SCI — Annual Report 2024

Nov 8, 2024

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Stock Code:4119

SCI PHARMTECH, INC.

Parent Company Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2024 and 2023

Address: No.61, LN. 309, HAIHUN.RD., LUZHU DIST., TAOYUAN CITY 33856, TAIWAN (R.O.C)

Telephone: (03)354-3133

The independent auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of material 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 9. The contents of statements of major accounting items

Page

1 2 3 4 5 6 7 8 8 8～11 11～26 26～27 27～56 56～58 58 58 58～59 59 59～60 60～61 61 61 62 62 63～73

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Independent Auditors’ Report

To the Board of Directors of SCI Pharmtech, Inc.:

Opinion

We have audited the financial statements of SCI Pharmtech, Inc.(“the Company”), which comprise the balance sheet as of December 31, 2024 and 2023, the statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of material accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company 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 of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report .

1. Inventory valuation

Please refer to Note 4(g) and Note 5 of the financial statements for the accounting policy of inventory valuation, as well as the estimation of inventory valuation, respectively. Information regarding the inventory and related expenses are shown in Note 6(e) of the financial statements.

Description of key audit matters:

Due to the characteristics of the pharmaceutical industry, products are manufactured for specific customers, providing batch-specific differentiation services according to their needs while the Company estimates the net realizable value of inventory. If there were no objective information regarding the current sales price available for reference, the Company has to make an evaluation of each product's various factors, such as the demands of the market, to determine the net realizable value of the product. As the reasonableness of estimation might have an impact on the inventory valuation, the test of inventory valuation is one of the key audit matters in our audit.

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Our audit procedures include:

． Assessing the reasonableness of provision policies and procedures on allowance for inventory valuation losses, including the evaluation of changes in the market, customer demand and inventory turn-over, to identify the obsolete inventories.

• ． Performing a retrospective review of inventory movements to evaluate the reasonableness of inventory obsolescence reserve policy and policy on scrapping of inventories.

• ． Sampling and inspecting the Company’s sales price; as well as verifying the calculation of the lower of cost or net realizable value; evaluating the adopted net realizable value as a basis for obsolete inventories.

2. Revenue recognition

Please refer to Note 4(o) of the financial statements, for the accounting policy of revenue recognition for operating revenue recognition.

Description of key audit matters:

The Company’s main products are the manufacture of active pharmaceutical ingredients, and intermediates, etc. The Company’ s major customers are foreign pharmaceutical companies that have transaction terms different from each other, and the revenue recognition was booked by using manual adjustments, which may result in an inappropriate risk in revenue recognition. Therefore, the revenue recognition is one of the key audit matters in our audit.

Our audit procedures include:

• ． Understanding and testing the related controls surrounding the aforementioned sales and collection cycle;

• ． Checking the vouchers related to sales revenue;

• ． Verifying whether the revenue had been recognized in the proper period by testing the selected sales transactions before and after the balance sheet date in order to evaluate the accuracy of the timing of the Company's operating revenue recognition.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’ 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 Company 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 Company’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 Standards on Auditing of the Republic of China 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 financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the 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.

2. 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 effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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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 financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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.

The engagement partners on the audit resulting in this independent auditors’ report are Hsin, Yu-Ting and Huang, Keng-Chia.

KPMG

Taipei, Taiwan (Republic of China) March 10, 2025

Notes to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and financial statements, the Chinese version shall prevail.

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(English Translation of Financial Statements Originally Issued in Chinese) SCI PHARMTECH, INC.

Balance Sheets

December 31, 2024 and 2023

(expressed in thousands of New Taiwan dollars)

Assets Current assets: 1100 Cash and cash equivalents(Note 6(a)) 1110 Current financial assets at fair value through profit or loss(Note 6(b)) 1170 Notes and accounts receivable, net(Notes 6(d) and 6(s)) 1206 Other receivables 1310 Inventories, net(Note 6(e)) 1470 Other current assets Non-current assets: 1518 Non-current financial assets at fair value through other comprehensive income(Note 6(c)) 1550 Investments accounted for using equity method(Note 6(f)) 1600 Property, plant and equipment(Notes 6(g), 7 and 8) 1755 Right-of-use assets(Note 6(h)) 1780 Intangible assets 1840 Deferred tax assets(Note 6(o)) 1900 Other non-current assets(Notes 6(c), 6(g) and 7) Total assets	December 31, 2024 Amount % $ 568,278 8 110,374 2 289,514 4 - - 620,897 8 57,214 1 1,646,277 23 81,427 1 486,331 7 4,706,299 64 89,715 1 37,765 1 143,817 2 90,243 1 5,635,597 77 $ 7,281,874 100	December 31, 2023	December 31, 2023
	Amount $ 568,278 110,374 289,514 - 620,897 57,214 1,646,277 81,427 486,331 4,706,299 89,715 37,765 143,817 90,243 5,635,597 $ 7,281,874	Amount 935,370 88,998 307,369 151 529,533 85,123 1,946,544 96,814 470,106 3,815,796 84,003 46,147 153,277 156,879 4,823,022 6,769,566	%
			14 1 5 - 8 1
			29
			2 7 56 1 1 2 2
			71
			100

Liabilities and Equity Current liabilities: 2100 Short-term borrowings(Note 6(i)) 2170 Notes and accounts payable 2130 Current contract liabilities(Note 6(s)) 2200 Other payables(Note 6(k)) 2213 Payables on equipment and construction 2230 Current tax liabilities 2250 Current provisions(Note 6(m)) 2280 Current lease liabilities(Notes 6(l) and 7) 2300 Other current liabilities 2322 Long-term borrowings, current portion(Note 6(j)) Non-current liabilities: 2541 Long-term borrowings(Note 6(j)) 2580 Non-current lease liabilities(Notes 6(l) and 7) 2570 Deferred tax liabilities(Note 6(o)) 2640 Provisions for employee benefits, non-current(Note 6(n)) 2600 Total other non-current liabilities(Notes 6(j) and 7) Total liabilities Equity(Note 6(p)): 3100 Ordinary shares 3200 Capital surplus 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interests Total equity Total liabilities and equity	December 31,	2024	2024		December 31, 2023	December 31, 2023
	Amount		%		Amount 175,000 44,251 38,367 169,346 68,840 11,536 29,058 3,022 11,351 20,000 570,771 842,670 81,799 146,000 21,536 6,837 1,098,842 1,669,613 1,195,087 2,233,590 462,435 54,727 1,128,657 25,457 5,099,953 6,769,566	%
	$ 100 58,437 94,923 193,155 155,325 85,251 17,011 3,606 4,078 403,439 1,015,325 578,009 87,520 104,453 11,959 7,676 789,617 1,804,942 1,195,087 2,234,986 504,024 - 1,532,765 10,070 5,476,932 $ 7,281,874		- 1 1 3 2 1 - - - 6			3 1 1 3 1 - - - - -
			14			9
			8 1 2 - -			13 1 2 - -
			11			16
			25			25
			16 31 7 - 21 -			17 33 7 1 17 -
			75			75
			100			100

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) SCI PHARMTECH, INC.

Statements of Comprehensive Income

For the years ended December 31, 2024 and 2023

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

4110 Operating revenue(Notes 6(s) and 7) 5110 Operating costs(Notes 6(e), 6(n) and 12) 5900 Gross profit Operating expenses(Notes 6(l), 6(n), 6(q) and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6900 Net operating income Non-operating income and expenses: 7101 Interest income 7130 Dividend income 7190 Other income(Notes 6(u), 7 and 10) 7235 Gains (losses) on financial assets at fair value through profit or loss 7510 Interest expense(Notes 6(l) and 7) 7590 Miscellaneous disbursements 7610 Losses on disposals of property, plant and equipment 7630 Foreign exchange gains (losses), net 7775 Share of loss of associates and joint ventures accounted for using equity method, net 7670 7900 Profit before tax 7950 Less: Income tax expenses(Note 6(o)) 8200 Profit 8300 Other comprehensive income: 8310 Items that will not be reclassified to profit or loss： 8311 Gains (losses) on remeasurements of defined benefit plans(Note 6(n)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8349 Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss(Note 6(o)) 8300 Other comprehensive income, net 8500 Total comprehensive income Earnings per share(Note 6(r)): 9750 Basic earnings per share 9850 Diluted earnings per share

2024

Amount

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) SCI PHARMTECH, INC.

Statements of Changes in Equity

For the years ended December 31, 2024 and 2023

(expressed in thousands of New Taiwan dollars)

Balance at January 1, 2023 Profit for the year ended December 31, 2023 Other comprehensive income for the year ended December 31, 2023 Total comprehensive income for the year ended December 31, 2023 Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of ordinary shares Stock dividends of ordinary shares Changes in equity of associates and joint ventures accounted for using equity method Capital increase by cash Share-based payments transaction Disposal of investments in equity instruments designated at fair value through other comprehensive income Capital increased by employee remunerations Balance at December 31, 2023 Profit for the year ended December 31, 2024 Other comprehensive income for the year ended December 31, 2024 Total comprehensive income for the year ended December 31, 2024 Appropriation and distribution of retained earnings: Legal reserve appropriated Reversal of special reserve Cash dividends of ordinary shares Changes in equity of associates and joint ventures accounted for using equity method Balance at December 31, 2024	Ordinary shares $ 953,824 - - - - - - 119,228 - 120,000 - - 2,035 1,195,087 - - - - - - - $ 1,195,087	Capital surplus 1,357,127 - - - - - - - - 837,600 18,720 - 20,143 2,233,590 - - - - - - 1,396 2,234,986	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 431,874 48,929 892,197 - - 294,721 - - (2,657) - - 292,064 30,561 - (30,561) - 5,798 (5,798) - - (23,846) - - (119,228) - - (670) - - - - - - - - 124,499 - - - 462,435 54,727 1,128,657 - - 534,678 - - 7,054 - - 541,732 41,589 - (41,589) - (54,727) 54,727 - - (149,387) - - (1,375) 504,024 - 1,532,765	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 431,874 48,929 892,197 - - 294,721 - - (2,657) - - 292,064 30,561 - (30,561) - 5,798 (5,798) - - (23,846) - - (119,228) - - (670) - - - - - - - - 124,499 - - - 462,435 54,727 1,128,657 - - 534,678 - - 7,054 - - 541,732 41,589 - (41,589) - (54,727) 54,727 - - (149,387) - - (1,375) 504,024 - 1,532,765	Other equity interests Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (54,727) - 204,683 204,683 - - - - - - - (124,499) - 25,457 - (15,387) (15,387) - - - - 10,070	Total equity 3,629,224 294,721 202,026 496,747 - - (23,846) - (670) 957,600 18,720 - 22,178 5,099,953 534,678 (8,333) 526,345 - - (149,387) 21 5,476,932
			Legal reserve 431,874 - - - 30,561 - - - - - - - - 462,435 - - - 41,589 - - - 504,024	Special reserve
				48,929
				- -
				-
				- 5,798 - - - - - - -
				54,727 - -
				-

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) SCI PHARMTECH, INC.

Statements of Cash Flows

For the years ended December 31, 2024 and 2023

(expressed in thousands of New Taiwan dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments for: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Net (profit) loss on financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share-based payments transactions Share of loss of subsidiaries, associates and joint ventures accounted for using equity method Losses from disposal of property, plant and equipment Reversal of provisions for losses on major disasters Others Total adjustments to reconcile profit Changes in operating assets and liabilities: Decrease (increase) in notes and accounts receivable Increase in inventories Decrease in other receivables and other current assets Increase (decrease) in notes and accounts payable Increase in contract liabilities Increase (decrease) in other payables Decrease in provisions (Decrease) increase in other current liabilities Decrease in provision for employee benefits, non-current Total changes in operating assets and liabilities Total adjustments Cash flow from operations Dividends received Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Increase in prepayments for investments Acquisition of property, plant and equipment Increase in refundable deposits Increase in prepayments of equipment Net cash flows used in investing activities Cash flows from (used in) financing activities: (Decrease) increase in short-term borrowings Proceeds from long term borrowings Repayments of long-term borrowings Increase in guarantee deposits received Payment of lease liabilities Cash dividends paid Proceeds from issuing shares Net cash flows (used in) from financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2024 $ 646,857 227,070 8,382 (3,616) 6,876 (7,961) (1,950) - 18,254 - - (4) 247,051 17,855 (91,364) 28,060 14,186 56,556 23,809 (12,047) (7,273) (760) 29,022 276,073 922,930 2,492 7,961 (6,876) (72,314) 854,193 - - (80,230) 62,470 (35,000) (9,656) (867,468) (297) (79,170) (1,009,351) (174,900) 141,786 (26,250) 228 (3,411) (149,387) - (211,934) (367,092) 935,370 $ 568,278	2023 364,190 138,442 8,435 1,872 7,582 (3,380) (2,720) 18,720 5,461 584 (373) - 174,623 (133,804) (16,103) 5,923 (4,385) 6,594 (104,392) (81,953) 6,127 (1,315) (323,308) (148,685) 215,505 2,720 3,380 (7,582) (4,928) 209,095 (3,981) 178,573 - 6,675 - - (873,601) (110) (155,759) (848,203) 63,000 430,805 - - (2,923) (23,846) 957,600 1,424,636 785,528 149,842 935,370

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) SCI PHARMTECH, INC.

Notes to the Financial Statements

For the years ended December 31, 2024 and 2023

(expressed in thousands of New Taiwan dollars, unless otherwise specified)

(1) Company history

SCI Pharmtech, Inc. (the “Company”) was incorporated in September 18, 1987 as a company limited by shares and registered under the Ministry of Economic Affairs, R.O.C. The major business activities of the Company are the research and development, manufacture and sale of Active Pharmaceutical Ingredients (“API”), Intermediates, specialty chemicals. Mercuries & Associates, Holding Ltd. is the parent company of the Company.

(2) Approval date and procedures of the financial statements

These financial statements were authorized for issuance by the Board of Directors on March 10, 2025.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the IFRS Accounting Standards endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2024:

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• ●Amendments to IAS 1 “Non-current Liabilities with Covenants”

• ●Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”

• ●Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2025, would not have a significant impact on its financial statements:

• ●Amendments to IAS21 “Lack of Exchangeability”

• (c) 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 Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

(Continued)

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SCI PHARMTECH, INC. Notes to the Financial Statements

Standards or Effective date per Interpretations Content of amendment IASB IFRS 18 “Presentation and The new standard introduces three January 1, 2027 Disclosure in Financial categories of income and expenses, two Statements” income statement subtotals and one single note on management performance measures. The three amendments, combined with enhanced guidance on how to disaggregate information, set the stage for better and more consistent information for users, and will affect all the entities.

• ●A more structured income statement: under current standards, companies use different formats to present their results, making it difficult for investors to compare financial performance across companies. The new standard promotes a more structured income statement, introducing a newly defined ‘operating profit’ subtotal and a requirement for all income and expenses to be allocated between three new distinct categories based on a company’ s main business activities.

• ●Management performance measures (MPMs): the new standard introduces a definition for management performance measures, and requires companies to explain in a single note to the financial statements why the measure provides useful information, how it is calculated and reconcile it to an amount determined under IFRS Accounting Standards.

• ●Greater disaggregation of information: the new standard includes enhanced guidance on how companies group information in the financial statements. This includes guidance on whether information is included in the primary financial statements or is further disaggregated in the notes.

(Continued)

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SCI PHARMTECH, INC. Notes to the Financial Statements

Standards or Effective date per Interpretations Content of amendment IASB Annual Improvements to The amendments set out: January 1, 2026 IFRS Accounting 1. IFRS 1 “ First-time Adoption of Standards—Volume 11 International Financial Reporting Standards”: The amendments address a potential confusion arising from an inconsistency in wording between paragraph B6 of IFRS 1 and requirements for hedge accounting in IFRS 9 Financial Instruments. 2. IFRS 7 “ Financial Instruments: Disclosures”: The amendments address a potential confusion in IFRS 7 arising from an obsolete reference to a paragraph that was deleted from the standard when IFRS 13 Fair Value Measurement was issued.

1. IFRS 9 “Financial Instruments”:

● Derecognition of a lease liability The IASB’ s amendment states that if a lease liability is derecognized, then the derecognition will be accounted for under IFRS 9, (i.e. the difference between the carrying amount and the consideration paid is recognized in profit or loss). However, when a lease liability is modified, the modification will be accounted for under IFRS 16 Leases.

● Transaction price The amendments require companies to initially measure a trade receivable without a significant financing component at the amount determined by applying IFRS 15 Revenue from Contracts with Customers. The amendments remove the conflict between IFRS 9 and IFRS 15 over the amount at which a trade receivable is initially measured.

(Continued)

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SCI PHARMTECH, INC. Notes to the Financial Statements

Standards or Interpretations	Content of amendment Effective date per IASB 4. IFRS 10 “ Consolidated Financial Statements”: The amendments clarify the determination of a ‘de facto agent’. 5. IAS 7 “Statement of Cash Flows”: The amendments address a potential confusion in applying paragraph 37 of IAS 7 that arises from the use of the term ‘cost method’.

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

The Company 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 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”

• ●IFRS 19 “Subsidiaries without Public Accountability: Disclosures”

• ●Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments”

• ●Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity”

(4) Summary of material accounting policies:

The material accounting policies presented in the financial statements are summarized as follows. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

• (a) Statement of compliance

These annual financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the annual financial statements have been prepared on a historical cost basis:

• 1) Financial instruments at fair value through profit or loss are measured at fair value;

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

(Continued)

12

SCI PHARMTECH, INC. Notes to the Financial Statements

value;

• 3) 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(q).

• (ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the Company operates. The financial statements are presented in New Taiwan Dollar (NTD), which is the Company’s functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

(c) Foreign currencies

Transactions in foreign currencies are translated into the respective functional currencies of the Company at 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:

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

• (ii) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• (iii) qualifying cash flow hedges to the extent that the hedges are effective.

• (d) Classification of current and non-current assets and liabilities

The Company classifies the asset as current under one of the following criteria, and all other assets are classified as non-current.

• (i) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;

• (ii) It holds the asset primarily for the purpose of trading;

(iii) It expects to realize the asset within twelve months after the reporting period; or

• (iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The Company classifies the liability as current under one of the following criteria, and all other liabilities are classified as non-current.

(Continued)

13

SCI PHARMTECH, INC. Notes to the Financial Statements

• (i) It expects to settle the liability in its normal operating cycle;

• (ii) It holds the liability primarily for the purpose of trading

• (iii) The liability is due to be settled within twelve months after the reporting period; or

• (iv) The Company does not have the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period.

(e) Cash and cash equivalents

Cash comprises cash in 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.

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade 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. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) 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) – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company 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.

• 1) 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 (SPPI) 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

(Continued)

14

SCI PHARMTECH, INC. Notes to the Financial Statements

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.

• 2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI 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 achieved by both collecting contractual cash flows and selling financial assets; 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.

On initial recognition of an equity investment that is not held for trading, the Company 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.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

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 Company’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above (e.g. financial assets held for trading and those that are managed and whose performance is evaluted on a fair value basis) are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

• 4) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and trade receivables, other receivable, guarantee deposit paid and other financial

(Continued)

15

SCI PHARMTECH, INC. Notes to the Financial Statements

assets) and debt investments measured at FVOCI.

The Company 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 receivable are always measured at an amount equal to lifetime ECL.

Lifetime ECL are the ECL that result from all possible default events over the expected life of a financial instrument.

12-month ECL are the portion of ECL that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECL is the maximum contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company 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 Company’ s historical experience and informed credit assessment as well as forwardlooking information.

The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘ investment grade which is considered to be BBB- or higher per Standard & Poor’s, Baa3 or higher per Moody’s or twA or higher per Taiwan Ratings’.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 90 days past due or the debtor is unlikely to pay its credit obligations to the Company in full.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECL are discounted at the effective interest rate of the financial asset.

(Continued)

16

SCI PHARMTECH, INC. Notes to the Financial Statements

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI 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 90 days 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 a security 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 securities at FVOCI, the loss allowance is charged to profit or loss and is 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 Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company 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 Company 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 Company’s procedures for recovery of amounts due.

• 5) Derecognition of financial assets

The Company 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 Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company 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.

(Continued)

17

SCI PHARMTECH, INC. Notes to the Financial Statements

(ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

3) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

4) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

• 5) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(Continued)

18

SCI PHARMTECH, INC. Notes to the Financial Statements

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The parent company only financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus, however, when the balance of the capital surplus arising from the investment was insufficient, the difference charged or credited to retained earnings. If the Company's ownership interest is reduced due to the additional subscription to the shares of associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(Continued)

19

SCI PHARMTECH, INC. Notes to the Financial Statements

(i) Investment in subsidiaries

When preparing the parent company only financial statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under the equity method, the amounts of net income, other comprehensive income and equity attributable to shareholders of the Company in the parent company only financial statement are equal to those in the consolidated financial statements.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

• (j) Property, plant and equipment

• (i) 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.

(ii) Subsequent expenditure

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

• (iii) 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:

• 1) Buildings: 2 ~ 56 years

• 2) Machinery: 3 ~21 years

• 3) Other equipment: 3 ~ 21 years

Building and equipment constitutes mainly building, mechanical and electrical power equipment and its related facilities. Each such part depreciates based on its useful life.

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

(Continued)

20

SCI PHARMTECH, INC. Notes to the Financial Statements

(k) Lease

At inception of a contract, the Company 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.

(i) As a lessee

The Company 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.

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 Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

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

• 1) fixed payments, including in-substance fixed payments;

• 2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• 3) amounts expected to be payable under a residual value guarantee; and

• 4) payments or penalties 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:

• 1) there is a change in future lease payments arising from the change in an index or rate; or

• 2) there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

• 3) 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 assets, or

• 4) there is a change of its assessment on whether it will exercise an extension or termination option; or

• 5) there is any lease modifications in lease subject, scope of the lease or other terms.

(Continued)

21

SCI PHARMTECH, INC. Notes to the Financial Statements

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 Company 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 Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of assets that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a leasor

When the Company 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 Company makes an overall assessment of whether the lease transfers to the lessee substantially all of 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 Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

(l) Intangible assets

(i) Recognition and measurement

Intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) 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, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

• (iii) 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, from the date that they are available for use.

The estimated useful life of computer software is 6~11 years.

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

(Continued)

22

SCI PHARMTECH, INC. Notes to the Financial Statements

(m) Impairment of non-financial assets

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

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. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

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.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(n) Provisions

A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

(o) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

(Continued)

23

SCI PHARMTECH, INC. Notes to the Financial Statements

(i) Sale of goods

The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, 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 Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

(ii) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(p) Government grants and government assistance

The Company recognizes an unconditional government grant related to profit or loss as other income when the grant becomes receivable. Other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant; they are then recognized in profit or loss as other income on a systematic basis over the useful life of the asset. Grants that compensate the Company for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(q) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Company ’s net obligation in respect of defined benefit plans is calculate separately for each the plan 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 perforually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, 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.

(Continued)

24

SCI PHARMTECH, INC. Notes to the Financial Statements

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 Company 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 Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

(iv) 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 Company 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.

(r) Share-based payment

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the liability are recognized in profit or loss.

The grant date of a share-based payment award is the date which the capital increase base date is adopted.

(Continued)

25

SCI PHARMTECH, INC. Notes to the Financial Statements

(s) 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.

The Company has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

The Company has determined that the global minimum top-up tax-which it is required to pay under Pillar Two legislation-is an income tax in the scope of IAS12. The Company has applieo a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.

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

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

1. temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and the time of the transaction (i) affects neither accounting nor taxable profits (losses) and (ii) does not give rise to equal taxable and deductible temporary differences;

2. temporary differences related to investments in subsidiaries and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

3. taxable temporary differences arising on the initial recognition of goodwill.

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, and reflect uncertainty related to income taxes, if any.

(Continued)

26

SCI PHARMTECH, INC. Notes to the Financial Statements

Deferred tax assets and liabilities are offset if the following criteria are met:

1. The Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

2. the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

   • (i) the same taxable entity; or

   • (ii) 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.

3. (t) Earnings per share

The Company discloses 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. Dilutive potential ordinary shares comprise convertible bond, employee stock options, remuneration to employees not yet approved by the Board of directors, and restricted employee shares.

• (u) Operating segments

The operating segment information is disclosed within the consolidated financial statements but not disclosed in the parent company only financial statements.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

In preparing the financial statements, management has made judgments and estimates about the future, including climate-related risks and opportunities, 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.

There are no critical judgments in applying the accounting policies that have significant effects on the amounts recognized in the financial statements.

Besides, for those uncertainties due to accounting assumptions and estimations, information about the significant risk of resulting in a material adjustment to the carrying of assets and liabilities within the next financial year is as follows:

(Continued)

27

SCI PHARMTECH, INC. Notes to the Financial Statements

(a) Inventory valuation

Inventories are measured at the lower of cost or net realizable value. The Company writes down the cost of inventories to net realizable value since the inventories at reporting date were estimated to be obsolescence and unmarketable items. The inventory valuation is based on the demand of the products within a specific period. Therefore, the value of inventories will vary significantly variable. Please refer to note 6(e) of the financial statement for inventory valuation.

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

	December 31,	December 31,	December 31,
		2024	2023
Cash in hand	$	658	487
Checking accounts and demand deposits		119,544	900,427
Time deposits		285,828	34,456
Bills sold under repurchase agreements		162,248	-
Cash and cash equivalents in the statements of cash flows	$	568,278	935,370

(i) The Company did not provide cash and cash equivalents as collateral for its loans.

• (ii) Please refer to note 6(v) for the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Company.

• (b) Financial assets at fair value through profit or loss

	December 31,	December 31,	December 31,
		2024	2023
Mandatorily measured at fair value through profit or loss:
Non-derivative financial assets
Beneficiary certificate	$	81,264	1,052
Stocks listed on domestic markets		29,110	87,946
Total	$	110,374	88,998

The Company did not provide any aforementioned financial assets as collateral for its loans as of December 31, 2024 and 2023, respectively.

• (c) Financial assets at fair value through other comprehensive income, non-current:

December 31, 2024 Financial assets at fair value through other comprehensive income: Stocks listed on domestic markets $ 81,427	December 31, 2023
	96,814

• (i) The Company designated the investments shown above as equity securities as at fair value through other comprehensive income because these equity securities represent those

(Continued)

28

SCI PHARMTECH, INC. Notes to the Financial Statements

investments that the Company intends to hold for long-term for strategic purposes.

• (ii) No strategic investments were disposed for the year ended Decenber 31, 2024, and there were no transfers of any cumulative gain or loss within equity relating to these investment. In 2023, the Company had sold all of its shares held in Sunny Pharmtech Inc, which is accounted under equity investments measured at fair value through other comprehensive income, with a fair value of $178,573 at the time of disposal, and the cumulated gain on disposal amounted to $124,499. Therefore, the Company has transferred the aforesaid cumulative gain on disposal from other equity to retained earnings.

• (iii) Energenesis Biomedical Co., Ltd., was originally an emerging company and became listed in June 2023.

• (iv) Energenesis Biomedical Co., Ltd. increased its capital by cash in November 2024 upon the resolution of the board of directors. The base date for the capital increase was January 7, 2025. As of December 31, 2024, the Company's prepaid investment amounted to $9,656 and recorded under other non-current assets.

• (v) Please refer to note 6(v) for market risk of the Company.

• (vi) As of December 31, 2024 and 2023, the Company did not provide any aforementioned financial assets as collateral for its loans.

• (d) Notes and accounts receivable

December 31, 2024 Accounts receivable 289,514 Less: loss allowance - $ 289,514	December 31, 2023
	307,369 - 307,369

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables as well as incorporated forward looking information including the reasonable prediction of historical credit loss experience and future economic situation (macroeconomic and relevant industry information). The loss allowance provision was determined as follows:

Current 1 to 30 days past due 31 to 60 days past due 61 to 90 days past due	December 31, 2024	December 31, 2024	December 31, 2024
	Gross carrying amount $181,874 71,515 36,081 44 $289,514	Rate of loss allowance provision - - - -	Loss allowance provision
			- - - -
			-

(Continued)

29

SCI PHARMTECH, INC. Notes to the Financial Statements

Current 1 to 30 days past due 31 to 60 days past due 61 to 90 days past due 91 to 180 days past due 181 to 270 days past due	December 31, 2023	December 31, 2023	December 31, 2023
	Gross carrying amount $184,452 28,289 25,539 - 14 69,075 $307,369	Rate of loss allowance provision - - - - - -	Loss allowance provision
			- - - - - -
			-

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

Balance at January 1 (Balance at December 31)	2024 $ -	2023
		-

As of December 31, 2024 and 2023, the Company did not provide any aforementioned notes and accounts receivable as collaterals for its loans.

• (e) Inventories

Raw materials Work in progress Finished goods	December 31, 2024 December 31, 2023 $ 111,027 92,404 176,339 85,692 333,531 351,437 $ 620,897 529,533	December 31, 2024 December 31, 2023 $ 111,027 92,404 176,339 85,692 333,531 351,437 $ 620,897 529,533
		92,404 85,692 351,437
		529,533

The details of the operating costs were as follows:

Inventory that has been sold (Reversal gains) Losses on write-down of inventories Loss on disposal of inventories Unallocated production overheads	2024 $ 950,423 (27,289) 35,960 153,979 $ 1,113,073	2023
		735,302 19,806 11,798 86,930
		853,836

The Company recognizes write-down losses of inventories as they are reduced to net realizable value and recognizes reversal gains of write-downs as the net realizable value of inventories increases due to the sale or written off obsolete inventories.

As of December 31, 2024 and 2023, the Company did not provide any inventories as collaterals for

(Continued)

30

SCI PHARMTECH, INC. Notes to the Financial Statements

its loans.

(f) Investments accounted for using equity method

The components of investments accounted for using equity method at the reporting date were as follows:

Subsidiaries Associates	December 31, 2024 December 31, 2023 $ 366,304 353,291 120,027 116,815 $ 486,331 470,106	December 31, 2024 December 31, 2023 $ 366,304 353,291 120,027 116,815 $ 486,331 470,106
		353,291 116,815
		470,106

(i) Subsidiaries

Please refer to the consolidated financial statements for the year ended December 31, 2024.

(ii) Associates

• 1) HoneyBear Biosciences, Inc.(HoneyBear) was originally an investments accounted for using equity method of Yushan Pharmaceuticals Inc., a subsidiary of the Company.In August 2024, HoneyBear conducted its first capital increase by cash. The Company increased its investment by $35,000 and acquired 4.97% of equity in HoneyBear, at a percentage disproportionate from its existing ownership percentage. As a result, the capital surplus decreased by $8,788, and the retained earnings decreased by $1,375. In November 2024, HoneyBear conducted its second capital increase by cash, the Company and its subsidiary did not acquire additional shares, resulting in the ownership of HoneyBear by the Company decreased from 4.97% to 4.04%, and the capital surplus increased by $10,184.

• 2) The Company’s financial information on investments accounted for using equity method that are individually insignificant was as follows:

Carrying amount of individually insignificant associates' equity Attributable to the Company: Profit (loss) for the year Other comprehensive income (loss) Total comprehensive income (loss)	December 31, 2024 $ 120,027 2024 $ (17,386) - $ (17,386)	December 31, 2023 116,815 2023 (10,068) - (10,068)

• (iii) Pledge to secure

As of December 31, 2024 and 2023, the Company did not provide any investment accounted for using equity method as collaterals for its loans.

(Continued)

31

SCI PHARMTECH, INC. Notes to the Financial Statements

(g) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2024 and 2023, were as follows:

Cost: Balance on January 1, 2024 Additions Disposal and derecognitions Transferred in (out) Balance on December 31, 2024 Balance on January 1, 2023 Additions Disposal and derecognitions Transferred in (out) Balance on December 31, 2023 Depreciation and impairments loss: Balance on January 1, 2024 Depreciation Disposals and derecognitions Balance on December 31, 2024 Balance on January 1, 2023 Depreciation Disposals and derecognitions Balance on December 31, 2023 Carrying amounts: Balance on December 31, 2024 Balance on January 1, 2023 Balance on December 31, 2023	Land $ 599,729 - - - $ 599,729 $ 599,729 - - - $ 599,729 $ - - - $ - $ - - - $ - $ 599,729 $ 599,729 $ 599,729	Buildings and construction	Buildings and construction	Machinery and equipment	Machinery and equipment		Office equipment		Others equipment	Prepayment for equipment and construction in progress 1,561,482 885,149 - (481,633) 1,964,998 1,320,022 655,972 - (414,512) 1,561,482 - - - - - - - - 1,964,998 1,320,022 1,561,482	Total 4,653,842 957,806 (13,038) 155,759 5,754,369 3,805,312 784,088 (846) 65,288 4,653,842 838,046 223,062 (13,038) 1,048,070 703,365 134,943 (262) 838,046 4,706,299 3,101,947 3,815,796
			707,002 - - 15,902		1,714,324 72,017 (13,038) 621,219 2,394,522 1,116,895 122,867 (846) 475,408 1,714,324 489,788 191,131 (13,038) 667,881 385,715 104,335 (262) 489,788 1,726,641 731,180 1,224,536		58,337 640 - 271		12,968 - - -
			722,904				59,248		12,968
			700,232 5,030 - 1,740				55,466 219 - 2,652		12,968 - - -
			707,002				58,337		12,968
			311,735 26,249 -				28,553 4,643 -		7,970 1,039 -
			337,984				33,196		9,009
			287,084 24,651 -				23,635 4,918 -		6,931 1,039 -
			311,735				28,553		7,970
			384,920				26,052		3,959
			413,148				31,831		6,037
			395,267				29,784		4,998

(Continued)

32

SCI PHARMTECH, INC. Notes to the Financial Statements

• (i) In May 2013, the Company purchased a piece of land for the construction of its factory in Taoyuan Luzhu that was auctioned by the court at a price of $211,184. The amount had been paid in full, and the transfer procedures have been completed. The title deed of a certain portion of the land, measuring 2,259 square meters, was registered in the name of Mr. Weichyun Wong due to certain legal requirements. However, both parties agreed that the Company is the actual owner of the land.

• (ii) As of December 31, 2024 and 2023, the Company’ s prepayments for equipment purchases amounted to $79,170 and $155,759, respectively, which were recorded as other non-current assets.

• (iii) As of December 31, 2024 and 2023, part of the property, plant and equipment of the Company had been pledged as collateral. Please refer to note 8 for the details.

• (h) Right-of-use assets

The Company leases many assets including land, company cars and copy machines. Information about leases for which the Company as a lessee is presented below:

Cost: Balance on January 1, 2024 Additions Reductions Balance on December 31, 2024 Balance on January 1, 2023 Additions Reductions Balance on December 31, 2023 Accumulated depreciation: Balance on January 1, 2024 Depreciation Reductions Balance on December 31, 2024 Balance on January 1, 2023 Depreciation Reductions Balance on December 31, 2023 Carrying amount: Balance on December 31, 2024 Balance on January 1, 2023 Balance on December 31, 2023	Land $ 85,025 3,364 - $ 88,389 $ 77,368 7,657 - $ 85,025 $ 2,703 2,373 - $ 5,076 $ 645 2,058 - $ 2,703 $ 83,313 $ 76,723 $ 82,322	Others 2,626 6,591 (1,132) 8,085 4,922 2,109 (4,405) 2,626 945 1,635 (897) 1,683 3,909 1,441 (4,405) 945 6,402 1,013 1,681	Total 87,651 9,955 (1,132) 96,474 82,290 9,766 (4,405) 87,651 3,648 4,008 (897) 6,759 4,554 3,499 (4,405) 3,648 89,715 77,736 84,003

In August 2022, the Company leases a piece of land in Guanyin, Taoyuan from its subsidiary for the construction of plants and the lease term is fifty years.

(Continued)

33

SCI PHARMTECH, INC. Notes to the Financial Statements

(i) Short-term borrowings

The details of short-term borrowings were as follows:

Secured bank loans Unsecured bank loans Total Unused credit line for short-term borrowings Range of interest rates	December 31, 2024 $ - 100 $ 100 $ 750,746 2.225%	December 31, 2023
		50,000 125,000
		175,000
		695,000
		1.7%~2.1%

• (i) For the collateral of the Company's assets for short-term borrowings, please refer to note 8.

• (ii) For the information on the Company's exposure to the interest rate risk and liquidity risk, please refer to note 6(v).

(j) Long-term borrowings

The details of long-term borrowings were as follows:

Secured bank loans－Maturity period 2025.3~2027.2 Unsecured bank loans－Maturity period 2025.11 and 2026.9 Less: current portion Less: deferred income Unused credit lines Range of interest rates	December 31, 2024 $ 818,358 163,750 (403,439) (660) $ 578,009 $ 257,892 1.675%~2.05%	December 31, 2023 686,572 180,000 (20,000) (3,902) 842,670 363,428 1.05%~1.925%

• (i) For the years ended December 31, 2024 and 2023, the Company had proceeds from long-term borrowings amounted to $141,786 and $430,805, respectively, and the repayments of longterm borrowings amounted to $26,250 and $0, respectively.

• (ii) The Company’ s application for a low-interest loan for the construction of plants, purchasing equipment, and support medium-term working capital, had been approved by the National Development Fund, Executive Yuan in 2022, with Mega International Commercial Bank providing the non-revolving loan of $1,000,000, which was recognized and measured by using the market rates, with the margin interests calculated by using the rates between the actual rates and the market rates, recognized as deferred income (other non-current liabilities), based on the Government grants. As of December 31, 2024, the Company had used the credit amount of $818,358.

• (iii) For the collateral of the Company's assets for long-term borrowings, please refer to note 8.

(Continued)

34

SCI PHARMTECH, INC. Notes to the Financial Statements

(k) Other payables

Salaries payable Others	December 31, 2024 December 31, 2023 $ 99,035 81,664 94,120 87,682 $ 193,155 169,346	December 31, 2024 December 31, 2023 $ 99,035 81,664 94,120 87,682 $ 193,155 169,346
		81,664 87,682
		169,346

(l) Lease liabilities

The carrying amount of lease liabilities was as follows:

	December	December	31,	December	31,
		2024		2023
Current	$	3,606		3,022
Non-current	$	87,520		81,799
Please refer to note 6(v) for maturity analysis.
		2024		2023
The amounts recognized in profit or loss were as follows:
Interest on lease liabilities	$	1,467		1,386
Expenses relating to short-term leases	$		713		693
Variable lease payments not included in the measurement of
lease liabilities	$	-			11
Expense relating to leases of low-value assets,
excluding short-term leases of low-value assets	$		822		691
The amounts recognized in the statement of cash flows of the
Company were as follows:
Total cash outflow for leases	$	6,413		5,704

(i) Lease of right-of-use assets

The Company leases company cars and parking lots, the leases typically run for a period of three to six years.

The Company leases land from its subsidiary: The leases run for a period of fifty years.

(ii) Other lease

The Company leases vehicles and office equipment. These leases are short-term or leases of low-value items. The Company has elected not to recognize right-of-use assets and lease liabilities for these leases.

(Continued)

35

SCI PHARMTECH, INC. Notes to the Financial Statements

(m) Provisions

Balance on January 1, 2024 Provisions made during the year Provisions used during the year Balance on December 31, 2024 Balance on January 1, 2023 Provisions made (reversed) during the year Provisions used during the year Balance on December 31, 2023	Environmental protection costs $ 29,058 59,792 (71,839) $ 17,011 $ 43,225 12,047 (26,214) $ 29,058	Fire disaster indemnity - - - - 68,159 (373) (67,786) -	Total 29,058 59,792 (71,839) 17,011 111,384 11,674 (94,000) 29,058

(i) In 2024 and 2023, the provisions were recognized for the treatment of liquid waste in accordance with the Standards of Environmental Protection Administration; the amount of provisions were estimated based on the quantity and cost of the treatment of liquid waste at the reporting date. The Company considers to write off and recognize the above provisions in the following year.

(n) Employee benefits

(i) Defined benefit plans

Reconciliations of the defined benefit obligation at present value and plan assets at fair value are as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2024 December 31, 2023 $ (79,262) (80,320) 67,303 58,784 $ (11,959) (21,536)

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for its employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on the years of service and average monthly salary for the six months prior to retirement.

1) 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 in the annual distributions on the final financial statements shall be no less than the earnings attainable from two-year time deposits with interest rates offered by the local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $67,303 at the end of the reporting period. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to

(Continued)

36

SCI PHARMTECH, INC. Notes to the Financial Statements

the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Company were as follows:

Defined benefit obligation at January 1 Current service costs and interest Remeasurement in net defined benefit liability (assets) Benefits paid Defined benefit obligation at December 31 3) Movements of defined benefit plan assets	2024 $ (80,320) (2,193) 3,251 - $ (79,262)	2023 (79,356) (1,578) (3,858) 4,472 (80,320)

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets at January 1 Contributions made Interest income Remeasurement in net defined benefit liability (assets) Benefits paid Fair value of plan assets at December 31	2024 $ 58,784 2,348 605 5,566 - $ 67,303	2023 59,826 2,145 748 537 (4,472) 58,784

• 4) Movements of the effect of the asset ceiling

In 2024 and 2023, there were no movements on the effect of the Company's defined benefit plans asset ceiling.

(Continued)

37

SCI PHARMTECH, INC. Notes to the Financial Statements

• 5) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Service cost Net interest of net liabilities for defined benefit obligations Operating cost Operating expenses	2024 $ 1,355 233 $ 1,588 $ 1,154 434 $ 1,588	2023
		600 230
		830
		571 259
		830

• 6) Remeasurement in net defined benefit liability (asset) recognized in other comprehensive income

The Company’s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2024 and 2023, were as follows:

Cumulative amount at January 1 Recognized during the year Cumulative amount at December 31	2024 $ 12,417 (8,817) $ 3,600	2023
		9,096 3,321
		12,417

• 7) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increasing rate	December 31, 2024 December 31, 2023 % 1.60 % 1.15 % 3.00 % 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 is $2,614.

The weighted-average duration of the defined benefit obligation is 6 years.

(Continued)

38

SCI PHARMTECH, INC. Notes to the Financial Statements

8) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

		The impact on the	present value of
		the defined benefit obligation
		Increased 0.25%	Decreased 0.25%
As of December 31, 2024
Discount rate	$	(1,213)	1,248
Future salary increasing rate		1,228	(1,200)
As of December 31, 2023
Discount rate		(1,360)	1,401
Future salary increasing rate		1,372	(1,339)

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 is consistent with the calculation of the pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2024 and 2023.

(ii) Defined contribution plans

The Company 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 this defined contribution plan, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligations.

The Company recognized the pension costs under the defined contribution method amounting to $8,853 and $7,501 for the years ended December 31, 2024 and 2023, respectively. Payment was made to the Bureau of Labor Insurance.

(Continued)

39

SCI PHARMTECH, INC. Notes to the Financial Statements

(o) Income taxes

(i) Income tax expenses

The amount of income tax for the years ended December 31, 2024 and 2023, was as follows:

Current tax expense Recognized during the year $ Tax incentives Income tax underestimate (overestimate) for prior years Deferred tax expense Recognition and reversal of temporary differences Income tax underestimate (overestimate) for prior years Income tax expense $	2024 126,062 (10,565) 30,532 146,029 5,864 (39,714) (33,850) 112,179	2023 16,953 (5,086) 774 12,641 56,828 - 56,828 69,469

The amount of income tax recognized in other comprehensive income for 2024 and 2023 was as follows:

Items that will not be reclassified to profit or loss: Remeasurement in defined benefit plan Reconciliation of income tax and profit before tax for Profit excluding income tax Income tax using the Company’s domestic tax rate Tax incentives Net gains or losses on domestic investments accounted for using equity method Tax-exempt income Over provision in prior periods Other	2024 2023 $ 1,763 (664) 2024 and 2023 is as follows: 2024 2023 $ 646,857 364,190 129,371 72,838 (10,565) (5,086) 3,651 1,092 (390) (544) (9,182) 774 (706) 395 $ 112,179 69,469

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets and liabilities: None.

(Continued)

40

SCI PHARMTECH, INC. Notes to the Financial Statements

2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2024 and 2023 were as follows:

Deferred tax assets: Balance on January 1, 2024 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2024 Balance on January 1, 2023 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2023 Deferred tax liabilities: Balance on January 1, 2024 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2024 Balance on January 1, 2023 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2023	Loss for market price decline and obsolete inventories $ 29,780 (5,458) - $ 24,322 $ 25,819 3,961 - $ 29,780	Losses due to major disasters Provision Others 110,989 2,843 9,665 (2,974) - 735 - - (1,763) 108,015 2,843 8,637 110,989 19,460 10,984 - (16,617) (1,983) - - 664 110,989 2,843 9,665 Insurance claim compensation Others $ 146,000 - (42,189) 642 - - $ 103,811 642 $ 103,811 - 42,189 - - - $ 146,000 -	Losses due to major disasters Provision Others 110,989 2,843 9,665 (2,974) - 735 - - (1,763) 108,015 2,843 8,637 110,989 19,460 10,984 - (16,617) (1,983) - - 664 110,989 2,843 9,665 Insurance claim compensation Others $ 146,000 - (42,189) 642 - - $ 103,811 642 $ 103,811 - 42,189 - - - $ 146,000 -	Total
				153,277 (7,697) (1,763)
				143,817
				167,252 (14,639) 664
				153,277
				Total 146,000 (41,547) - 104,453 103,811 42,189 - 146,000

• (iii) Examination and approval

The ROC tax authorities have examined the Company’s income tax returns through 2022.

(p) Capital and other equity

Based on the resolution of stockholders’ meeting held on May 30, 2024, the Company resolved to increase the authorized capital stock to $1,600,000, the statutory registration procedures have been completed.

As of December 31, 2024 and 2023, the authorized capital of the Company had the total of 160,000 thousand shares and 120,000 thousand shares, with a par value of $10 per share, amounting to $1,600,000 and $1,200,000, respectively, (of which 8,000 thousand shares were reserved for the exercise of share warrants, preferred shares with warrants, or convertible bonds with warrants; and also, 119,509 thousand shares were issued for both the financial year). All issued shares were paid up upon issuance.

(Continued)

41

SCI PHARMTECH, INC. Notes to the Financial Statements

(i) Ordinary shares

Based on the resolution of the shareholders’ meeting held on June 19, 2023, the Company increased its capital through the issuance of shares by transferring retained earnings amounting to $119,228. The newly issued shares totaled 11,923 thousand shares with a par value of NTD10 per share. The effective date was August 2, 2023, and the registration procedures had been completed.

Based on the resolution of the shareholders’ meeting held on June 19, 2023, the Company decided to issue 203 thousand new shares with par value of NTD10 per share as employees’ remuneration amounting to $22,178. The registration procedures have been completed.

Based on the resolution of the Board of Directors meeting held on August 10, 2023, the Company decided to issue 12,000 thousand new shares with par value of NTD10 per share, at an issuance price of NTD80 per share, raising $960,000, 10% of the total number of shares issued were reserved for employees’ subscription, with November 6, 2023, as the base date of the capital increase. The relevant registration procedures have been completed, and all of the payment for the shares issued have been received.

(ii) Capital surplus

The balances of capital surplus as of December 31, 2024 and 2023 were as follows:

Additional paid-in capital Cash capital increase reserved for employees' subscriptions Gain on disposal of assets Stock options Changes in equity of associates and joint ventures accounted for using equity method Employee stock options	December 31, 2024 December 31, 2023 $ 2,127,990 2,127,990 18,720 18,720 980 980 71,530 71,530 10,184 8,788 5,582 5,582 $ 2,234,986 2,233,590	December 31, 2024 December 31, 2023 $ 2,127,990 2,127,990 18,720 18,720 980 980 71,530 71,530 10,184 8,788 5,582 5,582 $ 2,234,986 2,233,590
		2,127,990 18,720 980 71,530 8,788 5,582
		2,233,590

According to the R.O.C. Company 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.

(Continued)

42

SCI PHARMTECH, INC. Notes to the Financial Statements

(iii) Retained earning

The Company's article of incorporation stipulates that Company’s net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and special reserves are supposed to set aside in accordance with the relevant regulations or as required by the government. And then any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

According to the Company’s dividend policy, the type of dividends should be determined after considering the Company’ s capital and financial structure, operating conditions, operating surplus, industrial characteristics and cycle. The distribution of net earnings should not be lower than 50% of the current profit before tax. Cash dividends to stockholders should not be lower than 10% of the total dividends.

1) 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.

2) Special reserve

A portion of current period earnings and undistributed prior period earnings shall be reclassified as a special earnings reserve during earnings distribution. The amount to be reclassified should equal to the current period total net reduction of other shareholders’ equity. The amount to be reclassified to special reserve shall be a portion of after-tax net profit for the period plus items other than after-tax net profit for the period, that are included in the undistributed earnings of the period. A portion of undistributed priorperiod earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

3) Earnings distribution

Based on the resolution of stockholders’ meeting held on May 30, 2024 and June 19, 2023, the appropriation of earnings for the year 2023 and 2022 was approved. The dividends per share were as follows:

Dividends distributed to ordinary shareholders: Cash Stock Total	2023 Amount per share (NTD) Total amount $ 1.25 149,387 - - $ 149,387	2022 Amount per share (NTD) Total amount 0.25 23,846 1.25 119,228 143,074	2022 Amount per share (NTD) Total amount 0.25 23,846 1.25 119,228 143,074
			Total amount
			23,846 119,228
			143,074

On March 10, 2025, the Company's Board of Directors resolved to appropriate the 2024

(Continued)

43

SCI PHARMTECH, INC. Notes to the Financial Statements

earnings. These earnings were appropriate as follows:

			2024	2024
			Amount
			per share	Total
			(NTD)	amount
	Dividends distributed to
	ordinary shareholders:
	Cash	$	1.50	179,263
(iv)	Other equity (net of tax)
			Unrealized gains
				(losses) from
			financial assets
			measured at fair
				value through
				other
			comprehensive
				income
	Balance at January 1, 2024		$	25,457
	Unrealized gains (losses) from financial assets measured at fair value through other
	comprehensive income			(15,387)
	Balance at December 31, 2024		$	10,070
	Balance at January 1, 2023		$	(54,727)
	Unrealized gains (losses) from financial assets measured at fair value through other
	comprehensive income			204,683
	Disposal of equity instruments at fair value through other comprehensive imcome			(124,499)
	Balance at December 31, 2023		$	25,457

(q) Share-based payment

Based on the resolution of the Board of Directors held on August 10, 2023, the Company decided to conduct a cash capital increase, among them 10% of the total number of shares, 1,200 thousand shares were reserved for preferential subscription by the Company's employees, and the actual number of shares subscribed was 1,200 thousand shares.

Grant date Quantity granted Recipients Vesting conditions	December 31, 2023
	Cash capital increase reserved for employees' subscription
	September 25, 2023 1,200 thousand shares Employees' of the Company Immediately vested

(Continued)

44

SCI PHARMTECH, INC. Notes to the Financial Statements

• (i) Fair value on the grant date

Information on the fair value of the Group's share-based payment at the grant date was as follows:

Fair value at the grant date Stock price at the grant date Exercise price Expected option life (years)	September 25, 2023
	Cash capital increase reserved for employees' subscription
	NTD15.6 NTD95.6 NTD80.0 Immediately vested

• (ii) For the year ended December 31, 2023, the expenses incurred by the Company for the sharebased payment were $18,720.

(r) Earnings per share

The calculation of basic earnings per share and diluted earnings per share for the years ended December 31, 2024 and 2023 were as follows:

2024 Basic earnings per share Profit attributable to ordinary shareholders of the Company $ 534,678 Weighted-average number of ordinary shares (thousand shares) 119,509 $ 4.47 Diluted earnings per share Profit attributable to ordinary shareholders of the Company $ 534,678 Weighted-average number of ordinary shares (thousand shares) 119,509 Effect of potentially dilutive ordinary shares: Effect of employee stock compensation 444 Weighted-average number of ordinary shares (thousand shares) (diluted) 119,953 $ 4.46	2023
	294,721
	109,309
	2.70
	294,721
	109,309 300
	109,609
	2.69

The above mentioned weighted average number ordinary shares has been retroactively adjusted for the shares obtained as stock dividends, with August 2, 2023, as the date of capital increase.

(Continued)

45

SCI PHARMTECH, INC. Notes to the Financial Statements

• (s) Revenue from contracts with customers

• (i) Disaggregation of revenue

Primary geographical markets Italy Spain Taiwan Switzerland United States of America Belgium Netherlands Germany Japan China Others Major products Active pharmaceutical ingredients Intermediates Specialty chemical (ii) Contract balances Notes and accounts receivable Less: loss allowance Total Contract liabilities (sales received in advance)	December 31, 2024	2024 $ 274,726 159,836 144,948 130,956 128,126 127,316 114,260 99,996 74,377 28,337 240,860 $ 1,523,738 $ 1,087,553 416,085 20,100 $ 1,523,738 December 31, 2023 307,369 - 307,369 38,367	2023
			313,713 33,289 96,234 71,380 127,473 9,935 54,009 116,080 116,547 61,833 203,666
			1,204,159
			718,312 471,644 14,203
			1,204,159
			January 1, 2023
	$ 289,514 - $ 289,514 $ 94,923		173,565 -
			173,565
			31,773

Please refer to note 6(d) for the information of accounts receivable and the impairment.

The amount of revenue recognized for the years ended December 31, 2024 and 2023 that was included in the contract liabilities balances at the beginning of the period were $6,917 and $323, respectively.

(Continued)

46

SCI PHARMTECH, INC. Notes to the Financial Statements

The changes of contract liabilities are arising from the difference of time point, which the Company transfers the ownership of goods and which customers do the payment.

(t) Remuneration to employees and directors

In accordance with the Articles of incorporation, the Company should contribute no less than 3% of the profit as employee remuneration and less than 2% as directors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The aforementioned employees’ compensation will be distributed in shares or cash. The recipients may include the employees of the subordinate of the Company who meet certain specific requirements.

For the years ended December 31, 2024 and 2023, the remunerations to employees amounted to $35,377 and $24,407, respectively, and the remunerations to directors amounted to $5,500 and $3,936, respectively. These amounts were calculated using the Company’s net income before tax without the remunerations to employees and directors for each period, multiplied by the proposed percentage which is stated under the Company's proposed Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period. Shares distributed to employees as employees’ remuneration are calculated based on the closing price of the Company’s shares on the day before the approval by the Board of Directors.

There were no differences between the amounts approved in the Board of Directors and those recognized in the 2024 and 2023 financial statements. Related information would be available at the Market Observation Post System Website.

(u) Other income

Other income
Provisions reversal of fire indemnity Insurance claim income, net Rental income and others	2024 $ - 431,455 8,810 $ 440,265	2023
		373 210,943 2,487
		213,803

(v) Financial instruments

• (i) Credit risk

1) Credit risk exposure

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

2) Concentration of credit risk

As of December 31, 2024 and 2023, there were seven and five major customers, respectively, that accounted for 75% and 76%, respectively, of notes and accounts receivable. Thus, credit risk is significantly centralized. In order to minimize credit risk, the Company periodically evaluates the major clients’ financial positions and the possibility of collecting notes and accounts receivables to ensure the uncollectible amount is recognized appropriately as loss allowance.

(Continued)

47

SCI PHARMTECH, INC. Notes to the Financial Statements

3) Receivables and debt securities

• a) For credit risk exposure of notes and accounts receivable, please refer to note 6(d).

• b) Other financial assets at amortized cost include other receivables and time deposits. The counterparties of the time deposits held by the Company are the financial institutions with investment grade credit ratings. Therefore, the credit risk is considered to be low.

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, excluding estimated interest payments:

Carrying amount December 31, 2024 Non-derivative financial liabilities: Short-term borrowings $ 100 Notes and accounts payable 58,437 Lease liabilities (including current and non-current) 91,126 Other payables 193,155 Payables on equipment and construction 155,325 Long-term borrowings (including current portion) 981,448 Guarantee deposits received 228 $ 1,479,819 December 31, 2023 Non-derivative financial liabilities: Short-term borrowings $ 175,000 Notes and accounts payable 44,251 Lease liabilities (including current and non-current) 84,821 Other payables 169,346 Payables on equipment and construction 68,840 Long-term borrowings (including current portion) 862,670 $ 1,404,928	Contractual cash flows (100) (58,437) (128,383) (193,155) (155,325) (1,006,400) (228) (1,542,028) (175,404) (44,251) (121,967) (169,346) (68,840) (898,412) (1,478,220)	Within a year (100) (58,437) (5,139) (193,155) (155,325) (418,262) - (830,418) (175,404) (44,251) (4,434) (169,346) (68,840) (32,789) (495,064)	1 ~ 2 years - - (4,605) - - (366,958) - (371,563) - - (3,601) - - (409,607) (413,208)	Over 2 years - - (118,639) - - (221,180) (228) (340,047) - - (113,932) - - (456,016) (569,948)

The Company is not expecting that the cash flows included in the maturity analysis could

(Continued)

48

SCI PHARMTECH, INC. Notes to the Financial Statements

occur significantly earlier or at significantly different amount.

• (iii) Currency risk

• 1) Exposure to foreign currency risk

The Company’s significant exposure to foreign currency risk was as follow:

Foreign currency: in thousands of dollars

Financial assets Monetary items USD EUR Financial liabilities Monetary items USD	December 31, 2024	December 31, 2024	December 31, 2024	December 31, 2023 Foreign currency Exchange rate NTD 11,320 30.655 347,015 303 33.78 10,235 633 30.655 19,405	December 31, 2023 Foreign currency Exchange rate NTD 11,320 30.655 347,015 303 33.78 10,235 633 30.655 19,405
	Foreign currency	Exchange rate	NTD		Exchange rate NTD 30.655 347,015 33.78 10,235 30.655 19,405
	$ 12,675 1,054 631	32.735 33.94 32.735	414,916 35,773 20,656	11,320 303 633

• 2) Sensitivity analysis

The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, loans and borrowings, accounts payable, accrued expenses and other payables that are denominated in foreign currency.

The analysis assumes that all other variables remain constant. A strengthening (weakening) 1% of the functional currency against each foreign currency as of December 31, 2024 and 2023 would have affected the net profit before tax increased or decreased $4,300 and $3,378, respectively, for the years ended December 31, 2024 and 2023. The analysis is performed on the same basis for both periods.

• 3) Foreign exchange gain and loss on monetary items

Since the Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2024 and 2023, foreign exchange gain (loss) (including realized and unrealized portions) amounted to $22,597 and $2,369, respectively.

(iv) Interest rate analysis

The details of financial assets and liabilities exposed to interest rate risk were as follows:

Financial assets	Carrying amount
	December 31, 2024 December 31, 2023 $ 119,278 900,104

(Continued)

49

SCI PHARMTECH, INC. Notes to the Financial Statements

Financial liabilities 982,208 1,041,572

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 0.25% when reporting to management internally, which also represents the Company management’s assessment of the reasonably possible interest rate change.

If the interest rate had increased or decreased by 0.25%, the Company's net profit before tax would have decreased or increased by $2,157 and $354, respectively, for the years ended December 31, 2024 and 2023, with all other variable factors remaining constant. This is mainly due to the Company’s bank savings and borrowings with variable interest rates.

(i) Others market price risks

For the years ended December 31, 2024 and 2023, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for both analysis, and assuming that the other variables were unchanged, the effects on the comprehensive income were as follows:

Price of securities at the reporting date Increasing 5% Decreasing 5%	2024 Other comprehensive income after tax Profit or loss before tax $ 4,071 5,519 $ (4,071) (5,519)	2023 Other comprehensive income after tax Profit or loss before tax 4,841 4,450 (4,841) (4,450)
	Other comprehensive income after tax $ 4,071 $ (4,071)	Other comprehensive income after tax 4,841 (4,841)

(v) Fair value

1) Fair value hierarchy

The fair value of financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income are measured on a recurring basis. The carrying amount and fair value of the Company’ s 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:

Financial assets at fair value through profit or loss Non-derivative financial assets mandatorily measured at fair value through profit or loss		December 31, 2023	December 31, 2023	December 31, 2023
	Book value $ 110,374		Fair value
		Level 1 110,374	Level 2 -	Level 3 Total - 110,374

(Continued)

50

SCI PHARMTECH, INC. Notes to the Financial Statements

Financial assets at fair value through other comprehensive income Listed stocks Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Refundable deposits (recognized as other non- current assets) Subtotal Total Financial liabilities measured at amortized cost Short-term borrowings Notes and accounts payable Lease liabilities (including current and non- current) Other payables Payables on equipment and construction Long-term borrowings (including current portion) Guarantee deposits received (recognized as other non-current liabilities) Total Financial assets at fair value through profit or loss Non-derivative financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Listed stocks Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Refundable deposits (recognized as other non- current assets) Subtotal Total Financial liabilities measured at amortized cost Short-term borrowings Notes and accounts payable Lease liabilities (including current and non- current)		December 31, 2023	December 31, 2023	December 31, 2023
	Book value 81,427 568,278 289,514 1,417 859,209 $ 1,051,010 $ 100 58,437 91,126 193,155 155,325 981,448 228 $ 1,479,819		Fair value
		Level 1 Level 2 Level 3 Total 81,427 - - 81,427 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - December 31, 2023
	Book value $ 88,998 96,814 935,370 307,369 151 1,120 1,244,010 $ 1,429,822 $ 175,000 44,251 84,821		Fair value
		Level 1 88,998 96,814 - - - - - - -	Level 2 - - - - - - - - -	Level 3 Total - 88,998 - 96,814 - - - - - - - - - - - - - - (Continued)

51

SCI PHARMTECH, INC. Notes to the Financial Statements

Others payables Payables on equipment and construction Long-term borrowings (including current portion) Total			December 31, 2023	December 31, 2023	December 31, 2023
				Fair value
			Level 1 - - -	Level 2 - - -	Level 3 Total - - - - - -

• 2) Valuation techniques for financial instruments not measured at fair value

The Company’s valuation techniques and assumptions used for financial instruments not measured at fair value were as follows:

• a) Financial assets and liabilities measured at amortized cost

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

• 3) Valuation techniques for financial instruments measured at fair value

• a) Non-derivative financial instruments

Financial instruments trade in active markets is based on quoted market prices. The quoted price of a financial instrument obtained from main exchanges and on-therun bonds from Taipei Exchange can be used as a base to determine the fair value of the listed companies’ equity instrument and debt instrument of the quoted price in an active market.

If a quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have a quoted price in an active market. If a financial instrument is not in accord with the definition mentioned above, then it is considered to be without a quoted price in an active market. In general, market with low trading volume or high bid-ask spreads is an indication of a non-active market.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

The measurement of fair value of a non-active market financial instruments held by the Company which do not have quoted market prices are based on the comparable market approach, with the use of key assumptions of price-book ratio multiple or earnings multiple of comparable listed companies as its basic measurement. These assumptions have been adjusted for the effect of discount without the marketability

(Continued)

52

SCI PHARMTECH, INC. Notes to the Financial Statements

of the equity securities.

4) Transfers between levels

The Company holds investment in equity shares, which are classified as financial assets at fair value through other comprehensive income, with the fair value of $81,427 and $96,814 as of December 31, 2024 and 2023, respectively.

In June, 2023, one of the above financial assets, Sunny Pharmtech Inc., listed its equity shares on an exchange and became publicly quoted on an active market. Furthermore, the degree of the stock trading activity of Energenesis, an emerging company, meets the definition of an active market. Therefore, the fair value measurement was transferred from Level 3 to Level 1 of the fair value heirarchy as of June 30, 2023, and had been fully disposed in the second half of 2023. In 2024, the Company did not have any transfer between levels of fair value.

• 5) Reconciliation of Level 3 fair values

January 1, 2023 Total gains and losses recognized: In profit or loss In other comprehensive income Reclassification Disposal December 31, 2023	Fair value through other comprehensive income Unquoted equity instruments $ 66,723 - 241,563 (241,377) (66,909) $ -

• (w) Financial risk management

• (i) Overview

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

• 1) credit risk

• 2) liquidity risk

• 3) market risk

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

• (ii) Structure of risk management

(Continued)

53

SCI PHARMTECH, INC. Notes to the Financial Statements

The Company operations are affected by a variety of financial risks, the risks including market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s financial risk management focus on uncertainty in the financial market to avoid hidden difficulty at the financial statement and financial performance of the Company. The Company’s finance department carried out risk management according to the dealer’s authority approved by Board of Directors. The Company’ s financial department maintain close communication with operation department in charge of identifying, evaluating, avoiding financial risk.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities.

1) Accounts receivable and other receivables

The Company’s finance department has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’ s credit limits are offered. Credit limits are established for each customer, which represent the maximum open amount without requiring approval from the finance department and are reviewed periodically. Customers that fail to meet the Company’ s benchmark creditworthiness may transact with the Company only on a prepayment basis.

The Company’ s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk. The Company’s customers are mainly from the pharmaceutical industry. In order to mitigate account receivable credit risk, the Company constantly assesses the financial status of the customers, and requests the customers to provide guarantee or security if necessary. The Company regularly accesses the collectability of accounts receivable and recognizes allowance for accounts receivable. The impairment losses are always within management’s expectation.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including customer profile, operating and financial status, payment records and the degree of cooperation. Customers that are graded as “ high risk” are placed on a restricted customer list and monitored by the finance department more strictly, and the transactions are made on a more cautious way.

The Company set the allowance for bad debt account to reflect the estimated losses for trade, other receivables, and investment. The allowance for bad debt account consists of specific losses relating to individually significant exposure and the unrecognized losses arising from similar assets groups. The allowance for bad debt account is based on historical collection record of similar financial assets.

• 2) Investment

The exposure to credit risk for the bank deposits, fixed income investments and other financial instruments is measured and monitored by the Company’s finance department.

(Continued)

54

SCI PHARMTECH, INC. Notes to the Financial Statements

The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

• 3) Guarantees

The Company’ s policy is to provide financial guarantees to the entities listed in the policy. The guarantees provided by the Group, please refer to note 7 and note 13(a).

(iv) Liquidity risk

The Company manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Company’s management supervises the banking facilities and ensures in compliance with the terms of the loan agreements.

Please refer to note 6(i) and note 6(j) for unused short-term and long-term bank facilities as of December 31, 2024 and 2023.

• (v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’ 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.

• 1) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Company’s entities, primarily the New Taiwan Dollars (NTD). The currencies used in these transactions are denominated in NTD and USD.

The Company pays attention to changes in exchange rates and uses forward exchange contracts to hedge its currency risk. The Company’ s risk management policy avoids currency risk by fair value hedge.

As for other monetary assets and liabilities denominated in other foreign currencies, when short-term imbalance takes place, the Company buys or sells foreign currencies at spot rate to ensure that the net exposure is kept on an acceptable level.

• 2) Interest rate risk

The Company evaluates the changes in market interest rates at any time, and establishes relationships with financial institutions to strive for the most suitable interest rate in a timely manner, and use it with short-term and long-term financing lines to reduce interest expenses.

• (x) Capital management

The Company’s objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders, to maintain the interest of other related parties, and to

(Continued)

55

SCI PHARMTECH, INC. Notes to the Financial Statements

maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liability.

The Company use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt.

The Company’s capital management strategy is to maintain a debt-to-equity ratio of less than 30% in December 31, 2024 and 2023. The ratio of debt to capital in December 31, 2024 and 2023, is as follows:

Total loan Less: cash and cash equivalents Net debt Total equity Debt-to-equity ratio	December 31, 2024 December 31, 2023 $ 982,208 1,041,572 568,278 935,370 $ 413,930 106,202 $ 5,476,932 5,099,953 % 8 % 2	December 31, 2024 December 31, 2023 $ 982,208 1,041,572 568,278 935,370 $ 413,930 106,202 $ 5,476,932 5,099,953 % 8 % 2
		1,041,572 935,370
		106,202
		5,099,953
		% 2

• (y) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow for the years ended December 31, 2024 and 2023, were as follows:

• (i) For the acquisition of right-of-use assets by lease for the years ended December 31, 2024 and 2023, please refer to note 6(h).

• (ii) Reconciliation of liabilities arising from financing activities for the years ended December 31, 2024 and 2023, were as follows:

Short-term borrowings Long-term borrowings (including current portion) Lease liabilities Guarantee deposits received	January 1, 2024 $ 175,000 862,670 84,821 - $ 1,122,491	Cash flows (174,900) 115,536 (3,411) 228 (62,547)	Non-cash	changes Other - 3,242 (239) - 3,003	December 31, 2024
			Acquisition - - 9,955 - 9,955
					100 981,448 91,126 228
					1,072,902

(Continued)

56

SCI PHARMTECH, INC. Notes to the Financial Statements

Short-term borrowings Long-term borrowings (including current portion) Lease liabilities	January 1, 2023 $ 112,000 432,356 77,978 $ 622,334	Cash flows 63,000 430,805 (2,923) 490,882	Non-cash	changes Other - (491) - (491)	December 31, 2023
			Acquisition - - 9,766 9,766
					175,000 862,670 84,821
					1,122,491

(7) Related-party transactions:

• (a) Parent company and ultimate controlling party

Mercuries & Associates Holding Ltd. (Mercuries) is both the parent company of the consolidated entity and the ultimate controlling party of the Company, holding 29.78% of the Company’ s outstanding shares. It has issued the consolidated financial statements available for public use.

• (b) Names and relationship with related parties:

Name of related party Relationship with the Company Yushan Pharmaceuticals, Inc. (Yushan) The subsidiary of the Company Framosa Co., Ltd. (Framosa) The associate of the Company HoneyBear Biosciences, Inc. (HoneyBear) Originally the associate of Yushan Pharmaceuticals, Inc, it has been identified as an associate of the Company and Yushan since August 2024.

Weichyun Wong

The chairman of the Company

• (c) Significant transaction with related parties

• (i) Sales

The amounts of sales by the Company to related parties were as follow:

2024 Associate $ -	2023
	10,000

The were no comparative sales prices between the related parties and other customers, and the payment term was 30 days. The payment terms have no significant differences between the related parties and other customers. As of December 31, 2023, all the above transaction amount have been received.

• (ii) Lease

• 1) Lessee

The Company rented lands from its subsidiary, the total value of the contract after

(Continued)

57

SCI PHARMTECH, INC. Notes to the Financial Statements

remeasured was $80,461. The rental fee is determined based on nearly and rental rates. Due to the rent adjustment, the total value of the contract increased to $82,756 in 2024. The details of the above lease transactions were as follows:

Subsidiary Subsidiary	Lease liabilities Interest expense December 31, 2024 December 31, 2023 2024 2023 $ 82,286 80,017 1,355 1,310 Refundable deposits received (recorded as other non-current assets) December 31, 2024 December 31, 2023 $ 200 200	Lease liabilities Interest expense December 31, 2024 December 31, 2023 2024 2023 $ 82,286 80,017 1,355 1,310 Refundable deposits received (recorded as other non-current assets) December 31, 2024 December 31, 2023 $ 200 200	Lease liabilities Interest expense December 31, 2024 December 31, 2023 2024 2023 $ 82,286 80,017 1,355 1,310 Refundable deposits received (recorded as other non-current assets) December 31, 2024 December 31, 2023 $ 200 200	Interest expense	Interest expense	Interest expense
	December 31, 2024 $ 82,286					2023
						1,310
			December 31, 2024 December 31, 2023 $ 200 200
					200

2) Lessor

The Company rented out office for related party. The details of the above lease transactions are as follows:

Rental income

		Rental income	Rental income
Associate Associate		(recorded as other income)		Other receivables December 31, 2024 December 31, 2023 - - Guarantee deposits received (recorded as other non-current liabilities)	Other receivables
	2024 $ 617		2023			December 31, 2023
			400
				December 31, 2024 December 31, 2023 $ 228 -
						-

(iii) Property transactions

The Company entrusted Framosa with the construction of its wastewater treatment equipment with the total contract price is $248,818 (before tax). As of December 31, 2024 and 2023, the amounts recognized in construction in progress were $101,021 and $90,238, respectively. As of December 31, 2024, all the above transaction price have been paid.

(iv) Guarantee

Associate- Framosa Please refer to note 13(a)(ii) for the details.	December 31, 2024 $ 400,000	December 31, 2023
		400,000

(Continued)

58

SCI PHARMTECH, INC. Notes to the Financial Statements

(v) Others

The title deed of a certain portion of the land was registered in the name of Mr. Weichyun Wong due to certain legal requirements for the years ended December 31, 2024 and 2023. Please refer to note 6(g).

(d) Key management personnel compensation

Salary and other short-term employee benefits Share-based payment	2024 $ 23,387 - $ 23,387	2023
		21,768 1,326
		23,094

Please refer to 6(q) for further explanations related to share-based payment transaction.

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Assets Land Building	Subject	December 31, 2024 December 31, 2023 $ 42,736 42,736 2,056 2,315 $ 44,792 45,051	December 31, 2024 December 31, 2023 $ 42,736 42,736 2,056 2,315 $ 44,792 45,051
	Pledged as collaterals 〃		42,736 2,315
			45,051

(9) Commitments and contingencies:

• (a) As of December 31, 2024 and 2023, the unused balance of the Company's outstanding standby letters of credit amounted to $19,154 and $35,813, respectively.

• (b) The significant outstanding purchase commitments for property, plant and equipment were as follows:

follows:
Acquisitions of property, plant and equipment	December 31, 2024 December 31, 2023 $ 425,423 614,765
		614,765

(10) Losses due to major disasters:

A major fire occurred on December 20, 2020, and caused damage to some of the Company's buildings, equipment, construction in progress and inventories, and spread to several nearby plants, resulting in damage to their property and interruption of their operations. In 2020, the Company derecognized damaged assets, including buildings, equipment and construction in progress and inventories and estimated the amount of fire indemnity for the nearby companies.

The Company is currently in the process of negotiating with the above-mentioned damaged companies for fire indemnity payments. For the indemnity payment, please refer to note 6(m) for the details. As of December 31, 2023, the indemnity payment had been fully completed.

(Continued)

59

SCI PHARMTECH, INC. Notes to the Financial Statements

The Company has entered into related property insurance and public liability insurance contracts, wherein it received insurance claims progressively from 2021. For the years ended December 31, 2024 and 2023, the Company received insurance claim income amounting to $431,455 and $210,943, respectively, which was recorded under other income, please refer to note 6(u). The above-mentioned claims have all been received.

(11) Subsequent events: None.

(12) Other:

The followings are the summary statement of current period employee benefits, depreciation and amortization expenses by function:

By function By item	2024	2024	2024	2023	2023	2023
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	187,550 17,304 7,864 - 4,339 199,372 4,138	84,146 5,229 2,577 5,500 9,359 27,698 4,244	271,696 22,533 10,441 5,500 13,698 227,070 8,382	159,953 13,784 6,122 - 3,574 110,090 4,157	86,181 4,814 2,209 3,936 7,687 28,352 4,278	246,134 18,598 8,331 3,936 11,261 138,442 8,435

For the years ended December 31, 2024 and 2023, the information on the number of employees and employee benefit expense of the Company is as follows:

Number of employees Number of directors (non-employees) Average employee benefit expenses Average salaries expenses Average employee salary expense adjustment Remuneration for supervisors	2024 275 6 $ 1,184 $ 1,010 % (6.48) $ -	2023
		233
		6
		1,247
		1,080
		-

The Company’ s salary and remuneration policy (including directors, managers and employees) is as follows:

• (a) Directors: the remuneration of the directors is based on the policy of the Company’s Articles of Incorporation.

The directors’ remuneration is less than 2% of the profit in according to the Articles of Incorporation. The reasonable remuneration is determined after considering the Company's operating results, and each director’s contribution. In addition, considering that independent directors are also the members of the audit and remuneration committees, the workload is more heavy, therefore, the independent directors have higher director remuneration than other members of the Board of

(Continued)

60

SCI PHARMTECH, INC. Notes to the Financial Statements

Director.

• (b) Managers and employees:

• (i) The Company’ s salary and remuneration policy is to provide a competitive salary level, to recruit and retain key managers and employees that are required for the Company's operations, and to achieve the Company's steady growth and sustainable development.

• (ii) Employee remuneration includes monthly salary, performance bonus, year-end bonus and remuneration based on the profit status of the current year.

• (iii) The remuneration of managers shall be handled in accordance with the "policies, systems, standards and structure of manager’s performance goals and salary remuneration".

(13) Other disclosures:

• (a) 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 Company for the year ended December 31, 2024:

• (i) Loans to other parties: None.

• (ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements e	Maximum amount for guarantees and ndorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	The Company	Framosa	The associate of the Company	547,693	400,000	400,000	196,158	-	% 7.30	2,190,772	N	N	N

• Note 1 ： The total amount of endorsements and guarantees provided by the Company to third parties shall not exceed 40% of the latest net worth as reported in the financial statements. The maximum limit for endorsements and guarantees provided to a single enterprise shall not exceed 10% of the Company's net worth. In addition the total amount of endorsements and guarantees provided by the Company and subsidiaries to third parties shall not exceed 40% of the latest net worth as reported in the financial statements. The maximum limit for endorsements and guarantees provided to a single enterprise shall not exceed 10% of the Company's net worth.

• (iii) Securities held as of December 31, 2024 (excluding investment in subsidiaries, associates and joint ventures):

							Unit: thousa	nd shares
Name of holder	Category and name of security	Relationship with company	Account title		Ending	balance		Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
The Company 〃 〃 〃 〃	Beneficiary Certificate (UPAMC James Bond Money Market Fund) Beneficiary Certificate (Nomura Taiwan Money Market) Stock (Cathay Financial Holding Co., Ltd. Preferred Stock A) Stock (CTBC Financial Holding Co., Ltd. Preferred Shares B) Stock (Shin Kong Financial Holding Co., Ltd. Preferred Shares A)	- - - - -	Current financial asset at fair value through profit or loss 〃 〃 〃 〃	2,367 2,363 50 333 148	41,170 40,094 3,050 20,813 5,247	- - - - -	41,170 40,094 3,050 20,813 5,247	- - - - -

(Continued)

61

SCI PHARMTECH, INC. Notes to the Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
〃	Stock (Energenesis Biomedical Co., Ltd.)	-	Financial assets at fair value through other comprehensive income	1,603	81,427	2.10 %	81,427	-

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock: None.

(v) Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock:

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter- party	Relationship with the Company	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	If the counter-party is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Buildings	2021.10.19	$ 630,000	$ 623,700	ECO Technical Services Co., Ltd.	None	Not applicable	Not applicable	Not applicable	-	Price negotiation	To expand production

(vi) Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock: None.

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of $100 million or 20% of the capital stock: None.

• (viii) Receivables from related parties with amounts exceeding the lower of $100 million or 20% of the capital stock: None.

(ix) Trading in derivative instruments: None.

• (b) Information on investees:

The following is the information on investees for the year ended December 31, 2024 (excluding information on investees in Mainland China):

				Unit: thousand dollars/ thousand shares	Unit: thousand dollars/ thousand shares	Unit: thousand dollars/ thousand shares	Unit: thousand dollars/ thousand shares	Unit: thousand dollars/ thousand shares	Unit: thousand dollars/ thousand shares	Unit: thousand dollars/ thousand shares	Unit: thousand dollars/ thousand shares
Name of investor	Name of investee	Location	Main businesses and products	Original investment amount		Ending balance			Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2024	December 31, 2023	Shares	Percentage of ownership	Carrying value
The Company 〃 〃 Yushan Pharmaceuticals Inc.	Yushan Pharmaceuticals Inc. Framosa Co., Ltd. HoneyBear Biosciences, Inc. HoneyBear Biosciences, Inc.	R.O.C. R.O.C. R.O.C R.O.C.	The research and development, manufacture and sale of API Circular economy by purifying and utilizing used solvents Biotechnology services Biotechnology services	351,761 143,750 35,000 33,000	351,761 143,750 - 33,000	35,190 14,375 1,750 3,300	% 100 % 25 % 4.04 % 7.61	366,304 100,915 19,112 36,070	(1,432) (51,451) (57,519) (57,519)	(868) (15,900) (1,486) (6,346)

(c) Information on investment in mainland China: None.

(Continued)

62

SCI PHARMTECH, INC. Notes to the Financial Statements

• (d) Major shareholders:

Unit: shares

		Unit: shares
Shareholding Shareholders' Name	Shares	Percentage
Mercuries & Associates Holding Ltd.	35,590,777	% 29.78

(14) Segment information:

Please refer to the consolidated financial statements for the year ended December 31, 2024.

63

SCI PHARMTECH, INC.

STATEMENT OF CASH AND CASH

EQUIVALENTS

December 31, 2024

(Expressed in thousands of New Taiwan Dollars

and Foreign Currency)

	Item	Description		Amount
Cash	in hand		$	658
Checking accounts				266
Demand deposits		NTD		29,040
		Foreign currency (USD2,524, JPY14,126, EUR127 and others)		90,238
Time	deposits	NTD		230,010
		Foreign currency (USD 1,705)		55,818
Bill sold under
repurchase agreements				162,248
Total			$	568,278
Note:	The exchange rate	at balance sheet date was as follows:
	USD: 32.735
	JPY: 0.2079
	EUR: 33.94

64

SCI PHARMTECH, INC.

STAEMENTS OF NOTES AND ACCOUNTS

RECEIVABLE

December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Item Accounts receivable: TOWA PHARMACEUTICAL EUROPE, S. Produlab Pharma Production B.V Siegfried USA, LLC Taiwan Biotech Co., Ltd. Apotex Inc. - Signet AZAD Pharma AG Corden Pharma Bergamo S.p.A. Others (Note) Subtotal Less: allowance for uncollectible accounts Notes and accounts receivable, net	Description Amount Third parties operating income $ 63,637 〃 31,904 〃 31,007 〃 28,818 〃 23,746 〃 20,018 〃 16,781 〃 73,603 289,514 - $ 289,514

Note: The amount of individual client included in others does not exceed 5% of the account balance.

65

SCI PHARMTECH, INC.

STATEMENTS OF INVENTORIES

December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Item Finished goods Work in progress Raw materials Total

Cost $ 333,531 176,339 111,027 $ 620,897	Net realizable value
	641,343 176,339 112,728
	930,410

STATEMENTS OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS CURRENT

Please refer to note 13(a)(iii).

66

SCI PHARMTECH, INC.

CHANGES IN NON-CURRENT FINANCIAL ASSETS AT FAIR VALUE

THROUGH OTHER COMPREHENSIVE INCOME

For the year ended December 31, 2024

(Expressed in thousands of New Taiwan Dollars; thousands of share)

Investee Company Energenesis Biomedical Co., Ltd. Less: valuation adjustment Total	Beginning balance	Beginning balance	Transferred In	Transferred In	Transferred In	Increase Number of shares Amount - - - (15,387) (15,387)	Decrease Number of shares Amount - - - - -	Ending balance Number of shares Amount Collaterals or pledged assets 1,603 71,357 None - 10,070 ″ 81,427	Ending balance Number of shares Amount Collaterals or pledged assets 1,603 71,357 None - 10,070 ″ 81,427
	Number of shares	Amount $ 71,357 25,457 $ 96,814	Number of shares		Amount - - -	Number of shares - -	Number of shares - -	Number of shares
	1,603 -		- -					1,603 -

67

SCI PHARMTECH, INC.

CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

For the year ended December 31, 2024

(Expressed in thousands of New Taiwan Dollars; thousands of shares)

Investee company Accounted for using equity method: Yushan Pharmaceuticals Inc. Framosa Co., Ltd. HoneyBear Biosciences, Inc.	Beginning balance Number of shares Amount 35,190 $ 353,291 14,375 116,815 - - $ 470,106	Increase Number of shares Amount - - - - 1,750 35,000 35,000	Increase Number of shares Amount - - - - 1,750 35,000 35,000	Decrease Number of shares Amount - (542) (Note 1) - - - - (542)	Share of profit recognized (868) (15,900) (1,486) (18,254)	Changes in equity of associates and joint ventures accounted for using equity method 14,423 (Note 2) - (14,402) (Note 3) 21	Ending balance Number of shares Amount 35,190 366,304 14,375 100,915 1,750 19,112 486,331	Percentage of ownership % 100 % 25 % 4	Net value Collaterals or pledged assets 364,952 None 106,028 None 19,128 None
	Number of shares 35,190 14,375 -	Number of shares - - 1,750		Number of shares - - -			Number of shares 35,190 14,375 1,750

Note 1: It's a cash dividend of $542. Note 2: It's a percentage disproportion from its existing ownership percentage, the capital surplus to increase by $14,423. Note 3: It's a percentage disproportion from its existing ownership percentage, the capital surplus to decrease by $13,027, and the retained earnings to decrease by $1,375, respectively.

68

SCI PHARMTECH, INC.

CHANGES IN PROPERTY, PLANT AND

EQUIPMENT

For the year ended December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Please refer to note 6(g).

STATEMENT OF SHORT-TERM BORROWINGS

December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Creditor	Description Credit loans	Ending balance $ 100	Contract period 2024.3.14~ 2025.3.14	Interest rate 2.225%	Loan commitments 80,000	Collaterals or pledged assets Note None
Taiwan Business Bank

69

SCI PHARMTECH, INC.

STATEMENT OF LONG-TERM BORROWINGS

December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Creditor Mega Bank Shanghai Commercial and Savings Bank E.SUN Bank Less: deferred income	Loan commitments $ 1,000,000 110,000 130,000 1,240,000 - $ 1,240,000	Contract period 2022.2.25~ 2027.2.15 2022.11.25~ 2025.11.24 2023.9.28~ 2026.9.28	Collaterals Interest pledged rate assets 1.675% Property plant, and equipment 2.05% None 1.92% None	Amount Loan within Loan more than 1year than 1year 268,314 550,044 110,000 - 25,125 28,625 403,439 578,669 - (660) 403,439 578,009
				Loan within than 1year 268,314 110,000 25,125 403,439 - 403,439

70

SCI PHARMTECH, INC.

STATEMENT OF NOTES AND ACCOUNTS

PAYABLE

December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Vendor name Notes payable: MSIG Mingtai Insurance Others (Note) Accounts payable: Trans Chief Chemical Industry Co., Ltd. Nantong Kaixin Pharma Chemical Co., Ltd. Fenhe Chemical Co., Limited Takasago International Corporation Air Products San Fu Corporation KINGYORKER ENTERPRISE CO., LTD. Others (Note)	Description Amount Third parties operating cost $ 322 〃 28 350 Third parties operating cost 25,160 〃 8,540 〃 4,761 〃 4,132 〃 3,991 〃 3,087 〃 8,416 58,087 $ 58,437

Note: The amount of individual vendor included in others does not exceed 5% of the account balance.

71

SCI PHARMTECH, INC.

STATEMENT OF OTHER PAYABLES

December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Item Payroll payables and year-end bonuses payable Estimated expenses payable Expenses payable Others (Note) Total	Description Amount Payroll expenses for December 2024, estimated 2024 year-end bonuses, and employees and directors' remuneration $ 99,035 Groundwater pollution remediation fee 19,938 Liquid waste disposal fee 12,306 Utilities expense and freight 61,876 $ 193,155

Note: The amount of each item in others does not exceed 5% of the account balance.

STATEMENT OF OPERATING REVENUE

For the year ended December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Item API Intermediates Specialty Chemical	Quantity (thousand kilograms) Amount 293 $ 1,087,553 101 416,085 204 20,100 $ 1,523,738

72

SCI PHARMTECH, INC.

OPERATING COSTS

For the year ended December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Raw materials
Raw materials, beginning of year	$	128,920
Add: Purchases		465,163
Less: Raw materials, end of year (including raw materials in transit)		(149,380)
Department used		(50,480)
Write-off		(2,959)
Material consumption		391,264
Direct labor		85,516
Manufacturing expenses		560,636
Total Manufacturing costs		1,037,416
Add: Work in progress, beginning of year		100,571
Finished good transferred-in		755,788
Less: Work in progress, end of year		(200,876)
Work in progress used		(6,179)
Write-off		(2,214)
Cost of finished goods		1,684,506
Add: Finished goods, beginning of year		448,941
Less: Finished goods, end of year (including finished goods in transit)		(392,251)
Remanufacture		(755,788)
Transferred to operating expenses		(389)
Finished good used		(6,091)
Write-off		(30,787)
Costs of goods sold		948,141
Add: Allowance for inventory obsolescence and valuation loss (reversal gains)		(27,289)
The write-off of inventories		35,960
Unallocated production overhead		153,979
Others		2,282
Operating costs	$	1,113,073

73

SCI PHARMTECH, INC.

STATEMENT OF OPERATING EXPENSES

For the year ended December 31, 2024

(Expressed in thousands of New Taiwan Dollars)

Item Payroll expenses Professional service fees Depreciation Freight Consumables Repair and maintenance Import expenses Comission expenses Miscellaneous purchase Others (Note) Total	Selling expenses $ 11,234 334 725 17,882 309 121 - 9,980 20 33,547 $ 74,152	Administrative expenses 61,400 9,668 18,418 - 2,725 10,489 5,532 - 6,314 (21,175) 93,371	Research and development expenses
			19,589 1,643 8,555 - 2,495 4,434 - - 559 5,405
			42,680

Note: The amount of each item in others does not exceed 5% of the account balance.