost of property, plant, or equipment. Instead, businesses are required to account for 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.

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.

(5) 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.

(6) 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.

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 for the periods January 1 to March 31, 2021 and 2020, have been prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and FSC-approved IAS 34 - "Interim Financial Reporting."

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 Group 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 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 Company 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;
(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	Ownership percentage	Ownership percentage	Ownership percentage
			March 31, 2021	December 31,2020	March 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.	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	100% 100% 100% 100% 100% 100% 100% 100% 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.

Some of the non-material subsidiaries listed above were consolidated into the consolidated financial statements using financial statements that were not reviewed by CPAs. As at March 31, 2021 and 2020, these subsidiaries aggregated reported total assets of NT$346,147 thousand and NT$314,310 thousand and total liabilities of NT$21,376 thousand and NT$22,388 thousand, respectively; whereas comprehensive income (loss) for the first quarter of 2021 and 2020 totaled NT$5,494 thousand and NT$11,732 thousand, respectively.

Except for the accounting policies stated in Note 4. 5 to 6, consolidated financial statements for the period January 1 to March 31, 2021 were prepared using the same accounting policies as those of 2020. Please refer to the Group's 2020 consolidated financial statements for summary of other significant accounting policies.

Interim retirement costs are calculated from the beginning until the end of the interim period using the actuarial pension cost rate determined at the end of the previous year, and adjusted for major market changes, plan curtailments, settlements and other onetime events that took place in the current period.
Income taxes for the interim period are accrued and disclosed using tax rate applicable for the Company's expected total earnings for the given year, or in other words, by applying the estimated average effective tax rate for the whole year to pre-tax profit for the interim period. Estimation of average annual effective tax rate only includes income tax expense for the current period; interim deferred income taxes are recognized and measured in the same manner as annual financial report, which follows IAS 12 - "Income Taxes." If tax rate changes in the interim period, the effect on deferred income tax is recognized in profit or loss, other comprehensive income, or directly through equity in one lump sum.

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

Consolidated financial statements for the period January 1 to March 31, 2021 were prepared using the same significant accounting judgments, estimates, and assumptions as those of 2020. Please refer to the Group's 2020 consolidated financial statements for details.

(VI) Notes to Major Accounts

1. Cash and cash equivalents

Cash Demand and check deposit Time deposit Total	March 31,2021	December 31,2020	March 31,2020
	$197 1,157,803 173,897	$198 1,175,524 172,682	$215 1,425,203 108,893
	$1,331,897	$1,348,404	$1,534,311

2. Financial assets at fair value through profit or loss

March 31, 2021 December 31, 2020 March 31, 2020 Equity instruments at fair value through profit or loss - non-current: Fund $14,790 $12,590 $10,000

(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.
(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

Equity instruments at fair value through other comprehensive income - non-current: TWSE/TPEX listed shares Unlisted shares Total	March 31,2021	December 31,2020	March 31,2020
	$80,687 14,163	$78,407 14,163	$86,866 11,459
	$94,850	$92,570	$98,325

(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 equity instruments measured 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 equity instruments measured at fair value through other comprehensive income, in 2020 as part of 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 recognized NT$4,555 thousand of dividend income in 2020 from 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.
(7) The Group acquired 47 thousand shares of Zero One Technology Co., Ltd., a TWSElisted company, in the first quarter of 2021, at a cost of NT$1,775 thousand.
(8) None of the Group's financial assets at fair value through other comprehensive income was placed as collateral.

4. Notes receivable

Notes receivable - arising from business activities Less: loss provisions Net amount	March 31,2021	December 31,2020	March 31,2020
	$2,448 -	$2,829 -	$6,310 -
	$2,448	$2,829	$6,310

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

The Group assesses impairment according to IFRS 9. Please see Note 6.16 for information on loss provisions and Note 12 for credit risk-related information.

5. Accounts receivable and instalment accounts receivable

March 31,2021	December 31,2020	March 31,2020
$292,540 142,221 (10,970)	$642,614 152,512 (12,511)	$342,099 170,788 (17,331)
423,791 (15,556)	782,615 (18,706)	495,556 (13,735)
$408,235	$763,909	$481,821

Expected recovery of instalment accounts receivable is as follows:

No more than 1 year 1 to 2 years 2 years and above Total	March 31,2021	December 31,2020	March 31,2020
	$57,311 37,240 47,670	$58,598 37,142 56,772	$52,024 35,955 82,809
	$142,221	$152,512	$170,788

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

The Group had accounts receivable and instalment accounts receivable balance outstanding at NT$423,791 thousand on March 31, 2021, NT$782,615 thousand on December 31, 2020, and NT$495,556 thousand on March 31, 2020. See Note 6.16 for information on loss provisions and Note 12 for credit risk-related information.

Inventories

Net inventory - merchandise	March 31,2021	December 31,2020	March 31,2020
	$2,116,373	$1,957,859	$1,454,592

Cost of inventory, consultation, and maintenance recognized as expenses in the first quarter of 2021 and 2020 totaled NT$1,072,195 thousand and NT$974,920 thousand, respectively. These amounts included NT$418 thousand and NT$2,625 thousand of gain on reversal of inventory devaluation and obsolescence for the first quarter of 2021 and 2020, respectively. The reversal gains were due to sale of inventories that were previously considered as devalued or obsolete, and were treated as reduction to the cost of sale. As at the first quarter of 2021 and 2020, the Group had provisions on inventory devaluation outstanding at NT$4,655 thousand and NT$6,925 thousand, respectively.

None of the above inventory was pledged as collateral.

7. Prepayments

March 31, 2021 December 31, 2020 March 31, 2020

	March 31,2021	December 31,2020	March 31,2020
Prepaid purchases Prepaid investments Other prepaid expenses Total	$428,334 - 72,594	$402,094 - 60,520	$373,405 4,444 51,068
	$500,928	$462,614	$428,917

8. Property, plant and equipment

Owner-occupied property, plant and equipment	March 31,2021	December 31,2020	March 31,2020
	$450,452	$453,651	$450,891

Land	Buildings	Transportation equipment	Office equipment	Lease improvements	Other equipment	Total
$291,892 - - - -	$202,098 50 - - -	$4,004 - - - 21	$45,759 737 (3,149) 70 2	$5,796 - - - -	$323 - - 255 -	$549,872 787 (3,149) 325 23
$291,892	$202,148	$4,025	$43,419	$5,796	$578	$547,858
$291,892 - - - -	$204,388 131 (3,253) - -	$4,848 - - - (15)	$31,394 1,714 (119) 233 (3)	$5,711 - - - -	$2,754 - - - -	$540,987 1,845 (3,372) 233 (18)
$291,892	$201,266	$4,833	$33,219	$5,711	$2,754	$539,675
$- - - -	$69,264 1,350 - -	$3,031 64 - 21	$21,582 2,629 (3,149) 1	$2,166 241 - -	$178 28 - -	$96,221 4,312 (3,149) 22
$-	$70,614	$3,116	$21,063	$2,407	$206	$97,406
$- - - -	$67,279 1,314 (3,253) -	$3,209 137 - (15)	$14,418 2,008 (119) (1)	$1,204 237 - -	$2,150 216 - -	$88,260 3,912 (3,372) (16)
$-	$65,340	$3,331	$16,306	$1,441	$2,366	$88,784
$291,892	$131,534	$909	$22,356	$3,389	$372	$450,452
$291,892	$132,834	$973	$24,177	$3,630	$145	$453,651
$291,892	$135,926	$1,502	$16,913	$4,270	$388	$450,891

The Group did not capitalize any interest in the first quarter of 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.

9. Intangible asset

Cost: January 1, 2021 Addition - acquisition by separate purchase Reduction - removal in the current period March 31, 2021 January 1, 2020 Addition - acquisition by separate purchase Reduction - removal in the current period March 31, 2020 Amortization and impairment: January 1, 2021 Reduction - removal in the current period Amortization March 31, 2021 January 1, 2020 Reduction - removal in the current period Amortization March 31, 2020 Net book value: March 31, 2021 December 31, 2020 March 31, 2020	Computer software
	$12,470 44 -
	$12,514
	$8,045 1,377 -
	$9,422
	$5,759 - 1,117
	$6,876
	$2,515 - 610
	$3,125
	$5,638
	$6,711
	$6,297

Amortization amount of intangible assets:

Operating costs Administrative expenses Research and development expenses	2021Q1	2020Q1
	$-	$-
	$1,117	$610
	$-	$-

10. Other non-current assets

Other non-current assets - others	March 31,2021	December 31,2020	March 31,2020
	$5,205	$5,803	$5,781

11. Short-term loans

Unsecured bank loans Interest rate range	March 31,2021	December 31,2020	March 31,2020
	$-	$-	$69,048
	-%	-%	2.29%~2.78%

The Group had undrawn short-term credit facilities of NT$1,983,055 thousand, NT$2,141,519 thousand, and NT$2,251,583 thousand as at March 31, 2021, December 31, 2020, and March 31, 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
	2021Q1	2020Q1
	$42,171 9,784 (1,356) (22,039)	$22,944 7,271 (2,153) (2,763)
	$28,560	$25,299

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.

13. Retirement benefit plans

Defined Contribution Plans

The Group recognized pension expenses related to defined contribution plans in the first quarter of 2021 and 2020 totaled NT$6,854 thousand and NT$6,777 thousand, respectively.

Defined Benefit Plans

The Group recognized pension expenses related to defined benefit plans in the first quarter of 2021 and 2020 totaled NT$2,543 thousand and NT$2,057 thousand, respectively.

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 March 31, 2021, December 31, 2020, and March 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 three 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	March 31,2021	December 31,2020	March 31,2020
	$148,259 18,255	$148,259 18,255	$148,259 18,255
	$166,514	$166,514	$166,514

According to regulations, capital surplus can not 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.

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.

After adopting IFRS, the Company is bound to comply with Letter No. Jin-Guan-ZhengFa-1010012865 issued by FSC on April 6, 2012, which states that, when adopting IFRS for the first time, any unrealized gain on revaluation and any cumulative translation adjustments (gains) classified into retained earnings due to opting of exemptions under IFRS 1 - "First-time Adoption of IFRS" on the conversion date shall be accompanied by provision of special reserve for the same amount.

Once the Company begins preparation of IFRS-compliant financial statements, the Company will be required to provide additional special reserves to make up for the shortfall between the balance of special reserves provided during first-time adoption of IFRS and the net balance of other contra equity items in years it decides to distribute available earnings. If contra equity items are reversed on a later date, the amount reversed may be distributed to shareholders.

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

The Company's 2020 and 2019 earnings appropriation proposal and dividends per share were proposed and resolved during the board of directors meeting held on February 26, 2021 and annual general meeting held on May 28, 2020, respectively. Details are as presented below:

Earnings appropriation plan Dividends per share (NTD)

Legal reserve Special reserve Cash dividends on ordinary shares	2020	2019	2020	2019
	$45,401 (61,935) 457,349	$51,913 (26,117) 473,303	$4.30	$4.45

Please refer to Note 6.18 for the amount of employee remuneration and director 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	2021Q1	2020Q1
	$966,369 476,213 1,759	$921,930 382,744 3,087
	$1,444,341	$1,307,761

Information relating to revenue from contracts with customers in the first quarter of 2021 and 2020 were as below:

(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
	2021Q1	2020Q1
	$966,369 476,213 1,759	$921,930 382,744 3,087
	$1,444,341	$1,307,761
	$968,128 476,213	$925,017 382,744
	$1,444,341	$1,307,761

(2) Contract balance

A. Contract assets - current

Sales of merchandise and rendering of service Less: loss provisions Total	March 31, 2021	December 31, 2020	March 31, 2020	January 1, 2020
	$487,291 (13,070)	$351,222 (12,524)	$340,812 (12,698)	$271,661 (11,898)
	$474,221	$338,698	$328,114	$259,763

Major changes in the balance of contract assets in the first quarter of 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	2021Q1	2020Q1
	$(238,231)	$(185,097)
	$374,300	$254,248

The Group assesses impairment according to IFRS 9. Please see Note 6.16 for information on loss provisions and Note 12 for credit risk-related information.

B. Contract liabilities - current

Sales of merchandise and rendering of service	March 31, 2021	December 31, 2020	March 31, 2020	January 1, 2020
	$1,333,897	$1,229,208	$860,072	$931,086

Major changes in the balance of contract liabilities in the first quarter of 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)	2021Q1	2020Q1
	$(500,286)	$(339,587)
	$604,975	$268,573

(3) Allocation of transaction price into unfulfilled contractual obligations

As at March 31, 2021, the Group had allocated NT$5,056,884 thousand of transaction price into unfulfilled (including partially fulfilled) contractual obligations; 84.53% of which are expected to be recognized as revenue in 2021, whereas the remainder will be recognized as revenue on and after 2022.

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

None.

16. Expected credit impairment loss/reversal gain

Operating expenses - expected credit impairment (loss) reversal gain Contract assets Accounts receivable Total Please see Note 12 for credit risk-related information.	2021Q1	2020Q1
	$(546) 2,403	$(800) 12,647
	$1,857	$11,847

All of the Group's contract assets and accounts receivable (including notes receivable, accounts receivable, and instalment 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 March 31, 2021, December 31, 2020, and March 31, 2020 are explained below:

Contract assets and accounts receivable 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:

March 31, 2021

March 31, 2021	1
Group 1 Not past due (Note 1) Total book value: $803,174 Loss ratio 0.9% Lifetime expected credit losses (7,405) Net amount $795,769 Group 2 (Note 2) Not past due (Note 1) Total book value: $12,909 Loss ratio 100% Lifetime expected credit losses (12,909) Net amount $-	Not past due (Note 1)			Past due			Total
		Within 30 days	31-60 days	61-90 days	91-120 days	121 days and above
	$803,174 0.9%	$44,242 0.6%	$16,710 0.5%	$14,687 0.5%	$2,699 0.7%	$11,484 2.2%	$892,996 (8,092)
	(7,405)	(257)	(83)	(75)	(19)	(253)
	$795,769	$43,985	$16,627	$14,612	$2,680	$11,231	$884,904
	Not past due (Note 1)			Past due			Total
		Within 30 days	31-60 days	61-90 days	91-120 days	121 days and above
	$12,909 100%	$- -	$- -	$- -	$- -	$7,625 100%	$20,534 (20,534)
		-	-	-	-	(7,625)
	$-	$-	$-	$-	$-	$-	$-

December 31, 2020

December 31, 2020	2020
Group 1 Not past due (Note 1) Total book value: $974,799 Loss ratio 0.9% Lifetime expected credit losses (8,843) Net amount $965,956 Group 2 (Note 2) Not past due (Note 1) Total book value: $12,909 Loss ratio 100% Lifetime expected credit losses (12,909) Net amount $-	Not past due (Note 1)			Past due			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%	$1,115,431 (9,995)
	(8,843)	(561)	(147)	(46)	(25)	(373)
	$965,956	$81,638	$27,166	$9,233	$2,866	$18,577	$1,105,436
	Not past due (Note 1)			Past due			Total
		Within 30 days	31-60 days	61-90 days	91-120 days	121 days and above
	$12,909 100%	$- -	$- -	$- -	$- -	$8,326 100%	$21,235 (21,235)
		-	-	-	-	(8,326)
	$-	$-	$-	$-	$-	$-	$-

March 31, 2020

March 31, 2020	0
Group 1 Not past due (Note 1) Total book value: $706,120 Loss ratio 0.9% Lifetime expected credit losses (6,271) Net amount $699,849 Group 2 (Note 2) Not past due (Note 1) Total book value: $13,741 Loss ratio 100% Lifetime expected credit losses (13,741) Net amount $-	Not past due (Note 1)			Past due			Total
		Within 30 days	31-60days	61-90days	91-120 days	121 days and above
	$706,120 0.9%	$53,146 0.7%	$21,294 0.6%	$6,497 0.5%	$3,475 1.2%	$33,004 1.4%	$823,536 (7,291)
	(6,271)	(358)	(125)	(33)	(43)	(461)
	$699,849	$52,788	$21,169	$6,464	$3,432	$32,543	$816,245
	Not past due (Note 1)			Past due			Total
		Within 30 days	31-60days	61-90days	91-120 days	121 days and above
	$13,741 100%	$- -	$- -	$- -	$- -	$5,401 100%	$19,142 (19,142)
		-	-	-	-	(5,401)
	$-	$-	$-	$-	$-	$-	$-

Note 1: All notes receivable and contract assets are not past due; loss provisions are measured based on expected credit loss over the remaining lifetime.
Note 2: The Group measures loss provision for individual counterparties based on expected credit loss over the remaining lifetime. 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 instalment accounts receivable for the first quarter of 2021 and 2020 are explained below:

Contract assets	Accounts receivable	Instalment accounts receivable
$12,524 347 199 - -	$11,657 (2,204) (199) (750) 3	$7,049 - - - -
$13,070	$8,507	$7,049
$11,898 (1,088) 1,888 - -	$19,676 (10,759) (1,888) (337) (6)	$7,049 - - - -
$12,698	$6,686	$7,049

17. Lease

(1) The Group as lessee

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

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	March 31,2021	December 31,2020	March 31,2020
	$25,126 2,812 2,716	$27,552 4,192 3,453	$34,476 5,994 2,024
	$30,654	$35,197	$42,494

Right-of-use assets increased by NT$0 and NT$2,001 thousand in the first quarter of 2021 and 2020, respectively.

(b) Lease liabilities

March 31,2021	December 31, 2020	March 31,2020
$31,915	$35,884	$42,981
$13,055 18,860	$14,957 20,927	$14,798 28,183
$31,915	$35,884	$42,981

Please see Note 6.19(4) - Financial cost for interest on lease liabilities in the first quarter of 2021 and 2020; and Note 12.5 - Liquidity risk management for maturity analysis of lease liabilities from January 1 to March 31, 2021.

B. Amount recognized in statement of comprehensive income

Depreciation of right-of-use assets

Buildings Transportation equipment Office equipment Total	2021Q1	2020Q1
	$2,435 1,380 737	$2,434 1,879 204
	$4,552	$4,517

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

Short-term lease expense	2021Q1	2020Q1
	$1,004	$1,466

D. Cash outflow relating to lease activities as a lessee

The Group incurred NT$5,161 thousand and NT$6,129 thousand of lease-related cash outflow in the first quarter of 2021 and 2020, respectively.

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

By function Bynature		2021Q1			2020 Q1
	Classified as operating costs	Classified as operating expenses	Total	Classified as operating costs	Classified as operating expenses	Total
Employee benefit expenses	$18,443	$164,155	$182,598	$17,732	$157,198	$174,930
Wages and salaries	15,826	137,887	153,713	15,298	131,818	147,116
Labor and national health insurance expenses	1,373	12,153	13,526	1,246	11,506	12,752
Pension expenses	814	8,583	9,397	749	8,085	8,834
Other employee benefit expenses	430	5,532	5,962	439	5,789	6,228
Depreciationexpenses	-	8,864	8,864	-	8,429	8,429
Amortization expenses	-	1,117	1,117	-	610	610

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 first quarter of 2021 were estimated at NT$10,136 thousand and NT$0, respectively, based on the Company's firstquarter profitability and the percentages stated in the Articles of Incorporation. Employee remuneration and director/supervisor remuneration for the first quarter of 2020 were estimated at NT$9,167 thousand and NT$0, 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 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 26, 2021 to pay the 2020 employee remuneration and director/supervisor remuneration at NT$38,900 thousand and NT$0, respectively, in cash; these amounts were indifferent from the expenses previously recognized in the 2020 financial statements.

The board of directors passed a resolution on February 26, 2020 to pay the 2019 employee remuneration and director/supervisor remuneration at NT$33,167 thousand and NT$0, respectively, in cash; these amounts were indifferent from the expenses previously recognized in the 2019 financial statements.

19. Non-operating income and expenses

(1) Interest income

Financial assets carried at cost after amortization	2021Q1	2020Q1
	$1,834	$3,571

(2) Other income

Rental income Other income - others Total	2021Q1	2020Q1
	$3 950	$3 6,039
	$953	$6,042

(3) Other gains and losses

Net gain on currency exchange Gain on financial assets at fair value through profit or loss Total Finance costs Interest expense on bank loans Interest expense on lease liabilities Total	2021Q1	2020Q1
	$1,042 2,200	$1,896 -
	$3,242	$1,896
	2021Q1	2020Q1
	$- 179	$394 230
	$179	$624

(4) Finance costs

20. Composition of other comprehensive income

Composition of other comprehensive income for the first quarter of 2021 is explained below:

Items not reclassified into profit or loss: Unrealized gain(loss) on equity instruments investments 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	Incurred in the current period	Reclassifications in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount After tax
	$(544) 1,050 2,171	$- - -	$(544) 1,050 2,171	$ - - -	$(544) 1,050 2,171
	$2,677	$-	$2,677	$-	$2,677

Composition of other comprehensive income for the first quarter of 2020 is explained below:

Items not reclassified into profit or loss: Unrealized gain(loss) on equity instruments investments 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	Incurred in the current period	Reclassifications in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount aftertax
	$2,017 (148) (2,713)	$- - -	$2,017 (148) (2,713)	$- - -	$2,017 (148) (2,713)
	$(844)	$-	$(844)	$-	$(844)

Income tax

Main components of income tax expense (benefit) for Income tax recognized in profit or loss Income tax expense (benefit) for the current period: Current income tax payable Deferred income tax expense (benefit): Deferred income tax expense (benefit) 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 Income tax expense	2021 and 2020 were as follows: 2021Q1 2020 Q1 $30,934 $31,079 5,639 6,657 (5) 461 311 (1,640) - (112) $36,879 $36,445	2021 and 2020 were as follows: 2021Q1 2020 Q1 $30,934 $31,079 5,639 6,657 (5) 461 311 (1,640) - (112) $36,879 $36,445
	$30,934 5,639 (5) 311 -	$31,079 6,657 461 (1,640) (112)
	$36,879	$36,445

Assessment of income tax return

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

The Company Subsidiary - SRAIN Investment Co., Ltd. Subsidiary - Stark Inforcom Inc.	Assessment of income tax return
	Certified up to 2018 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) Diluted earnings per share (NTD)	2021Q1	2020Q1
	$143,794	$130,140
	106,360,291	106,360,291
	$1.35	$1.22
	$143,794	$130,140
	106,360,291 510,105	106,360,291 571,984
	106,870,396	106,932,275
	$1.35	$1.22

There had been no other transaction that significantly changed the number of closing 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	2021Q1	2020Q1
	$24,542 670	$28,180 616
	$25,212	$28,796

(VIII) Pledged assets

The Group had placed the following assets as collaterals:

Item		Book value		Details of debts secured
	March 31, 2021	December 31, 2020	March 31, 2020
Other financial assets - current Other financial assets - non- current Total	$9,360 8,207	$8,433 9,092	$1,127 16,592	Performance guarantee Performance guarantee
	$17,567	$17,525	$17,719

(IX) Significant contingent liabilities and unrecognized contract commitments

The Company had engaged financial institutions to provide NT$116,945 thousand of performance and customs guarantee for various projects.
The Company had issued NT$38,391 thousand of guaranteed notes to customers and banks to secure sales and borrowing limits.

(X) Losses from Major Disasters

None.

(XI) Significant Subsequent Events

None.

(XII) Others

1. Types of financial instrument

March 31,2021	December 31, 2020	March 31,2020
$14,790	$12,590	$10,000
94,850	92,570	98,325
1,331,700 335,961 79,432 17,567 214,369	1,348,206 682,110 87,317 17,525 215,597	1,534,096 380,777 108,312 17,719 176,540
1,979,029	2,350,755	2,217,444
$2,088,669	$2,455,915	$2,325,769
$- 1,524,422 31,915 3,146	$- 1,388,024 35,884 2,821	$69,048 1,433,567 42,981 4,668

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 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 currencies. Sensitivity analysis for the two currencies is provided below:

If NTD strengthened/weakened against USD by 1%, profits for the first quarter of 2021 and 2020 would have increased/decreased by NT$177 thousand and NT$334 thousand, whereas equity would have decreased/increased NT$132 thousand and NT$149 thousand, respectively.

If NTD strengthened/weakened against RMB by 1%, profits for the first quarter of 2021 and 2020 would have increased/decreased by NT$435 thousand and decreased/increased by NT$903 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 equity instruments at fair value through other comprehensive income would have affected the Group's equity by NT$8,069 thousand and NT$8,687 thousand in the first quarter of 2021 and 2020, respectively.

4. Credit risk management

Credit risk refers to the possibility of financial losses suffered due to counterparties 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 32%, 33%, and 21% of total contract assets and accounts receivable balance as at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Judging by the above, there was no credit risk concentration 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, investmentgrade 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:

			Totalbookvalue:	Totalbookvalue:	Totalbookvalue:
Credit risk grade	Indicator	Method of measuring expected creditloss	March 31,	December 31,	March 31,
			2021	2020	2020
Simplified approach (Note)	(Note)	Lifetime expected credit losses	$913,530	$1,136,666	$842,678

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 instalment accounts receivable.

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

March 31, 2021 Payables Lease liabilities December 31, 2020 Payables Lease liabilities March 31, 2020 Short-term loans Payables Lease liabilities	Less than 1 year	2 to 3 years	4 to 5 years	More than 5 years	Total
	$1,524,422 13,562 $1,388,024 15,526 $69,871 1,433,567 15,525	$- 18,543 $- 19,222 $- - 20,744	$- 703 $- 2,171 $- - 8,262	$- - $- - $- - -	$1,524,422 32,808 $1,388,024 36,919 $69,871 1,433,567 44,531

6. Reconciliation of liabilities relating to financing activities

Reconciliation of liabilities for the first quarter of 2021:

January 1, 2021 Non-cash movement Cash flow Effect of exchange rate changes March 31, 2021	Guarantee deposits	Lease liabilities	Total
	$2,821 - 325 -	$35,884 179 (4,157) 9	$38,705 179 (3,832) 9
	$3,146	$31,915	$35,061

Reconciliation of liabilities for the first quarter of 2020:

January 1, 2020 Non-cash movement	Short-term loans	Guarantee deposits	Lease liabilities	Total
	$130,190 -	$5,027 -	$45,425 2,231	$180,642 2,231

Cash flow Effect of exchange rate changes March 31, 2020	(61,142) -	(359) -	(4,663) (12)	(66,164) (12)
	$69,048	$4,668	$42,981	$116,697

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.

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 cost after amortization closely resemble their fair value.

(3) Fair value hierarchy for financial instruments

See Note 12.8 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 can not 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 explained below:

March 31, 2021:

Level 1	Level 2	Level 3	Total
$14,790	$-	$-	$14,790
$80,687	$-	$14,163	$94,850
Level 1	Level 2	Level 3	Total
$12,590	$-	$-	$12,590
$78,407	$-	$14,163	$92,570
Level 1	Level 2	Level3	Total
$10,000	$-	$-	$10,000
$86,866	$-	$11,459	$98,325

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 in the first quarter of 2021 and 2020 that involved assets or liabilities with fair value measured on a recurring basis.

Transfer of level 3 input for recurring fair value measurements

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

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

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

March 31, 2021:

Financial assets: At fair value through other comprehensive income Stock	Valuation technique	Significant unobservable input	Quantitative information	Relationship between input and fair value	Sensitivity analysis on relationship between input and fair value
	Asset Method	Discount for lack of liquidity	20%	The higher the lack of liquidity, the lower the fair value estimate	If P/E ratio of a similar share rises/falls by 10%, the Group's profits would increase/decrease by NT$16 thousand.

December 31, 2020:

Valuation technique Financial assets: At fair value through other comprehensive income Stock Asset Method March 31, 2020: Valuation technique Financial assets: At fair value through other comprehensive income Stock Market Method Stock Asset Method	Valuation technique	Significant unobservable input	Quantitative information	Relationship between input and fair value	Sensitivity analysis on relationship between input and fair value
		Discount for lack of liquidity Significant unobservable input	20% Quantitative information	The higher the lack of liquidity, the lower the fair value estimate Relationship between input and fair value	If P/E ratio of a similar share rises/falls by 10%, the Group's profits would increase/decrease by NT$16 thousand. Sensitivity analysis on relationship between input and fair value
	Market Method Asset Method	Discount for lack of liquidity Discount for lack of liquidity	20% 20%	The higher the lack of liquidity, the lower the fair value estimate The higher the lack of liquidity, the lower the fair value estimate	If liquidity indicator improves/worsens by 10%, the Group's profits would decrease/increase by NT$430 thousand. If P/E ratio of a similar share rises/falls by 10%, the Group's profits would increase/decrease by NT$16 thousand.

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

9. Significant foreign currency-denominated financial assets and liabilities

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

Financial assets		Unit: thousand dollars March 31, 2021	Unit: thousand dollars March 31, 2021
	Foreign currency	Exchange rate	NTD
Monetary items: USD CNY (RMB) JPY SGD Financial liabilities
Monetary items: USD CNY (RMB) Financial assets
	Foreign currency	Exchange rate	NTD
	$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)

Financial assets		March 31, 2020
	Foreign currency	Exchange rate	NTD
	$1,603 61,326 27,198 83 $3,545 1,278	30.261 4.274 0.282 21.271 30.261 4.274	$48,522 262,107 7,670 1,772 $107,261 5,463
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$1,042 thousand and NT$1,896 thousand of gains on currency exchange in the first quarter of 2021 and 2020, respectively.

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	$1,259,067	$7,163	$5,471	$5,471	-	0.22%	$1,259,067	Y	-	-
0	The Company	STARK (NINGBO) Technology Inc.	2	1,259,067	129,420	129,420	-	-	5.14%	1,259,067	Y	-	Y
1	Stark Inforcom Inc.	The Company	4	212,712	38,526	19,500	19,500	-	0.77%	425,425	-	Y	-

Note 1: Explanation to the serial number column:

1. 0 for the Company.

Investees are numbered in sequential order starting from 1; serial number should be consistent for the same company.

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

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.
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		At the end	of theperiod
					Shares / units	Book value	Percentage of shareholding	Fair value
Stark Technology Inc.	Fund	Yuanta Taiwan High- yield Leading CompanyFund	-	Financial assets at fair value through profit or loss - non-current	1,000,000	$14,790	-	$14,790
	TWSE- listed stock	ITEQ Corporation	-	Financial assets at fair value through other comprehensive income - non-current	362,829	49,526	0.11%	49,526
	Stock	DWINS Digital Service Corp.	-	Financial assets at fair value through other comprehensive income - non-current	1,151	-	0.07%	-
	Stock	NexPower Technology Corp.	-	Financial assets at fair value through other comprehensive income - non-current	5,014	-	0.01%	-
SRAIN Investment Co., Ltd.	TWSE- listed stock	ITEQ Corporation	-	Financial assets at fair value through other comprehensive income - non-current	187,614	25,609	0.06%	25,609
	TWSE- listed stock	Zero One Technology Co., Ltd.	-	Financial assets at fair value through other comprehensive income - non-current	47,000	2,181	0.04%	2,181
	TPEX- listed stock	Genesis Technology Inc.	-	Financial assets at fair value through other comprehensive income - non-current	20,000	1,240	0.04%	1,240
	TPEX- listed stock	Dimerco Data System Corporation	-	Financial assets at fair value through other comprehensive income - non-current	28,000	2,131	0.04%	2,131
	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)

Name of the investor	Type of marketable security	Name of marketable security	Relationship between the securities issuer and the Company	Financial statement account		At the end	of theperiod
					Shares / units	Book value	Percentage of shareholding	Fair value
SRAIN Investment Co., Ltd.	Stock	Hua Chih Venture Capital Corp.	SRAIN Investment Co., Ltd. is the director of the mentioned company	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	NexPower Technology Corp.	-	Financial assets at fair value through other comprehensive income - non-current	4,512	-	0.01%	-

(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:

First quarter of 2021:

Serial No. (Note 1)	Name of transacting party	Counterparty	Relationship with the transacting party (Note 2)			Transactionsummary
				Account	Amount	Transaction terms	As a percentage of consolidated net revenues or total assets (Note3)
0	Stark Technology Inc.	Stark Technology Inc. (USA)	1	Purchase	$600	Purchase price is determined by applying a 5%- 30% markup on cost or through negotiation. Payment term is 7-30 days after delivery.	0.04%
				Accounts payable	469		0.01%
0	Stark Technology Inc.	Stark Inforcom Inc.	1	Sales revenue	2,582	Selling price is determined at 90%-99% of general selling price or through negotiation. Collectionterm is 30-120 days after inspection.	0.18%
				Purchase	6,881	Purchase price is determined by applying a 3%- 20% markup on cost or through negotiation. Payment term is 30-120 days after delivery.	0.48%
				Accounts payable	2,307		0.04%
				Rental income	498	-	0.03%
				Other income	9	-	-%
				Other expense	47	-	-%
0	Stark Technology Inc.	SRAIN Investment Co.,Ltd.	1	Rental income	29	-	-%

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

(All amounts in NTD thousands unless otherwise specified)

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 (Note3)
1	Stark Inforcom Inc.	Stark TechnologyInc. (USA)	3	Purchase	13	Purchase price is determined by applying a 5%- 30% markup on cost or through negotiation. Payment term is 7-30 days afterdelivery.	-%

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 as at the first quarter of 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	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- relatedproducts	$1,424 (USD50,000)	$1,424 (USD50,000)	500,000	100.00%	$12,818	$(289)	$(298)	-
Stark Technology Inc.	SRAIN Investment Co., Ltd.	Note 3	General investment	410,967	410,967	-	100.00%	525,406	32,282	32,282	-
Stark Technology Inc.	Pacific Ace Holding International Ltd.	Note 4	General investment	85,410 (USD3,000,000)	85,410 (USD3,000,000)	3,000,000	100.00%	300,320	4,406	4,406	-
Stark Technology Inc.	Stark Information (Hong Kong) Limited	Note 5	Trading of computer equipment and software	1,993 (USD70,000)	-	70,000	100.00%	1,993	-	-	-
SRAIN Investment Co., Ltd.	S-Rain Investment Ltd.	Note 6	General investment	22,776 (USD800,000)	22,776 (USD800,000)	800,000	100.00%	10,063	(559)	-	-

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

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	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
SRAIN Investment Co., Ltd.	Stark Inforcom Inc.	Note 7	Trading of computer- relatedproducts	370,000	370,000	37,000,000	100.00%	425,425	32,860	-	-
Pacific Ace Holding International Ltd.	Profit Reap International Limited	Note 4	General investment	85,410 (USD3,000,000) (Note 8)	85,410 (USD3,000,000) (Note 8)	3,000,000	100.00%	300,643	4,406	-	-

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, CA 95131, 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 March 31,

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

3. Information relating to investments in the Mainland China

(1) Breakdown of investments:

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 theperiod	Investment flows of theperiod	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)	$85,410 (USD3,000,000)	-	-	$85,410 (USD3,000,000) (Note 1)	$4,406 (Note 4. (2), 3)	100.00%	$4,406 (Note 4. (2), 3)	$300,915	-
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)	33,025 (USD1,160,000)	-	-	33,025 (USD1,160,000)	(559) (Note 4. (2), 3)	100.00%	(559) (Note 4. (2), 3)	10,052	-
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)	85,410 (USD3,000,000)	-	-	85,410 (USD3,000,000)	- (Note 2)	- (Note 2)	- (Note 2)	- (Note 2)	-

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

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
$203,845 (USD7,160,000) (Note 3)	$203,845 (USD7,160,000) (Note 3)	$1,510,880(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 March 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 March 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 13.1(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 13.1(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 13.1(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 4.

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STARK — Interim / Quarterly Report 2021

52113_rns_2021-12-17_05985bcd-ac47-457b-b924-e3bd97d16940.pdf

Independent Auditor's Review Report

Foreword

Scope

Basis of reservation

Reservations

Stark Technology Inc. and Subsidiaries

Consolidated Balance Sheet

As at March 31, 2021, December 31, 2020, and March 31, 2020

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

As at March 31, 2021, December 31, 2020, and March 31, 2020

Stark Technology Inc. and Subsidiaries Consolidated Statement of Changes in Equity For the periods January 1 to March 31, 2021 and 2020

Stark Technology Inc. and Subsidiaries Consolidated Statement of Cash Flow

For the periods January 1 to March 31, 2021 and 2020

(I) Organization and Operations

(II) Financial Statement Approval Date and Procedures

(2) IFRS 17, “Insurance Contracts”

B. Property, Plant and Equipment: Proceeds before Intended Use (IAS 16 amendment)

D. IFRS improvements for years 2018-2020

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

This consolidated financial statement encompasses the following:

(VI) Notes to Major Accounts

1. Cash and cash equivalents

2. Financial assets at fair value through profit or loss

3. Financial assets at fair value through other comprehensive income

4. Notes receivable

5. Accounts receivable and instalment accounts receivable

7. Prepayments

8. Property, plant and equipment

9. Intangible asset

Amortization amount of intangible assets:

10. Other non-current assets

11. Short-term loans

12. Provisions

Warranty

13. Retirement benefit plans

Defined Contribution Plans

Defined Benefit Plans

14. Equity

(1) Ordinary share

(2) Capital surplus

(3) Earnings appropriation and dividend policy

(4) Non-controlling interests: None.

15. Operating revenue

(1) Breakdown of revenue

(2) Contract balance

A. Contract assets - current

B. Contract liabilities - current

16. Expected credit impairment loss/reversal gain

March 31, 2021

December 31, 2020

March 31, 2020

17. Lease

(b) Lease liabilities

B. Amount recognized in statement of comprehensive income

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

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

19. Non-operating income and expenses

(1) Interest income

(3) Other gains and losses

(4) Finance costs

20. Composition of other comprehensive income

Assessment of income tax return

22. Earnings per share (EPS)

publication date of financial statements.

(VII) Related party transactions

(VIII) Pledged assets

(IX) Significant contingent liabilities and unrecognized contract commitments

(X) Losses from Major Disasters

(XI) Significant Subsequent Events

STARK Interim / Quarterly Report 2021