Stock Code: 4133

Abnova (Taiwan) Corporation and Subsidiaries

Consolidated Financial Statements With Independent Auditors’ Report

For the Years Ended December 31, 2022 and 2021

Address ： 9th Fl., No. 108, Jhouzih St., Neihu District, Taipei City Telephone ： (02)8751-1888

Notice to readers.

THIS IS A TRANSLATION OF THE FINANCIAL STATEMENTS (THE “FINANCIAL STATEMENTS”) OF ABNOVA (TAIWAN) CORPORATION (THE “COMPANY”). THIS TRANSLATION IS INTENDED FOR REFERENCE ONLY AND NOTHING ELSE, THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF THE FINANCIAL STATEMENTS SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETATION OF THE SUBJECT MATTER STATED HEREIN.

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Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’ Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses due to major disasters (11) Subsequent events (12) Other (13) Other disclosures A. Information on significant transactions B. Information on investees C. Information on investment in Mainland China D. Major shareholders (14) Segment information	Page
	1 2 3 4 5 6 7 8 9 9 9～10 10～22 22 22～46 46～47 47 47 48 48 48 48～49 49 50 50 50～51

Contents
1. Cover Page
2.
Table of Contents
3.
Representation Letter
4.
Independent Auditors’ Report
5.
Consolidated Balance Sheets
6.
Consolidated Statements of Comprehensive Income
7.
Consolidated Statements of Changes in Equity
8.
Consolidated Statements of Cash Flows
9.
Notes to the Consolidated Financial Statements
(1) Company history
(2) Approval date and procedures of the consolidated financial statements
(3) New standards, amendments and interpretations adopted
(4) Summary of significant accounting policies
(5) Significant accounting assumptions and judgments, and major sources of
estimation uncertainty
(6) Explanation of significant accounts
(7) Related-party transactions
(8) Pledged assets
(9) Commitments and contingencies
(10) Losses due to major disasters
(11) Subsequent events
(12) Other
(13) Other disclosures
A. Information on significant transactions
B. Information on investees
C. Information on investment in Mainland China
D. Major shareholders
(14) Segment information

Page

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Representation Letter

The entities that are required to be included in the consolidated financial statements of Abnova (Taiwan) Corporation as of and for the year ended December 31, 2022 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the consolidated financial statements is included in the consolidated financial statements. Consequently, Abnova (Taiwan) Corporation and Subsidiaries do not prepare a separate set of consolidated financial statements.

Company name: Abnova (Taiwan) Corporation Chairman: WILBER HUANG Date: February 24, 2023

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Independent Auditors’ Report

To the Board of Directors of Abnova (Taiwan) Corporation:

Opinion

We have audited the consolidated financial statements of Abnova (Taiwan) Corporation and its subsidiaries (“the Group”), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of Abnova (Taiwan) Corporation and its subsidiaries as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statement section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters we judge that shall be communicated in the audit report are as follows:

1. Inventory valuation

Please refer to Note 4(8) “Inventories”; Note 5(1) “Significant accounting assumptions and judgments, and major sources of estimation uncertainty”, and Note 6(5) “Inventories”.

Description of key audit matter:

The major business of the Group is the manufacturing and sales of antibody, protein, test reagents and testing instruments. Inventories are measured at the lower of cost and net realizable value. Due to the longer life cycle of the products, the management considers factors such as product circulation, exposure, preservation and industry information to evaluate the net realizable value of inventories. As Abnova (Taiwan) Corporation and its subsidiaries have large amount of inventories and a large number of items, and the net realizable value used in the above-mentioned evaluation involves subjective judgment, the evaluation of loss allowance for inventory valuation has been listed as the key audit matter of the year.

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Our principal audit procedures included:

The key audit procedures for the above-mentioned key audit matter based on the understanding of the industrial characteristics of Abnova (Taiwan) Corporation and its subsidiaries include obtaining statistical information on the sales time and sales status of the products on the shelves in each year provided by the management in the subsequent years to evaluate the consistency of the policy used to recognize the inventory valuation loss; understanding the Group and its subsidiaries’ inventory management process, reviewing the annual inventory plan and participating in the annual inventory check to evaluate the effectiveness of the management’s inventory control; obtaining the inventory net realizable value calculation sheet, and spot check the correctness of the calculation.

Other matter

Abnova (Taiwan) Corporation has prepared its parent-company-only financial statements as of and for the years ended December 31, 2022 and 2021, on which we have issued an unmodified opinion.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards, we exercise professional judgment and professional skepticism throughout the audit. We also:

A. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

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effectiveness of the Group’s internal control.

C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group’s to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the consolidated financial reports, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

KPMG

Auditors：

Securities ：Financial-SupervisoryCompetent Securitities-Six-0940100754 Authority Financial-SupervisoryApprovedSecuritities-Auditingcertified No. 1070304941 February 24, 2023

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Abnova (Taiwan) Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2022 Amount ％ $ 367,065 27 246 - 59,999 4 95,657 7 396,079 29 7,237 - 849 - 1,060 -	December 31, 2022 Amount % $ 2,622 - 14,995 1 41,387 3 2,057 - 7,199 1 4,559 -	December 31, 2021 Amount % 2,638 - 11,480 1 33,517 3 4,396 - 6,992 1 3,703 -
	72,819 5	62,726 5
	5,804 - 3,686 - 526 -	- - 560 - 8,007 1
928,192 67
- - 550 - 256,546 19 10,733 1 68,815 5 98,278 7 11,715 1
	10,016 -	8,567 1
	82,835 5	71,293 6
	605,536 44 474,527 35 85,642 7 138,196 10 (11,907) (1)	605,536 47 474,527 37 82,766 6 39,698 3 9,229 1
446,637 33
	1,291,994 95	1,211,756 94
	$ 1,374,829 100	1,283,049 100
$ 1,374,829 100

(See accompanying notes to financial statements.) Manager: WILBER HUANG

Chairman: WILBER HUANG

Accounting supervisor: YA-PING ZHANG

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Abnova (Taiwan) Corporation and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

2022	％ 100 (51)	2021	％ 100 (56)
Amount $ 411,756 (210,327)		Amount 451,487 (254,148)
201,429	49	197,339	44
(40,349) (47,216) (48,740) (698)	(10) (11) (12) -	(39,812) (59,365) (53,141) (1,201)	(9) (13) (12) -
(137,003)	(33)	(153,519)	(34)
64,426	16	43,820	10
3,636 971 26,075 (152) -	1 - 6 - -	716 2,259 (9,925) (246) (330)	- 1 (2) - -
30,530	7	(7,526)	(1)
94,956 20,113	23 5	36,294 7,925	9 2
74,843	18	28,369	7
304 28,730 -	- 7 -	388 11,345 -	- 3 -
29,034	7	11,733	3
4,216 -	1 -	(3,108) -	(1) -
4,216	1	(3,108)	(1)
33,250	8	8,625	2
$ 108,093	26	36,994	9
$	1.24		0.47
$	1.23		0.47

(See accompanying notes to financial statements.)

Chairman: WILBER HUANG Manager: WILBER HUANG Accounting supervisor: YA-PING ZHANG

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Abnova (Taiwan) Corporation and Subsidiaries Consolidated Statements of Changes in Equity For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Other equity interest Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Exchange differences on translation of foreign financial statements (8,070) 9,062 - - (3,108) 11,345	Other equity interest Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Exchange differences on translation of foreign financial statements (8,070) 9,062 - - (3,108) 11,345	Total equity 1,211,094 28,369 8,625
Shares Ordinary shares $ 605,536 - -	Capital surplus 474,527 - -	Retained	earnings Unappropriated retained earnings 51,055 28,369 388
				Exchange differences on translation of foreign financial statements (8,070) - (3,108)
		Legal reserve 78,984 - -
-	-	-	28,757	(3,108)	11,345	36,994
- -	- -	3,782 -	(3,782) (36,332)	- -	- -	- (36,332)
605,536 - -	474,527 - -	82,766 - -	39,698 74,843 304	(11,178) - 4,216	20,407 - 28,730	1,211,756 74,843 33,250
-	-	-	75,147	4,216	28,730	108,093
- - -	- - -	2,876 - -	(2,876) (27,855) 54,082	- - -	- - (54,082)	- (27,855) -
$ 605,536	474,527	85,642	138,196	(6,962)	(4,945)	1,291,994

(See accompanying notes to financial statements.) Manager: WILBER HUANG Accounting supervisor: YA-PING ZHANG

Chairman: WILBER HUANG

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Abnova (Taiwan) Corporation and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2022 and 2021 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss) Depreciation expenses Amortization expenses Expected credit loss Interest expense Interest income Share of associates and joint ventures losses accounted for using equity method Loss (gain) from disposal of property, plant and equipment Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Notes receivable Accounts receivable Other receivables Inventories Prepayments Other current assets Other non-current assets Total changes in operating assets Changes in operating liabilities: Contract liabilities Accounts payable Other payables Other current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows used in investing activities: Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in guarantee deposits paid Acquisition of intangible assets Increase in other current financial assets Decrease in other non-current assets Increase in other non-current liabilities Increase in prepayments for business facilities Net cash flows (outflows) used in investing activities Cash flows from financing activities: Decrease in guarantee deposits received Payment of lease liabilities Cash dividends paid Proceeds from disposal of subsidiaries cash Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2022 $ 94,956 23,754 10,739 698 152 (3,636) - (7)	2021 36,294 31,741 10,308 1,201 246 (716) 330 824
	31,700	43,934
	194 (12,335) (439) 9,314 3,068 726 -	315 (1,453) 168 36,565 (3,296) (4,554) (22)
	528	27,723
	(16) 3,515 3,504 708	369 (5,477) 1,392 63
	7,711	(3,653)
	8,239	24,070
	39,939	68,004
	134,895 3,189 (152) (5,259)	104,298 728 (246) (11,903)
	132,673	92,877
	- (1,390) 45 476 (5,240) (304) 66 (97) (7,231)	(811) (642) 2,152 219 (104) (2) - 234 (88)
	(13,675)	958
	(4,423) (8,897) (27,855) (20,225)	4,159 (11,630) (36,332) -
	(61,400)	(43,803)
	2,746 60,344 306,721	(1,074) 48,958 257,763
	$ 367,065	306,721

(See accompanying notes to financial statements.) Chairman: WILBER HUANG Manager: WILBER HUANG Accounting supervisor: YA-PING ZHANG

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Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in thousands of New Taiwan Dollars, unless specified otherwise)

1. Company history

Abnova (Taiwan) Corporation (the “Company”) was legally established with the approval of the Ministry of Economic Affairs (R.O.C.) on January 4, 2002, with registered address at 9th Fl., No. 108, Jhouzih St., Neihu District, Taipei City, Taiwan (R.O.C.). The Company and its subsidiaries (the “Group”) has been actively developing, manufacturing, and sell monoclonal antibody, polyclonal antibody, proteins, medical inspection instruments and testing reagents, which are mainly antibody reagents, antibody chips or related products provided to and used by academic, research institutions or pharmaceutical factories, etc. Antibodies are the most important means for understanding proteins and their functions. The products of the Group help to study the relationship between protein changes in the process of cancer, infectious diseases, metabolism and endocrine diseases, and then apply to the development of medical inspection reagents and drugs.

2. Approval date and procedures of the consolidated financial statements

These consolidated financial statements were authorized for issue by the Board of Directors on February 24, 2023.

3. New standards, amendments and interpretations adopted

(1) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted. The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2022.
‧Amendments to IAS 16 “Property, Plant and Equipment－Proceeds Before Intended Use”
‧Amendments to IAS 37 “Onerous Contracts－Cost of Fulfilling a Contract”
‧ Annual Improvements to IFRS Standards 2018-2020
‧ Amendments to IFRS 3 “Reference to the Conceptual Framework”
(2) The impact of IFRS issued by the FSC but not yet effective
The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2023, would not have a significant impact on its consolidated financial statements.
‧ Amendments to IAS 1 “Disclosure of Accounting Policies”
‧ Amendments to IAS 8 “Definition of Accounting Estimates”
‧ Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities Arising from a Single Transaction”

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Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(3) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Content of amendment The current IAS 1 provided that with respect to classification as current, an entity’s right to defer settlement for at least 12 months is subject to the entity complying with conditions after the reporting period. The amendment deleted the requirement that the right shall be unconditional and instead requires that the right must exist and be substantive at the end of the reporting period. The amendments clarify how an entity classifies debt and other financial liabilities as current or non-current with its own equity instruments for the settlement of a liability (such as convertible corporate bonds).	Effective date per IASB
		January 1, 2024

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements.

‧ Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
‧ IFRS 17 “Insurance Contracts” and amendments to IFRS 17 “Insurance Contracts”
‧ Amendments to IAS 1 “Non-current Liabilities with Covenants”
‧ Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”

4. Summary of significant accounting policies

The significant accounting policies presented in the consolidated financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

(1) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, ands SIC Interpretations endorsed by the Financial Supervisory Commission, R.O.C.

(2) Basis of preparation
A. Basis of measurement
Except for the following significant accounts, the consolidated financial statements have been prepared on a historical cost basis:
(a) Financial assets at fair value through other comprehensive income are measured at fair value; and
(b) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in Note 4(16).

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Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

B. Functional and presentation currency

The functional currency of each entity of the Group is determined based on the primary economic environment in which the entity operates. The financial statements are presented in New Taiwan Dollars, which is the Group’s functional currency. All financial information presented in New Taiwan Dollars has been rounded to the nearest thousand.

(3) Basis of consolidation

A. Principles of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Group. Except for Abnova GmbH, the German subsidiary which is not included in an entity of the Group’s consolidated financial report, the rest of the subsidiaries have been included. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

B. List of subsidiaries in the consolidated financial statements The consolidated entities were as follows:

Name of investor	Name of subsidiary	Main activities	Percentage of ownership	Percentage of ownership	Note
			December 31, 2022	December 31, 2021
The Company Abnova Holding Corporation 〞〞 Abnova (Cayman) Corporation 〞	Abnova Holding Corporation Abnova (Cayman) Corporation Citil Pharma Corporation Wellconn Genomics (Cayman) Corporation Abnova (HK) Limited Abnova Diagnostics	Investment business Investment business Investment business Investment business Investment business R&D, manufacturing and sales of medical device, etc., testing services	100.00% 100.00% - % - % 100.00% 100.00%	100.00% 100.00% 100.00% 100.00% 100.00% 100.00%	Note 3 Note 4

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Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (HK) Limited	Abnova Diagnostics	R&D,	100.00%	100.00%	100.00%	100.00%	Note 5
	(Dongguan) Limited	manufacturing
		and sales of
		medical
		device
Wellconn Genomics	Wellconn Genomics (HK)	Investment	-	%	100.00%		Note 2
(Cayman) Corporation	Limited	business
Wellconn Genomics (HK)	Wellconn Genomics	Medical	-	%	-	%	Note 1
Limited	(Dongguan) Limited	testing service
		business and
		technical
		consulting
		service
Citil Pharma Corporation	Katoku	R&D,	-	%	-	%	Note 1
		manufacturing
		and sales of
		cell therapy
		technology/pr
		oducts

Note 1 ： Wellconn Genomics (Dongguan) Limited and Katoku had been liquidated in 2021. Note 2 ： Wellconn Genomics (HK) Limited had been liquidated in January 2022.

Note 3 ： Citil Pharma Corporation had been liquidated in May 2022.

Note 4 ： Wellconn Genomics (Cayman) Corporation had been liquidated in September 2022.

Note 5 ： Abnova Diagnostics (Dongguan) Limited had been sold in 2022.

C. Subsidiaries excluded from the consolidated financial statements:

Name of investor	Name of subsidiary	Main activities	Percentage	of wnership	Note
			December 31, 2022	December 31, 2021
The Company	Abnova-GmbH	Distribution of biological products	100.00%	100.00%	Note

Note ： Since Abnova GmbH’s capital equivalent to NT$1,210 (0.2% of the Group’s capital), its total assets were less than 1% of the Group’s total assets, and it had no operating income, the consolidated financial report with this subsidiary had not been prepared. The Board of Directors of the Company approved the dissolution and liquidation proposal of Abnova GmbH on November 11, 2016, and the dissolution and liquidation was on December 31, 2016, as the base date.

(4) Foreign currency

A. Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Company entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

(a) an investment in equity securities designated as at fair value through other comprehensive income;

(b) a financial liability designated as a hedge of the net investment in a foreign operation to the

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Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

extent that the hedge is effective; or

(c) qualifying cash flow hedges to the extent that the hedges are effective.
B. Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the New Taiwan Dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the New Taiwan Dollars at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes only a part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes only a part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(5) Classification of current and non-current assets and liabilities
An asset is classified as current under one of the following criteria, and all other assets are classified as non-current:
A. It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
B. It is held primarily for the purpose of trading;
C. It is expected to be realized within twelve months after the reporting period; or
D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current:
A. It is expected to be settled in the normal operating cycle;
B. It is held primarily for the purpose of trading;
C. It is due to be settled within twelve months after the reporting period; or
D. The Group does not have any unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments that do not affect its classification.
(6) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(7) Financial instruments

Accounts receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. An accounts receivable without a significant financing component is initially measured at the transaction price.

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Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

A. Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(a) Financial assets measured at amortized cost
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
‧ It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
(b) Financial assets measured at fair value through other comprehensive income (FVOCI) On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis. Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established (usually the ex-dividend date).

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, financial assets measured at amortized costs, notes and accounts receivables, other receivable, financial lease payments receivable, guarantee deposit paid and other financial assets) and contract assets.

The Group measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:
‧ Debt securities that are determined to have low credit risk at the reporting date; and
‧ Other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivables and contract assets are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment as well as forward-looking information.

ECLs are probability-weighted estimate of credit losses. Credit losses are measured as the

～ 14 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

‧ Significant financial difficulty of the borrower or issuer;
‧ A breach of contract such as a default or being more than some time past due;
‧ The lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
‧ It is probable that the borrower will enter bankruptcy or other financial reorganization; or
‧ The disappearance of an active market for that financial assets because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt investment at FVOCI, loss allowances are recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate accounts, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

(d) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(8) Inventories
A. The perpetual inventory system is adopted, and the acquisition costs are recorded in the account. The costs are determined by the weighted average method, and the fixed production overheads are allocated according to the normal operating capacity of the production equipment. Inventories at the end of period except for obsolete and slow-moving inventories are provided for loss allowance. Inventories are measured at the lower of cost and net realizable value. When comparing the lower of cost and net realizable value, the item-by-item comparison method is adopted. The market price of raw materials is the replacement cost (that is, the latest purchase price); the market price of work in progress, semi-finished goods, finished goods and commodity inventories is the net realizable value.
B. The basis for the loss allowance for each obsolete and slow-moving inventory is explained as follows:
(a) 100% loss allowance provisions for protein inventory over two years (entering the third year); 2% to 50% loss allowance provisions for the stock age within two years (exclusive).
(b) 1% to 3% loss allowance provisions for testing instruments within two years (exclusive) according to the stock age; 10% to 70% loss allowance provisions for the stock age over two

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Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

years (entering the third year) to five years (exclusive); 100% loss allowance provisions for the stock age reaches five years (entering the sixth year).

(c) 0.1% to 20% loss allowance provisions for the stock age of inventories other than protein and testing instruments within four years (exclusive); 40% to 80% loss allowance provisions for the stock age reaches five years (entering the sixth year) to six years (exclusive); 100% loss allowance provisions for the stock age reaches six years (entering the seventh year).
(9) Non-current assets held for sale
In the first quarter of 2022, the Group passed the resolution to sell the equity of the subsidiary made by the Board of Directors, therefore, the accounting policy related to non-current assets held for sale began to apply from March 31, 2022.

When the carrying amount of the disposal group comprising of non-current assets or assets and liabilities is highly probable to be recovered mainly through a sale transaction rather than continuing use, it is classified as held for sale. Assets or components of disposal groups are remeasured according to the accounting policy of the Group before classifying to be held for sale. The disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Impairment losses of any disposal group are first apportioned to goodwill and then apportioned to the remaining assets and liabilities on a pro rata basis. However, the loss will not be allocated to assets that are not within the scope of asset impairment under IAS 36, and the aforementioned items will continue to be measured in accordance with the accounting policy of the Group. Impairment losses recognized for the classification as held for sale and gains and losses arising from the subsequent remeasurements are recognized in profit or loss, provided that gains on reversal cannot exceed the cumulative impairment loss recognized.

When intangible assets and property, plant and equipment are classified as held for sale, they are no longer depreciated or amortized. In addition, when an associate recognized using the equity method is classified as held for sale, the equity method will cease to be adopted.

(10) Invest in associates
Associates are that in which the Group has significant influence over their financial and operating policies but is not controlling or jointly controlling.

The Group adopts the equity method to handle the interests of the associates. Under the equity method, the original acquisition is recognized at cost, and investment costs include transaction costs. The carrying amount of investments in an associate includes the goodwill identified at the time of the original investment, less any accumulated impairment loss.

The consolidated financial report includes from the date of significant influence to the date of loss of significant influence; after the adjustments made consistent with the accounting policy of the Group, the Group recognizes the profit and loss and the amount of other comprehensive income of each investment in associates based on the equity ratio. When the equity changes in non- profit or loss and other comprehensive income of an associate does not affect the shareholding ratio of the Group, the Group will recognize all changes in equity as capital reserves according to the shareholding ratio.

Unrealized gains and losses arising from transactions between the Group and associates are recognized in the corporate financial statements only within the scope of non-related party investors’ interests in associates.

When the Group shall recognize the loss share of an associate proportionally equal to or exceeds its equity in the associate, it shall stop recognizing the losses, and only within the scope of a legal obligation, a constructive obligation, or a payment made on behalf of the invested company, additional losses and related liabilities shall be recognized.

When an associate issues new shares, if the Group does not subscribe in accordance with the shareholding ratio, resulting in a change in the shareholding ratio, and thus an increase or decrease in the net equity value of the investment occurred, the increase or decrease shall be

～ 16 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

adjusted to the capital reserve and the investment using the equity method. If this adjustment is to write-down the capital reserve, and the balance of the capital reserve generated by the investment using the equity method is insufficient, the difference will be debited to retained earnings. However, if the Group does not subscribe according to the shareholding ratio, resulting in a decrease in its ownership interest in the associate, the amount related to the associate previously recognized in other comprehensive income is reclassified according to the reduction ratio, and its accounting treatment is the basis same as that which an associate would have to follow if it directly disposes of the related assets or liabilities.

(11) Property, plant and equipment
A. Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses. If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

B. Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

C. Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

(a) Buildings and structures 10 to 50 years (b) Machinery and equipment 2 to 10 years (c) Office equipment 3 to 8 years (d) Leasehold improvements 3 to 15 years (e) Other equipment 3 to 5 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(12) Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

A. As a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

～ 17 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

(a) fixed payments;

(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable under a residual value guarantee; and

(d) payments for purchase or termination options that are reasonably certain to be exercised. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

(a) there is a change in future lease payments arising from the change in an index or rate;
(b) there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee;
(c) there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset;
(d) there is a change of its assessment on whether it will exercise a purchase, extension or termination option;

(e) there is any lease modification.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets and lease liabilities that do not meet the definition of investment property as a separate line item respectively in the statement of financial position. The Group has elected not to recognize right-of-use assets and lease liabilities for office equipment with short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

B. As a lessor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to

～ 18 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

allocate the consideration in the contract.

(13) Intangible assets
A. Recognition and measurement
Goodwill arising on the acquisition of a subsidiary is measured at cost less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

B. Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, is recognized in profit or loss as incurred, including internally developed goodwill and brands.

C. Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives of intangible assets for current and comparative periods are as follows:
(a) Royalty
(b) Intangible assets internally generated
5 to 30 years
3 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(14) Impairment of non-derivative financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

(15) Revenue recognition
A. Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good to a customer. The description of main income items is as follows:

(a) Sales of goods

The Group recognizes revenue when control of the products has transferred, being when the

～ 19 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

products are delivered to the customer upon the transaction terms, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

The Group offers volume discounts to customers. The Group recognizes revenue on the basis of the net amount of the contract price minus the estimated volume discount. The amount of the volume discount is estimated based on the expected value based on past cumulative experience, and revenue is recognized only in the range where there is a high probability that no significant reversal will occur.

(16) Employee benefits
A. Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contribution is recognized as an asset to the extent that they will result in a return of cash or a reduction in future payments.

B. Defined benefit plans

The Company’s net obligation in respect of each defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

C. Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(17) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of

～ 20 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

current tax payables or receivables, which reflects the related uncertainties of income taxes (if any), are the best estimate of the tax amount expected to be paid or received. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if the following criteria are met:

A. the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
B. the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
(a) The same taxable entity; or
(b) Different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(18) Earnings per share

The Group discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares.

(19) Segment information

The Group’s operating segments information is reported in a consistent manner with internal management reports provided to key operating decision makers. The chief operating decision maker is responsible for allocating resources to operating segments and assessing their performance.

～ 21 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

5. Significant accounting assumptions and judgments, and major sources of estimation uncertainty

The preparation of the consolidated financial report requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates. The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

Accounting policies involve critical judgments and have no significant impact on the amount recognized in this consolidated financial report.

Information about uncertainties of the following assumptions and estimates which have significant risks of causing critical adjustments to the carrying amount of assets and liabilities in the next fiscal year and reflected the impact of COVID-19, is as follows:

(1) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for normal loss and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. In addition, the Group has also considered the industry characteristics and the liquidity of inventories to assess the loss allowance for slow-moving inventories. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the changes in industrial application technology, there may be significant changes in the net realizable value of inventories.

6. Explanation of significant accounts

(1) Cash and cash equivalents

tion of significant accounts ash and cash equivalents
Cash Checking account Demand deposits Time deposits Cash and cash equivalents listed in the consolidated statements of cash flows	December 31, 2022 $ 589 716 163,855 201,905	December 31, 2021 798 714 149,439 155,770
	$ 367,065	306,721

The term of the Group’s time deposits is three months to one year. It is used as a short-term fund that can be converted momentarily for any fund demand, and the risk of value changes is low, so it is classified under cash and cash equivalents. Please refer to Note 6(18) for the exchange rate risk, interest rate risk, and sensitivity analysis of the financial assets and liabilities.

(2) Financial assets measured at fair value through other comprehensive income

Equity instruments measured at fair value through other comprehensive income: Foreign non-listed (non-OTC-listed) stocks－Hukui Biotechnology Corporation (Samoa) Foreign non-listed (non-OTC-listed) stocks－ Hangzhou Watson Biotech Co., Ltd.	December 31, 2022 $ - -	December 31, 2021 - 36,547
	$ -	36,547

～ 22 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

A. Investments in equity instruments measured at fair value through other comprehensive income The Group designated the investment shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term strategic purpose.
Gains on valuation of financial assets measured at fair value through other comprehensive income recognized by the Group were $28,730,000 and $11,345,000 as of December 31, 2022 and 2021, respectively.
B. Please refer to Note 6(18) for information on market risks.
C. As of December 31, 2022 and 2021, the aforementioned financial assets were not pledged as collateral.
D. The Group had completed the disposal of the subsidiary, Abnova Diagnostics (Dongguan) Limited, on November 3, 2022. The subsidiary held stocks of Hangzhou Watson Biotech Co., Ltd. with the realized profit of $54,082,000, which was transferred from other equity to retained earnings. The strategic investment in 2021 is not disposed.
(3) Notes and accounts receivable

earnings. The strategic investment in 2021 is not disposed. otes and accounts receivable
Notes receivable Accounts receivable Less: Loss allowance	December 31, 2022 $ 246 68,151 (8,152)	December 31, 2021 440 62,811 (14,449)
	$ 60,245	48,802

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward-looking information.

The loss allowance provisions for notes and accounts receivable of the series products of circulating tumor cell testing were determined as follows:

December 31, 2022	December 31, 2022	Loss allowance provision -
Gross carrying amount $ 26	Weighted-aver age loss rate
		Loss allowance provision - 11,590
Gross carrying amount $ 12 11,590	Weighted-aver age loss rate
	4.22% 100.00%
$ 11,602		11,590

The loss allowance provisions for notes and accounts receivable for the series products of noncirculating tumor cell testing were determined as follows:

Current and less than 30 days past due 31 to 60 days past due 61 to 90 days past due 91 to 120 days past due	December 31, 2022	December 31, 2022	Loss allowance provision 539 1,749 474 1,418
	Gross carrying amount $ 45,339 12,486 1,888 3,350	Weighted-aver age loss rate 1.19% 14.01% 25.11% 42.32%

～ 23 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

2,066 56.21% 2,330 81.47% 912 100.00% $ 68,371 December 31, 2021	2,066 56.21% 2,330 81.47% 912 100.00% $ 68,371 December 31, 2021	1,161 1,899 912
		8,152
		Loss allowance provision 149 328 119 288 331 205 1,439
Gross carrying amount	Weighted-aver age loss rate 0.35% 6.30% 13.76% 29.15% 43.66% 71.63% 100.00%
$ 42,110 5,206 862 988 759 286 1,439
$ 51,650		2,859

The movement in the loss allowance for notes and accounts receivable were as follows:

Balance at January 1 Impairment losses Irrecoverable amount written-off in the current year Balance at December 31	2022 $ 14,449 698 (6,995)	2021 13,248 1,201 -
	$ 8,152	14,449

As of December 31, 2022 and 2021, the aforementioned financial assets were not pledged as long-term loans and financing facilities. (4) Other receivables

Other receivables	December 31, 2022 $ 95,657	December 31, 2021 1,566

The Group disposed its subsidiary, Abnova Diagnostics (Dongguan) Limited, on November 3, 2022 for a total selling price of $93,205,000 (USD 3,035,000). As of December 31, 2022, the unrecovered amount was $93,205,000. Due to foreign exchange control in Mainland China, the remittance can be made to overseas only after the equity transferred. In order to ensure the rights and interests of the Group, a capital supervision agreement was signed with the bank. The first installment of USD 2,135,000 has been remitted to the supervision account and will be remitted back after the verification and relevant procedures were done by the bank. The remaining USD 900,000 does not need to be remitted to the supervision account, and will be collected according to the schedule agreed in the contract and after the completion of the procedures.

～ 24 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(5) Inventories

ventories
Raw materials and supplies Semi-finished goods Work in progress Finished goods Merchandise Testing instruments	December 31, 2022 $ 21,973 239,258 6,503 119,329 6,364 2,652	December 31, 2021 24,991 247,335 2,498 126,615 10,311 4,043 415,793
	$ 396,079

The components of cost of sales for the years ended December 31, 2022	The components of cost of sales for the years ended December 31, 2022	The components of cost of sales for the years ended December 31, 2022	and	2021 are as
follows:
		2022		2021
Sales of inventories transferred	$	163,554		202,909
Inventory valuation loss		60,016		60,229
Inventory disposal loss		(13,243)		(8,990)
Total	$	210,327		254,148
As of December 31, 2022 and 2021, the inventories were not pledged as collateral.
(6) Investments accounted for using equity method
The equity method adopted by the Group at the reporting date was as follows:
	December 31,		December 31,
		2022		2021
Subsidiary
Abnova GmbH (Note)	$	(2,809)		(2,809)
Associate
Citil Pharma Incorporated	$	550		495

Note：The net amount deducted from receivables as of December 31, 2022 and 2021 were listed in other non-current liabilities.

～ 25 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Since Abnova GmbH’s capital equivalent to NT$1,210 (0.2% of the Group’s capital), its total assets were less than 1% of the Group’s total assets, and it had no operating income, the consolidated financial report with this subsidiary had not been prepared.

The Board of Directors of the Company approved the dissolution and liquidation proposal of Abnova GmbH on November 11, 2016, and the dissolution and liquidation was on December 31, 2016, as the base date. The liquidation has not completed by December 31, 2022.

The Group paid an investment of $811,000 on July 9, 2021 and acquired 40% of the shares of Citil Pharma Incorporated, thus obtaining significant influence over the company. As of December 31, 2022 and 2021, the investment adopting equity method were not pledged as collateral.

(7) Property, plant and equipment

Land	Buildings and structures	Machinery and equipment	Office equipment	Leasehold improveme nts	Other equipment	Unfinished constructio n and equipment pending acceptance	Total
$ 137,911 - - - -	101,747 - - - -	187,951 1,390 352 (2,357) (91)	27,263 - - (367) (25)	33,426 - - (16,947) 301	9,094 - - - -	992 - (792) - -	498,384 1,390 (440) (19,671) 185
$ 137,911	101,747	187,245	26,871	16,780	9,094	200	479,848
$ 137,911 - - - -	101,747 - - - -	197,707 338 - (9,505) (589)	28,129 - - (704) (162)	34,376 - - - (950)	8,619 304 388 (217) -	1,380 - (388) - -	509,869 642 - (10,426) (1,701)
$ 137,911	101,747	187,951	27,263	33,426	9,094	992	498,384

～ 26 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Land	Buildings and structures	Machinery and equipment	Office equipment	Leasehold improveme nts	Other equipment	Unfinished constructio n and equipment pending acceptance	Total
$ - - - -	23,804 5,997 - -	139,115 7,958 (2,320) (37)	26,739 248 (366) (10)	29,573 380 (16,947) 430	8,394 344 - -	- - - -	227,625 14,927 (19,633) 383
$ -	29,801	144,716	26,611	13,436	8,738	-	223,302
$ - - - -	17,807 5,997 - -	135,454 10,618 (6,574) (383)	26,988 507 (659) (97)	26,998 2,907 - (332)	8,289 322 (217) -	- - - -	215,536 20,351 (7,450) (812)
$ -	23,804	139,115	26,739	29,573	8,394	-	227,625
$ 137,911	71,946	42,529	260	3,344	356	200	256,546
$ 137,911	83,940	62,253	1,141	7,378	330	1,380	294,333
$ 137,911	77,943	48,836	524	3,853	700	992	270,759

The amount of machinery and equipment, office equipment and leasehold improvements disposed of by the Group due to the sale of Abnova Diagnostics (Dongguan) Limited in the current period were $456,000, $278,000 and $16,946,000, respectively, and the accumulated depreciation were $419,000, $277,000 and $16,946,000, respectively. (8) Right-of-use assets

Buildings and structures $ 37,273 11,030 1,249 (6,377) (12)	Transportatio nequipment 2,954 - - - -	Total 40,227 11,030 1,249 (6,377) (12)
$ 43,163	2,954	46,117
$ 36,036 1,936 (699)	1,552 1,402 -	37,588 3,338 (699)
$ 37,273	2,954	40,227

～ 27 ～

Abnova (Taiwan ) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Buildings and structures $ 30,961 8,358 (6,377) 33	Transportatio nequipment 1,942 467 - -	Total 32,903 8,825 (6,377) 33
$ 32,975	2,409	35,384
$ 20,658 10,810 (507)	1,362 580 -	22,020 11,390 (507)
$ 30,961	1,942	32,903
$ 10,188	545	10,733
$ 15,378	190	15,568
$ 6,312	1,012	7,324

(9) Intangible assets

The movements of intangible assets of the Group for the years ended December 31, 2022 and 2021 were as follows:

Development expenditure of

monoclonal antibody hybridoma	Other 235 - - (240) 5	Total 382,061 5,240 6,655 (240) 5
$ 318,105 75,616	-	393,721
$ 299,487 75,512 - 104 3,424 - 3,299 - - -	237 - - - (2)	375,236 104 3,424 3,299 (2)
$ 306,210 75,616	235	382,061

～ 28 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Amortization and impairment loss: Balance at January 1, 2022 Amortization Disposals Effects of changes in foreign exchange rates Balance at December 31, 2022 Balance at January 1, 2021 Amortization Disposals Balance at December 31, 2021 Carrying amount: Balance at December 31, 2022 January 1, 2021 Balance at December 31, 2021	$ 295,167 19,000 235 314,402 8,330 2,409 - 10,739 - - 5 5 - - (240) (240)
	$ 303,497 21,409 - 324,906
	$ 287,265 16,594 237 304,096 7,902 2,406 - 10,308 - - (2) (2)
	$ 295,167 19,000 235 314,402
	$ 14,608 54,207 - 68,815
	$ 12,222 58,918 - 71,140
	$ 11,043 56,616 - 67,659

The amortization expenses of intangible assets for the years ended December 2022 and 2021 were presented in the following items in the consolidated statements of comprehensive income:

Operating costs Operating expenses Lease liabilities The carrying amount of lease liabilities were as follows: Current Non-current	2022 $ 8,331 2,408	2021 7,902 2,406
	$ 10,739	10,308
	December 31, 2022 $ 7,199	December 31, 2021 6,992
	$ 3,686	560

(10) Lease liabilities

The carrying amount of lease liabilities were as follows:

For the maturity analysis, please refer to Note 6(18) Financial instruments. The amount recognized in profit or loss were as follows:

2022 2021 Interest on lease liabilities $ 152 246 Expenses relating to short-term leases $ 3,061 3,099 The amount recognized in the statements of cash flows for the Group were as follows: 2022 2021 Total cash outflow for leases $ 12,110 14,975	2022 $ 152	2021 246
	$ 3,061	3,099

The amount recognized in the statements of cash flows for the Group were as follows:

A. Buildings and structures leases

The Group leases buildings and structures for its office space and factories for the year ended December 31, 2022, which typically run for a period of one to six years.

B. Other leases

The Group leases transportation equipment with contract terms of three years.

～ 29 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(11) Employee benefits

A. Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit assets	December 31, 2022 $ 5,743 (7,191)	December 31, 2021 5,725 (6,862)
	$ (1,448)	(1,137)

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle retired employees to receive retirement benefits based on their years of service and average monthly salary for the six months prior to retirement. The Company received the approval letters from the Department of Labor, Taipei City Government No. 1096017325, No. 1106083461 and No. 1116069618 of May 8, 2020, September 27, 2021 and August 15, 2022, respectively which approved to suspend the appropriation of pension fund from May 2020 to April 2021, from September 2021 to August 2022 and from September 2022 to August 2023.

(a) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’s Bank of Taiwan labor pension reserve account balance amounted to $7,191,000 as of the reporting date. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(b) Movements in present value of defined benefit obligations

The movement in the present value of the defined benefit obligations for the years ended December 31, 2022 and 2021 were as follows:

Defined benefit obligations at January 1 Current service cost and interest cost Remeasurements loss of net defined benefit obligations －Actuarial loss (benefit) arising from experience adjustments －Actuarial loss arising from changes in demographic hypothesis －Actuarial benefit arising from changes in financial assumptions Benefits paid Defined benefit obligations at December 31	2022 $ 5,725 40 743 - (530) (235)	2021 5,977 24 (38) 7 (245) -
	$ 5,743	5,725

～ 30 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(c) Movements in fair value of plan assets

The movements in the fair value of the plan assets for the years ended December 31, 2022 and 2021 were as follows:

2022 Fair value of plan assets at January 1 $ (6,862) Interest income (48) Remeasurements loss of net defined benefit obligations －Return on plan assets excluding interest income (516) Contributions paid by the employer - Benefits paid 235 Fair value of plan assets at December 31 $ (7,191)	2022 Fair value of plan assets at January 1 $ (6,862) Interest income (48) Remeasurements loss of net defined benefit obligations －Return on plan assets excluding interest income (516) Contributions paid by the employer - Benefits paid 235 Fair value of plan assets at December 31 $ (7,191)	2021 (6,720) (27) (112) (3) -
	$ (7,191)	(6,862)

(d) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the years ended December 31, 2022 and 2021 were as follows:

Net interest of net defined benefit liabilities (assets) Operating costs Operating expenses	2022 $ (8)	2021 (3)
	$ (6) (2)	(2) (1)
	$ (8)	(3)

(e) Actuarial assumptions

The principal actuarial assumptions for determining present value of defined benefit obligations at the reporting date were as follows:

Discount rate Future salary increase rate	December 31, 2022 1.40% 3.00%	December 31, 2021 0.70% 3.00%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date was $0.

The weighted average lifetime of the defined benefit plans was 12 years.

(f) Sensitivity analysis

When calculating the present value of defined benefit obligations, the Company must practice judgments and estimates to determine relevant actuarial assumptions at the balance sheets date, including discount rates and future salary changes. Any changes in actuarial assumptions may cause significant impacts on the amount of defined benefit obligations.

As of December 31, 2022 and 2021, if the actuarial assumptions had changed, the impact on the present value of the defined benefit obligations shall be as follows:

Influences of defined benefit

obligations

Increase Decrease

～ 31 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

December 31, 2022
Discount rate (0.25% variable)	(175)	182
Future salary increases rate (0.25% variable)	166	(161)
December 31, 2021
Discount rate (0.25% variable)	(188)	196
Future salary increases rate (0.25% variable)	179	(173)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis was consistent with the calculation of net defined benefit liabilities in the balance sheets.

There were no changes in the method and assumptions used in the preparation of sensitivity analysis for 2022 and 2021.

B. Defined contribution plans

The Group allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Group allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation. The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $3,857,000 and $2,923,000 for the years ended December 31, 2022 and 2021, respectively.

～ 32 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(12) Income taxes

A. Tax expense

The components of the income tax in the years 2022 and 2021 were as follows:

2022 2021 Current tax expense Current period $ 6,561 7,236 Adjustment for prior periods (3,646) - 2,915 7,236 Deferred tax expense Origination and reversal of temporary differences 17,198 689 Income tax for the continuing operations $ 20,113 7,925 The reconciliation of income tax expenses recognized in other comprehensive income were as below: 2022 2021 Profit from continuing operations before tax $ 94,956 36,294 Income tax using the Company’s domestic tax rate $ 18,991 7,258 Tax effect in foreign jurisdiction 33 48 Nondeductible expenses 9,182 3,044 Tax incentive (4,447) (2,425) Overestimation for prior periods (3,646) - Tax expense $ 20,113 7,925	2022 $ 6,561 (3,646)	2021 7,236 -
	2,915 17,198	7,236 689
	$ 20,113	7,925
	$ 18,991 33 9,182 (4,447) (3,646)	7,258 48 3,044 (2,425) -
	$ 20,113	7,925

The reconciliation of income tax expenses recognized in other comprehensive income were as below:

B. Deferred tax assets and liabilities

Changes in the amount of deferred tax assets for the years ended December 31, 2022 and 2021 were as follows:

Deferred tax liabilities: Balance at January 1, 2022 Recognized in profit or loss Balance at December 31, 2022	Other $ - 5,804
	$ 5,804

Allowance for inventory valuation and obsolescence $ 98,406 (2,648)	Other 11,266 (8,746)	Total 109,672 (11,394)
$ 95,758	2,520	98,278
$ 100,204 (1,798)	10,157 1,109	110,361 (689)
$ 98,406	11,266	109,672

C. Assessment of tax

The Company’s tax returns for the years through 2020 were assessed by the National

～ 33 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Taiwan Bureau.

(13) Capital and other equity
A. Ordinary shares

As of December 31, 2022 and 2021, the number of authorized ordinary shares each consisted were $800,000,000. In addition, the issuance of ordinary shares each consisted of 60,554 thousand, with a par value of $10 per share. Payments for all issued shares had been received.

B. Capital surplus

The balances of capital surplus were as follows:

Share premium	December 31, 2022 $ 474,527	December 31, 2021 474,527

According to the R.O.C. Group Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

C. Retained earnings

The Company’s article of incorporation stipulates that any Company’s profit for the period should first be used to offset the prior years’ deficits (including the adjustments of the unappropriated retained earnings), allocate 10% of the remaining balance as legal reserve, unless such legal reserve has amounted to the paid-in capital, then set aside or reverse a special reserve in accordance with the laws and regulations or competent authorities. The remainder, if any, together with any undistributed retained earnings (including the adjustments of the unappropriated retained earnings) should be proposed earnings distribution by the Company’s Board of Directors. Wherein the distributable dividend and bonus may be paid by cash after a resolution has been adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors, and in addition thereto, a report of such distribution shall be submitted to the shareholders’ meeting. Wherein the distributable dividend and bonus may be paid by issuing new shares after a resolution has been adopted in the shareholders’ meeting.

The dividend distribution policy of the Company is to coordinate with the current and future development plans, consider the investment environment, capital needs, and domestic and foreign competition conditions, and take into consideration factors such as shareholders’ interests. The dividends and bonus to shareholders each year shall not be less than 10% of the distributable earnings, but when the accumulated distributable earnings are lower than 3% of the paid-in capital, the distribution may not be done. When distributing dividends and bonus to shareholders, it can be done in the form of cash or stocks, and the cash dividends should not be less than 10% of the total dividends.

(a) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

～ 34 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(b) Special reserve

According to the laws and regulations, special earnings shall be set aside from the net reduction of other shareholders’ equity in current-period balance sheets during earnings distribution. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

(c) Earnings distribution

The amount of cash dividends on the appropriations of earnings for 2021 and 2020 had been approved during the board meetings on March 16, 2022 and March 30, 2021, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash	2021 Amount per share Amount $ 0.46 27,855	2020 Amount per share Amount 0.6 36,332	2020 Amount per share Amount 0.6 36,332
	Amount per share	Amount per share
	$ 0.46	0.6

The amount of dividends on the appropriation of earnings for 2022 had been approved during the board meetings on February 24, 2023. The distribution to shareholders was as follows:

Amount per $ Exchange differences on translation of foreign financial statements $ (11,178) 4,216 - -		2022 share Amount 0.80 48,443 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Total 20,407 9,229 - 4,216 28,730 28,730 (54,082) (54,082)	2022 share Amount 0.80 48,443 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Total 20,407 9,229 - 4,216 28,730 28,730 (54,082) (54,082)
	Amount per	share

$ (6,962)		(4,945)	(11,907)

D. Other equity interest

	Unrealized
	gains (losses)
	from financial
	assets
Exchange	measured at
differences on	fair value
translation of	through other
foreign financial	comprehensive
statements	income	Total

～ 35 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Balance at January 1, 2021 Exchange differences on foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Balance at December 31, 2021	$ (8,070) 9,062 992 (3,108) - (3,108) - 11,345 11,345
	$ (11,178) 20,407 9,229

(14) Earnings per share

A. Basic earnings per share

The basic earnings per share of the Group in 2022 and 2021 were calculated based on the net profit attributable to the ordinary shareholders of the Company according to the weighted average number of ordinary shares outstanding. The calculations were as follows:

(a) Profit attributable to ordinary shareholders of the Company

2022 Profit attributable to ordinary shareholders of the Company $ 74,843 Weighted average number of ordinary shares (in thousands) 2022 Weighted average number of ordinary shares at December 31 (in thousands) (the number of shares at January 1) 60,554	2022 $ 74,843	2022 $ 74,843	2021 28,369
			2021 60,554

(b) Weighted average number of ordinary shares (in thousands)

B. Diluted earnings per share

The diluted earnings per share in 2022 and 2021 were calculated based on the net profit attributable to the ordinary shareholders of the Company according to the weighted average number of ordinary shares outstanding after all potential ordinary shares adjusted to be diluted. The calculations were as follows:

(a) Profit attributable to ordinary shareholders of the Company (diluted)

2022 Profit attributable to ordinary shareholders of the Company (diluted) $ 74,843 b) Weighted average number of ordinary shares (diluted) (in thousands) 2022 Weighted average number of ordinary shares (basic) 60,554 Effect of employee share bonus 110 Weighted average number of ordinary shares at December 31 (diluted) 60,664 ue from contracts with customers Details of revenue 2022 Primary geographical markets: America $ 196,828 Europe 112,624 Taiwan 29,325 Other country 72,979 $ 411,756 Main product/service line:	2022 $ 74,843	2021 28,369
		2021 60,554 44
	60,664	60,598
	2022 $ 196,828 112,624 29,325 72,979	2021 191,317 113,684 68,694 77,792
	$ 411,756	451,487

(b) Weighted average number of ordinary shares (diluted) (in thousands)

(15) Revenue from contracts with customers

A. Details of revenue

～ 36 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Monoclonal antibody Matched antibody Protein Polyclonal antibody Testing instruments Other	$ 132,754 125,093 93,223 145,983 66,825 56,338 30,701 33,179 (1,908) 15,403 90,161 75,491
	$ 411,756 451,487

B. Contract balances

Contract balances
Notes and accounts receivable Less: Loss allowance Total Contract liabilities	December 31, 2022	December 31, 2021 63,251 (14,449)	January 1, 2021 62,134 (13,248)
	$ 68,397 (8,152)
	$ 60,245	48,802	48,886
	$ 2,622	2,638	2,269

For details on accounts receivable and its loss allowance, please refer to note 6(3). The balance of contract liabilities at January 1, 2022 and 2021 recognized as revenue for the years 2022 and 2021 were $864,000 and $359,000, respectively.

(16) Remuneration to employees and directors

The Company’s articles of incorporation, which were authorized by the Board of Directors but has yet to be approved by the shareholders, require that earnings shall first be offset against any deficit, then, a minimum of 1% will be distributed as employee remuneration, and a maximum of 3% will be allocated as remuneration to directors. Employees who are entitled to receive the abovementioned employee remuneration, in share or cash, include the employees of the Company’s subsidiaries who meet requirements set by the Board of Directors. The aforesaid remuneration to directors shall be distributed in cash only.

For the years ended December 31, 2022 and 2021, the Company recognized its employee remuneration amounting to $4,179,000 and $1,511,000 respectively; as well as its remuneration to directors and supervisors amounting to $795,000 and $287,000, respectively. These amounts were calculated by using the Company’s pre-tax net profit for the period before deducting the amounts of the remuneration to employees and directors, multiplied by the distribution of ratio of the remuneration to employees and directors based on the Company’s articles of incorporation, and expensed under operating costs or expenses. If any discrepancy occurred between the actual distributions and the accrued amount for the following year, it shall be treated as a change in accounting estimates, and the difference shall be recognized as profit or loss for the next year. Related information would be available at the Market Observation Post System website.

The amounts, as stated in the financial statements are identical to those of the actual distributions for 2022 and 2021.

～ 37 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(17) Non-operating income and expenses

A. Interest income

The details of interest income were as follows:

Interest income from bank deposits B. Other income The details of other income were as follows: Other income C. Other gains and losses The details of other gains and losses were as follows: Gains (losses) on disposal of property, plant and equipment Foreign exchange gains (losses) Miscellaneous income (expenses) D. Finance cost The details of finance cost were as follows: Interest expense	2022 $ 3,636	2021 716 2021 2,259 2021 (824) (8,394) (707)
	2022 $ 971
	2022 $ 7 26,079 (11) $ 26,075 2022 $ 152
		(9,925)
		2021 246

(18) Financial instruments

A. Credit risk

(a) Credit risk exposure

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

(b) Concentration of credit risk

Except for the biggest customers, the Company has no significant credit risk exposure to any single counterparty or any group of counterparties with similar characteristics. As of December 31, 2022 and 2021, 31% and 17%, respectively, of accounts receivable were concentrated on the biggest customer, and 69% and 83%, respectively, of accounts receivable were concentrated on other counterparties’ transactions.

～ 38 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(c) Receivables and debt securities

For credit risk exposure of notes and accounts receivable, please refer to Note 6(3). Other financial assets measured at amortized cost, including other receivables are with low credit risk and which loss allowance for the period is measured by the twelve-month expected credit loss amount. As of December 31, 2022, the Group had no impairment on other receivables.

B. Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying amount	Contractual cash flow	Within 1year	1 to 2years	2 to 5years	Over 5years
$ 14,995 41,387 10,885 4,559	14,995 41,387 11,148 4,559	14,995 41,387 7,337 4,559	- - 3,811 -	- - - -	- - - -
$ 71,826	72,089	68,278	3,811	-	-
$ 11,480 33,517 7,552 7,383 3,703	11,480 33,517 7,636 7,383 3,703	11,480 33,517 7,065 7,383 3,703	- - 571 - -	- - - - -	- - - - -
$ 63,635	63,719	63,148	571	-	-

The Group does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

～ 39 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

C. Currency risk

(a) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD EUR GBP JPY Non-monetary items USD EUR JPY Financial liabilities Monetary items USD EUR JPY Financial assets Monetary items USD EUR GBP Non-monetary items USD EUR JPY CNY Financial liabilities Monetary items USD EUR		December 31, 2022	New Taiwan Dollars 354,194 19,849 6,906 3,407 97,564 (2,809) 5,604 10,211 3,463 1,029 New Taiwan Dollars 256,914 23,806 5,230 91,843 (2,809) 8,074 60,075 New Taiwan Dollars 9,331 3,066
	Foreign currency (inthousands) Exchange rate $ 11,533 USD：TWD 30.71 607 EUR：TWD 32.72 186 GBP：TWD 37.09 14,659 JPY：TWD 0.23 3,177 USD：TWD 30.71 (86) EUR：TWD 32.72 24,011 JPY：USD 0.0076 333 USD：TWD 30.71 106 EUR：TWD 32.72 4,426 JPY：TWD 0.23 December 31, 2021
	Foreign currency (in thousands) Exchange rate $ 9,282 USD：TWD 27.68 760 EUR：TWD 31.32 140 GBP：TWD 37.30 3,318 USD：TWD 27.68 (90) EUR：TWD 31.32 33,526 JPY：USD 0.0087 13,833 CNY：USD 0.1569 December 31, 2021
	Foreign currency (in thousands) Exchange rate 337 USD：TWD 27.68 98 EUR：TWD 31.32

～ 40 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(b) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the conversion of the foreign currency exchange gains and losses on cash and cash equivalents, accounts and other receivables, financial assets measured at fair value through other comprehensive income and accounts and other payables that are denominated in foreign currency. A strengthening (weakening) of 1% of the NTD against the USD, EUR and JPY as of December 31, 2022 and 2021 would have increased (decreased) the net profit after tax by $2,957,000 and $2,187,000, respectively. The analysis for the two periods were on the same basis.

Since the Group transacts in different functional currencies, the information on foreign exchange gains (losses) on monetary items is disclosed by total amount. For the years ended December 31, 2022 and 2021, the foreign exchange gains (losses) (including realized and unrealized portions) amounted to $26,079,000 and $(8,394,000), respectively.

D. Interest rate analysis
Please refer to the notes on liquidity risk management and interest rate exposure of the Group’s financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 1% when reporting to the management internally, which also represents the Group management’s assessment of the reasonably possible interest rate change.

If the interest rate had increased or decreased by 1% basis points, the Group’s net income would have increased or decreased by $1,639,000 and $1,494,000 for the years ended December 31, 2022 and 2021, assuming all other variable factors remain constant. This is mainly due to the Group’s deposits and investments in floating variable rates.

E. Fair value of financial instruments
(a) Fair value hierarchy

The Group’s financial assets at fair value through other comprehensive income are measured at fair value on a recurring basis. The carrying amount and fair value of financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value and lease liabilities, disclosure of fair value information is not required:

～ 41 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

	December 31, 2022	December 31, 2022	December 31, 2022
Carrying amount $ -		Fair value		Total -
	Level 1 -	Level 2 -	Level 3 -
367,065 60,245 95,657 849 2,581	- - - - -	- - - - -	- - - - -	- - - - -
526,397	-	-	-	-
$ 526,397	-	-	-	-
$ 14,995 41,387 10,885 4,559	- - - -	- - - -	- - - -	- - - -
$ 71,826	-	-	-	-

	December 31, 2021	December 31, 2021	December 31, 2021
Carrying amount $ 36,547		Fair value		Total 36,547
	Level 1 -	Level 2 -	Level 3 36,547
306,721 48,802 1,566 545 3,078	- - - - -	- - - - -	- - - - -	- - - - -
360,712	-	-	-	-
$ 397,259	-	-	36,547	36,547
	December 31, 2021
Carrying amount		Fair value		Total
	Level 1	Level 2	Level 3

～ 42 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Accounts payable Other payables Lease liabilities Other financial liabilities (as Other current liabilities) Guarantee deposits received (as Other non-current liabilities) Total	$ 11,480 - - - - 33,517 - - - - 7,552 - - - - 3,703 - - - - 7,383 - - - -
	$ 63,635 - - - -

(b) Valuation techniques for financial instruments measured at fair value

(2.1) Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available.

The fair values of financial instruments other than those in an active market are acquired through valuation technique or referring to quotations from counterparties. The fair value acquired through valuation technique can refer to the current fair value of other financial instruments with substantial conditions and similar characteristics, discounted cash flow method or other valuation techniques.

January 1 Total gains or losses Recognized to other comprehensive income Effects of changes in foreign exchange rates Disposals December 31	Measured at fair value through other comprehensive income 2022 2021 $ 36,547 25,291 28,730 11,345 - (89) (65,277) -	Measured at fair value through other comprehensive income 2022 2021 $ 36,547 25,291 28,730 11,345 - (89) (65,277) -
	2022 $ 36,547 28,730 - (65,277)
	$ -	36,547

The above-mentioned total gains or losses were accrued and recognized to “unrealized gains (losses) of financial assets measured at fair value through other comprehensive income”. Wherein, those related to the assets still held in 2022 and 2021 are as follows:

Total gains or losses Recognized to other comprehensive income (accrued and recognized to “unrealized gains (losses) of financial assets measured at fair value through other comprehensive income”)	2022 $ 28,730	2021 11,345

～ 43 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(d) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group’s financial instruments that use Level 3 inputs to measure fair value include “financial assets measured at fair value through other comprehensive income – equity investments”

Most of the fair value of the Group is classified as Level 3 with only single significant unobservable inputs, and only investments in equity instruments without an active market have multiple significant unobservable inputs. Significant unobservable inputs of investments in equity instruments without an active market are independent of each other, therefore there is no interrelationship.

Quantified information of significant unobservable inputs was as follows:

Item Financial assets measured at fair value through other comprehensive income－equity investments without an active market	Valuation technique Comparable to Company Law of listed or OTC-listed companies	Significant unobservable inputs ‧Multiplier of net equity method and sales value of stock price (December 31, 2021 and July 17) ‧The market illiquidity discount rate (30% on December 31, 2021)	Inter-relationship between significant unobservable inputs and fair value measurement
			‧The higher multiplier, the higher fair value ‧The higher market illiquidity discount, the lower fair value ‧Including adjustments for uncertainties

(e) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions
The fair value measurement of financial instruments by the Group is reasonable, but the use of different evaluation models or evaluation parameters may result in different evaluation results. For fair value measurements in Level 3, if the evaluation parameters change, would have the following effects of profit or loss or other comprehensive income:

Input	Assumptions	Other comprehensive income	Other comprehensive income
		Favorable $ 364 264	Unfavorable
Liquidity discount rate Multiplier of net equity method and sales value of stock price	3% 3%		(364) (264)
		$ 628	(628)

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

～ 44 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(19) Financial risk management

A. Overview

The Group have exposures to the following risks from its financial instruments:

(a) Credit risk
(b) Liquidity risk
(c) Market risk

The following likewise discusses the Group’s objectives, policies and processes for measuring and managing the abovementioned risks. For more disclosures about the quantitative effects of these risk exposures, please refer to the respective notes in the accompanying financial statements.

B. Risk management framework

The Board of Directors is fully responsible for the development and control of the risk management policy of the Group, which its establishment is to identify and analyze the risks faced by the Group, set adequate risk limits and controls and supervise the risks and compliance with risk limits. Risk management policies and systems are regularly reviewed to reflect changes in market conditions and operations of the Group. The Group develops a disciplined and constructive control environment through training, management principles and operating procedures so that all employees understand their roles and responsibilities. The Board of Directors oversees how the managements supervision is in compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, and reports the reviews to the Board of Directors.

C. Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations. A credit policy of the Group is stipulated internally to assess the credit quality of customers through the internal risk controls of considering their financial conditions, past experience and other factors, and periodically monitor the use of credit lines. The main credit risk arises principally from cash and cash equivalents, deposits in banks and financial institutions and outstanding accounts receivable from customers’ sales. The credit quality of the financial institutions that the Group contacts is stable, and deals with multiple institutions to diversify credit risks. The possibility of default is expected to be very low. The maximum amount of exposure to credit risk on the balance sheet date is the carrying amount of cash and deposits in banks.
D. Liquidity risk
Cash flow forecasts are summarized by the Group’s finance department. The management regularly monitors rolling forecasts of working capital needs to ensure sufficient funds to cover daily operating activities and appropriate financial flexibility to maintain a balance between funding continuity and agility.
E. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices that will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

～ 45 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(a) Currency risk

The Group operates transnationally, so it is subject to currency risks arising from transactions that are relatively different from the functional currency of the Company and its subsidiaries, mainly the US dollar and Euro. The related currency risk arises from future commercial transactions, assets and liabilities recognized and net investments in foreign operating institutions.

The management of the Group has established a policy, managing currency risk arises from future commercial transactions and assets and liabilities recognized, and based on the principal of natural hedging, the Group considers the funding needs and net positions in the Company and its subsidiaries’ currency to hedge risks in accordance with market foreign exchange conditions. Currency risks arise when future commercial transactions and assets or liabilities recognized are denominated in a foreign currency that is not the Group’s functional currency.

(b) Interest rate risk

The measures taken by the Group to respond to the risk of interest rate changes are mainly to regularly assess loan interest rates from banks and each currency and maintain good relationships with financial institutions to obtain lower financing costs, meanwhile practice methods such as strengthening working capital management to reduce the dependence on bank loans and diversify the risk of interest rate changes.

(20) Capital management

The goal of the Group’s capital management is to ensure for continuing operating, maintain an optimal capital structure to reduce capital costs, and provide remuneration to shareholders. The Group achieves the goal of capital management through monitoring whether the capital position is sufficient to meet the debt repayments.

7. Related-party transactions

(1) Names of related parties and their relationships

The transactions between the Group and other related parties within the period of this consolidated financial report were as follows:

Name of related party Relationship with the Group Abnova-GmbH Subsidiary of the Group Wellconn Genomics Other related party

(2) Significant transactions with related parties

A. Operating revenue

The significant sales amount of the Group to related parties were as follows:

Associate Other related party	2022 $ - -	2021 696 974
	$ -	1,670

The general sales price is no significant difference between the Group’s sales to associates and other related parties, and the collection period is one month.

～ 46 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

B. Loans to related parties

Related parties Abnova GmbH Less: Investment additions accounted for using equity method Other non-current liabilities	December 31, 2022 $ 2,283 (2,809)	December 31, 2021 2,185 (2,809)
	$ (526)	(624)

(a) The Group did not charge interest for the above-mentioned transactions of loans to related parties.

(b) The Group’s maximum limit of fund lent to related parties in 2022 and 2021 were both $5,000,000.

C. Other

(a) The Group entrusted other related parties to provide cell testing services. Since there was no similar type of transaction for reference, the transaction price and payment terms were agreed according to the contract signed by both parties. The commissioned research expenses (as R&D expenses) in 2022 and 2021 were $1,575,000 and $1,740,000, respectively.

(b) The Group signed an office leasing contract with other related parties, which will be renewed every year after the expiration. The leasing price was negotiated by both parties, and the Group collects rent on a monthly basis according to the contract. The rent income in 2022 and 2021 was both $648,000.

(3) Key management personnel transaction

Key management personnel compensation comprised:

was both $648,000. (c) The Group increased the cash capital to Citil Pharma $811,000 on July 9, 2021. ey management personnel transaction Key management personnel compensation comprised:	Incorporated with	a total amount of
Short-term employee benefits	2022	2021
	$ 9,606	7,976

8. Pledged assets

The carrying values of pledged assets were as follows:

dged assets The carrying values	of pledged assets were as follows:
Pledged assets	Object	December 31, 2022 $ 849 2,581	December 31, 2021 545 3,078
Other current financial assets Other financial assets－ non-current	Customs duty pledged, Forward exchange transactions guarantee guarantee deposits paid
		$ 3,430	3,623

9. Commitments and contingencies

The Group’s significant contractual commitments were as follows:

The Group and Louisiana State University of the United States signed an exclusive license for CHP technology on September 20, 2018, and the first payment was paid in 2018. Since the follow-up payments of the above contract must meet the requirements of conditions stipulated in the contract and the outcome obtained, whether and when it will be paid are uncertain. The Company’s contractual commitments for the acquisition of intangible assets that were not recognized in 2021 and 2021 were $33,320,000 and $30,033,000, respectively. In addition, the Company paid the maintenance fee on an annual basis according to the contract, and paid royalty after the income was generated.

～ 47 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

10. Losses due to major disasters ： None.

11. Subsequent events ： None.

12. Other

The employee benefits, depreciation, and amortization expenses categorized by function, were as follows:

were as follows:
By function By item	2022			2021
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits Salaries and wages Labor and health insurance Pension Other Depreciation expenses Amortizationexpenses	36,480 3,977 1,983 1,854 8,037 8,331	45,693 3,695 1,866 1,756 15,717 2,408	82,173 7,672 3,849 3,610 23,754 10,739	37,726 4,189 2,109 1,938 8,755 7,902	50,600 4,309 2,133 1,977 22,986 2,406	88,326 8,498 4,242 3,915 31,741 10,308

13. Other disclosures

(1) Information on significant transactions

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

A. Loans to other parties:

A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:	A. Loans to other parties:
(Expressed in Thousands													of New Taiwan Dollars
Num ber	Name of lender	Name of borrowe r	Accou nt name	Relate d party	Highest balance of financin g to other parties during the period	Ending balance	Actual usage amount during the period	Range of interes t rates during the period	Natu re of finan cing	Transac tion amount for business between two parties	Reasons for short-term financing	Allowan ce for bad debt Amount	Collateral		Individual funding loan limits	Maximu m limit o fund financing
													Name	Value
0	Abnova (Taiwan) Corporatio n	Abnova- GmbH	Other receiva bles-rel ated party	Yes	5,000	5,000	2,283	-	2	-	Operating turnover for subsidiarie s	-		-	129,199	516,797

Note 1 ： The numbers filled in were as follows:

The Company is ‘0’.
The investee companies are numbered in order starting from ‘1’.
Note 2 ： Financing purpose:
‘1’ for entities the Company has business transactions with.
‘2’ for entities that have short-term financing needs.

Note 3 ： Limit of fund financing:

The total amount available for financing purposes shall not exceed 40% of the Company’s net worth in the latest financial statements audited or reviewed by accountants.
The individual financing amount to one entity that have business transaction with the Company shall not exceed the total transaction amount.
The total amount for short-term financing to one entity shall not exceed 10% (inclusive) of the Company’s net worth in the latest financial statements audited or reviewed by auditors.
B. Guarantees and endorsements for other parties: None.

～ 48 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

C. Securities held as of December 31, 2022 (excluding investment in subsidiaries, associates and joint ventures):

Unit: New Taiwan Dollars per share

Name of holder	Category and name of security	Relationship with company	Account name	Ending balance	Ending balance	Ending balance	Ending balance	Highest percentage of ownership	Note
				Shares	Carrying amount	Percentage of ownership	Fair value
The Company	Hukui Biotechnology Corporation (Samoa)	-	Financial assets measured at fair value through other comprehensive income	50,000	-	1.32%	-	- %

D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
E. Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
F. Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
G. Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.
H. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.
I. Trading in derivative instruments: None.
J. Business relationships and significant intercompany transactions: None.
(2) Information on investees (excluding information on investees in Mainland China):

The following is the information on investees for the years ended December 31, 2022

				Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share	Unit: New Taiwan Dollars per share
Name of investor	Name of investee	Locatio n	Main businesses and products	Original investment amount		Balance as of December 31, 2022			Highest percentage of ownership	Net income (loss) of investee	Investment profit (loss) recognized by investor	Note
				December 31, 2022	December 31, 2021	Shares	Percentage of ownership	Carrying amount
The Company " " Abnova Holding Corporation " " Abnova (Cayman) Corporation " Wellconn Genomics (Cayman)	Abnova GmbH (Note 5) Abnova Holding Corporation Citil Pharma Incorporated Abnova (Cayman) Corporation Citil Pharma Corporation (Note 6) Wellconn Genomics (Cayman) Corporation (Note 6) Abnova (HK) Limited Abnova Diagnostics Wellconn Genomics (HK) Limited(Note 6)	German y British Virgin Islands America Cayman Islands Cayman Islands Cayman Islands Hong Kong Japan Hong Kong	Distribution of biological products Investment business R&D of cell therapy technology Investment business Investment business Investment business Investment business R&D, manufacturing and sales of medical device, etc., testing services Investment business	818 80,921 888 80,000 - - 51,286 20,916 -	818 107,946 888 80,000 1,843 25,182 51,286 20,916 25,182	(Note4) 52,700 2,890,000 2,605,000 - - 1,670,000 1,800,000 -	100.00% 100.00% 40.00% 100.00% - % - % 100.00% 100.00% - %	(2,809) 97,014 550 96,913 - - 90,423 5,604 -	- % - % - % - % - % - % - % - % - %	- (4,336) - (4,283) - - (1,898) (2,155) -	- (4,336) - (4,283) - - (1,898) (2,155) -	Subsidia ry " Associat es Second- tier subsidia ry " " " " "

Note 1 ： The above transaction amount was eliminated in the consolidated financial statements.

Note 2 ： The original investment amount of investees was calculated at USD1:TWD30.71 of December 31, 2022. Note 3 ： The original investment amount of investees was calculated at JPY1:TWD0.2324 of December 31, 2022. Note 4 ： The investee is a limited company with no shares issued.

Note 5 ： The investee is a subsidiary of the Company, and the net amount after deducting its receivables was listed in “Other non-current liabilities”. Note 6 ： The investee was liquidated in 2022.

～ 49 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(3) Information on investment in Mainland China:

A. The names of investees in Mainland China, the main businesses and products, and other information:

(Expressed in Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investm ent (Note 1)	Accumulated outflow of investment from Taiwan as of January 1, 2022	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2022	Net income (loss) of investee	Percentage of ownership	Highest percentage of ownership	Highest percentage of ownership	Investment profit (loss) recognized by investor	Book value	Accumulate d remittance of earnings in current period
					Outflow	Inflow
Abnova Diagnostics (Dongguan) Limited(Note 4、7)	R&D, manufacturin g and sales of medical device	44,962	(1)	44,962	-	-	-	(1,847)	- %	- %		(1,847)	-	-
B. Limitation on investment in Mainland China: Name Accumulated Investment in Mainland China as of December 31, 2022 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment (Note 5) The Company - - 775,196
Name		Accumulated Investment in Mainland China as of December 31, 2022					Investment Amounts Authorized by Investment Commission, MOEA				Upper Limit on Investment (Note 5)
The Company		-					-				775,196

Note 1 ： Investment methods are classified into the following two categories:

Remit investment to Mainland China through a third region.
Reinvest in Mainland China through an investee in Mainland China.

Note 2 ： The basis for recognition of investment profit and loss is based on the financial statements of the investee audited by accountants or prepared by the company.

Note 3 ： The exchange rate on the financial statement date is converted into New Taiwan Dollars.

Note 4 ： The paid-in capital of the investee was CNY10,200,000 calculated at CNY1:TWD4.408 of December 31, 2022.

Note 5 ： The limit is based on 60% of the net worth.

Note 6 ： The above transaction was eliminated in the consolidated financial statements.

Note 7 ： Abnova Diagnostics (Dongguan) Limited had been sold in 2022. Please refer to Note 6(4) for the related information.

C. Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of financial statements, are disclosed in “Information on significant transactions”.

(4) Major shareholders ：

Unit: Shares	Unit: Shares	Unit: Shares
Shareholding Shareholder’s name	Shares	Percentage
Huang Wilber	3,651,144	6.02%

14. Segment information

(1) General information

The Group’s main business is the R&D and production of biotechnology and operates only a single industry. The operating decision-makers of the Group evaluate performance and allocate resources based on the company’s overall operating results, and the group is identified as a single reportable segment.

(2) Segment information

The accounting policies of the Group's operating segments are the same as ‘summary of significant accounting policies’ stated in Note 4 to the financial reports, and profit or loss are measured by net operating income, which is as the basis for evaluating the operating segments’ performance.

～ 50 ～

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(3) Reconciliation of segment’s income

The Group’s net operating income reported to the chief operating decision-maker adopts the same measurement method as the income and expenses in the statements of comprehensive income, so the reconciliation items of net operating income are the same as those in the statements of comprehensive income.

(4) Geographic information

In presenting information on the basis of geography, segment revenue was based on the geographical location of customers, while segment assets were based on the geographical location of the assets. Non-current assets include property, plant and equipment, intangible assets and other assets, excluding financial instruments, deferred tax assets, assets of postemployment benefits and guarantee deposits paid.

Revenue from external

customers Revenue from external customers: Taiwan America England China Japan Germany Other country Total Non-current assets Non-current assets: Taiwan China Japan Total	2022 $ 29,325 192,910 64,738 28,449 28,851 14,424 53,059	2021 68,694 188,435 57,240 44,116 13,396 23,132 56,474
	$ 411,756	451,487
	December 31, 2022 $ 339,607 - 4,723	December 31, 2021 339,559 285 5,897
	$ 344,330	345,741

(5) Major customers

The Group’s income from a single customer accounted for 10% of the operating revenue for the years ended December 31, 2022 and 2021 was as follows:

Customer A Customer B	2022 $ 59,699 -	2021 47,808 21,817
	$ 59,699	69,625

～ 51 ～

AI assistant

Abnova — Annual Report 2022

52384_rns_2022-11-10_a27dc511-cf68-446b-a938-f61f902303f3.pdf

Abnova (Taiwan) Corporation and Subsidiaries

Consolidated Financial Statements With Independent Auditors’ Report

Table of Contents

Representation Letter

Independent Auditors’ Report

Opinion

Basis for opinion

Key audit matter

1. Inventory valuation

Other matter

Responsibilities of management and those charged with governance for the financial statements

Auditor’s responsibilities for the audit of the financial statements

KPMG

Auditors：

Abnova (Taiwan) Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Abnova (Taiwan) Corporation and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Abnova (Taiwan) Corporation and Subsidiaries Consolidated Statements of Changes in Equity For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Abnova (Taiwan) Corporation and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2022 and 2021 (Expressed in Thousands of New Taiwan Dollars)

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 (Expressed in thousands of New Taiwan Dollars, unless specified otherwise)

1. Company history

2. Approval date and procedures of the consolidated financial statements

3. New standards, amendments and interpretations adopted

(3) The impact of IFRS issued by IASB but not yet endorsed by the FSC

4. Summary of significant accounting policies

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(3) Basis of consolidation

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

A. Financial assets

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

A. As a lessee

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

5. Significant accounting assumptions and judgments, and major sources of estimation uncertainty

6. Explanation of significant accounts

(2) Financial assets measured at fair value through other comprehensive income

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(5) Inventories

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

Abnova (Taiwan ) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(9) Intangible assets

Development expenditure of

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(10) Lease liabilities

A. Buildings and structures leases

B. Other leases

(11) Employee benefits

A. Defined benefit plans

(a) Composition of plan assets

(b) Movements in present value of defined benefit obligations

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(c) Movements in fair value of plan assets

(d) Expenses recognized in profit or loss

(e) Actuarial assumptions

(f) Sensitivity analysis

Influences of defined benefit

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

B. Defined contribution plans

Abnova (Taiwan) Corporation and Subsidiaries Notes to the Consolidated Financial Statements

(12) Income taxes

A. Tax expense

B. Deferred tax assets and liabilities

C. Assessment of tax

Abnova Annual Report 2022