SINPHAR — AGM Information 2023

Jul 13, 2023

Sinphar Pharmaceutical Co., Ltd. 2023 Shareholders’ Meeting Minutes

Time: 10:00 a.m. on Tuesday, June 20, 2023

Venue: No. 95, Xinliao Rd., Zhongshan Village, Dongshan Township, Yilan County

269, Taiwan (R.O.C.) (Vocational Training Center)

• Attendance: The total issued shares were 167,722,022 shares, and the total shares outstanding were 167,722,022 shares. There were 107,700,764 shares represented by attending shareholders (including 10,369,979 shares of electronic voting). The attendance rate was 64.21%, and the attending shares had reached the number legally required for the shareholders’ meeting. The attending directors were Chih Wen Lee (Chairman), Yi Ta Lee (Vice Chairman), Ching Lung Lee (Independent Director), Yau Yuan Wen (Independent Director), Hsin Yu Chou (Independent Director), Hsiu Min Lin (Director), Hsiu Chi Kuo (Director), Ling Mo Chao (Director), Jehng Jer Guan (Director), Hung Chih Lin (Director), Neng Chun Yu (Director). All the directors totaling 11 directors attended the shareholders’ meeting.

Other Attendees: Qing Chen (CPA)

Chairperson: Chih Wen Lee Recorder: Yi Mei Lou

Ⅰ. Call the Meeting to Order

(The total shareholding of the shareholders present in person or by proxy

constituted a quorum. The chairperson called the meeting to order.)

Ⅱ. Chairperson Remarks: (omitted)

Ⅲ. Company Reports

1. 2022 Business Report (Please refer to Attachment 1)

2. Audit Committee’s Review Report on the 2022 Financial Statements

(Please refer to Attachment 2)

1. Report on 2022 Remuneration Distribution for Directors and Employees

(Please refer to the Handbook for Shareholders’ Meeting)

1. Report on Amendment to the Rules and Procedures of Board of Directors

Meeting (Please refer to the Handbook for Shareholders’ Meeting)

1. Status Report of Endorsements and Guarantees for Subsidiaries

(Please refer to the Handbook for Shareholders’ Meeting)

1. Other Matters (Please refer to the Handbook for Shareholders’ Meeting)

Ⅳ. Ratifications

1. Proposed by the Board

Proposal:

Adoption of the 2022 Business Report and Financial Statements

Explanation:

The Company’s Parent Company Only Financial Statements and Consolidated Financial Statements for 2022 were audited by the CPAs, Ya Quan Zhang and Jin Shu Pan of Crowe (TW) CPAs. Also, the Business Report and Financial Statements were approved by the Board and reviewed by the Audit Committee of the Company. Please refer to Attachment 1 and Attachment 3 for the documents mentioned above.

Voting Results:

Voting rights represented by the presence of shareholders: 107,700,764 votes 100% In favor: 103,785,229 votes 96.36% (including votes casted electronically 7,455,572 votes) Against and invalid: 19,246 votes 0.01% (including votes casted electronically 19,246 votes) Abstained: 3,896,289 votes 3.61% (including votes casted electronically 2,895,161 votes)

Resolution:

The proposal was approved as proposed.

2. Proposed by the Board

Proposal:

Adoption of 2022 Earnings Distribution

Explanation:

The 2022 Earnings Distribution Table was passed by the Board of Directors. The distribution status is as follows.

Sinphar Pharmaceutical Co., Ltd.

2022 Earnings Distribution Table

	Unit: NT$
Items	Total
Unappropriated retained earnings at the beginningofperiod	0
Add(minus):
Other comprehensive income(benefitplans)	9,080,321
Unappropriated retained earnings at the beginning of period after adjusted	9,080,321
Add(minus): Net income after tax in 2022	224,643,303
Unappropriated retained earnings after adjusted	233,723,624
Allocation:
Legal reserves	(23,372,362)
Special reserves	(30,291,990)
Retained earnings available for distribution	180,059,272
Distributable Items:
Cash dividend	(167,722,022)
Unappropriated retained earnings	12,337,250

Chairman: Chih Wen Lee General Manager: Yu Liang Pei Accounting Manager: Li Jung Hsieh

1. The Company will distribute cash dividend of NT$167,722,022 from retained earnings, approximately NT$1 per share.

2. The cash dividends is calculated to the nearest NT dollar. The remainder will be transferred into the account of Employee Welfare Committee. The Board of Directors was authorized to determine the ex-dividend date after the proposal was approved by the Shareholders’ Meeting.

3. If the number of total shares outstanding changed which may cause a fluctuation of the ratios of dividend, therefore requiring adjustments, the Board of Director was proposed to be authorized to make such adjustments.

Voting Results:

Voting rights represented by the presence of shareholders: 107,700,764 votes 100% In favor: 103,821,037 votes 96.69% (including votes casted electronically 7,491,380 votes) Against and invalid: 24,275 votes 0.02% (including votes casted electronically 24,275 votes) Abstained: 3,855,452 votes 3.57% (including votes casted electronically 2,854,324 votes)

Resolution:

The proposal was approved as proposed.

Ⅴ. Discussion

1. Proposed by the Board

Proposal:

Proposal for Release the Prohibition on Directors from Participation in Competitive Business

Explanation:

1. According to Article 209 of Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.

2. The proposal was approved by the Board of Directors on August 9, 2022 to release the non-competition restriction during the term of office.

Name	Company Name and Concurrent Position	Company Name and Concurrent Position	Main Business Scope and Conflict of Interest
Director, Yi Ta Lee	Bionet Corp.	Independent Director	Cell Therapy, Regenerative medicine, Big Data in Healthcare Similar industry, submit to permit to lift the restriction

Voting Results:

Voting rights represented by the presence of shareholders: 107,700,764 votes 100% In favor: 103,756,441 votes 96.33% (including votes casted electronically 7,426,784 votes) Against and invalid: 77,264 votes 0.07% (including votes casted electronically 77,264 votes) Abstained: 3,867,059 votes 3.59% (including votes casted electronically 2,865,931 votes)

Resolution:

The proposal was approved as proposed.

Ⅵ. Extraordinary Motions: None

• Ⅶ. Adjournment (The meeting was closed at 10:26 a.m., June 23, 2023)

No shareholders raised questions or spoke in the shareholders’ meeting.

Chairperson: Chih Wen Lee Recorder: Yi Mei Lou

Attachment 1

2022 Business Report

2022 was an exhilarating year for Sinphar, with double-digit increase in revenue and profits. Generic drugs, functional food, cancer drugs, and products made by natural botanical materials showed significant growth, and domestic and export markets have been developing well and strategically. This is a result from Sinphar’s commitment to investing in new products, new projects, process and quality management, and digital transformation, and building a foundation with active market channels expansion and strategic alliances. Sinphar makes investment and development decisions with giving back to society in mind. We spend tens of millions of dollars in energy saving and carbon reduction, and work towards having a more positive impact on society.

In addition to the development of generic drugs and functional foods, another major advantage of Sinphar is the control on natural plant extraction raw materials. Cistanche tubulosa extract, poria cocos extract, and walnut oligopeptides have received 160 patents from 19 countries, and has been selling in 14 countries. Current development is conducting in-depth studies and clinical trials. Take “Memoregain Capsules” as an example, in 2022 it has garnered a gold medal and the U.S. special award in the 2022 Moscow International Salon of Inventions and Innovative Technologies ARCHIMEDES, a silver medal in Monde Selection, a gold medal in International Invention Innovation Competition in Canada, etc. In 2023, Memoregain Capsules is the only health food awarded both The 25[th] National Biotechnology and Medicine Care Quality Award and Symbol of National Quality. The Group will continue to develop distinctive and functional products based on scientific results to generate higher profits.

In new drugs R&D, in addition to SynCore Bio’s pipeline of SB01, SB02, SB04, and SB05, several botanical new drugs and natural botanical materials developed by Sinphar are in progress. Though the preliminary result of phase III clinical trial of second-line treatment final analysis of SynCore Bio’s SB05PC (EndoTAG®-1) was below expectation, this is the case with investment in new drugs, even the most rigorous evidence may change under clinical trials in a variable environment. Fortunately, the team has accumulated a solid foundation for cancer drug R&D and management as well as earned an internationally recognized reputation during this process, which can be used for continued development of global cancer drugs.

The pandemic has tested people’s understanding of life sciences and their ability to respond to crises, and it has also changed people’s perception of long-term

healthcare and the medicines to keep at home. Despite the daunting challenges brought on by the pandemic, there are also boundless opportunities. Sinphar has responded rapidly and adjusted resources to meet the government’s and public’s needs, and prepared safety inventory; therefore, Sinphar was not affected by the shortage of medicines during pandemic. Looking ahead, Sinphar will continue to uphold the philosophy of “life, health, and technology” to invest in and develop our business. Sinphar will be contributory to Taiwan pharmaceutical industry and live up to the expectations of shareholders.

1.1 2022 Business Report

1.1.1 2022 Operational Performance

In 2022, Company’s revenue reached NT$2.85 billion, an increase of NT$423.13 million over the previous year. Net profit after taxes was NT$164.17 million, net profit attributed to the parent company was NT$224.64 million, and the earnings per share was NT$1.34.

1.1.2 Financial and Profitability Analysis

Unit: NT$ thousand

Item	Year	2022	2021	Increase (Decrease) (%)
Financial Status	Revenue	2,856,651	2,433,516	17.39
	Gross Profit	1,091,300	888,707	22.80
	Net Profit (Loss)	164,174	(204,959)	180.10
	Net Profit (Loss)- Parent Company	224,644	(38,135)	689.08
	Net Loss- Non-controlling Interest	(60,470)	(166,824)	63.75
Profitability	Net Profit Margin	5.75%	-8.42%	168.29
	Earnings (Loss) Per Share (NTD)	1.34	(0.23)	682.61

1.1.3 Research and Development

A. Research and Development Expenses in Recent Two Years

Unit: NT$ thousand

		Unit: NT$ thousand
Year Item	2022	2021
R&D Expenses	272,163	511,881
Revenue	2,856,651	2,433,516
%	9.53%	21.03%

B. Main Research and Development Activities in 2022

• (A) Food: 9 products

• (B) Cosmetics: 1 product

• (C) Drugs: 1 product

• (D) Product Improvement: 67 products

• (E) 13 Technical Projects

C. Research and Development Progress

Item	Category
		Code	Indication/	R&D Progress/ Current Situation
			Application
1	Botanical new drugs/ Natural botanical materials
			Dementia/	Approved for phase II clinical trial by TFDA and U.S. FDA.
		ST01	Brain Health/	Preparing for clinical trial.
			Vitlit/
			ay	Acquired the health food certification for anti-aging.
			Health food
2	Botanical new drugs
			Drugs for
				Approved for phase II clinical trial by TFDA and U.S. FDA.
		ST02	chronic stable
				Follow-up development is in progress
			angina
3	Botanical new drugs/ Natural botanical materials
				Completed Druggability Research Part I and Part II in
			Cancer adjuvant
				progress.
		SF01	treatment agent/
				Acquired the health food certification of assisting in
			Health food
				modulating allergy constitution and immune modulation.
4	Natural botanical materials
				Completed clinical efficacy trial proving the product has the
		GF159	Brain Health	function of improving memories, learning abilities, and
				sleep quality.

Item	Category
		Code	Indication/	R&D Progress/ Current Situation
			Application
5	New small molecular drugs
				Received project funding from MOEA.
				Completed phase I clinical trial in Taiwan.
				Approved for phase II clinical trial by U.S. FDA.
		SB01	Head and neck	Approved for and completed phase II clinical trial by
			cancers	TFDA.
				The efficacy of drug and dose adjustment is under
				discussion.
6	New small molecular drugs
			Cancer	Formulation development before clinical trial.
		SB02
			treatment	Deprescribing is under discussion.
7	Botanical new drugs
		SB03	Genital wart	Acquired TFDA drug license to sell drug products in
		VEREGEN®	(condyloma)	specialized channels (hospitals, clinics, and pharmacies).
8	Eye drops
				Successful international cooperation with South Korean
			Dry age-related
				AJU Pharm in granting authorization right to the Company.
		SB04	macular
				Approved for phase II/III clinical trial by TFDA.
			degeneration
				Dose adjustment is under discussion
9	Positively charged liposome
				Approved for the phase III clinical trial by FAMHP and
				TGA.
		SB05	Triple-negative
				Approved for the phase III clinical trial by TFDA and the
		TNBC	breast cancer
				feasibility study is under discussion.
				Received project funding from MOEA.
				Approved for phase III clinical trial in the U.S., Taiwan,
				France, Hungary, South Korea, Russia, and Israel.
				Received the grant of A+ Industrial Innovation R&D
			Pancreatic
		SB05PC		Program by MOEA.
			cancer
				Completed final analysis of phase III clinical trial.
				Approved for phase III clinical trial by NMPA.

1.2 Business Plan for 2023

1.2.1 Management Guideline and Marketing Strategies

“Public’s health is the ideal of Sinphar.” Sinphar upholds the philosophy of “life, health, and technology,” and develop drugs, health supplements, and aesthetic medicine products to guard public’s health and quality of life.

Sinphar is paying equal attention to R&D, production, and marketing. Based on the professional research and development, the group combines the resources of the subsidiaries at home and abroad to make a comprehensive one-stop industry chain of R&D, production, packaging supplies and sales.

In recent year, the three major developments of the group are new drugs R&D, natural botanical materials, and drugs. Sinphar develops specific products through efficient production and strengthened quality monitoring. Additionally, the group enters global health market and maximizes value with diverse marketing tools and channels.

Operation and Marketing Strategies in 2023

A. New Drugs Research and Development

• (A) SynCore Bio’s pipeline of SB01, SB02, SB04 and SB05 is still in progress.

• (B) Detail analysis and discussion of SB05PC’s clinical trial data to find the possibilities for application for specific ethnic groups.

B. Natural Botanical Materials

• (A) Based on long-term R&D and scientific data from the group, Sinphar combines and develops natural botanical materials that strengthen brain health, muscle energy and immune system to create a niche.

• (B) Develop unique health supplement, focus on preventive medicine, develop or introduce functional food, accelerate product innovation, and improve various diseases caused by aging population and stress.

• (C) Develop monopolistic API, in addition to internal-use, Sinphar actively expands the supply markets.

• (D) Independent research and development of natural materials with patent protected raw materials, control the source of raw materials, in order to develop market-differentiated health supplements.

C. Drugs

• (A) Develop preventive and niche products for all ages.

• (B) Focus on niche generic drug products. Through drug repurposing, develop new indication. The group can shorten development schedule and reduce costs for better NHI price.

• (C) Diversify product development. Except for self-production, Sinphar also actively collaborates with foreign pharmaceutical companies. Recently, Sinphar introduced gastrointestinal and hypolipidemic drugs from Japan and entered the market successfully. With a growing aging population, Sinphar will further develop drugs for chronic illnesses to expand market share.

D. Strengthen Quality System to Lay the Foundation for Sustainable Development

• (A) Import digital integrated management system and establish routine digital management.

• (B) Handle abnormal quality with automated report which forward the report to related departments for timely investigation, and start a cross-departmental quality committee to establish improvement measures.

• (C) Continue to strengthen the manufacturing quality system and corresponding measures of laws.

• (D) Cooperate with external quality agencies to inspect quality and process of production to strengthen quality management system and quality monitoring.

E. Diversified Marketing and Foreign Business

• (A) After the steady growth of generic drugs market in Japan, Sinphar also participates in Southern Policy and obtained the GMP certification of food plant and HALAL certification from MUI, actively captures market shares of South East Asia and Islam in Asia.

• (B) Using different product strategies between Blue Ocean and Red Ocean to capture hospital and clinic market shares and create better profit structure.

• (C) In the post-pandemic era, more emphasis is placed on consumers’ spending process and target the differentiated shopping process to attract customer loyalty. Sinphar uses social media to create omnichannel marketing strategy. Cosmetics products, functional foods, YouBest and other branded products are sold online and physical channels to integrate online and offline sales.

• (D) Establish strategic alliances with international companies and to develop

global market through the co-development of various kinds of pharmaceuticals.

F. Set up Intelligent Plant to Improve Productivity to Meet Global Demand

• (A) The plants implemented SAP, MES, and WMS systems. From

• purchase-sales-inventory management, product manufacturing and control, warehouse management, and to real-time inventory, we reduced cost and improved operation efficiency with computerized management. Complete computerized data meets global market demand and increases international competitiveness.

• (B) Sinphar spares no expense when investing in the replacement of software and hardware and implement AI for checking production compliance and preventing human error, improving manufacturing efficiency, and monitoring quality. We combine the system with manufacturing automation, and plan to expand it to include logistics and sales and marketing systems.

• (C) Sinphar simultaneously establishes an information security management system to protect enterprise resource management system, manufacturing execution system and the maintenance of machine room.

Chairman: Chih Wen Lee

General Manager: Yu Liang Pei

Accounting Manager: Li Jung Hsieh

Attachment 2

Sinphar Pharmaceutical Co., Ltd.

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2022 Business Report, Financial Statements (including Consolidated Financial Statements), and Proposal for Earnings Distribution. The above-mentioned Financial Statements have been audited by CPAs, Ya Quan Zhang and Jin Shu Pan of Crowe (TW) CPAs and they have issued an audit report. The Business Report, Financial Statements, and Proposal for Earnings Distribution have been audited and determined to be no inappropriateness by the Audit Committee. According to Article 14 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

Sinphar Pharmaceutical Co., Ltd. Audit Committee Convener: Ching Lung Lee

March 17, 2023

Attachment 3

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders of

Sinphar Pharmaceutical Co., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Sinphar Pharmaceutical Co., Ltd. (the “Company”), which comprise the parent company only balance sheet as of December 31, 2022 and 2021 and the parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2022 and 2021, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompany parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31,2022 and 2021, and its financial performance and its cash flows for the years ended December 31, 2022 and 2021, in accordance with the Regulation Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulation Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only 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 for 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 parent company only financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31, 2022 are stated as follows:

Inventory Valuation

Please refer to Note 4(7.) and 5(2.) in the accompanying parent company only financial statements for related disclosures of the Company’s valuation of inventory accounting policies and critical accounting estimate and assumption.

The Company mainly engages in the production and sales of various types of drugs and food supplements. As the regulations to the pharmaceutical industry cause the cost to increase and meanwhile selling prices are less likely to be affected as they are covered by the health insurance system. Furthermore, the price of food supplement inventory fluctuates due to market competition and the impacts aroused from advertisements. Management assesses that the net realizable value of inventory involves material judgment. Hence, it is taken as a one of the key audit matters.

Our key audit procedures in response

Our procedures in relation to inventory valuation included:

1. Understand and evaluate the design and implementation of the internal control in relation to inventory.

2. Perform inventory counts, to identify if there are any inventories which are obsolete or damaged.

3. Obtain Inventory aging reports to analyses the changes in inventory age, and check the records of inventory changes to verify the correctness of inventory.

4. Evaluate the reasonableness of its inventory valuation policy of unmarketable items and obsolescence, and check the latest inventory sales price to evaluate the reasonableness of the net realizable value of the inventory.

5. Obtain evaluation documents for subsequent measurement of inventories and assess whether they have been measured in accordance with established accounting policies and review if the management’s disclosure on the evaluation of inventory is presented fairly.

Revenue Recognition

Please refer to Note 4(16.) and 5(2.) in the accompanying parent company only financial statements for related disclosures of the Company’s revenue recognition accounting policies and critical accounting estimate and assumption.

Some products of the Company provide discounts or annual sales incentives based on the terms of the sales contract. Since the recognition of the revenue is measured on the net basis of the related discounts and incentives, we consider the revenue recognition as a key audit matter.

Our key audit procedures in response

Our procedures in relation to the revenue recognition included:

1. Evaluate the design and implementation of the internal control in relation to the revenue recognition.

2. Perform sales contract checks to verify whether the records on the recognition of sales revenue agree with the related contract, and evaluate the fairness of the management’s estimated sales discounts and annual sales incentives.

3. Assess whether the management’s accounting treatments and disclosure in relation to sales discounts and annual sales incentives are presented fairly.

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

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

In preparing the parent company only 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 operation, or has no realistic alternative but to do so.

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

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards 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 parent company only financial statements.

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

1. Identify and assess the risks of material misstatement of the parent company only 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, misrepresentation, 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 parent company only financial statements or, if such disclosure 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 parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieve fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the investee accounted for using equity method within the Company to express an opinion on the parent company only financial statements. We are responsible for direction, supervision and performance of the investee audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2022 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 Ya Quan Zhang and Jin Shu Pan.

Crowe (TW) CPAs

Taipei, Taiwan The Republic of China

March 17, 2023

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

Sinphar Pharmaceutical Co., Ltd.

PARENT COMPANY ONLY BALANCE SHEETS For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS	Note	% Amount December 31,2022	% Amount December 31,2022	Amount % December 31,2021
		Amount
Cash and cash equivalents Notes receivable, net Accounts receivable, net Inventories Prepayments Other current assets Total current assets NONCURRENT ASSETS	6 (1) 6 (2) 6 (3) and 7 (3) 6 (4) 7 (3) 6 (5) 6 (5) 6 (6) 6 (7), 7 (3) and 8 6 (8) and 8 6 (9) and 8 6 (23)	$ 703,055 178,825 456,586 615,056 36,598 4,105 1,994,225	13 3 8 11 1 － 36	$ 531,130 10 159,150 3 365,301 7 559,723 10 26,709 1 2,147 － 1,644,160 31
Financial assets at fair value through profit and loss, non-current Financial assets at fair value through other comprehensive income, non-current		1,219 9,608	－ －	－ － － －
Investments accounted for using equity method Property, plant and equipment Investment property, net Intangible assets Deferred tax assets Prepayments for equipment Refundable deposits Other non-current assets Total non-current assets TOTAL		1,161,753 2,020,278 237,961 28,466 52,108 57,626 17,830 19,147 3,605,996 $ 5,600,221	21 36 4 1 1 1 － － 64 100	1,248,606 23 2,065,639 38 239,508 5 35,028 1 74,875 1 22,902 － 25,292 － 31,337 1 3,743,187 69 $ 5,387,347 100
LIABILITIES AND EQUITY CURRENT LIABILITIES
Short-term loans Contract liabilities-current	6 (10) 6 (18)	$ 360,000 93,235	6 2	$ 440,000 8 92,307 2
Accounts payable	7 (3)	313,721	5	193,522 3
Other payable Deferred tax liabilities Long-term loans - current portion Other current liabilities, others Total current liabilities NONCURRENT LIABILITIES Long-term loans Net defined benefit liability, non-current Other non-current liabilities, others	7 (3) 281,867 39,774 6 (11) , 6 (12) and 8 48,116 42,614 1,179,327 6 (11) and 8 1,404,819 6 (13) 35,978 6 (23) 49,867 1,490,664 2,669,991 6 (14) 1,677,221 6 (15) 929,972 6 (16) 119,606 6 (16) 91,075 6 (16) 233,724 444,405 6 (17) ( 121,368 ) ( 2,930,230 $ 5,600,221	281,867 39,774 48,116 42,614 1,179,327 1,404,819 35,978 49,867	5 1 1 1 21 25 1 1	238,879 4 35,123 1 59,057 1 31,936 1 1,090,824 20 1,472,978 27 50,889 1 50,417 1
Total non-current liabilities		1,490,664	27	1,574,284 29
Total liabilities EQUITY Capital stock		2,669,991 1,677,221	48 30	2,665,108 49 1,677,221 31
Capital surplus		929,972	16	963,516 18
Retained earnings Legal capital reserve Special capital reserve Unappropriated retained earnings (accumulated deficit)		119,606 91,075 233,724	2 153,734 3 2 91,075 2 4 ( 34,128 ) ( 1 )
Total retained earnings		444,405	8	210,681 4
Other Equity Total equity TOTAL LIABILITIES AND EQUITY			2 ) ( 129,179 ) ( 2 ) 52 2,722,239 51 100 $ 5,387,347 100

The accompanying notes are an integral part of the consolidated financial statements.

Sinphar Pharmaceutical Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars)

ITEM	Note	2022	%	2021	%
		Amount		Amount
NET REVENUE COST OF REVENUE GROSS PROFIT Less: Unrealized profit on sales Add: Realized profit on sales GROSS PROFIT OPERATING EXPENSES Selling expenses Administrative expenses Research and development expenses Expected credit impairment (loss) gain Total operating expenses NET OPERATIONS INCOME NON-OPERATING INCOME AND EXPENSES Interest income Other income Other gains and losses Finance costs Share of the loss of subsidiaries and associated and joint ventures accounted for using equity method Total non-operating income and expenses INCOME (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE PROFIT (LOSS) OTHER COMPREHENSIVE INCOME (LOSS)	6 (18) and 7 (3) 6 (4), 6(21) and 7 (3) ( ( 6 (21) and 7 (3) ( ( ( ( ( 6 (19) and 7 (3) 6 (20) and 7 (3) 6 (22) ( 6 (6) ( ( 6 (23) ( 6 (24) ( ( ( ( 6 (25)	$ 2,511,206 1,577,211 ) ( 933,995 371 ) ( 1,106 934,730 390,581 ) ( 121,669 ) ( 111,002 ) ( 1,869 ) ( 625,121 ) ( 309,609 1,744 40,226 11,707 25,007 ) ( 51,887 ) ( 23,217 ) ( 286,392 61,748 ) ( 224,644	100 63 ) ( 37 － ) ( － 37 16 ) ( 5 ) ( 4 ) ( －) 25 ) ( 12 － 2 － ( 1 ) ( 2 ) ( 1 ) ( 11 ( 2 ) ( 9 (	$ 2,157,258 1,391,730 ) ( 765,528 1,106 ) ( 610 765,032 336,091 ) ( 104,453 ) ( 96,247 ) ( 1,160 537,951 ) ( 227,081 243 49,767 5,284 ) ( 22,382 ) ( 271,979 ) ( 249,635 ) ( 22,554 ) ( 15,581 ) ( 38,135 ) (	100 65 ) 35 － ) － 35 16 ) 5 ) 4 ) － 25 ) 10 － 2 －) 1 ) 12 ) 11 ) 1 ) 1 ) 2 )
Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Unrealized loss from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive loss of subsidiaries, associates and joint ventures accounted for using equity method Items that may be reclassified subsequently to profit or loss:		9,080 68 ) ( 3,274 ) ( 5,738 ) ( 13,919 18 2,784 ) ( 11,153 16,891	－ －) －) ( －) ( 1 ( － ( －) － ( 1 (	4,007 － 4,642 ) ( 635 ) ( 6,873 ) ( 47 ) ( 1,374 5,546 ) ( 6,181 ) (	－ － －) －) －) －) － －) －) 2 )
Exchange differences arising on translation of foreign operations
Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for using equity method
Income tax related to components of other comprehensive
income that will be reclassified to profit or loss
Other comprehensive income (loss) for the year, net of income tax
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR		$ 241,535	10 (	$ 44,316 ) (
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share Diluted earnings per share		$ 1.34 $ 1.34	(	$ 0.23 )

The accompanying notes are an integral part of the consolidated financial statements.

Sinphar Pharmaceutical Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars)

For the years ended December 31, 2022 and 2021 (In Thousands of New Taiwan Dollars)
	Capital Stock			Retained Earning
ITEM	Common Stock	Capital Surplus	Legal Capital Reserve	Special Capital Reserve	Unappropriated Retained Earnings (Accumulated Deficit)
Balance, January 1, 2021	$ 1,677,221	$ 941,391	$ 184,734
Appropriations of earnings
Legal reserve used to offset accumulated deficits	－	－ (	31,000 )	－	31,000
Other changes in capital surplus
Difference between consideration and carrying amount of subsidiaries acquired or disposed	－	150,726	－	－	－
Changes in ownership interests in subsidiaries	－ ( 95,181 )		－	－	－
Stock dividends from capital surplus	－ ( 33,544 )		－	－	－
Others	－	124	－	－	－
Total	－	22,125	－	－	－	－	－	22,125
Net loss in 2021	－	－	－	－ ( 38,135 )		－
Other comprehensive income (loss) in 2021, net of income tax Total comprehensive income (loss) in 2021 Balance, December 31, 2021 Appropriations of earnings	－ － 1,677,221	－ － 963,516	－ － 153,734
Legal reserve used to offset accumulated deficits	－	－ (	34,128 )	－	34,128	－	－ －
Other changes in capital surplus
Stock dividends from capital surplus Net profit in 2022	－ ( －	33,544 ) －	－ －	－ －	－ 224,644	－ －
Other comprehensive income (loss) in 2022, net of income tax Total comprehensive income (loss) in 2022	－ －	－ －	－ －	－ －	9,080 233,724
Balance, December 31, 2022	$ 1,677,221	$ 929,972	$ 119,606	$ 91,075	$ 233,724 ($ 80,701 ) ($ 40,667 ) $ 2,930,230

The accompanying notes are an integral part of the consolidated financial statements.

Sinphar Pharmaceutical Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars)

ITEM CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax $ 286,392 ( $ 22,554 ) Adjustments for: Depreciation expense (including investment property) 139,137 135,070 Amortization expense 41,207 36,904 Expected credit impairment loss 1,869 1,160 Interest expense 25,007 22,382 Interest income ( 1,744 ) ( 243 ) 2022 2021	ITEM CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax $ 286,392 ( $ 22,554 ) Adjustments for: Depreciation expense (including investment property) 139,137 135,070 Amortization expense 41,207 36,904 Expected credit impairment loss 1,869 1,160 Interest expense 25,007 22,382 Interest income ( 1,744 ) ( 243 ) 2022 2021
Share of profit of subsidiaries and associates and joint ventures accounted for using equity method, net 51,887 271,979 Gain on disposal of property, plant and equipment 402 ( 258 )
Unrealized profit on sales 371 1,106 Realized profit on sales ( 1,106 ) ( 610 ) Changes in operating assets and liabilities: Notes receivable, net ( 19,675 ) ( 56,761 ) Accounts receivable, net ( 93,154 ) ( 57,301 ) Inventories ( 55,333 ) ( 15,512 ) Prepayments ( 9,889 ) ( 9,013 )
Other current assets ( 1,958 ) 3,750 Contract liabilities 928 ( 3,831 ) Accounts payable 120,199 13,965
Other payable 36,888 59,515 Other current liabilities 10,678 727 Net defined benefit liability ( 5,831 ) ( 9,919 ) Other operating liabilities ( 1,474 ) 2,532 Cash generated from operations 524,801 373,088
Interest received	1,744 243
Interest paid ( 24,802 ) ( 22,382 ) Income taxes paid ( 35,422 ) ( 35,344 )
Net cash generated from operating activities	466,321 315,605
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for using equity method	－ ( 332,920 )
Proceeds from disposal of investments accounted for using equity method － 178,830 Acquisition of financial assets at fair value through other comprehensive income ( 9,676 ) － Acquisition of property, plant and equipment ( 69,670 ) ( 81,301 ) Proceeds from disposal of property, plant and equipment 87 258
Decrease (increase) in refundable deposits 7,462 ( 6,846 ) Acquisition of intangible assets ( 11,061 ) ( 13,911 )
Increase in other non-current assets ( 12,219 ) ( 38,199 )
Increase in prepayments for equipment ( 51,369 ) ( 47,609 ) Dividends received 44,405 31,191
	44,405 31,191
Net cash used in investing activities ( 102,041 ) ( 310,507 ) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loan ( 80,000 ) 90,000 Proceeds from long-term debt 150,000 85,000 Repayments of long-term debt ( 226,888 ) ( 106,695 ) Decrease in long-term payables ( 1,895 ) ( 3,752 ) Decrease in refundable deposits ( 28 ) ( 948 ) Cash dividends paid ( 33,544 ) ( 33,544 ) Other financing activities － 124 Net cash generated from (used in) financing activities ( 192,355 ) 30,185 NET INCREASE IN CASH AND CASH EQUIVALENTS 171,925 35,283 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 531,130 495,847 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 703,055 $ 531,130

The accompanying notes are an integral part of the consolidated financial statements.

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders of

Sinphar Pharmaceutical Co., Ltd.

Opinion

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

In our opinion, the accompany consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2022 and 2021, in accordance with the Regulation Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2022 are stated as follows:

Cash and Cash Equivalents

As of December 31, 2022, the cash and cash equivalent of the consolidated balance sheet was NT$ 1,237,556 thousand, which represented 20% of the Group’s consolidated total assets. As the Group is still in the research and development phase, it is necessary to maintain sufficient cash and cash equivalent balance to support future research and development costs. However, it is taken as a key audit matters due to cash and cash equivalent is a high-risk item.

Our key audit procedures in response

Our procedures in relation to cash and cash equivalent included:

1. Evaluate the design and implementation of internal control. Related to cash and cash equivalent, performed test count of cash on hand, checked the bank deposit balance with the bank statements, and send bank confirmation request in accordance with the Auditing Standards No.69. “External confirmation”.

2. Performed a test audit of the supporting documents for large inflows and outflows of cash and bank deposits, paying attention to changes in cash and bank deposits immediately prior to and after the balance sheet date.

Inventory Valuation

Please refer to Note 4(8.) and 5(2.) in the accompanying consolidated financial statements for related disclosures of the Group’s valuation of inventory accounting policies and critical accounting estimate and assumption.

The Group mainly engages in the production and sales of various types of drugs and food supplements. As the regulations to the pharmaceutical industry cause the cost to increase and meanwhile the selling prices are less likely to be affected as they are covered by the health insurance system. Furthermore, the price of food supplement inventory fluctuates due to market competition and the impacts aroused from advertisements. Management assesses that the net realizable value of inventory involves material judgment. Hence, it is taken as a one of the key audit matters.

Our key audit procedures in response

Our procedures in relation to inventory valuation included:

1. Understand and evaluate the design and implementation of the internal control in relation to inventory.

2. Perform inventory counts, to identify if there are any inventories which are obsolete or damaged.

3. Obtain Inventory aging reports to analyses the changes in inventory age, and check the records of inventory changes to verify the correctness of inventory.

4. Evaluate the reasonableness of its inventory valuation policy of unmarketable items and obsolescence, and check the latest inventory sales price to evaluate the reasonableness of the net realizable value of the inventory.

5. Obtain evaluation documents for subsequent measurement of inventories and assess whether they have been measured in accordance with established accounting policies and review if the management’s disclosure on the evaluation of inventory is presented fairly.

Revenue Recognition

Please refer to Note 4(17.) and 5(2.) in the accompanying consolidated financial statements for related disclosures of the Group’s revenue recognition accounting policies and critical accounting estimate and assumption.

Some products of the Group provide discounts or annual sales incentives based on the terms of the sales contract. Since the recognition of the revenue is measured on the net basis of the related discounts and incentives, we consider the revenue recognition as a key audit matter.

Our key audit procedures in response

Our procedures in relation to the revenue recognition included:

1. Evaluate the design and implementation of the internal control in relation to the revenue recognition.

2. Perform sales contract checks to verify whether the records on the recognition of sales revenue agree with the related contract, and evaluate the fairness of the management’s estimated sales discounts and annual sales incentives.

3. Assess whether the management’s accounting treatments and disclosure in relation to sales discounts and annual sales incentives are presented fairly.

Intangible Assets Impairment

Please refer to Note 4(13.) and 5(2.) in the accompanying consolidated financial statements for related disclosures of the Group’s intangible assets impairment accounting policies and critical accounting estimate and assumption.

The accompanying consolidated financial statements for the year ended December 31, 2022 included intangible assets amounted to NT$ 86,983 thousand, which represented 2% of the Group’s consolidated total assets. The intangible assets of the Group are mainly for the patent technology licensing of the "positively charged liposomes EndoTag-1 anti-tumor drugs". The Group will continue to develop new drugs based on these patented technologies. Because the drugs are still under development, no cash inflow can be generated. As of the balance sheet date, the Group considers external and internal information in determining whether the intangible asset is impaired. If any indication of impairment exists, an assessment of the recoverable amount of the asset is required to confirm the impairment of the intangible asset. Since the impairment assessment performed by management involves critical judgement, we consider impairment assessment of intangible asset as a key audit matter.

Our key audit procedures in response

Our procedures in relation to management’s assessment of indicators of impairment included:

1. Reviewing the assessment of indicators of impairment provided by the management, and discussing with management to evaluate the following items:

2. (1)The product characteristics, target markets, technical trends, and possible derivative products of research and development projects and the patented technology licensing are still competitive in the marketplace；

3. (2)There is no significant delay in the progress of the main research and development projects；

(3)The total market value of the Group is higher than the net assets as of the balance sheet date.

1. Evaluating the reasonableness of management’s adoption of the key assumption and sensitivity analysis including the cash-generating units, forecast of cash flows, the possibility for product commercialization and the discount rate.

Other Matter

We have also audited the parent company only financial statements of Sinphar Pharmaceutical Co., Ltd. as of and for the years ended December 31, 2022 and 2021 on which we have issued an unmodified opinion.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards 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 consolidated financial statements.

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

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentation, 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 Group'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 Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2022 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 Ya Quan Zhang and Jin Shu Pan.

Crowe (TW) CPAs

Taipei, Taiwan Republic of China

March 17, 2023

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

Sinphar Pharmaceutical Co., Ltd and Subsidiaries CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS	Note	% Amount December 31,2022	% Amount December 31,2022	% Amount December 31,2021
		Amount
Cash and cash equivalents Financial assets at fair value	6 (1) 6 (2) 6 (3) 6 (4) 6 (5) 6 (6) 6 (7) 8 6 (2) 6 (8) 6 (9), 7(3) and 8 6 (10) and 8 6 (11) and 8 6 (26) 6 (12) and 8 6 (21) 6 (13) ,6 (14) and 8 6 (13) and 8 6 (15) 6 (26)	$ 1,237,556	20	$ 1,194,785 19
through profit or loss, current Financial assets at amortized cost, current		6,660 －	－ －	6,660 － 43,440 1
Notes receivable, net Accounts receivable, net Inventories Prepayments Other current assets Total current assets		179,136 506,053 737,013 107,172 4,861 2,778,451	3 8 12 2 － 45	159,288 3 433,684 7 697,393 11 158,069 3 10,030 － 2,703,349 44
NONCURRENT ASSETS Financial assets at fair value through profit or loss, non-current Financial assets at fair value through other comprehensive income, non-current		－	－	－ －
		24,695	－	20,359 －
Property, plant and equipment Right-of-use assets Intangible assets Deferred tax assets		3,119,747 19,562 86,983 52,108	51 － 2 1	3,203,902 52 19,909 － 117,296 2 74,875 1
Prepayments for equipment		65,075	1	23,061 －
Refundable deposits Other non-current assets Total non-current assets TOTAL		19,400 19,170 3,406,740 $ 6,185,191	－ － 55 100	26,818 － 31,362 1 3,517,582 56 $ 6,220,931 100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans Current contract liabilities		$ 447,000 96,559	7 2	$ 587,000 9 93,637 2
Notes payable		558	－	163 －
Accounts payable		323,182	5	201,261 3
Other payable Current tax liabilities Long-term loans - current portion Other current liabilities, others Total current liabilities NONCURRENT LIABILITIES Long-term loans		426,424 45,407 50,341 56,440 1,445,911 1,415,618	7 1 1 1 24 23	520,013 8 35,273 1 61,283 1 35,869 1 1,534,499 25 1,485,954 24
Net defined benefit liability, non-current		35,978	－	50,889 1
Other non-current liabilities, others Total non-current liabilities Total liabilities		70,836 1,522,432 2,968,343	1 24 48	72,406 1 1,609,249 26 3,143,748 51
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT Capital stock	6 (16) 6 (17) 6 (18)	1,677,221	27	1,677,221 27
Capital surplus		929,972	15	963,516 15
Retained earnings Appropriated as legal capital reserve		119,606	2	153,734 3
Appropriated as special capital reserve		91,075	1	91,075 1
Unappropriated retained earnings (accumulated deficit)		233,724	4 ( 34,128 ) ( 1 )
Total retained earnings Others equity interests	6 (19) ( 6 (20)	444,405	7	210,681 3
		121,368 ) ( 2 ) ( 129,179 ) ( 2 )
Total equity attributable to shareholders of the parent non-controlling interests Total equity		2,930,230 286,618 3,216,848	47 5 52	2,722,239 43 354,944 6 3,077,183 49
Total liabilites and equity		$ 6,185,191	100	$ 6,220,931 100

The accompanying notes are an integral part of the consolidated financial statements.

Sinphar Pharmaceutical Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars)

ITEM	Note	2022	%	Amount % 2021
		Amount
OPERATING REVENUE OPERATING COSTS GROSS PROFIT OPERATING EXPENSES Selling expenses Administrative expenses Research and development expenses Expected credit impairment (loss) gain Total operating expenses NET OPERATIONS INCOME (LOSS) NON-OPERATING INCOME AND EXPENSES Interest income Other income Other gains and losses Finance costs Total non-operating income and expenses INCOME (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE PROFIT (LOSS) OTHER COMPREHENSIVE INCOME (LOSS)	6 (21) $ 2,856,651 100 $ 2,433,516 100 6 (6, 24) ( 1,765,351 ) ( 62 ) ( 1,544,809 ) ( 64 ) 1,091,300 38 888,707 36 6 (24) and 7 (3) ( 408,272 ) ( 14 ) ( 355,463 ) ( 15 ) ( 213,063 ) ( 7 ) ( 201,597 ) ( 8 ) ( 272,163 ) ( 10 ) ( 511,881 ) ( 21 ) 6(5) ( 467 ) ( －) ( 2,536 ) ( －) ( 893,965 ) ( 31 ) ( 1,071,477 ) ( 44 ) 197,335 7 ( 182,770 ) ( 8 ) 5,776 － 3,683 － 6 (22) 48,707 2 29,382 1 6 (23) 21,041 1 ( 10,021 ) ( －) 6 (25) ( 27,813 ) ( 1 ) ( 24,799 ) ( 1 ) 47,711 2 ( 1,755 ) ( －) 245,046 9 ( 184,525 ) ( 8 ) 6 (26) ( 80,872 ) ( 3 ) ( 20,434 ) ( 1 ) 164,174 6 ( 204,959 ) ( 9 ) 6 (27) 9,080 － 4,007 － ( 5,340 ) ( －) ( 7,486 ) ( －) 3,740 － ( 3,479 ) ( －) 16,874 － ( 8,397 ) ( －) ( 2,784 ) ( －) 1,374 － 14,090 － ( 7,023 ) ( －) 17,830 － ( 10,502 ) ( －) $ 182,004 6 ($ 215,461 ) ( 9 ) $ 224,644 8 ( $ 38,135 ) ( 2 ) ( 60,470 ) ( 2 ) ( 166,824 ) ( 7 ) $ 164,174 6 ($ 204,959 ) ( 9 ) $ 241,535 8 ( $ 44,316 ) ( 2 ) ( 59,531 ) ( 2 ) ( 171,145 ) ( 7 ) $ 182,004 6 ( $ 215,461 ) ( 9 ) 6 (28)
Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Unrealized gain from investments in equity instruments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations
Income tax related to components of other comprehensive income that will be reclassified to profit or loss Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR PROFIT (LOSS) ATTRIBUTABLE TO : Shareholders of the parent Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share Diluted earnings per share		$ 1.34 $ 1.34	($ 0.23 )

The accompanying notes are an integral part of the consolidated financial statements.

Sinphar Pharmaceutical Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(In Thousands of New Taiwan Dollars)
				EquityAttributable to	Owners of Parent
	Capital Stock			Retained Earning				Total
ITEM	Common Stock	Capital Surplus	Legal Capital Reserve	Special Capital Reserve	Unappropriated Retained Earnings (Accumulated Deficit)				Non- Controlling Interests	Total Equity
Balance, January 1, 2021	$ 1,677,221	$ 941,391	$ 184,734					$ 2,744,430 －	$ 399,393	$ 3,143,823
Appropriations of earnings
Legal reserve used to offset accumulated deficits	－	－	( 31,000 )	－	31,000				－	－
Other changes in capital surplus
Difference between consideration and carrying amount of subsidiaries acquired or disposed	－	150,726	－	－	－				22,112	172,838
Changes in ownership interests in subsidiaries	－ ( 95,181 )		－	－	－				110,761	15,580
Stock dividends from capital surplus	－ ( 33,544 )		－	－	－				－ ( 33,544 )
Others	－	124	－	－	－				－ 124
Total	－	22,125	－	－	－	－	－	22,125	132,873 154,998
Net loss in 2021	－	－	－	－ ( 38,135 )		－	－ ( 38,135 ) ( 166,824 ) ( 204,959 ) ( 4,642 ) ( 6,181 ) ( 4,321 ) ( 10,502 ) ( 4,642 ) ( 44,316 ) ( 171,145 ) ( 215,461 )
Other comprehensive income (loss) in 2021, net of income tax Total comprehensive income (loss) in 2021	－ －	－ －	－ －	－ －	4,007 ( 34,128 )	( 5,546 ) ( 5,546 )		( 6,181 ) ( 44,316 )	( 4,321 ) ( 10,502 ) ( 171,145 ) ( 215,461 )
Decrease in non-controlling interests	－	－	－	－	－	－	－	－	( 6,177 ) ( 6,177 )
Balance, December 31, 2021 Appropriations of earnings	1,677,221	963,516	153,734	91,075 ( 34,128 ) ( 91,854 ) ( 37,325 )				2,722,239	354,944 3,077,183
Legal reserve used to offset accumulated deficits	－	－ (	34,128 )	－	34,128	－	－	－	－ －
Other changes in capital surplus							－ － ( 3,342 ) ( 3,342 )
Stock dividends from capital surplus Net profit (loss) in 2022	－ ( －	33,544 ) －	－ －	－ －	－ 224,644	－ －		( 33,544 ) － ( 33,544 ) 224,644 ( 60,470 ) 164,174
Other comprehensive income (loss) in 2022, net of income tax Total comprehensive income (loss) in 2022	－ －	－ －	－ －	－ －	9,080 233,724	11,153 11,153		16,891 241,535	939 17,830 ( 59,531 ) 182,004
Decrease in non-controlling interests	－	－	－	－	－	－	－	－	( 8,795 ) ( 8,795 )
Balance, December 31, 2022	$ 1,677,221	$ 929,972	$ 119,606	$ 91,075	$ 233,724	($ 80,701 )	($ 40,667 )	$ 2,930,230	$ 286,618 $ 3,216,848

The accompanying notes are an integral part of the consolidated financial statements.

Sinphar Pharmaceutical Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

ITEM CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax $ 245,046 ( $ 184,525 ) Adjustments for: Adjustments to reconcile profit (loss) Depreciation expense 200,849 196,982 Amortization expense 65,865 72,388 Expected credit impairment loss 467 2,536 Interest expense 27,813 24,799 Interest income ( 5,776 ) ( 3,683 ) 2022 2021	ITEM CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax $ 245,046 ( $ 184,525 ) Adjustments for: Adjustments to reconcile profit (loss) Depreciation expense 200,849 196,982 Amortization expense 65,865 72,388 Expected credit impairment loss 467 2,536 Interest expense 27,813 24,799 Interest income ( 5,776 ) ( 3,683 ) 2022 2021	ITEM CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) before income tax $ 245,046 ( $ 184,525 ) Adjustments for: Adjustments to reconcile profit (loss) Depreciation expense 200,849 196,982 Amortization expense 65,865 72,388 Expected credit impairment loss 467 2,536 Interest expense 27,813 24,799 Interest income ( 5,776 ) ( 3,683 ) 2022 2021
Loss on disposal of property, plant and equipment 811 1,498
Changes in operating assets and liabilities: Notes receivable, net ( 19,138 ) ( 56,784 ) Accounts receivable, net ( 73,590 ) ( 84,102 ) Inventories ( 39,620 ) ( 15,945 ) Prepayments 50,897 32,394 Other current assets 1,320 12,735 Contract liabilities 2,922 ( 4,161 ) Notes payable 395 ( 582 )
Accounts payable 121,921 7,045
Other payable ( 99,220 ) 206,854 Other current liabilities 20,571 4,322 Net defined benefit liability ( 5,831 ) ( 9,919 ) Other operating liabilities ( 1,413 ) ( 781 ) Cash generated from operations 494,289 201,071
Interest received	5,751 3,687
Interest paid ( 27,644 ) ( 24,864 ) Income taxes paid ( 47,098 ) ( 44,350 )
Net cash generated from operating activities	425,298 135,544
CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through other comprehensive income ( 9,676 ) ( －)
Acquisition of financial assets at amortised cost ( －) ( 43,440 )
Proceeds from disposal of financial assets at amortised cost 43,440 43,770 Acquisition of property, plant and equipment ( 82,166 ) ( 94,997 ) Proceeds from disposal of property, plant and equipment 243 532 Decrease (increase) in refundable deposits 7,418 ( 6,816 ) Acquisition of intangible assets ( 11,963 ) ( 15,261 ) Increase in other non-current assets ( 12,218 ) ( 38,199 ) Increase in prepayments for equipment ( 59,316 ) ( 51,186 ) Net cash used in investing activities ( 124,238 ) ( 205,597 ) CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in short-term loan ( 140,000 ) 35,000 Proceeds from long-term debt 180,000 85,000 Repayments of long-term debt ( 259,065 ) ( 138,915 ) Decrease in redundable deposits ( 25 ) ( 3,201 ) Decrease in long-term payables ( 1,896 ) ( 3,752 )
Cash dividends paid ( 33,544 ) ( 33,544 ) Proceeds from issuing shares － 15,580 Disposal of ownership interests in subsidiaries (without losing control) － 172,838 Change in non-controlling interests ( 8,795 ) ( 6,177 )
Other financing activities	－	124
Net cash generated from (used in) financing activities ( 263,325 ) 122,953 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 5,036 ( 1,884 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 42,771 51,016 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 1,194,785 1,143,769 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 1,237,556 $ 1,194,785

The accompanying notes are an integral part of the consolidated financial statements.