SCI — Interim / Quarterly Report 2023

Nov 13, 2023

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Stock Code:4119

SCI PHARMTECH, INC. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Three Months Ended March 31, 2023 and 2022

Address: No.61, LN. 309, HAIHUN.RD., LUZHU DIST., TAOYUAN CITY 33856, TAIWAN (R.O.C) Telephone: (03)354-3133

The independent auditors’ review report and the accompanying consolidated 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’ review report and consolidated 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’ Review Report 4. Consolidated Balance Sheets 5. Consolidated Statements of Comprehensive Income 6. Consolidated Statements of Changes in Equity 7. Consolidated Statements of Cash Flows 8. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information

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KPMG

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Independent Auditors’ Review Report

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

Introduction

We have reviewed the accompanying consolidated balance sheets of SCI Pharmtech, Inc. and its subsidiaries as of March 31, 2023 and 2022, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2023 and 2022, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordance with the Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” of the Republic of China. A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the Standards on Auditing of the Republic of China and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As stated in Note 6(g), the other equity accounted investments of the SCI Pharmtech, Inc. and its subsidiaries in its investee companies of $139,320 thousand and $50,278 thousand as of March 31, 2023 and 2022, respectively, and its equity in net earnings (losses) on these investee companies of $(1,997) thousand and $(2,169) thousand respectively, were recognized solely on the financial statements prepared by these investee companies, but not reviewed by independent auditors.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the consolidated financial statements of certain equity accounted investee companies described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements, do not present fairly, in all material respects, the consolidated financial position of SCI Pharmtech, Inc. and its subsidiaries as of March 31, 2023 and 2022, and of its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2023 and 2022 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “ Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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

KPMG

Taipei, Taiwan (Republic of China) May 12, 2023

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated 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 review such consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ review report and the accompanying consolidated 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’ review report and consolidated financial statements, the Chinese version shall prevail.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with Standards on Auditing as of March 31, 2023 and 2022

SCI PHARMTECH, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2023, December 31, 2022, and March 31, 2022 (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(t)) 1206 Other receivables (notes 6(f) and 10) 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(g)) 1600 Property, plant and equipment (notes 6(h), 7 and 8) 1755 Right-of-use assets (note 6(i)) 1761 Investment property, land (notes 6(j) and 7) 1780 Intangible assets 1840 Deferred tax assets 1900 Other non-current assets (note 6(h)) Total assets	March 31, 2023 Amount % $ 99,605 2 97,401 2 254,530 5 141 - 521,057 10 60,985 1 1,033,719 20 63,212 1 139,320 3 3,449,235 66 610 - 228,012 4 52,468 1 167,252 3 82,533 2 4,182,642 80 $ 5,216,361 100	December 31, 2022 Amount % 166,828 3 97,545 2 173,565 4 31,101 1 513,430 10 59,929 1 1,042,398 21 66,723 1 141,317 3 3,193,144 64 1,013 - 228,012 5 54,582 1 167,252 4 66,098 1 3,918,141 79 4,960,539 100	March 31, 2022 Amount % 173,454 4 233,453 5 174,451 4 265,581 6 348,130 8 75,299 2 1,270,368 29 90,370 2 50,278 1 2,361,140 54 1,723 - - - 58,461 1 241,552 6 325,941 7 3,129,465 71 4,399,833 100 Liabilities and Equity Current liabilities: 2100 Total short-term borrowings (note 6(k)) 2170 Notes and accounts payable 2130 Current contract liabilities (note 6(t)) 2200 Other payables (note 6(m)) 2213 Payables on contractors and equipment 2230 Current tax liabilities 2250 Current provisions (notes 6(o) and 10) 2280 Current lease liabilities (note 6(n)) 2300 Other current liabilities (note 6(d)) Non-Current liabilities: 2541 Long-term borrowings (note 6(l)) 2580 Non-current lease liabilities (note 6(n)) 2570 Deferred tax liabilities 2630 Deferred income (note 6(l)) 2640 Provisions for employee benefits, non-current 2600 Total other non-current liabilities (note 7) Total liabilities Equity attributable to owners of parent (note 6(r)): 3100 Ordinary Share 3200 Capital surplus 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other components of equity Total equity Total liabilities and equity	March 31, 2023		December 31, 2022		March 31, 2022 Amount % 243,000 6 45,095 1 35,739 1 100,994 2 67,758 2 10,833 - 279,666 6 1,516 - 4,887 - 789,488 18 108,417 3 227 - 103,811 2 1,599 - 16,638 - - - 230,692 5 1,020,180 23 953,824 22 1,348,339 31 426,103 9 29,378 1 653,089 15 (31,080) (1) 3,379,653 77 4,399,833 100
				Amount %		Amount %
						112,000 2 48,636 1 31,773 1 296,017 6 160,591 4 3,862 - 111,384 2 828 - 5,224 - 770,315 16 432,356 9 195 - 103,811 2 4,108 - 19,530 - 1,000 - 561,000 11 1,331,315 27 953,824 19 1,357,127 27 431,874 9 48,929 1 892,197 18 (54,727) (1) 3,629,224 73 4,960,539 100

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with Standards on Auditing

SCI PHARMTECH, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2023 and 2022

(expressed in Thousands of New Taiwan Dollars, except for earnings per share)

4110 Sales revenue (note 6(t)) 5110 Cost of sales (notes 6(e), 6(p) and 12) 5900 Gross profit Operating expenses (notes 6(p) 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(v), 7 and 10) 7235 Gains (losses) on financial assets at fair value through profit or loss 7510 Interest expense (note 6(n)) 7590 Miscellaneous disbursements 7610 Losses on disposals of property, plant and equipment 7630 Foreign exchange gains (losses) 7770 Share of loss of associates and joint ventures accounted for using equity method, net (note 6(g)) 7900 Profit before tax 7950 Less: Income tax expenses (note 6(q)) 8200 Profit 8300 Other comprehensive income: 8310 Items that may not be reclassified subsequently to profit or loss: 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(q)) 8300 Other comprehensive income, net 8500 Total comprehensive income Earnings per share (note 6(s)): 9750 Basic earnings per share 9850 Diluted earnings per share

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with Standards on Auditing SCI PHARMTECH, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the three months ended March 31, 2023 and 2022

(expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2022 Profit for the three months ended March 31, 2022 Other comprehensive income for the three months ended March 31, 2022 Total comprehensive income for the three months ended March 31, 2022 Balance at March 31, 2022 Balance at January 1, 2023 Profit for the three months ended March 31, 2023 Other comprehensive income for the three months ended March 31, 2023 Total comprehensive income for the three months ended March 31, 2023 Balance at March 31, 2023				Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Other equity interest Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Total equity (48,929) 3,320,631 - 41,173 17,849 17,849 17,849 59,022 (31,080) 3,379,653 (54,727) 3,629,224 - 63,438 (3,511) (3,511) (3,511) 59,927 (58,238) 3,689,151	Other equity interest Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Total equity (48,929) 3,320,631 - 41,173 17,849 17,849 17,849 59,022 (31,080) 3,379,653 (54,727) 3,629,224 - 63,438 (3,511) (3,511) (3,511) 59,927 (58,238) 3,689,151
	Ordinary shares	Capital surplus		Retained earnings
				Legal reserve	Special reserve Unappropriated retained earnings
	$ 953,824 - - - $ 953,824 $ 953,824 - - - $ 953,824	1,348,339		426,103 - - - 426,103 431,874 - - - 431,874	29,378 - - - 29,378 48,929 - - - 48,929	611,916		(48,929) - 17,849 17,849 (31,080) (54,727) - (3,511) (3,511) (58,238)
		- -				41,173 -
		-				41,173
		1,348,339				653,089
		1,357,127				892,197
		- -				63,438 -
		-				63,438
		1,357,127				955,635

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with Standards on Auditing

SCI PHARMTECH, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2023 and 2022

(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 (gain) loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of loss of associates and joint ventures accounted for using equity method Losses due to (reversal of) major disasters Others Total adjustments to reconcile profit Changes in operating assets and liabilities: Increase in notes and accounts receivable Increase in inventories Decrease (increase) in other receivables and other current assets Decrease in contract liabilities (Decrease) increase in notes and accounts payable Decrease in other payable Decrease in provisions Increase (decrease) in other current liabilities Decrease in provision for employee benefits, non-current Total changes in operating assets and liabilities Total adjustments Cash flow from (used in) operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from (used in) operating activities Cash flows from (used in) investing activities: Disposal of financial assets designated at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Increase in prepayments of property, plant and equipment Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Proceeds from long-term borrowings Payment of lease liabilities Net cash flows from (used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with Standards on Auditing as of March 31, 2023 and 2022

SCI PHARMTECH, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

March 31, 2023 and 2022

(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. The consolidated financial statements of the Company comprise the Company and its subsidiaries (together referred to as the “Group” and individually as the “ Group entities” ). Please refer to note 4(b) for related information of the Group primarily business activities. Mercuries & Associates, Holding Ltd. is the parent company of the Company.

(2) Approval date and procedures of the consolidated financial statements

These consolidated financial statements were authorized for issuance by the Board of Directors on May 12, 2023.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2023:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Non- current Liabilities with Covenants”

Content of amendment Effective date per IASB Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to defer settlement for at least 12 months after the reporting date. The amendments has removed the requirement for a right to be unconditional and instead now requires that a right to defer settlement must exist at the reporting date and have substance. The amendments clarify how a company classifies a liability that can be settled in its own shares – e.g. convertible debt. January 1, 2024 After reconsidering certain aspects of the 2020 amendments1, new IAS 1 amendments clarify that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants) do not affect a liability’ s classification at that date. However, when non-current liabilities are subject to future covenants, companies will now need to disclose information to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date. January 1, 2024

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

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “

• ●IFRS16 “Requirements for Sale and Leaseback Transactions”

(4) Summary of significant accounting policies:

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the preparation and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed and issued into effect by FSC, and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC (hereinafter referred to IFRS endorsed by the FSC) for a complete set of the annual consolidated financial statements.

Except the following accounting policies mentioned below, the significant accounting policies adopted in the consolidated financial statements are the same as those in the consolidated financial statement for the year ended December 31, 2022. For the related information, please refer to note (4) of the consolidated financial statements for the year ended December 31, 2022.

• (b) Basis of Consolidation

Name of investor	Name of subsidiary	Principal activity The research and development, manufacture and sale of API	Shareholding	Shareholding
			March 31, 2023 % 100.00	December 31, 2022 March 31, 2022 % 100.00 % 100.00
The Company	Yushan Pharmaceuticals Inc. (Yushan)

(c) Employee benefits

The pension cost in the interim period was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year.

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of International Financial Reporting Standards 34, Interim Reporting.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period by the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

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

The preparation of the consolidated financial statements in conformity with the Regulations and IFRSs (in accordance with IAS 34 “Interim Financial Reporting” and endorsed by the FSC) requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, 2022. For the related information, please refer to note 5 of the consolidated financial statements for the year ended December 31, 2022.

(6) Explanation of significant accounts:

Except for the following disclosures, there is no significant difference as compared with those disclosed in the consolidated financial statements for the year ended December 31, 2022. Please refer to note 6 of the 2022 annual consolidated financial statements.

(a) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Time deposits	March 31, 2023 $ 541 68,657 30,407 $ 99,605	December 31, 2022 743 74,369 91,716 166,828	March 31, 2022
			570 144,884 28,000
			173,454

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

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

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Mandatorily measured at fair value through profit or loss: Non-derivative financial assets Beneficiary certificate Stocks listed on domestic markets Total	March 31, 2023 $ 1,042 96,359 $ 97,401	December 31, 2022 1,039 96,506 97,545	March 31, 2022
			36,486 196,967
			233,453

The Group did not provide any aforementioned financial assets as collateral for its loans as of March 31, 2023, December 31 and March 31, 2022, respectively.

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

Financial assets at fair value through other comprehensive income: Emerging stocks and unlisted stocks in domestic markets	March 31, 2023 $ 63,212	December 31, 2022 66,723	March 31, 2022
			90,370

The Group designated the investments shown above as equity securities as at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term for strategic purposes.

No strategic investments were disposed for the three months ended March 31, 2023 and 2022, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

Please refer to note 6(w) for market risk of the Group.

As of March 31, 2023, December 31 and March 31, 2022, the Group did not provide any aforementioned financial assets as collateral for its loans.

(d) Notes and accounts receivable

Notes receivable Accounts receivable Less: Loss allowance	March 31, 2023 $ 536 253,994 - $ 254,530	December 31, 2022 - 173,565 - 173,565	March 31, 2022
			60 174,391 -
			174,451

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables, 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 91 to 180 days past due 181 to 270 days past due 271 to 360 days past due More than 360 days past due		March 31, 2023
	Gross carrying amount $ 247,006 - - 2,745 - - - 4,779 (note) $ 254,530	Rate of loss allowance provision - - - - - - - -	Loss allowance provision
			- - - - - - - -
			-

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 271 to 360 days past due More than 360 days past due	December 31, 2022	December 31, 2022
	Gross carrying amount $ 134,842 30,762 535 2,709 - - - 4,717 (note) $ 173,565	Rate of loss allowance provision - - - - - - - -	Loss allowance provision
			- - - - - - - -
			-

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated 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 271 to 360 days past due More than 360 days past due		March 31, 2022
	Gross carrying amount $ 110,471 21,250 38,069 60 - - - 4,601 (note) $ 174,451	Rate of loss allowance provision - - - - - - - 100%	Loss allowance provision
			- - - - - - - -
			-

Note: The account receivable has already estimated as refund liabilities for short-term sales discounts and allowances. (recorded as other current liabilities)

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

Balance at January 1 (Balance at March 31)	For the three months ended March 31,	For the three months ended March 31,
	2023 $ -	2022
		-

As of March 31, 2023, December 31 and March 31, 2022, the Group did not provide any aforementioned notes and accounts receivable as collaterals for its loans.

• (e) Inventories

Raw materials Work in progress Finished goods	March 31, 2023 $ 130,719 62,000 328,338 $ 521,057	December 31, 2022	March 31, 2022
		195,009 45,405 273,016 513,430	122,245 52,358 173,527
			348,130

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The write-down of inventories to net realizable value were recorded as cost of sales. The details are as following:

Inventory that has been sold Write-down of inventories Loss on disposal of inventories Unallocated production overheads	For the three months ended March 31, 2023 2022 $ 190,323 121,491 9,634 826 1,381 - 17,429 10,544 $ 218,767 132,861	For the three months ended March 31, 2023 2022 $ 190,323 121,491 9,634 826 1,381 - 17,429 10,544 $ 218,767 132,861
		2022 121,491 826 - 10,544
		132,861

As of March 31, 2023, December 31 and March 31, 2022, the Group did not provide any inventories as collaterals for its loans.

• (f) Other receivables

Insurance claim receivable Others	March 31, 2023 $ - 141 $ 141	December 31, 2022 30,950 151 31,101	March 31, 2022
			265,539 42
			265,581

(g) Investments accounted for using equity method

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

Associates	March 31, 2023 $ 139,320	December 31, 2022 141,317	March 31, 2022
			50,278

(i) There was no significant change for investments accounted for using equity method for the period from January 1 to March 31, 2023 and 2022. For the related information, please refer to note 6(g)of the consolidated financial statements for the year ended December 31, 2022.

(Continued)

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SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Attributable to the Group: Profit (loss) Other comprehensive income (loss) Total comprehensive income (loss)		For the three months ended March 31, 2023 2022 (1,997) (2,169) - - (1,997) (2,169)
		2023 (1,997) - (1,997)

• (iii) Pledge to secure

The Group did not provide any investment accounted for using equity method as collaterals for its loans.

• (iv) The investments were accounted for using the equity method, and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have not been reviewed.

(h) Property, plant and equipment

Cost: Balance on January 1, 2023 Additions Transferred in (out) Balance on March 31, 2023 Balance on January 1, 2022 Additions Disposal and derecognitions Transferred in (out) Balance on March 31, 2022	Land $ 687,883 - - $ 687,883 $ 825,680 - - 90,215 $ 915,895	Buildings and construction	Buildings and construction	Machinery and equipment	Machinery and equipment		Office equipment		Others equipment	Prepayment for equipment and construction in progress 1,323,065 210,463 28,805 1,562,333 633,296 248,923 - (74,816) 807,403	Total 3,896,509 220,132 65,288
			700,232 - -		1,116,895 9,669 36,237		55,466 - 246		12,968 - -
			700,232		1,162,801		55,712		12,968		4,181,929
			684,472 - - 1,181				33,939 90 - 412		12,968 - - -		2,733,498 250,986 (3,854) 27,267
			685,653				34,441		12,968		3,007,897

(Continued)

17

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Depreciation and impairments loss: Balance on January 1, 2023 Depreciation Balance on March 31, 2023 Balance on January 1, 2022 Depreciation Disposals and derecognitions Balance on March 31, 2022 Carrying amounts: Balance on January 1, 2023 Balance on March 31, 2023 Balance on January 1, 2022 Balance on March 31, 2022	Land	Buildings and construction 287,084 6,138 293,222 264,840 5,849 - 270,689 413,148 407,010 419,632 414,964	Buildings and construction 287,084 6,138 293,222 264,840 5,849 - 270,689 413,148 407,010 419,632 414,964	Machinery and equipment	Machinery and equipment		Office equipment		Others equipment	Prepayment for equipment and construction in progress - - - - - - - 1,323,065 1,562,333 633,296 807,403	Total 703,365 29,329 732,694 635,501 14,701 (3,445) 646,757 3,193,144 3,449,235 2,097,997 2,361,140
	$ - - $ - $ - - - $ - $ 687,883 $ 687,883 $ 825,680 $ 915,895		287,084 6,138		385,715 21,701		23,635 1,230		6,931 260
			293,222		407,416		24,865		7,191
			264,840 5,849 -				19,688 872 -		5,892 260 -
			270,689				20,560		6,152
			413,148				31,831		6,037
			407,010				30,847		5,777
			419,632				14,251		7,076
			414,964				13,881		6,816

Except for the following, the information on significant transactions of the Group's property, plant and equipment, please refer to note 6(h) to the consolidated financial statements for the year ended December 31, 2022.

• (i) In May 2013, the Group purchased a piece of land for the construction of its plant 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 Group is the actual owner of the land.

• (ii) As of March 31, 2023, December 31 and March 31, 2022, the Group’ s prepayments for equipment purchases amounted to $81,723, $65,288 and $323,131, respectively, which were recorded as other non-current assets.

• (iii) As of March 31, 2023, December 31 and March 31, 2022, part of the property, plant and equipment of the Group had been pledged as collateral. Please refer to note 8 for the details.

(Continued)

18

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Right-of-use assets

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

Cost: Balance on January 1, 2023 Reductions Balance on March 31, 2023 Balance on January 1, 2022 (Same as balance on March 31, 2022) Accumulated depreciation: Balance on January 1, 2023 Depreciation for the period Reductions Balance on March 31, 2023 Balance on January 1, 2022 Depreciation for the period Balance on March 31, 2022 Carrying amount: Balance on January 1, 2023 Balance on March 31, 2023 Balance on January 1, 2022 Balance on March 31, 2022

Amount $ 4,922 (868) $ 4,054 $ 4,406 $ 3,909 403 (868) $ 3,444 $ 2,272 411 $ 2,683 $ 1,013 $ 610 $ 2,134 $ 1,723

• (j) Investments property

• (i) Investment property, with a carrying amount of $228,012, with lease that has fixed rental income and contains an initial non-cancellable lease term of 50 years (extendable upon maturity) based on the agreement, comprises lands owned by the Group.

• (ii) There were no significant additions, disposal, or recognition and reversal of impairment losses of investment property for the three months ended March 31, 2023 and 2022. For related information, please refer to note 6(j) of the consolidated financial statements for the year ended December 31, 2022.

• (iii) There were no significant changes in the fair value of the Group’ s investment property as disclosed in note 6(j) of the consolidated financial statements for the year ended December 31, 2022.

• (iv) The Group did not provide any investment properties as collaterals for its loan.

(Continued)

19

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(k) Short-term borrowings

The details of short-term borrowings were as following:

Unsecured bank loans Secured bank loans Total Unused short-term credit lines Range of interest rates	March 31, 2023 $ 395,000 30,000 $ 425,000 $ 365,000 1.6%~1.975%	December 31, 2022 112,000 - 112,000 658,000 1.48%~1.58%	March 31, 2022
			177,000 66,000
			243,000
			117,000
			1.00%~1.26%

• (i) For the three months ended March 31, 2023 and 2022, the Group had the additional short-term borrowings amounting to $747,000 and $296,000, respectively, and the repayment each amounted to $434,000 and $53,000, respectively.

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

• (iii) For the information on the Group's exposure to the interest rate risk and liquidity risk, please refer to note 6(w).

(l) Long-term borrowings

The details of long-term borrowings were as following:

Secured bank loans—Maturity year 114.3~116.2 Unsecured bank loans—Maturity year 114.11 Less: current portion Less: Deferred income Unused credit lines Range of interest rates	March 31, 2023 $ 375,687 130,000 - (3,508) $ 502,179 $ 624,313 0.8%~1.8%	December 31, 2022 322,767 113,000 - (3,411) 432,356 714,233 0.8%~1.8%	March 31, 2022 110,016 - - (1,599) 108,417 889,984 0.80%

• (i) For the three months ended March 31, 2023 and 2022, the Group had the additional long-term borrowings amounting to $69,920 and $110,016, respectively, and the repayment amounted to $0.

(Continued)

20

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ii) The Group’ 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, based on the Government grants. As of March 31, 2023, the Group had used the credit amount of $375,687.

(m) Other payables

Salaries payable Indemnities payable Others	March 31, 2023 $ 81,066 - 87,797 $ 168,863	December 31, 2022 85,129 125,403 85,485 296,017	March 31, 2022
			55,048 - 45,946
			100,994

• (n) Lease liabilities

The carrying amount of lease liabilities was as follows:

March 31, 2023 Current $ 485 Non-current $ 131 Please refer to note 6(w) for maturity analysis. The amounts recognized in profit or loss were as follows: Interest on lease liabilities Expenses relating to short-term leases Variable lease payments not included in the measurement of lease liabilities Expense relating to leases of low-value assets, excluding short-term leases of low-value assets The amounts recognized in the statement of cash flows for the Group were as follows: Total cash outflow for leases	December 31, 2022 March 31, 2022 828 1,516 195 227 For the three months ended March 31, 2023 2022 $ 3 8 $ 194 8,195 $ 6 9 $ 140 145 For the three months ended March 31, 2023 2022 $ 750 8,769 (Continued)	December 31, 2022 March 31, 2022 828 1,516 195 227 For the three months ended March 31, 2023 2022 $ 3 8 $ 194 8,195 $ 6 9 $ 140 145 For the three months ended March 31, 2023 2022 $ 750 8,769 (Continued)	March 31, 2022
			1,516
			227
		2023 $ 750

21

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group leases company cars and copy machines: The leases typically run for a period of three to six years.

The Group also leases production lines, vehicles and office equipment with contract terms of less than one year. These leases are short-term or leases of low-value items. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(o) Provisions

Except for the following disclosure, there was no significant change for provisions for the three months ended March 31, 2023 and 2022. For the related information, please refer to note 6(o) of the consolidated financial statements for the year ended December 31, 2022.

Balance on January 1, 2023 Provisions used during the year Balance on March 31, 2023 Balance on January 1, 2022 Provisions reversed during the year Provisions used during the year Balance on March 31, 2022	Environmental protection costs		Fire disaster indemnity 68,159 (60,949) 7,210 374,894 (29,803) (102,661) 242,430	Total 111,384 (70,772) 40,612 418,840 (29,803) (109,371) 279,666

Please refer to note 10 for the above fire indemnity.

(p) Employee benefits

(i) Defined benefit plans

Management believes that there was no material volatility of the market, no material reimbursement and settlement or other material one-time events since prior fiscal year. As a result, the pension cost in the accompanying interim period was measured and disclosed according to the actuarial report as of December 31, 2022 and 2021.

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

		For	the three months ended	the three months ended
			March 31,
			2023	2022
Operating	cost	$	136	133
Operating	expenses		70	48
Total		$	206	181

(Continued)

22

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Defined contribution plans

The Group’s expenses under the pension plan cost to the Bureau of Labor Insurance were as follows:

	For	the three months ended	the three months ended
		March 31,
		2023	2022
Operating cost	$	1,325	1,198
Selling expenses		63	57
Administration expenses		217	168
Research expenses		194	215
Total	$	1,799	1,638

(q) Income taxes

• (i) The Group’s income tax expense in the interim financial statements is measured and disclosed accordance to paragraph B12 of IAS 34 “Interim Financial Reporting”.

• (ii) The Group’s income tax expenses for the three months ended March 31, 2023 and 2022 were calculated as follows:

	For	the three months ended	the three months ended
		March 31,
		2023	2022
Current income tax expense	$	15,286	10,833

• (iii) For the three months ended March 31, 2023 and 2022, the Group did not recognize income tax expense in equity and other comprehensive income.

• (iv) Examination and approval

The ROC tax authorities have examined the Company’ s and Yushan’ s income tax returns through 2021.

(r) Capital and other equity

Except for the following disclosure, there was no significant change for capital and other equity for the periods from January 1 to March 31, 2023 and 2022. For the related information, please refer to note 6(r) of the consolidated financial statements for the year ended December 31, 2022.

(i) Retained Earnings

The Company’s article of incorporation stipulates that Company’s net earnings should first be used to offset the prior years’ deficits, if any, after 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.

(Continued)

23

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(ii) Earnings distribution

Based on the resolution of Board of Directors held on March 14, 2023, the appropriation of earnings for the year 2022 was proposed. Moreover, based on the resolution of stockholders’ meeting held on June 21, 2022, there were no dividends to be appropriated from the 2021 earnings, and the dividends per share were appropriated as follows:

Dividends distributed to ordinary shareholders: Cash Stock Total	2022 Amount per share (dollars) Total amount $ 0.25 23,846 1.25 119,228 $ 143,074	2021	2021
		Amount per share (dollars) - -	Total amount
			- -
			-

(iii) Other equity (net of tax)

Other equity (net of tax)
		Unrealized gains
		(losses) from
		financial assets
		measured at fair
		value through
		other
		comprehensive
		income
Balance at January 1, 2023	$	(54,727)
Unrealized gains (losses) from financial assets measured at fair value through
other comprehensive income	$	(3,511)
Balance at March 31, 2023	$	(58,238)
Balance at January 1, 2022	$	(48,929)
Unrealized gains (losses) from financial assets measured at fair value through
other comprehensive income		17,849
Balance at March 31, 2022	$	(31,080)

(Continued)

24

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) Earnings per share

The Company’s earnings per share was calculated as follows:

The Company’s earnings per share was calculated as follows:
	For	the three months ended
		March 31,
		2023	2022
Basic earnings per share
Profit attributable to ordinary shareholders of the Company	$	63,438	41,173
Weighted-average number of ordinary shares (thousand shares)		95,382	95,382
	$	0.67	0.43
Diluted earnings per share
Profit attributable to ordinary shareholders of the Company	$	63,438	41,173
Weighted-average number of ordinary shares (thousand shares)		95,382	95,382
Effect of potentially dilutive ordinary shares:
Effect of employee compensation		258	125
Weighted-average number of ordinary shares (thousand shares)
(diluted)		95,640	95,507
	$	0.66	0.43

(t) Revenue from contracts with customers

(i) Disaggregation of revenue

	For	the three months ended	the three months ended
		March 31,
		2023	2022
Primary geographical markets:
Italy	$	78,383	70,872
Germany		61,312	49,748
Netherlands		27,025	-
United States		23,389	-
Switzerland		23,330	9,344
Australia		20,641	2,071
Taiwan		13,267	18,349
Japan		10,618	14,067
Others		83,814	23,572
	$	341,779	188,023

(Continued)

25

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	For	the three months ended	the three months ended
		March 31,
Major products:
Active Pharmaceutical Ingredients	$	208,711	52,814
Intermediates		130,830	128,688
Specialty Chemical		2,238	6,521
	$	341,779	188,023

(ii) Contract balances

Contract balances
Notes and accounts receivable Less: Loss allowance Total Contract liabilities (sales received in advance)	March 31, 2023 $ 254,530 - $ 254,530 $ 31,450	December 31, 2022 173,565 - 173,565 31,773	March 31, 2022
			174,451 -
			174,451
			35,739

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

The amount of revenue recognized for the three months ended March 31, 2023 and 2022, that was included in the contract liability balance at the beginning of the period was $323 and $7,541, respectively.

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

(u) 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 three months ended March 31, 2023 and 2022, the remunerations to employees amounted to $7,622 and $5,111, respectively, and the remunerations to directors amounted to $1,250 and $720, 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.

(Continued)

26

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the years ended December 31, 2022 and 2021, the remunerations to employees amounted to $26,091 and $6,424, respectively, and the remunerations to directors amounted to $4,250 and $876, respectively. The remunerations above are identical to those of the actual distributions. The information is available on the Market Observation Post System website.

(v) Other Income

Provisions reversal of fire indemnity Others	For the three months ended March 31,	For the three months ended March 31,
	2023 $ - 1,816 $ 1,816	2022
		29,803 2,153
		31,956

(w) Financial Instruments

Except for the contention mentioned below, there was no significant change in the fair value of the Group’s financial instruments and degree of exposure to credit risk, liquidity risk and market risk arising from financial instruments. For the related information, please refer to note 6(x) of the consolidated financial statements for the year ended December 31, 2022.

(i) Credit risk

• 1) Credit risk exposure

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

• 2) Concentration of credit risk

As of March 31, 2023, December 31 and March 31, 2022, there were all five major customers, respectively, that accounted for 60.99%, 72.58% and 75.10%, respectively, of notes and accounts receivable. Thus, credit risk is significantly centralized. In order to minimize credit risk, the Group 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.

3) Receivables and debt securities

• a) For credit risk exposure of notes and trade receivables, 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 Group are the financial institutions with investment grade credit ratings. Therefore, the credit risk is considered to be low.

(Continued)

27

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Liquidity Risk

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

March 31, 2023 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Lease liabilities (including current and non-current) Other payables Payables on contractors and equipment Long-term borrowings Deposits received December 31, 2022 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Lease liabilities (including current and non-current) Other payables Payables on contractors and equipment Long-term borrowings Deposits received	Carrying Amount $ 425,000 46,815 616 168,863 158,637 502,179 1,000 $ 1,303,110 $ 112,000 48,636 1,023 296,017 160,591 432,356 1,000 $ 1,051,623	Contractual cash flows (426,185) (46,815) (621) (168,863) (158,637) (527,436) (1,000) (1,329,557) (112,177) (48,636) (1,033) (296,017) (160,591) (455,385) (1,000) (1,074,839)	Within a year (426,185) (46,815) (490) (168,863) (158,637) (6,699) - (807,689) (112,177) (48,636) (836) (296,017) (160,591) (5,608) - (623,865)	1 ~ 2 years - - (131) - - (6,672) - (6,803) - - (197) - - (5,624) - (5,821)	Over 2 years - - - - - (514,065) (1,000) (515,065) - - - - - (444,153) (1,000) (445,153)

(Continued)

28

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

March 31, 2022 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Lease liabilities (including current and non-current) Other payables Payables on contractors and equipment Long-term borrowings	Carrying Amount $ 243,000 45,095 1,743 100,994 67,758 108,417 $ 567,007	Contractual cash flows (243,417) (45,095) (1,758) (100,994) (67,758) (114,017) (573,039)	Within a year (243,417) (45,095) (1,531) (100,994) (67,758) (890) (459,685)	1 ~ 2 years - - (227) - - (892) (1,119)	Over 2 years - - - - - (112,235) (112,235)

The Group is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amount.

• (iii) Currency risk

• 1) Exposure to foreign currency risk

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

Foreign currency: in thousands of dollars

Financial assets Monetary items USD to TWD EUR to TWD Financial liabilities Monetary items USD to TWD	M	arch 31, 2023	TWD 262,200 46,097 29,610	De Foreign currency	cember 31, 2	022	Foreign currency	March 31, 2022
	Foreign currency	Exchange rate			Exchange rate	TWD 254,079 16,032 31,518		Exchange rate TWD 28.575 225,571 31.72 24,805 28.575 33,176
	$ 8,625 1,399 974	30.4 32.95 30.4		8,287 493 1,028	30.66 32.52 30.66		7,894 782 1,161

• 2) Sensitivity analysis

The Group’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 for the three months ended March 31, 2023 and 2022, would have affected the net profit before tax increased or decreased $2,787 and $2,172, respectively. The analysis is performed on the same basis for both periods.

(Continued)

29

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Foreign exchange gain and loss on monetary items

The exchange gains and losses of monetary items, including realized and unrealized, are changed into functional currency, which is the Group’s presentation currency. For the three months ended March 31, 2023 and 2022, the exchange gains (losses), including realized and unrealized, are $(776) and $6,822, respectively.

(iv) Interest rate analysis

For the details of financial assets and liabilities exposed to interest rate risk, please refer to financial risk management.

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

Variable rate instruments: Financial assets Financial liabilities	Carrying amount
	March 31, 2023 March 31, 2022 $ 68,243 144,281 930,687 353,016

The following sensitivity analysis is based on the exposure to the interest rate risk of nonderivative 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 Group management’s assessment of the reasonably possible interest rate change.

If the interest rate had increased or decreased by 0.25%, the Group's net profit before tax would have increased or decreased by $(539) and $(130), respectively, for the three months ended March 31, 2023 and 2022, with all other variable factors remaining constant. This is mainly due to the Group’s bank savings and borrowings with variable interest rates.

(Continued)

30

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 Group’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 Financial assets at fair value through other comprehensive income Emerging stocks Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Refunded 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 contractors and equipment Long-term borrowings Deposits received (recognized as other non-current liabilities) Total			March 31, 2023	March 31, 2023	March 31, 2023
	Book value			Fair Value
			Level 1 97,401 - - - - - - - - - - - -	Level 2 - - - - - - - - - - - - -	Level 3 Total - 97,401 63,212 63,212 - - - - - - - - - - - - - - - - - - - - - -
	$ 97,401 63,212 99,605 254,530 141 810 355,086 $ 515,699 $ 425,000 46,815 616 168,863 158,637 502,179 1,000 $ 1,303,110

(Continued)

31

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 Emerging stocks Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Refunded 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 contractors and equipment Long-term borrowings Deposits received (recognized as other non-current liabilities) Total			December 31, 2022	December 31, 2022	December 31, 2022
	Book value			Fair Value
			Level 1 97,545 - - - - - - - - - - - -	Level 2 - - - - - - - - - - - - -	Level 3 Total - 97,545 66,723 66,723 - - - - - - - - - - - - - - - - - - - - - -
	$ 97,545 66,723 166,828 173,565 31,101 810 372,304 $ 536,572 $ 112,000 48,636 1,023 296,017 160,591 432,356 1,000 $ 1,051,623

(Continued)

32

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 Emerging stocks Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Refunded 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 contractors and equipment Long-term borrowings Total			March 31, 2022	March 31, 2022
	Book value			Fair Value
			Level 1 233,453 - - - - - - - - - - -	Level 2 Level 3 Total - - 233,453 - 90,370 90,370 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	$ 233,453 90,370 173,454 174,451 265,581 2,810 616,296 $ 940,119 $ 243,000 45,095 1,743 100,994 67,758 108,417 $ 567,007

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

The Group’ s valuation techniques and assumptions used for financial instruments not measured at fair value are 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.

(Continued)

33

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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 Group 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 of the equity securities.

4) Transfers between Levels

For the three months ended March 31, 2023 and 2022, there were no transfers from one level to another.

• 5) Reconciliation of Level 3 fair values

January 1, 2023 Total gains and losses recognized: In profit or loss In other comprehensive income March 31, 2023	Fair value through other comprehensive income Unquoted equity instruments $ 66,723 - (3,511) $ 63,212 (Continued)

34

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

January 1, 2022 Total gains and losses recognized: In profit or loss In other comprehensive income March 31, 2022	Fair value through other comprehensive income
	Unquoted equity instruments
	$ 72,521 - 17,849 $ 90,370

For the three months ended March 31, 2023 and 2022, total gains and losses that were included in unrealized gains and losses from financial assets at fair value through other comprehensive income were as follows:

comprehensive income were as follows:
		For the three	months
		ended March 31,
		2023	2022
Total gains and losses recognized:
In other comprehensive income, and presented in
“unrealized gains and losses from financial assets at
fair value through other comprehensive income”	$	(3,511)	17,849

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

The Group’s financial instruments that use Level 3 inputs to measure fair value include “financial assets measured at fair value through other comprehensive income – equity investments”. Financial assets at fair value through other comprehensive income – equity investments without an active market have more than one significant unobservable inputs. The significant unobservable inputs of financial assets at fair value through other comprehensive income – equity investments without an active market are individually independent, and there is no correlation between them.

(Continued)

35

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Quantified information of significant unobservable inputs was as follows:

Item Fair value through other comprehensive income– equity investments without an active market 〃	Valuation technique Price-Book ratio method 〃	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧ The multiplier of Price- Book Ratio (As of March 31, 2023, December 31 and March 31, 2022 were 1.46~2.84, 1.42~2.89 and 1.61~3.08 , respectively) The higher the fair value is, the higher the fair value will be. ‧ Lack-of-Marketability discount rate (As of March 31, 2023, December 31 and March 31, 2022 were 23%, 23% and 23%~25%, respectively) The higher the Lack-of- Marketability discount rate is, the lower the fair value will be.

• 7) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions

The Group’ s measurement on the fair value of financial instruments is deemed reasonable despite different valuation models or assumptions that may lead to various results. For fair value measurements in Level 3, changing one or more of the assumptions would have the following effects on profit or loss and other comprehensive income:

March 31, 2023 Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income December 31, 2022 Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income	Inputs Price-Book ratio multiples Lack-of Marketability discount rate Price-Book ratio multiples Lack-of Marketability discount rate	Move up or Other comprehensive income downs Favorable Unfavorable 5% $ 3,197 3,152 5% $ 972 928 5% $ 3,312 3,357 5% $ 976 1,021	Other comprehensive income	Other comprehensive income
				Unfavorable
				3,152
				928
				3,357
				1,021

(Continued)

36

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

March 31, 2022 Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income	Inputs Price-Book ratio multiples Lack-of Marketability discount rate	Move up or Other comprehensive income downs Favorable Unfavorable 5% $ 4,433 4,583 5% $ 1,323 1,422	Other comprehensive income	Other comprehensive income
				Unfavorable
				4,583
				1,422

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

(x) Financial risk management

There were no significant changes in the Group’ s financial risk management and policies as disclosed in note 6(y) of the consolidated financial statements for the year ended December 31, 2022.

(y) Capital management

Management believes that the objectives, policies and processes of capital management of the Group has been applied consistently with those described in the consolidated financial statements for the year ended December 31, 2022. Also, management believes that there were no significant changes in the Group’s capital management information as disclosed for the year ended December 31, 2022. Please refer to note 6(z) of the consolidated financial statements for the year ended December 31, 2022.

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

The Group’s investing and financing activities which did not affect the current cash flow for the three months ended March 31, 2023 and 2022, were as follows:

• (i) For the acquisition of right-of-use assets by lease for the three months ended March 31, 2023 and 2022, please refer to note 6(i).

• (ii) Reconciliation of liabilities arising from financing activities for the three months ended March 31, 2023 and 2022, were as follows:

Non-cash changes

Short-term borrowings Long-term borrowings Lease liabilities	January 1, 2023 $ 112,000 432,356 1,023 $ 545,379	Cash flows 313,000 69,920 (407) 382,513	Acquisition - - - -	Others - (97) - (97)	March 31, 2023
					425,000 502,179 616
					927,795

(Continued)

37

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Short-term borrowings Long-term borrowings Lease liabilities	January 1, 2022 $ - - 2,155 $ 2,155	Cash flows 243,000 110,016 (412) 352,604	Non-cash	changes Others - (1,599) - (1,599)	March 31, 2022
			Acquisition - - - -
					243,000 108,417 1,743
					353,160

(7) Related-party transactions:

(a) Names and relationship with related parties:

Name of related party Relationship with the Group Weichyun Wong The chairman of the Company Framosa Co., Ltd. (Framosa) The associate of the Company

• (b) Significant transaction with related parties:

• (i) Lease

The Group rented out land and laboratory for related party, the details of the above lease transactions were as follows:

Rental income (recorded as other income) Other receivables from related parties For the three months ended March 31, March 31, December 31, March 31, 2023 2022 2023 2022 2022 Associate $ 1,557 - - - - Guarantee deposits received (recorded as other non-current liability) March 31, 2023 December 31, 2022 March 31, 2022 sociate $ 1,000 1,000 -	Rental income (recorded as other income) Other receivables from related parties For the three months ended March 31, March 31, December 31, March 31, 2023 2022 2023 2022 2022 Associate $ 1,557 - - - - Guarantee deposits received (recorded as other non-current liability) March 31, 2023 December 31, 2022 March 31, 2022 sociate $ 1,000 1,000 -	Rental income (recorded as other income) Other receivables from related parties For the three months ended March 31, March 31, December 31, March 31, 2023 2022 2023 2022 2022 Associate $ 1,557 - - - - Guarantee deposits received (recorded as other non-current liability) March 31, 2023 December 31, 2022 March 31, 2022 sociate $ 1,000 1,000 -	Rental income (recorded as other income) Other receivables from related parties For the three months ended March 31, March 31, December 31, March 31, 2023 2022 2023 2022 2022 Associate $ 1,557 - - - - Guarantee deposits received (recorded as other non-current liability) March 31, 2023 December 31, 2022 March 31, 2022 sociate $ 1,000 1,000 -	Rental income (recorded as other income) Other receivables from related parties For the three months ended March 31, March 31, December 31, March 31, 2023 2022 2023 2022 2022 Associate $ 1,557 - - - - Guarantee deposits received (recorded as other non-current liability) March 31, 2023 December 31, 2022 March 31, 2022 sociate $ 1,000 1,000 -	Rental income (recorded as other income) Other receivables from related parties For the three months ended March 31, March 31, December 31, March 31, 2023 2022 2023 2022 2022 Associate $ 1,557 - - - - Guarantee deposits received (recorded as other non-current liability) March 31, 2023 December 31, 2022 March 31, 2022 sociate $ 1,000 1,000 -
	For the three months ended March 31,
		2022
		-
			March 31, 2023 $ 1,000	December 31, 2022 1,000	March 31, 2022 -

Associate

(ii) 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 three months ended March 31, 2023 and 2022. Please refer to note 6(h).

• (c) Key management personnel compensation

Salary and short-term employee benefits

For the three months ended March 31,	For the three months ended March 31,
2023 $ 5,717	2022
	4,416

(Continued)

38

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Assets Land Building	Subject Pledged as collaterals 〃	March 31, 2023 $ 42,736 2,729 $ 45,465	December 31, 2022 42,736 2,884 45,620	March 31, 2022
				42,736 3,363
				46,099

(9) Commitments and contingencies:

(a) As of March 31, 2023, December 31 and March 31, 2022, the unused balance of the Group’ s outstanding standby letters of credit amounted to $2,432, $5,535 and $12,953, respectively.

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

Acquisitions of property, plant and equipment	March 31, 2023 $ 526,969	December 31, 2022 464,044	March 31, 2022 732,936

(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 negotiation with the above damaged companies for fire indemnity payments. As of March 31, 2023, December 31 and March 31, 2022, the outstanding provisions for fire indemnity was $7,210, $68,159 and $242,430, respectively, which was recorded under provisions. Please refer to note 6(o) for the details.

The Company has already entered into related property insurance and public liability insurance contracts. As of March 31, 2023, December 31 and March 31, 2022, the Company recognized the claim receivables for $0, $30,000 and $265,539, respectively, which were recorded under other receivables.

(11) Subsequent Events:

The Company applied the third insurance settlement on March 31, 2023, with compensation that includes claims for maintenance expenses and compensation income for replacement assets amounting to $500,000. As of date of the report, the above receivables had been fully received.

(Continued)

39

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(12) Other:

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

By function By item	For the three months ended March 31, 2023	For the three months ended March 31, 2023	For the three months ended March 31, 2023	For the three months ended March 31, 2022	For the three months ended March 31, 2022	For the three months ended March 31, 2022
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	38,619 3,370 1,461 - 898 22,719 1,042	20,725 1,270 544 1,250 1,705 7,013 1,072	59,344 4,640 2,005 1,250 2,603 29,732 2,114	29,380 3,188 1,331 - 830 9,300 1,035	16,670 1,229 488 720 1,199 5,812 1,005	46,050 4,417 1,819 720 2,029 15,112 2,040

• (b) Seasonality of operations

The Group’s operations were not affected by seasonality or cyclicality factors.

(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 Group for the three months ended March 31, 2023:

• (i) Loans to other parties: None.

• (ii) Guarantees and endorsements for other parties: None.

• (iii) Securities held as of March 31, 2023 (excluding investment in subsidiaries, associates and joint ventures):

Unit: thousand shares

Name of holder	Category and name of security	Relationship with company	Account title		Ending	balance		Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company 〃 〃 〃 〃	Beneficiary Certificate (UPAMC James Bond Money Market Fund) Stock (Cathay Financial Holding Co., Ltd. Preferred Stock A) Stock (Cathay Financial Holding Co., Ltd. Preferred Stock B) 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 〃 〃 〃 〃	61 743 0.023 528 577	1,042 44,506 1 31,311 20,541	- - - - -	1,042 44,506 1 31,311 20,541	- - - - -

(Continued)

40

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated 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 (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company 〃	Stock (Energenesis Biomedical Co., Ltd.) Stock (Sunny Pharmtech Inc.)	- -	Financial assets at fair value through other comprehensive income 〃	1,603 4,497	28,852 34,360	2.40 % 3.25 %	28,852 34,360	- -

• (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	$ 472,500	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.

• (x) Business relationships and significant intercompany transactions: None.

• (b) Information on investees:

The following is the information on investees for the three months ended March 31, 2023 (excluding information on investees in Mainland China):

								Unit	: thousand dollars/ thousand shares	: thousand dollars/ thousand shares	: thousand dollars/ thousand shares
Name of investor	Name of investee	Location	Main businesses and products	Original invest	ment amount	Ending balance			Net income (losses) of investee	Share of profits/losses of investee	Note
				March 31, 2023	December 31, 2022	Shares (thousands)	Percentage of ownership	Carrying value
The Company The Company Yushan Pharmaceuticals Inc.	Yushan Pharmaceuticals Inc. Framosa Co., Ltd. Honey Bear Biosciences, Inc.	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	351,761 143,750 15,000	351,761 143,750 15,000	35,190 14,375 1,500	% 100 % 25 % 6.09	351,132 125,006 14,314	1,778 (6,198) (1,971)	1,778 (1,877) (120)	Note 1

Note 1：The transactions had been eliminated in the consolidated financial statements.

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

(Continued)

41

SCI PHARMTECH, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Major shareholders:

Unit: shares

		Unit: shares
Shareholding Shareholders' Name	Shares	Percentage
Mercuries & Associates Holding Ltd.	30,283,358	% 31.74
Zhan Liwei	6,060,000	% 6.35

(14) Segment information:

The Group only uses one segment to assess its performance and allocate resources. Hence, there is no need to disclose the information.