2480

Stark Technology Inc. and Subsidiaries

Consolidated Financial Statements and Independent Auditor's Review Report

For the Six Months Ended June 30, 2021 and 2020

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

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Consolidated Financial Statements

Item	Page
I. COVER PAGE	1
II. TABLE OF CONTENTS	2
III. INDEPENDENT AUDITOR'S REVIEW REPORT	3-4
IV. CONSOLIDATED BALANCE SHEET	5-6
V. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	7
VI. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	8
VII. CONSOLIDATED STATEMENT OF CASH FLOW	9
VIII. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(I) ORGANIZATION AND OPERATIONS	10
(II) FINANCIAL STATEMENT APPROVAL DATE AND PROCEDURES	10
(III) APPLICATION OF NEW STANDARDS, AMENDMENTS, AND INTERPRETATIONS	10-14
(IV) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	14-17
(V) SOURCES OF UNCERTAINTY TO SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES, AND ASSUMPTIONS	17
(VI) NOTES TO MAJOR ACCOUNTS	18-47
(VII) RELATED PARTY TRANSACTIONS	48
(VIII) PLEDGED ASSETS	48
(IX) SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZEDCONTRACTCOMMITMENTS	48
(X) LOSSES FROM MAJOR DISASTERS	48
(XI) SIGNIFICANT SUBSEQUENT EVENTS	48
(XII) OTHERS	49-59
(XIII) OTHER DISCLOSURES
1. INFORMATION RELATED TO SIGNIFICANT TRANSACTIONS	60-65
2. INFORMATION ON BUSINESS INVESTMENTS	66-67
3. INFORMATION RELATING TO INVESTMENTS IN THE MAINLANDCHINA	68-69
4. INFORMATION ON MAJOR SHAREHOLDERS	69
(XIV) SEGMENT INFORMATION	70

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 of June 30, 2021 and 2020, the consolidated statement of comprehensive income for the three months ended June 30, 2021 and 2020, six months ended June 30, 2021 and 2020, consolidated statement of changes in equity for the six months ended June 30, 2021 and 2020, consolidated statement of cash flow, and the accompanying footnotes (including a summary of key accounting policies). 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 June 30, 2021 and 2020, these subsidiaries aggregately reported total assets of NT$354,299 thousand and NT$334,222 thousand that represented 6.32% and 6.44% of consolidated total assets, and total liabilities of NT$23,163 thousand and NT$29,207 thousand that represented 0.78% and 1.12% of consolidated total liabilities, respectively. These subsidiaries also reported total comprehensive income of NT$7,002 thousand, NT$9,656 thousand, NT$12,496 thousand and NT$21,388 thousand that represented 5.19%, 7.83%, 4.44% and 8.47% of consolidated total comprehensive income for the three months ended June 30, 2021 and 2020, six months ended June 30, 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 June 30, 2021 and 2020, or the consolidated financial performance for the three months ended June 30, and six months ended June 30, 2021 and 2020 or consolidated cash flow for the six months ended June 30, 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

July 30, 2021

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Stark Technology Inc. and Subsidiaries Consolidated Balance Sheet

As at June 30, 2021, December 31, 2020, and June 30, 2020

(Information as at June 30, 2021 and 2020, were reviewed only, and not audited in accordance with generally accepted audit principles)

							Unit: NTD thousands	Unit: NTD thousands
Asset			June 30,2021		December 31,2020		June 30,2020
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 asset 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 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	$ 1,073,022 523,874 8,615 357,624 47,006 1,202 2,111,513 550,609 10,471 101,911 2,760 4,788,607 15,130 98,096 448,098 29,539 4,525 17,404 115,034 76,420 7,100 4,875 816,221 $5,604,828	19 9 - 6 1 - 38 10 - 2 - 85 - 2 8 1 - - 2 2 - - 15 100	$ 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	$ 1,510,047 297,423 903 420,727 37,688 3,303 1,516,008 449,786 8,665 91,839 3,556 4,339,945 10,700 106,394 449,882 39,709 6,412 17,286 98,906 103,076 9,076 7,358 848,799 $5,188,744	29 6 - 8 1 - 29 9 - 2 - 84 - 2 9 1 - - 2 2 - - 16 100

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 (Continued) Consolidated Balance Sheet

As at June 30, 2021, December 31, 2020, and June 30, 2020

(Information as at June 30, 2021 and 2020, were reviewed only, and not audited in accordance with generally accepted audit principles)

								Unit: NTD thousands
Liabilities and equity			June 30,2021		December 31,2020		June 30,2020
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 4 and 6.17 4 and 6.21 4 and 6.17 4 12 6.14	$ - 1,220,128 2,039 754,880 701,294 79,219 20,643 13,429 54,273 2,845,905 50,834 16,949 34,914 3,113 105,810 2,951,715 1,063,603 166,514 833,911 62,079 496,035 1,392,025 30,971 2,653,113 $5,604,828	- 22 - 14 13 1 - - 1 51 1 - 1 - 2 53 19 3 15 1 9 25 - 47 100	$ - 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	$ 69,111 900,462 747 688,259 710,279 71,919 26,295 13,516 24,803 2,505,391 44,939 26,791 30,058 4,584 106,372 2,611,763 1,063,603 166,514 833,911 62,079 508,946 1,404,936 (58,072) 2,576,981 $5,188,744	1 17 - 13 14 1 1 - 1 48 1 - 1 - 2 50 21 3 16 1 10 27 (1) 50 100

(Please refer to notes to consolidated financial statements)

Chairman: Liang, Hsiu-Chung

Manager: Liang, Hsiu-Chung

Head of Accounting: Tseng, Shu-Chen

Stark Technology Inc. and Subsidiaries Consolidated Statement of Comprehensive Income For the three months ended June 30, 2021 and 2020 and for the six months ended June 30, 2021 and 2020

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

Unit: NTD thousands

Code	Item	Notes	April 1 to June 30,2021	April 1 to June 30,2021	April 1 to June 30,2020	April 1 to June 30,2020	January1 to June 30,2021	January1 to June 30,2021	January1 to Ju	ne 30,2020
			Amount	%	Amount	%	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 loss/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 gains on investments in equity instruments as 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 interest 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	$ 1,518,616 (1,149,140) 369,476 (183,789) (25,476) 277 (208,988) 160,488 2,420 6,340 1,596 (180) 10,176 170,664 (36,141) 134,523 3,341 (2,885) 456 $134,979 $ 134,523 - $134,523 $ 134,979 - $134,979 $1.27 $1.26	100 (76) 24 (13) (2) - (15) 9 - 1 - - 1 10 (2) 8 - - - 8	$ 1,326,323 (997,580) 328,743 (183,592) (21,907) 3,132 (202,367) 126,376 2,447 14,723 3,093 (528) 19,735 146,111 (32,438) 113,673 13,882 (4,295) 9,587 $123,260 $ 113,673 - $113,673 $ 123,260 - $123,260 $1.07 $1.06	100 (75) 25 (14) (1) - (15) 10 - 1 - - 1 11 (3) 8 1 - 1 9	$ 2,962,957 (2,221,335) 741,622 (361,977) (46,468) 2,134 (406,311) 335,311 4,254 7,293 4,838 (359) 16,026 351,337 (73,020) 278,317 3,847 (714) 3,133 $281,450 $ 278,317 - $278,317 $ 281,450 - $281,450 $2.62 $2.61	100 (75) 25 (12) (2) - (14) 11 - 1 - - 1 12 (2) 10 - - - 10	$ 2,634,084 (1,972,500) 661,584 (349,857) (44,630) 14,979 (379,508) 282,076 6,018 20,765 4,989 (1,152) 30,620 312,696 (68,883) 243,813 15,751 (7,008) 8,743 $252,556 $ 243,813 - $243,813 $ 252,556 - $252,556 $2.29 $2.28	100 (75) 25 (13) (2) 1 (14) 11 - 1 - - 1 12 (3) 9 1 - 1 10

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 Changes in Equity For the six months ended June 30, 2021 and 2020

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

										Unit: NTDthousands
	Item			Equity attributable to owners		ofthe parent company				Totalequity
		Share capital	Capitalsurplus		Retained earnings		Otherequityitems		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 comprehensiveincome
Code		3100	3200	3310	3320	3350	3410	3420	31XX	3XXX
A1 B1 B3 B5 D1 D3 D5 Q1 Z1 A1 B5 D1 D3 D5 Q1 Z1	Balance as at January 1, 2020 Appropriation and distribution of 2019 earnings Legal reserve allocation Reversal of special reserve Cash dividends on ordinary shares Net income for the six months ended June 30, 2020 Other comprehensive income from January 1 to June 30, 2020 Total comprehensive income for the period Disposal of equity instruments measured at fair value through other comprehensive income Balance as at June 30, 2020 Balance as at January 1, 2021 Appropriation and distribution of 2020 earnings Cash dividends on ordinary shares Net income for the six months ended June 30, 2021 Other comprehensive income from January 1 to June 30, 2021 Total comprehensive income for the period Disposal of equity instruments measured at fair value through other comprehensive income Balance as at June 30, 2021	$ 1,063,603 - - - - $1,063,603 $ 1,063,603 - - - - - $1,063,603	$ 166,514 - - - - $166,514 $ 166,514 - - - - - $166,514	$ 781,998 51,913 - - - - $833,911 $ 833,911 - - - - - $833,911	$ 88,196 (26,117) - - - - $62,079 $ 62,079 - - - - - $62,079	$ 759,497 (51,913) 26,117 (473,303) 243,813 - 243,813 4,735 $508,946 $ 675,258 (457,349) 278,317 - 278,317 (191) $496,035	$ (22,931) - - (7,008) (7,008) $ (29,939) $ (25,798) - - (714) (714) - $ (26,512)	$ (39,149) - - 15,751 15,751 (4,735) $ (28,133) $ 53,445 - - 3,847 3,847 191 $57,483	$ 2,797,728 (473,303) 243,813 8,743 252,556 $2,576,981 $ 2,829,012 (457,349) 278,317 3,133 281,450 - $2,653,113	$ 2,797,728 (473,303) 243,813 8,743 252,556 $2,576,981 $ 2,829,012 (457,349) 278,317 3,133 281,450 - $2,653,113

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 six months ended June 30, 2021 and 2020

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

							Unit: NTDthousands
Code	Item	Six months ended June 30, 2021	Six months ended June 30, 2020	Code	Item	Six months ended June 30, 2021	Six months ended June 30, 2020
		Amount	Amount			Amount	Amount
AAAA A10000 A20000 A20010 A20100 A20200 A20300 A20400 A20900 A21200 A21300 A22500 A31000 A31125 A31130 A31150 A31180 A31200 A31230 A31240 A32125 A32130 A32150 A32180 A32200 A32230 A33000 A33100 A33200 A33300 A33500 AAAA	Cash flow from operating activities: Income before income tax Adjustments: Income, expenses and losses: Depreciation expenses Amortization expenses Expected credit impairment reversal gain Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Loss on disposal of property, plant and equipment Changes in assets/liabilities that are related to operating activities: Contract assets Notes receivable Accounts receivable Other receivables Inventories Prepayments Other current assets Contract liabilities - current Notes payable Accounts payable Other payables Provisions Other current liabilities Cash inflow (outflow) from operations Interests received Dividend received Interests paid Income tax paid Net cash inflow (outflow) from operating activities	$ 351,337 17,634 2,236 (2,134) (2,540) 359 (4,254) (8) 2 (185,898) (5,786) 287,995 1,494 (154,270) (86,045) 790 (9,080) (707) (362,126) (24,327) (21,528) 18,124 (178,732) 1,967 8 (19) (82,384) (259,160)	$ 312,696 16,855 1,292 (14,979) (700) 1,152 (6,018) (554) - (37,821) 5,078 63,903 (1,704) (48,303) (85,758) (269) (30,624) 172 (79,794) (29,800) 3,351 2,122 70,297 2,586 554 (654) (41,995) 30,788	BBBB B00010 B00020 B00030 B00100 B02000 B02700 B02800 B03700 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 Disposal of financial assets at fair value through other comprehensive income Capital reduction of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Increase in prepaid investments Acquisition of property, plant and equipment Disposal of property, plant and equipment Increase in Refundable deposits Acquisition of intangible assets Decrease (increase) in other current financial assets Decrease (increase) 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 Closing cash and cash equivalents, end of period	(1,774) - 95 - (1,950) (2,454) 4 (1,348) (50) (46) 928 (6,595) - 292 (9,158) (8,866) (761) (275,382) 1,348,404 $1,073,022	(4,444) 10,257 - (10,000) - (2,864) - (936) (1,688) 302 (932) (10,305) (61,079) (443) (9,189) (70,711) (6,902) (57,130) 1,567,177 $1,510,047

Chairman: Liang, Hsiu-Tsung

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

Head of Accounting: Tseng, Shu-Chen

Stark Technology Inc. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 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 six months ended June 30, 2021 and 2020, were approved by the board of directors on July 30, 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.

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

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

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

(1) 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.

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

Amendments to interpretations of IFRS 16 - "Leases"

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

Amendments to IAS 41

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

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

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 orJointVenture"	Pending the decision of the International Accounting Standards Board
2	IFRS17,“Insurance Contracts”	January1,2023
3	Classification of Liabilities as Current or Non-current (IAS 1 amendment)	January 1, 2023
4	Disclosure initiative - Accounting policies (IAS 1 amendment)	January 1, 2023
5	Definition of AccountingEstimates(IAS 8amendment)	January1,2023
6	Deferred income tax related to assets and liabilities arising from a single transaction(Amendment to IAS No.12)	January 1, 2023

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

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

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

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

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

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

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

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

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

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

(6) Deferred Income Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendment to IAS No. 12)

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

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

IV. Summary of Significant Accounting Policies

1. Compliance statement

The consolidated financial statements for the six months ended June 30, 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."

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

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.

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

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
			June 30, 2021	December 31, 2020	June 30, 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.

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

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 June 30, 2021 and 2020, these subsidiaries aggregated reported total assets of NT$354,299 thousand and NT$334,222 thousand and total liabilities of NT$23,163 thousand and NT$29,207 thousand, respectively; whereas comprehensive income (loss) for the three months ended June 30, 2021 and 2020 totaled NT$7,002 thousand and NT$9,656 thousand, respectively and six months ended June 30, 2021 and 2020 totaled NT$12,496 thousand and NT$21,388 thousand, respectively.

Except for the accounting policies stated in Note 4. 5 to 6, consolidated financial statements for the six months ended June 30, 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 six months ended June 30, 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.

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

VI. Notes to Major Accounts

1. Cash and cash equivalents

June 30,2021 Cash $196 Demand and check deposit 879,017 Time deposit 193,809 Total $1,073,022 Financial assets at fair value through profit or loss June 30,2021 Equity instruments at fair value through profit or loss - non-current: Fund $15,130	June 30,2021	December 31,2020	June 30,2020
	$196 879,017 193,809	$198 1,175,524 172,682	$198 1,402,543 107,306
	$1,073,022	$1,348,404	$1,510,047
		December 31,2020	June 30,2020
Equity instruments at fair value through profit or loss - non-current: Fund
	$15,130	$12,590	$10,700

2. Financial assets at fair value through profit or loss

(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	June 30,2021	December 31,2020 $78,407 14,163 $92,570	June 30,2020
	$83,933 14,163		$94,935 11,459
	$98,096		$106,394

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

(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$544 thousand of dividend income for the six months ended June 30, 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 of the balance sheet date.
(7) 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.
(8) 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.

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

(9) The company of the Group to which the shares of Energy Trend Co., Ltd. belong completed the liquidation procedures on March 8, 2021, returned the stock investment fund of NT$95 thousand and obtained the dividend income of NT$8 thousand from the distribution of its remaining surplus, and transferred the unrealized evaluation loss of NT$191 thousand accumulated at the time of disposal from other equity to retained earnings.
(10) None of the Group's financial assets at fair value through other comprehensive income was placed as collateral.
Notes receivable

Notes receivable - arising from business activities Less: loss provisions Net amount	June 30,2021	December 31,2020	June 30,2020
	$8,615 -	$2,829 -	$903 -
	$8,615	$2,829	$903

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

June 30,2021	December 31,2020	June 30,2020
$365,679 140,706 (10,231)	$642,614 152,512 (12,511)	$424,873 163,628 (15,815)
496,154 (15,104)	782,615 (18,706)	572,686 (11,195)
$481,050	$763,909	$561,491

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

Expected recovery of instalment accounts receivable is as follows:

No more than 1 year 1 to 2 years 2 years and above Total	June 30,2021	December 31,2020	June 30,2020
	$59,506 40,323 40,877	$58,598 37,142 56,772	$51,322 36,754 75,552
	$140,706	$152,512	$163,628

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$496,154 thousand on June 30, 2021, NT$782,615 thousand on December 31, 2020, and NT$572,686 thousand on June 30, 2020. See Note 6.16 for information on loss provisions and Note 12 for credit risk-related information.

6. Inventories

Net inventory - merchandise	June 30,2021	December 31,2020	June 30,2020
	$2,111,513	$1,957,859	$1,516,008

(1) Cost of inventory, consultation, and maintenance recognized as expenses for the three months ended June 30, 2021 and 2020 were NT$1,149,140 thousand and NT$997,580 thousand respectively. These amounts included NT$750 thousand and NT$752 thousand of gain on reversal of inventory devaluation and obsolescence for the three months ended June 30, 2021 and 2020, respectively.
(2) Cost of inventory, consultation, and maintenance recognized as expenses for the six months ended June 30, 2021 and 2020 were NT$2,221,335 thousand and NT$1,972,500 thousand respectively. These amounts included NT$1,168 thousand and NT$3,377 thousand of gain on reversal of inventory devaluation and obsolescence for the six months ended June 30, 2020 and 2021, respectively.
(3) 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 of June 30, 2021, December 31, 2020 and June 30, 2020, the Group had provisions on inventory devaluation outstanding at NT$3,905 thousand, NT$5,074 thousand and NT$6,173

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

thousand, respectively.

(4) None of the above inventory was pledged as collateral.

7. Prepayments

Prepaid purchases Prepaid investments Other prepaid expenses Total	June 30,2021	December 31,2020	June 30,2020
	$489,343 1,950 59,316	$402,094 - 60,520	$406,067 - 43,719
	$550,609	$462,614	$449,786

8. Property, plant and equipment

Owner-occupied property, plant and equipment	June 30,2021	December 31,2020	June 30,2020
	$448,098	$453,651	$449,882

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

Land	Buildings	Transportation equipment	Office equipment	Lease improvements	Other equipment	Total
$291,892 - - - -	$202,098 275 (537) - -	$4,004 1,119 (298) - (2)	$45,759 1,026 (3,851) 408 (1)	$5,796 34 - - -	$323 - - 255 -	$549,872 2,454 (4,686) 663 (3)
$291,892	$201,836	$4,823	$43,341	$5,830	$578	$548,300
$291,892 - - - -	$204,388 706 (3,253) - -	$4,848 - - - (52)	$31,394 2,073 (553) 2,214 (5)	$5,711 85 - - -	$2,754 - (2,431) - -	$540,987 2,864 (6,237) 2,214 (57)
$291,892	$201,841	$4,796	$35,123	$5,796	$323	$539,771
$- - - -	$69,264 2,689 (537) -	$3,031 158 (292) (2)	$21,582 5,271 (3,851) (1)	$2,166 483 - -	$178 63 - -	$96,221 8,664 (4,680) (3)
$-	$71,416	$2,895	$23,001	$2,649	$241	$100,202
$- - - -	$67,279 2,636 (3,253) -	$3,209 273 - (50)	$14,418 4,099 (553) (3)	$1,204 479 - -	$2,150 432 (2,431) -	$88,260 7,919 (6,237) (53)
$-	$66,662	$3,432	$17,961	$1,683	$151	$89,889
$291,892	$130,420	$1,928	$20,340	$3,181	$337	$448,098
$291,892	$132,834	$973	$24,177	$3,630	$145	$453,651
$291,892	$135,179	$1,364	$17,162	$4,113	$172	$449,882

The Group did not capitalize any interest for the six months ended June 30, 2021 and 2020. Major components of buildings include: main structure, air conditioning, and renovation, which are depreciated over useful lives of 51-56 years, 6 years, and 6 years, respectively.

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

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

9. Intangible asset

	Computer software
Cost:
January 1, 2021	$12,470
Addition - acquisition by separate purchase	50
Addition – internal transfer
	-
Reduction - removal in the current period	(70)
June 30, 2021	$12,450
January 1, 2020	$8,045
Addition - acquisition by separate purchase	1,688
Addition – internal transfer	486
Reduction - removal in the current period	-
June 30, 2020	$10,219
Amortization and impairment:
January 1, 2021	$5,759
Reduction - removal in the current period	(70)
Amortization	2,236
June 30, 2021	$7,925
January 1, 2020	$2,515
Reduction - removal in the current period
	-
Amortization	1,292
June 30, 2020	$3,807
Net book value:
June 30, 2021	$4,525
December 31, 2020	$6,711
June 30, 2020	$6,412

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

Amortization amount of intangible assets:

Three months ended June 30, 2021	Three months ended June 30,2020	Six months ended June 30, 2021	Six months ended June 30, 2020
$-	$-	$-	$-
$1,117	$681	$2,234	$1,291
$2	$1	$2	$1

10. Other non-current assets

June 30,2021	December 31,2020	June 30,2020 $7,358 June 30,2020
$4,875	$5,803
June 30,2021	December 31,2020 $- -%
$-		$69,111
-%		1.27%~2.606%

11. Short-term loans

The Group had undrawn short-term credit facilities of NT$2,078,685 thousand, NT$2,141,519 thousand, and NT$2,073,346 thousand as at June 30, 2021, December 31, 2020, and June 30, 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
	Six months ended June 30,2021	Six months ended June 30,2020
	$42,171 17,850 (3,226) (36,152)	$22,944 14,426 (4,279) (6,796)
	$20,643	$26,295

Warranty

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

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

13. Retirement benefit plans

Defined Contribution Plans

The Group recognized pension expenses related defined contribution plan for the three months ended June 30, 2021 and 2020 were NT$6,920 thousand and NT$6,750 thousand respectively; the amounts of recognized pension expenses related defined contribution plan for the six months ended June 30, 2021 and 2020 were NT$13,774 thousand and NT$13,527 thousand respectively.

Defined Benefit Plans

The Group recognized pension expenses related defined benefit plan for the three months ended June 30, 2021 and 2020 were NT$2,807 thousand and NT$2,023 thousand respectively; the amounts of recognized pension expenses related defined benefit plan for the six months ended June 30, 2021 and 2020 were NT$5,350 thousand and NT$4,080 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 June 30, 2021, December 31, 2020, and June 30, 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.

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

(2) Capital surplus

Premium on consolidation Premium on conversion of convertible bonds Total	June 30,2021	December 31,2020	June 30,2020
	$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.

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

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

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

As at June 30, 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 July 9, 2021 and the annual general meeting held on May 28, 2020 respectively. Details are as presented below:

Legal reserve Special reserve Cash dividends on ordinary shares	Earnings appropriationplan	Earnings appropriationplan	Dividendsper share(NTD)	Dividendsper share(NTD)
	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.

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

15. Operating revenue

Revenues from sale of merchandise Revenues from rendering of service Other operating revenues Total	Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
	$1,075,735 441,214 1,667	$990,794 330,327 5,202	$2,042,104 917,427 3,426	$1,912,724 713,071 8,289
	$1,518,616	$1,326,323	$2,962,957	$2,634,084

Information relating to revenue from contracts with customers for the six months ended June 30, 2021 and 2020 were as below:

(1) Breakdown of revenue

	Operatingsegment	Operatingsegment
Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
$1,075,735 441,214 1,667	$990,794 330,327 5,202	$2,042,104 917,427 3,426	$1,912,724 713,071 8,289
$1,518,616	$1,326,323	$2,962,957	$2,634,084
$1,077,402 441,214	$995,996 330,327	$2,045,530 917,427	$1,921,013 713,071
$1,518,616	$1,326,323	$2,962,957	$2,634,084

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

(2) Contract balance

A. Contract assets - current

Sales of merchandise and rendering of service Less: loss provisions Total	June 30,2021 $537,120 (13,246) $523,874	December 31,2020	June 30,2020	January1,2020
		$351,222 (12,524)	$309,482 (12,059)	$271,661 (11,898)
		$338,698	$297,423	$259,763

Major changes in the balance of contractual assets for the six months ended June 30, 2021 and 2020 are explained below:

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	Six months ended June 30,2021	Six months ended June 30,2020
	$(299,871)	$(222,922)
	$485,769	$260,743

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. Contractual liabilities - current

	June 30,2021	December 31,2020	June 30,2020	January1,2020
Sales of merchandise
and rendering of
service	$1,220,128	$1,229,208	$900,462	$931,086

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

Major changes in the balance of contractual liabilities for the six months ended June 30, 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)	Six months ended June 30,2021	Six months ended June 30,2020
	$(740,601)	$(514,006)
	$731,521	$483,382

(3) Allocation of transaction price into unfulfilled contractual obligations

As at June 30, 2021, the Group had allocated NT$5,260,427 thousand of transaction price into unfulfilled (including partially fulfilled) contractual obligations; 65.56% 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	Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
	$(176) 453	$639 2,493	$(722) 2,856	$(161) 15,140
	$277	$3,132	$2,134	$14,979

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

Please see Note 12 for credit risk-related information.

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 June 30, 2021, December 31, 2020, and June 30, 2020 are explained below:

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

June 30, 2021

June 30, 2021
Group 1 Total book value Loss ratio Lifetime expected credit losses Net amount Group 2 (Note 2) Total book value Loss ratio Lifetime expected credit losses 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
	$894,145 0.8%	$90,776 0.8%	$19,325 0.5%	$8,061 0.8%	$2,734 1%	$7,069 0.9%	$1,022,110 (8,571)
	(7,586)	(728)	(104)	(62)	(27)	(64)
	$886,559	$90,048	$19,221	$7,999	$2,707	$7,005	$1,013,539
	Not past due (Note 1)	Within 30 days		Past due			Total
			31-60 days	61-90 days	91-120 days	121 days and above
	$12,909 100%	$- -	$- -	$- -	$- -	$6,870 100%	$19,779 (19,779)
	(12,909)	-	-	-	-	(6,870)
	$-	$-	$-	$-	$-	$-	$-

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

December 31, 2020

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)
(12,909)	-	-	-	-	(8,326)
$-	$-	$-	$-	$-	$-	$-

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

June 30, 2020

June 30, 2020
Group 1 Total book value Loss ratio Lifetime expected credit losses Net amount Group 2 (Note 2) Total book value Loss ratio Lifetime expected credit losses 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
	$716,906 0.9%	$84,614 0.6%	$14,851 0.6%	$12,425 1%	$8,394 0.9%	$30,545 1.3%	$867,735 (7,918)
	(6,715)	(533)	(83)	(123)	(71)	(393)
	$710,191	$84,081	$14,768	$12,302	$8,323	$30,152	$859,817
	Not past due (Note 1)			Past due			Total
		Within 30 days	31-60 days	61-90 days	91-120 days	121 days and above
	$12,908 100%	$- -	$- -	$- -	$- -	$2,428 100%	$15,336 (15,336)
	(12,908)	-	-	-	-	(2,428)
	$-	$-	$-	$-	$-	$-	$-

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

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

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

Changes in loss provisions on contract assets, accounts receivable, and installment accounts receivable for the six months ended June 30, 2021 and 2020 are explained below:

Contract assets	Accounts receivable	Instalment accounts receivable
$12,524 457 265 -	$11,657 (2,591) (265) (746)	$7,049 - - -
$13,246	$8,055	$7,049
$11,898 (1,346) 1,507 - -	$19,676 (13,633) (1,507) (373) (17)	$7,049 - - - -
$12,059	$4,146	$7,049

17. Lease

(1) The Group as lessee

The Group leases several types of assets, including buildings, 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:

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

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	June 30,2021	December 31,2020	June 30,2020
	$22,691 4,500 2,348	$27,552 4,192 3,453	$32,389 5,186 2,134
	$29,539	$35,197	$39,709

Right-of-use assets increased by NT$3,304 thousand and NT$3,658 thousand for the six months ended June 30, 2021 and 2020, respectively.

(b) Lease liabilities

June 30,2021	December 31,2020	June 30,2020
$30,378	$35,884	$40,307
$13,429 16,949	$14,957 20,927	$13,516 26,791
$30,378	$35,884	$40,307

Please see Note 6.19(4) - Financial cost for interest on lease liabilities for the six months ended June 30, 2021 and 2020; and note 12.5 - Liquidity risk management for maturity analysis of lease liability for the six months ended June 30, 2021.

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

B. Amount recognized in statement of comprehensive income

Depreciation of right-of-use assets

Buildings Transportation equipment Office equipment Total	Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
	$2,433 1,247 738	$2,426 1,788 205	$4,868 2,627 1,475	$4,860 3,667 409
	$4,418	$4,419	$8,970	$8,936

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

Short-term lease expense	Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
	$962	$1,399	$1,966	$2,865

D. Cash outflow relating to lease activities as a lessee

The Group incurred NT$11,124 thousand and NT$12,054 thousand of lease-related cash outflow for the six months ended June 30, 2021 and 2020.

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

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

By function Bynature	Three months ended June 30,2021	Three months ended June 30,2021	Three months ended June 30,2021	Three months ended June 30,2020	Three months ended June 30,2020	Three months ended June 30,2020
	Classified as operating costs	Classified as operating expenses	Total	Classified as operating costs	Classified as operating expenses	Total
Employee benefit expenses	$19,298	$176,738	$196,036	$19,256	$174,073	$193,329
Wages and salaries	16,583	150,802	167,385	16,635	149,366	166,001
Labor and national health insurance expenses	1,427	11,704	13,131	1,344	11,038	12,382
Pension expenses	845	8,882	9,727	809	7,964	8,773
Other employee benefit expenses	443	5,350	5,793	468	5,705	6,173
Depreciation expenses	-	8,770	8,770	-	8,426	8,426
Amortization expenses	-	1,119	1,119	-	682	682

By function By nature	Six months ended June 30,2021	Six months ended June 30,2021	Six months ended June 30,2021	Six months ended June 30,2020	Six months ended June 30,2020	Six months ended June 30,2020
	Classified as operating costs	Classified as operating expenses	Total	Classified as operating costs	Classified as operating expenses	Total
Employee benefit expenses	$37,741	$340,893	$378,634	$36,988	$331,271	$368,259
Wages and salaries	32,409	288,689	321,098	31,933	281,184	313,117
Labor and national health insurance expenses	2,800	23,857	26,657	2,590	22,544	25,134
Pension expenses	1,659	17,465	19,124	1,558	16,049	17,607
Other employee benefit expenses	873	10,882	11,755	907	11,494	12,401
Depreciation expenses	-	17,634	17,634	-	16,855	16,855
Amortization expenses	-	2,236	2,236	-	1,292	1,292

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

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 three months ended June 30, 2021 were estimated and recognized at NT$9,955 thousand and NT$0 thousand, respectively, based on the Company's profitability and the percentages stated in the Articles of Incorporation. The basis of estimation is the profitability of the particular year. The abovementioned amounts were included under salary expense; 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.

Employee remuneration and director remuneration for the six months ended June 30, 2021 were estimated and recognized at NT$20,091 thousand and NT$0 thousand, respectively, based on the Company's profitability and the percentages stated in the Articles of Incorporation. The basis of estimation is the profitability of the particular year. The abovementioned amounts were included under salary expense; 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.

Employee remuneration and director remuneration for the three months ended June 30, 2020 were estimated and recognized at NT$9,166 thousand and NT$0 thousand, respectively, based on the Company's profitability and the percentages stated in the Articles of Incorporation. The basis of estimation is the profitability of the particular year, and the abovementioned amounts were included under salary expense.

Employee remuneration and director remuneration for the six months ended June 30, 2020 were estimated and recognized at NT$18,333 thousand and NT$0 thousand, respectively, based on the Company's profitability and the percentages stated in the Articles of Incorporation. The basis of estimation is the profitability of the particular year, and the abovementioned amounts were included under salary expense.

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

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

The board of directors passed a resolution on February 26, 2020 to pay the 2019 employee remuneration and director remuneration at NT$33,167 thousand and NT$0 thousand, 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 at amortized costs	Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
	$2,420	$2,447	$4,254	$6,018

(2) Other income

Rental income Dividend income Other income - others Total	Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
	$3 8 6,329	$3 554 14,166	$6 8 7,279	$6 554 20,205
	$6,340	$14,723	$7,293	$20,765

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

(3) Other gains and losses

Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020 $4,289 700 - $4,989 Six months ended June 30, 2020
$1,258 340 (2)	$2,393 700 -	$2,300 2,540 (2)
$1,596	$3,093	$4,838
Three months ended June 30,2021	Three months ended June 30,2020	Six months ended June 30, 2021
$19 161	$310 218	$19 340	$704 448
$180	$528	$359	$1,152

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

20. Composition of other comprehensive income

Composition of other comprehensive income for the three months ended June 30, 2021 is explained below:

Items not reclassified into profit or loss: Unrealized gain/loss on investment in equity instruments at fair value through other comprehensive income Share of other comprehensive income on subsidiaries, associates and joint ventures using equity method Items likely to be reclassified into profit or loss: Exchange differences on translation of foreign operations Total other comprehensive income for the current period	Occurred during the currentperiod	Reclassifications in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount after tax
	$2,227 1,114 (2,885)	$- - -	$2,227 1,114 (2,885)	$- - -	$2,227 1,114 (2,885)
	$456	$-	$456	$-	$456

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

Composition of other comprehensive income for the three months ended June 30, 2020 is explained below:

Items not reclassified into profit or loss: Unrealized gain/loss on investment in equity instruments at fair value through other comprehensive income Share of other comprehensive income on subsidiaries, associates and joint ventures using equity method Items likely to be reclassified into profit or loss: Exchange differences on translation of foreign operations Total other comprehensive income for the current period	Occurred during the currentperiod	Reclassifications in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount after tax
	$5,706 8,176 (4,295)	$- - -	$5,706 8,176 (4,295)	$- - -	$5,706 8,176 (4,295)
	$9,587	$-	$9,587	$-	$9,587

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

Composition of other comprehensive income for the six months ended June 30, 2021 is explained below:

Items not reclassified into profit or loss: Unrealized gain/loss on investment in equity instruments at fair value through other comprehensive income Share of other comprehensive income on subsidiaries, associates and joint ventures using equity method Items likely to be reclassified into profit or loss: Exchange differences on translation of foreign operations Total other comprehensive income for the current period	Occurred during the currentperiod	Reclassifications in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount after tax
	$1,683 2,164 (714)	$- - -	$1,683 2,164 (714)	$- - -	$1,683 2,164 (714)
	$3,133	$-	$3,133	$-	$3,133

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

Composition of other comprehensive income for the six months ended June 30, 2020 is explained below:

Items not reclassified into profit or loss: Unrealized gain/loss on investment in equity instruments at fair value through other comprehensive income Share of other comprehensive income on subsidiaries, associates and joint ventures using equity method Items likely to be reclassified into profit or loss: Exchange differences on translation of foreign operations Total other comprehensive income for the current period	Occurred during the currentperiod	Reclassifications in the current period	Other comprehensive income	Income tax benefits (expenses)	Amount after tax
	$7,723 8,028 (7,008)	$- - -	$7,723 8,028 (7,008)	$- - -	$7,723 8,028 (7,008)
	$8,743	$-	$8,743	$-	$8,743

21. Income tax

Compositions of income tax expenses (benefits) for the six months ended June 30, 2021 and 2020 are explained below:

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

Income tax recognized in profit or loss

Income tax expenses (benefits) for the current period: Current income tax payable Adjustment of current income tax of previous years Deferred income tax expenses (benefits): Deferred income tax expenses (benefits) relating to the origination and reversal of temporary differences Deferred income tax relating to the origination and reversal of tax losses and income tax credits Offset (reversal of previous offset) of deferred income tax asset Deferred income taxes relating to tax rate changes Income tax expenses	Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
	$33,448 (155) 3,374 (38) (488) -	$28,513 143 2,936 10 836 -	$64,382 (155) 9,013 (43) (177) -	$59,592 143 9,593 471 (804) (112)
	$36,141	$32,438	$73,020	$68,883

Assessment of income tax return

Assessment of income tax filings submitted by the Company and domestic subsidiaries as at June 30, 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.

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

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.

Three months ended June 30, 2021	Three months ended June 30, 2020	Six months ended June 30, 2021	Six months ended June 30, 2020
$134,523	$113,673	$278,317	$243,813
106,360,291	106,360,291	106,360,291	106,360,291
$1.27	$1.07	$2.62	$2.29
$134,523	$113,673	$278,317	$243,813
106,360,291 295,455	106,360,291 276,104	106,360,291 477,809	106,360,291 475,618
106,655,746	106,636,395	106,838,100	106,835,909
$1.26	$1.06	$2.61	$2.28

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

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

VII. Related party transactions

Compensation for key management of the Group

	Three months	Three months	Six months	Six months
	ended June	ended June	ended June 30,	ended June 30,
	30,2021	30,2020	2021	2020
Short-term employee benefits	$14,297	$16,652	$38,839	$44,832
Post-employment benefits -	648	632	1,318	1,248
pension
Total	$14,945	$17,284	$40,157	$46,080

VIII. Pledged assets

The Group had placed the following assets as collaterals:

Item		Book value		Details of debts secured
	June 30, 2021	December 31, 2020	June 30, 2020
Other financial assets - current Other financial assets - non- current Total	$10,471 7,100	$8,433 9,092	$8,665 9,076	Performance guarantee Performance guarantee
	$17,571	$17,525	$17,741

IX. Significant contingent liabilities and unrecognized contract commitments

The Company had engaged financial institutions to provide NT$151,315 thousand of performance and customs guarantee for various projects.
The Company had issued NT$38,408 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.

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

XII. Others

1. Types of financial instrument

June 30,2021	December 31,2020	June 30,2020
$15,130	$12,590	$10,700
98,096	92,570	106,394
1,072,826 414,447 76,420 17,571 216,945	1,348,206 682,110 87,317 17,525 215,597	1,509,849 462,621 103,076 17,741 190,745
1,798,209	2,350,755	2,284,032
$1,911,435	$2,455,915	$2,401,126
$- 1,458,213 30,378 3,113	$- 1,388,024 35,884 2,821	$69,111 1,399,285 40,307 4,584
$1,491,704	$1,426,729	$1,513,287

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.

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

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

3. Market risk

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

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

Exchange rate risk

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

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

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

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

If NTD strengthened/weakened against USD by 1%, profits for the six months ended June 30, 2021 and 2020 would have decreased/increased by NT$14 thousand and NT$15 thousand, whereas equity would have decreased/increased NT$122 thousand and NT$145 thousand, respectively.

If NTD strengthened/weakened against RMB by 1%, profits for the six months ended June 30, 2021 and 2020 would have decreased/increased by NT$535 thousand and NT$749 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$8,393 thousand and NT$9,494 thousand for the six months ended June 30, 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).

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

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 37%, 33%, and 26% of total contract assets and accounts receivable balance as at June 30, 2021, December 31, 2020, and June 30, 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:

				Total book value:
Credit risk grade	Indicator	Method of measuring expected credit loss
			June 30,2021	December 31,2020	June 30,2020
Simplified approach (Note)	(Note)	Lifetime expected credit losses	$1,041,889	$1,136,666	$883,071

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.

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

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

June 30, 2021 Payables Lease liabilities December 31, 2020 Payables Lease liabilities June 30, 2020 Short-term loans Payables Lease liabilities	Less than 1 year	2 to 3years	4 to 5years	More than 5 years	Total
	$1,458,213 13,899 $1,388,024 15,526 $69,802 1,399,285 14,222	$- 17,172 $- 19,222 $- - 21,245	$- 81 $- 2,171 $- - 6,256	$- - $- - $- - -	$1,458,213 31,152 $1,388,024 36,919 $69,802 1,399,285 41,723

6. Reconciliation of liabilities relating to financing activities

Reconciliation of liabilities relating for the six months ended June 30, 2021:

January 1, 2021 Non - cash movement Cash flow Effect of exchange rate changes June 30, 2021	Guarantee deposits	Lease liabilities	Total
	$2,821 - 292 -	$35,884 3,644 (9,158) 8	$38,705 3,644 (8,866) 8
	$3,113	$30,378	$33,491

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

Reconciliation of liabilities relating for the six months ended June 30, 2020:

January 1, 2020 Non - cash movement Cash flow Effect of exchange rate changes June 30, 2020	Short-term loans	Guarantee deposits	Lease liabilities	Total
	$130,190 - (61,079) -	$5,027 - (443) -	$45,425 4,106 (9,189) (35)	$180,642 4,106 (70,711) (35)
	$69,111	$4,584	$40,307	$114,002

7. 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.

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

(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:

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

June 30, 2021

Level 1	Level 2	Level 3	Total
$15,130	$-	$-	$15,130
$83,933	$-	$14,163	$98,096
Level 1	Level 2	Level 3	Total
$12,590	$-	$-	$12,590
$78,407	$-	$14,163	$92,570
Level 1	Level 2	Level 3	Total
$10,700	$-	$-	$10,700
$94,935	$-	$11,459	$106,394

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

Transfer of fair value input between level 1 and level 2

There had been no transfer of fair value input between level 1 and level 2 for the six months ended June 30, 2021 and 2020 that involved assets or liabilities with recurring fair value measurement.

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 recurring fair value measurement.

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:

June 30, 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 Approach	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:

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 Approach	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.

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

June 30, 2020:

Financial assets: At fair value through other comprehensive income Stock Stock	Valuation technique	Significant unobservable input	Quantitative information	Relationship between input and fair value	Sensitivity analysis on relationship between input and fair value
	Market Approach 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 worsens/improves 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:

Unit: thousand dollars

Financial assets		June 30, 2021
	Foreign currency	Exchange rate	NTD
	$2,609 72,782 10,213 53 134 1,498 33	27.79 4.281 0.25 20.61 27.79 4.281 20.61	$72,500 311,581 2,553 1,093 3,722 6,414 689
Monetary items: USD CNY (RMB) JPY SGD Financial liabilities
Monetary items: USD CNY (RMB) SGD

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

Financial assets	December 31,2020	December 31,2020	December 31,2020
	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 June30,2020	$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
	Foreign currency	Exchange rate	NTD
	$1,280 71,991 11,436 2,412 2,613	29.800 4.212 0.277 29.800 4.212	$38,150 303,226 3,168 71,880 11,005
Monetary items: USD CNY (RMB) JPY 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's foreign currency exchange benefits for the three months ended June 30, 2021 and 2020 were NT$1,258 thousand and NT$2,393 thousand respectively; the foreign currency exchange benefits for the six months ended June 30, 2021 and 2020 were NT$2,300 thousand and NT$4,289 thousand 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	$1,326,556	$7,163	$-	$-	-	-%	$1,326,556	Y	-	-
0	The Company	STARK (NINGBO) Technology Inc.	2	1,326,556	129,420	128,430	-	-	4.84%	1,326,556	Y	-	Y
1	Stark Inforcom Inc.	The Company	4	225,444	38,526	19,500	19,500	-	0.73%	450,889	-	Y	-

Note 1: Explanation to the serial number column:

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

Note 2: The relationship between endorsement/guarantee providers and guaranteed parties are classified as follows:

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

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		End of theperiod	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	$15,130	-	$15,130
	TWSE- listed stock	ITEQ Corporation	-	Financial assets at fair value through other comprehensive income - non-current	362,829	51,703	0.11%	51,703
	Stock	DWINS Digital Service Corp.	-	Financial assets at fair value through other comprehensive income - non-current	1,151	-	0.07%	-
SRAIN Investment Co., Ltd.	TWSE- listed stock	ITEQ Corporation	-	Financial assets at fair value through other comprehensive income - non-current	187,614	26,735	0.06%	26,735
	TWSE- listed stock	Zero One Technology Co., Ltd.	-	Financial assets at fair value through other comprehensive income - non-current	47,000	2,148	0.04%	2,148
	TPEX- listed stock	Genesis Technology Inc.	-	Financial assets at fair value through other comprehensive income - non-current	20,000	1,440	0.04%	1,440
	TPEX- listed stock	Dimerco Data System Corporation	-	Financial assets at fair value through other comprehensive income - non-current	28,000	1,907	0.04%	1,907
	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		End of theperiod	End of theperiod
					Shares / units	Book value	Percentage of shareholding	Fair value
	Stock	Hua Chih Venture Capital Corp.	SRAIN Investment Co., Ltd. is the director of Hua Chih Venture CapitalCorp.	Financial assets at fair value through other comprehensive income - non-current	16,304	163	3.26%	163
SRAIN Investment Co., Ltd.	Stock	Incomm Technologies Co., Ltd.	-	Financial assets at fair value through other comprehensive income - non-current	30	$-	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:

For periods January 1 to June 30, 2021:

Serial No. (Note 1)	Name of transacting party	Counterparty	Relationship with the transacting party (Note 2)			Transaction summary
				Account	Amount	Transaction terms	As a percentage of consolidated net revenues or total assets (Note 3)
0	Stark Technology Inc.	Stark Technology Inc. (USA)	1	Purchase	$1,526	Purchase price is determined by applying a 5%- 30% markup on cost or through negotiation. Payment term is 7-30 days after delivery.	0.05%
				Accounts payable	754		0.01%
0	Stark Technology Inc.	Stark Inforcom Inc.	1	Sales revenue	6,477	Selling price is determined at 90%-99% of general selling price or through negotiation. Collection term is 30-120 days after acceptance inspection.	0.22%
				Accounts receivable	135		-%
				Purchase	11,461	Purchase price is determined by applying a 3%- 20% markup on cost or through negotiation. Payment term is 30-120 days after acceptance inspection.	0.39%
				Accounts payable	479		0.01%
				Rental income	962	-	0.03%
				Other income	11	-	-%
				Other expense	72	-	-%
0	Stark Technology Inc.	SRAIN Investment Co.,Ltd.	1	Rental income	57	-	-%
0	Stark Technology Inc.	STARK (NINGBO) Technology Inc.	1	Sales revenue	$1,357	Selling price is determined by applying a 3%- 20% markup on cost or through negotiation. Collection term is 30-120 days after acceptance inspection.	0.05%
				Accounts receivable	1,372		0.02%
1	Stark Inforcom Inc.	Stark Technology Inc. (USA)	3	Purchase	13	Purchase price is determined by applying a 5%- 30% markup on cost or through negotiation. Payment term is 7-30days after delivery.	-%

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

(All amounts in NTD thousands unless otherwise specified)

Note 1: Business dealings between the parent company and subsidiaries are indicated in the serial number column. The numbering rule is explained below:
0 for parent company.
Each subsidiary is numbered in sequential order starting from 1.
Note 2: Related party transactions are distinguished into one of three categories, as shown below:
Parent to subsidiary.
Subsidiary to parent.
Subsidiary to subsidiary.
Note 3: Calculation for business dealings as a percentage of total consolidated revenues or total assets is explained as follows: for balance sheet items, percentage of period-end balance is calculated relative to consolidated total assets; for profit or loss items, percentage of end-of-period cumulative amount is calculated relative to consolidated total revenues.

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

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

(All amounts in NTD thousands unless otherwise specified)

2. Information on business investments:

Supplementary disclosure of investees in which the Company has significant influence or control for the six months ended June 30, 2021 (excluding Mainland China investees)

				Unit: NT$thousands/USD	Unit: NT$thousands/USD	Unit: NT$thousands/USD	Unit: NT$thousands/USD	Unit: NT$thousands/USD	Unit: NT$thousands/USD	Unit: NT$thousands/USD	Unit: NT$thousands/USD
Name of the investor	Name of investee	Location of the investee	Main business activities	Initial investment (Note 9)		Shares held as at end of the period			Current profit (loss) of the investee (Note 1)	Investment gains (losses) recognized in the current period (Note 1)	Remarks
				End of the current period	End of the previous year	Number of shares	Percentage	Book value
Stark Technology Inc.	Stark Technology Inc. (USA)	Note 2	Trading of computer- related products	$1,390 (USD50,000)	$1,390 (USD50,000)	500,000	100.00%	$12,041	$(623)	$(770)	-
Stark Technology Inc.	SRAIN Investment Co., Ltd.	Note 3	General investment	410,967	410,967	-	100.00%	551,363	57,194	57,194	-
Stark Technology Inc.	Pacific Ace Holding International Ltd.	Note 4	General investment	83,370 (USD3,000,000)	83,370 (USD3,000,000)	3,000,000	100.00%	308,351	14,900	14,900	-
Stark Technology Inc.	Stark Information (Hong Kong) Limited	Note 5	Trading of computer equipment and software	1,945 (USD70,000)	-	70,000	100.00%	1,945	-	-	-
SRAIN Investment Co., Ltd.	S-Rain Investment Ltd.	Note 6	General investment	22,232 (USD800,000)	22,232 (USD800,000)	800,000	100.00%	9,368	(1,184)	-	-
SRAIN Investment Co., Ltd.	Stark Inforcom Inc.	Note 7	Trading of computer- related products	370,000	370,000	37,000,000	100.00%	450,889	58,324	-	-

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

		(All amounts in NTD thousands unless otherwise specified)	(All amounts in NTD thousands unless otherwise specified)	(All amounts in NTD thousands unless otherwise specified)	(All amounts in NTD thousands unless otherwise specified)	(All amounts in NTD thousands unless otherwise specified)	(All amounts in NTD thousands unless otherwise specified)
Pacific Ace Holding International Ltd.	Profit Reap International Limited	Note 4	General investment	83,370 (USD3,000,000) (Note 8)	83,370 (USD3,000,000) (Note 8)	3,000,000	100.00%	308,673	14,900	-	-

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 June 30, 2021.

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	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)	$83,370 (USD3,000,000)	-	-	$83,370 (USD3,000,000) (Note 1)	$14,900 (Note 4. (2), 3)		100.00%	$14,900 (Note 4. (2), 3)	$308,945	-
Shanghai Stark Technology Inc.	Wholesale and import/export trade of computers and peripherals, software, office equipment, and electrical/electronic equipment, computer system design, data processing service, and supply of network information.	USD 1,160,000	Invested indirectly through an investee in a third location (S-Rain Investment Ltd)	32,236 (USD1,160,000)	-	-	32,236 (USD1,160,000)	(1,184) (Note 4. (2), 3)		100.00%	(1,184) (Note 4. (2), 3)	9,358	-
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)	83,370 (USD3,000,000)	-	-	83,370 (USD3,000,000)		- (Note 2)	- (Note 2)	- (Note 2)	- (Note 2)	-

Accumulated outflows of investment from Taiwan to Mainland China as end of current period				Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)					Ceiling	on investments in Mainland China imposed by the Investment Commission of MOEA
$198,976 (USD7,160,000) (Note 3)				$198,976 (USD7,160,000) (Note 3)						$1,591,868(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 June 30, 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 June 30, 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.
Information on major shareholders: Disclosure requirements not met.

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

(All amounts in NTD thousands unless otherwise specified)

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.

AI assistant

STARK — Interim / Quarterly Report 2021

52113_rns_2021-12-17_868db196-e9fd-464f-87bc-1e8ba531386e.pdf

2480

Stark Technology Inc. and Subsidiaries

Consolidated Financial Statements

Table of Contents

Independent Auditor's Review Report

Foreword

Scope

Basis of reservation

Reservations

Stark Technology Inc. and Subsidiaries Consolidated Balance Sheet

As at June 30, 2021, December 31, 2020, and June 30, 2020

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

As at June 30, 2021, December 31, 2020, and June 30, 2020

Stark Technology Inc. and Subsidiaries Consolidated Statement of Changes in Equity For the six months ended June 30, 2021 and 2020

Stark Technology Inc. and Subsidiaries Consolidated Statement of Cash Flow For the six months ended June 30, 2021 and 2020

Stark Technology Inc. and Subsidiaries

Notes to Consolidated Financial Statements

I. Organization and Operations

II. Financial Statement Approval Date and Procedures

III. Application of New Standards, Amendments, and Interpretations

Amendments to IFRS 1

Amendments to IFRS 9 - "Financial Instruments"

Amendments to interpretations of IFRS 16 - "Leases"

Amendments to IAS 41

(2) IFRS 17, “Insurance Contracts”

IV. Summary of Significant Accounting Policies

1. Compliance statement

2. Basis of Preparation

3. Consolidation overview

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

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

5. Accounts receivable and instalment accounts receivable

6. Inventories

7. Prepayments

8. Property, plant and equipment

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

9. Intangible asset

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

15. Operating revenue

(1) Breakdown of revenue

(2) Contract balance

A. Contract assets - current

B. Contractual liabilities - current

16. Expected credit impairment loss/reversal gain

December 31, 2020

17. Lease

A. Amounts recognized in the balance sheet

(b) Lease liabilities

B. Amount recognized in statement of comprehensive income

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

19. Non-operating income and expenses

(1) Interest income

(2) Other income

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

(3) Other gains and losses

20. Composition of other comprehensive income

21. Income tax

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

Income tax recognized in profit or loss

Assessment of income tax return

22. Earnings per share (EPS)

VII. Related party transactions

VIII. Pledged assets

IX. Significant contingent liabilities and unrecognized contract commitments

STARK Interim / Quarterly Report 2021