SINPHAR - Annual Report 2022 | FinancialReports.eu

Ⅰ. Spokesperson and Deputy Spokesperson

Spokesperson

Deputy Spokesperson

Name: Chih Hsiao Chen Name: Wan Ping Lee Title: Chief Financial Officer Title: Manager, Chairman Office Tel: +886-2-2760-3688 Tel: +886-2-2760-3688 Email: [email protected] Email: [email protected]

Ⅱ. Headquarters, Branch Offices and Factory

Headquarters and Factory

Address: No. 84, Zhongshan Rd., Zhongshan Village, Dongshan Township, Yilan County 269, Taiwan (R.O.C.)

Tel: +886-3-958-1101 Fax: +886-3-958-3040

Taipei Branch Office

Address: 5F., No. 69, Dongxing Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.) Tel: +886-2-2760-3688

Fax: +886-2-2760-9918

Ⅲ. Stock Transfer Agency

Company: SinoPac Securities Address: 3F., No. 17, Bo'ai Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.) Tel: +886-2-2381-6288

Website: http://www.sinotrade.com.tw

Ⅳ. Contact Information of the Certified Public Accountants for the Latest Financial Report

Name of Accountants: Ya Quan Zhang and Jin Shu Pan

Firm: Crowe (TW) CPAs

Address: 10F., No. 369, Fuxing N. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.) Tel: +886-2-8770-5181

Website: http://www.crowe.com/tw

Ⅴ. Overseas Securities Exchange and the Inquiry Methods for Listed Negotiable Securities

Not applicable.

Ⅵ. Company Website

http://www.sinphar.com.tw

Page Ⅰ. Letter to Shareholders ................................................................................................................. 1 1.1 2022 Business Report .............................................................................................................. 2 1.2 Business Plan for 2023 ............................................................................................................ 5 1.3 The Impact on Company’s Future Development Strategies Due to Competition, Regulatory Restrictions and Market Changes ............................................................................................ 7 Ⅱ. Company Profile ........................................................................................................................ 9 2.1 Date of Incorporation ............................................................................................................. 9 2.2 Company History ................................................................................................................... 9 Ⅲ. Corporate Governance Report ................................................................................................ 14 3.1 Organizational System .......................................................................................................... 14 3.2 Directors, Supervisors and Management Team Information ................................................ 16 3.3 Remuneration Paid to Directors, Supervisors, and Management Team in the Most Recent Year ....................................................................................................................................... 36 3.4 Implementation of Corporate Governance ........................................................................... 42 3.5 Information on CPA Fees ...................................................................................................... 81 3.6 Replacement of CPA ............................................................................................................. 81 3.7 The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or an affiliated enterprise ............................................................................. 81 3.8 Transfer and pledge of stock equity by directors, supervisors, managerial officers and holders of 10% or more of company shares .......................................................................... 82 3.9 Information on Relationships among the Top Ten Shareholders .......................................... 84 3.10 Ownership of Shares in Affiliated Enterprises.................................................................... 85 Ⅳ. Company Shares and Fundraising .......................................................................................... 87 4.1 Capital and Shares ................................................................................................................ 87 4.2 Corporate Bonds ................................................................................................................... 94 4.3 Preferred Shares .................................................................................................................... 94 4.4 Global Depository Receipts .................................................................................................. 94 4.5 Employee Stock Options ...................................................................................................... 94

4.6 New Restricted Employee Shares ......................................................................................... 94 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions .................... 94 4.8 Financing Plans and Implementation .................................................................................... 94 Ⅴ. Operational Highlights .............................................................................................................. 95 5.1 Business Activities ................................................................................................................. 95 5.2 Market and Sales Overview ................................................................................................... 110 5.3 Employees’ status from the two most recent fiscal year up to the printing date of this annual report ...................................................................................................................................... 120 5.4 Environmental Protection Expenditure .................................................................................. 120 5.5 Labor Relations ...................................................................................................................... 121 5.6 Information Security Management......................................................................................... 124 5.7 Important Contract ................................................................................................................. 127 Ⅵ. Financial Information .............................................................................................................. 129 6.1 Most Recent Five Years Concise Balance Sheet and Statement of Comprehensive Income ................................................................................................................................... 129 6.2 Most Recent Five Years Financial Analysis .......................................................................... 133 6.3 Audit Committee’s Review Report in the Most Recent Year ............................................... 137 6.4 Consolidated Financial Statements in the Most Recent Year ............................................... 137 6.5 Parent Company Only Financial Statement in the Most Recent Year Audited by CPA ....... 137 6.6 If the Company or Related Companies Experienced Financial Turnover Difficulties up to the Printing Date of this Annual Report ................................................................................ 137 Ⅶ. Review of Financial Status, Performance, and Risk Related Issues .................................. 266 7.1 Analysis of Financial Status ................................................................................................ 266 7.2 Financial Performance......................................................................................................... 268 7.3 Cash Flow ............................................................................................................................ 270 7.4 Major Capital Expenditure Items ........................................................................................ 270 7.5 Cause of the Profit/Loss for Investment in Recent Year and Investment Plans for the Coming Year ........................................................................................................................ 271 7.6 Analysis of Risk Management ............................................................................................ 272 7.7 Other Important Matters ...................................................................................................... 275

Ⅷ. Special Notes .......................................................................................................................... 276 8.1 Summary of Affiliated Company ....................................................................................... 276 8.2 Private Securities in the Most Recent Year and before the Printing Date ......................... 280 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year and before the Printing Date .............................................................................................. 280 8.4 Other Supplementary Information ..................................................................................... 280 Ⅸ. The Matters Impacting Shareholder Equity or Securities Price in Accordance with Subparagraph 2, Paragraph 3, Article 36 in the Securities and Exchange Act in the Most Recent Year and Before the Printing Date .............................................................................. 280

Ⅰ. Letter to Shareholders

Dear Shareholders,

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.

Thank you for your trust and support.

Sinphar Pharmaceutical Co., Ltd. Chairman, Chih Wen Lee

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 Budget Implementation

This is not applicable because financial forecasting was not disclosed.

1.1.3 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

1.1.4 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		Indication/
		Code		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.
			Brain Health/
		ST01		Preparing for clinical trial.
			Vitality/
				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		Indication/
		Code		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.
			Head and neck
		SB01		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.
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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
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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.

1.2.2 Sales Volume Forecast and Supporting Basis

Drugs and functional food are the main product categories of our Company.

1.3 The Impact on Company’s Future Development Strategies Due to Competition, Regulatory Restrictions and Market Changes

There is a steady growth in healthcare related consumerism as the aging population expands in Taiwan. In order to control the increasing cost of health insurance, the government takes measure to adjust drug prices. However, as the healthcare market continues to grow, the government encourages hospitals or primary medical institutions to use generic drugs resulting in an upward trend in market demand of generic drugs. Yet, domestic pharmaceutical companies are at a disadvantage compared to international pharmaceutical companies due to lack of economic scale and unfair competition of imported drugs. Domestic

companies are under stricter regulations and are required to implement PIC/S GMP, which increase the production cost dramatically, and at the same time, NHI has been steadily reducing the drug prices that it covers.

Although we are facing severe challenges in the future, limitless opportunities exist. Sinphar believes in the company philosophy of life, health, and technology, and consistently invests in and improves hardware and software. We introduce talents and technologies, improve quality, develop new products, and focus more on E-commerce and digital marketing. Sinphar aims to be a contributor to Taiwan pharmaceutical industry and reciprocate the support of shareholders.

Ⅱ. Company Profile

2.1 Date of Incorporation : July 2, 1977

2.2 Company History

1977	Founded on July 2, 1977 with NT$10 million capital.
1980	Started operations on March 1.
1988	Passed GMP inspection and obtained 65 pharmaceutical licenses.
1997	1. Established CanCap Pharmaceutical Ltd. in Canada to facilitate overseas expansion. 2. The Securities & Futures Institute approved the public offering of the Company’s stock in November and the paid-in capital is NT$316,800,000.
1998	The Company increased capital by retained earnings. The paid-in capital is NT$339,480,000.
1999	The Company increased capital by retained earnings and capital surplus. The paid-in capital is NT$390,402,000.
2000	1. Completed 4,900m2 plant expansion and acquired G.M.P. facility certification from Taiwan Industrial Development Bureau. 2. Stock listed for OTC trading (stock code: 4719) on October 17. The paid-in capital is NT$433,346,220.
2001	1. The Company’s new anti-cancer drug, Phyxol injection, was approved by the Department of Health for launching into the market and acquired sales, distribution, and manufacturing rights in Taiwan, China, and other Far East regions. 2. The Company implemented seasoned equity offering and increased capital by retained earnings. The paid-in capital is NT$512,346,990.
2002	1. Received approval to invest in Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) (Sinphar Tian-Li) 2. The Company used follow-on offering, retained earnings and capital surplus to increase capital. The paid-in capital is NT$643,087,800. 3. Officially listed on Taiwan Stock Exchange (stock code: 1734) on August 26 (transferred from OTC trading, stock code: 4112). The paid-in capital is NT$643,087,800. 4. On October 27, grand opening Company-funded Research and Development Center.
2003	1. Passed the ISO9001 quality system certification by the Bureau of Standards, Metrology and Inspection. 2. The Company increased capital by retained earnings. The paid-in capital is NT$675,242,200.


	1. The Company implemented cash capital increase in April. The paid-in capital is
	NT$775,242,200.
	2. Sinphar Tian-Li obtained the GMP drug permit license in May.
2004
	3. The Company increased capital by retained earnings. The paid-in capital is

	NT$821,756,730.
	4. Sinphar Tian-Li acquired Hangzhou Vitrum Healthy Food Co., Ltd.


	1. Passed the ISO14001 environmental management system by the Bureau of
	Standards, Metrology and Inspection.
	2. The Company increased capital by retained earnings in July. The paid-in capital is
2005	NT$879,279,700.
	3. Established headquarters in Yilan.
	4. The Company implemented cash capital increase in October. The paid-in capital is
	NT$979,279,700.


	The Company increased capital by retained earnings in September. The paid-in capital
2006
	is NT$1,057,622,000.


2007	Established Sinphar Counter in March to actively expand presence in pharmacies.

	1. The Company declared to Securities and Futures Bureau, FSC to issue the first
	domestic secured convertible bond amounts to NT$350 million in April.
	2. In August, signed a Technology Transfer Contract for Exclusive R&D Outcome of
2008
	Novel Small Anti-Cancer Drug with the National Health Research Institute, and

	jointly established SynCore Biotechnology Co., Ltd. (SynCore Bio) to develop
	anti-cancer drugs.


	1. Received the BSI OHSAS 18001 certification in February.
	2. In September, PIC/S cancer and ophthalmic solution manufacturing plants and R&D
2009
	facilities entered validation and trial run phase.

	3. The Company passed the ISO 22000 food safety certification in November.


	SynCore Bio new drug SB01 was approved by the USFDA and Taiwan Department of
2010
	Health for phase Ⅰ clinical trial in July and November.



	1. Passed Taiwan’s Department of Health PIC/S GMP inspection and GMP evaluation
	for facility expansion in February.
	2. SynCore Bio signed a botanical medicine agreement with MediGene of Germany to
	acquire exclusive right to manufacture and sell Veregen® in Taiwan in May.
2011	3. In November, SynCore Bio and U.S. MacuCLEAR signed an agreement pertaining
	to authorization of a new AMD drug, which completed phase Ⅰ clinical trial as
	approved by U.S. FDA, in Asia and Australia.
	4. The Company implemented cash capital increase in December. The paid-in capital is
	NT$1,488,511,620.

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	1. Acquired a pharmaceutical plastic container manufacturing plant and changed the
	company name to ZuniMed Biotech Co., Ltd. (ZuniMed Biotech) in February.
	2. SynCore Bio’s new AMD drug was approved for phase Ⅱ/Ⅲ clinical trial in the
	United States by U.S. FDA in April.
	3. SynCore Bio and MediGene signed an agreement to cooperate in co-development of
2012
	the new cancer drug (SB05) and conduct phase Ⅲ clinical trial of SB05 in July.

	4. In accordance with the Act for The Development of Biotech And New
	Pharmaceuticals Industry, the MOHW approved SynCore Bio as a new drug
	biotechnology company in September.
	5. In November, SynCore Bio changed its name in Chinese.


	1. Sinphar Tian-Li signed a New Drug Collaboration Agreement with Kanion
	Pharmaceutical in January.
	2. SynCore Bio’s new AMD drug was approved for phase Ⅱ/Ⅲ clinical trial in Taiwan
	in February.
2013	3. SynCore Bio and MediGene, a German listed company, signed an investment
	agreement and acquired manufacturing and marketing rights for global phase Ⅲ
	clinical trial on SB05 in May.
	4. SynCore Bio, (stock code: 4192) was approved by Taipei Exchange and listed in the
	emerging market in August.


	1. SynCore Bio’s new drug, SB05, obtained the approval for conducting phase Ⅲ
	clinical trial by Belgium and Australia EC in February.
	2. The Company implemented cash capital increase in September. The paid-in capital is
2014	NT$1,612,711,750.
	3. SynCore Bio (stock code: 4192) was publicly listed on GTSM on October 28.
	4. The Company launched its second fully-automated anticancer drugs manufacturing
	facility in Yilan headquarters in October.


	1. SynCore Bio and National Taiwan University Hospital setup the Age-related Macular
	Degeneration Research Center in January.
	2. SynCore Bio signed with AJU PHARM Korea a co-development contract for SB04,
2015
	eye drops for treating Age-related macular degeneration in May.

	3. The Company’s cytotoxic capsule product passed PIC/S GMP inspection by the
	Department of Health in December.

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SynCore Bio’s new drug SB05 (EndoTAG-1) was approved for phase Ⅲ clinical trial by Australian and Taiwanese authorities in February. 2. The Company passed the PIC/S GMP inspection by the Department of Health for its cytotoxic agents (coated tablet) in February. 2016 3. The Company passed the PIC/S GMP inspection by the Department of Health for its injections (sterile) in April. 4. The Company increased capital by retained earnings in September. The paid-in capital is NT$1,677,220,220. 1. SynCore Bio received the US and Taiwan clearance of SB05(EndoTAG® -1) to conduct the phase Ⅲ pancreatic cancer clinical trial. 2. Sinphar Migus Phyto-Protein Powder obtained the “blood lipid regulation” 2017 certification approved by the MOHW in July. 3. Sinphar Memoregain Capsules, a supplement derived from Cistanche tubulosa, obtained the “anti-aging” certification approved by the MOHW in September. 1. SB05 (EndoTAG® -1) developed by SynCore Bio was approved by five countries to conduct phase III clinical trial for pancreatic cancer. 2018 2. Sinphar Potent Plus Soft Capsules was certified by the Ministry of Health and Welfare as a nutritional supplement for “anti-fatigue function” in December. 1. Sinphar soft Capsules and Powder production line received the HALAL certification by MUI in January. 2019 2. In June, SynCore Bio’s SB05PC （ EndoTAG® -1 ） was approved by China NMPA to be the first line treatment for pancreatic cancer patients in phase Ⅲ clinical trial. 1. In January, Sinphar Tian-Li signed with Japan ASAHI GODO INC. an exclusive distribution license agreement for patented Protygold® for distribution in Japan. 2020 2. The global phase Ⅲ clinical trial of SynCore Bio’s SB05 pancreatic cancer announced the results of the interim analysis in August. 3. The Company recalled some products in September.
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Lanostanes, a substance found in patented Lipucan® , can boost immune system and relieve allergy and asthma symptoms. This finding was published in Life magazine. 2. Sinphar Tian-Li combined Cistanche Tubulosa extracts and Lipucan® to create a series of brain-beneficial product and issued patent for “Composition with memory improving function” from China in October, (Patent No. ZL 2018 1 0691573.1). 2021 3. The Subsidiary, SynCore Bio, announced the phase Ⅲ clinical trial result for the new drug treating pancreatic cancer, SB05PC(EndoTAG® -1), in October. The primary efficacy endpoint showed no statistical significance. 4. The Subsidiary, SynCore Bio, was awarded bronze medal in pharmaceutical category for the “2021 Pharmaceutical Technology Research Development Award” held by Ministry of Health and Welfare in December. 1. Sinphar Memoregain Capsules was awarded a gold medal in the 2022 Moscow International Salon of Inventions and Innovative Technologies ARCHIMEDES and the U.S. special award. Additionally, it was also the silver medal winner in Monde Selection of International Institute for Quality Selections. 2. Sinphar Memoregain Capsules was awarded Symbol of National Quality in health 2022 food section in September. 3. The testing laboratories passed ISO17025 certification in October. 4. In October, the Company co-hosted the Yilan Marathon with Yilan County. 5. Sinphar Memoregain Capsules was awarded bronze medal in National Healthcare Quality Award in December. It is the only health food that won this award.
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Ⅲ. Corporate Governance Report

3.1 Organizational System

3.1.1 Organizational Chart

==> picture [705 x 288] intentionally omitted <==

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3.1.2 Major Corporate Functions

Department	Functions
Chairman Office	Support the Chairman to plan, design and implement management system and strategies, and oversee each department to execute and meet organizational and corporate governance targets. It consists of the “Secretary Team.”
Audit Office	Responsible for revising, auditing, and supervising and managing internal control system to meet corporate governance requirements.
Chief Operating Officer Office	To optimize benefits for the Company, the Chief Operating Officer Office guides and coordinates the long-term operating policies and gives direction on major investments of the Company, There are three divisions under the Chief Operating Officer Office. Business Units Team: Consists of the General Manager of each Business Unit: Sinphar Taiwan and Sinphar Tian-Li, and they are responsible for each respective business unit locally in research and development, production, sales, and management. International Business Development Team: Responsible for consolidating products and business resources of Business Units. This team focuses on developing global business and marketing the global image of the Company to optimize opportunities for Business Units. It is also in charge of sourcing international products, raw materials, and equipment for Business Units. China Affairs Office: Responsible for investment and management of affairs in China.
Technology Management Office	The highest management unit responsible for R&D and quality. The major functions of this Office are: establish and control PIC/S GMP production protocols, GLP R&D policy, intellectual property, recruiting legal and patent talents, integrating each Business Unit’s natural products as food products. Setup Technology Management Office Information Platform to manage and track all R&D projects in the Company, Business Units, and outsourced partners. This Office consists of Risk Management Team, R&D Team, Legal & Intellectual Property Team, Information Technology Team, Technology & Human Resource Team, and Food Supplement Team.
Finance Team	Consolidate, supervise, and evaluate accounting, finance, and tax functions.

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3.2 Directors, Supervisors and Management Team Information

3.2.1 Directors

April 23, 2022 Unit: shares; %

Title	Nationality/ Place of Incorporation	Name	Gender/ Age	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chi	ROC	Chih W L	Male/	August	3	June 07,	3149791	188	3149791	188	1799725	107			‧Bachelor Degree in Pharmacy, Kaohsiung Medical University ‧Director, National Association of Small & Medium Enterprises ‧Director, Taiwan Research-based Biopharmaceutical Manufacturers Association ‧Director, Institute for Biotechnology and	‧Director, Xing-Da Capital Corp. ‧Chairman, ZuniMed Biotech Co., Ltd. ‧Chairman, SynCore Biotechnology Co., Ltd. ‧Chairman, SUNETIC	Corporate Director Representative	Yi Ta Lee	First degree of kinship	–
arman	...	en ee	71-80	03, 2021		1999	,,	.	,,	.	,,	.	–	–	Medicine Industry ‧Director, Taiwan Cancer Foundation ‧Director, Youngsun Culture & Education Foundation ‧Presedent, National Outstanding SMEs Award Firendship Club ‧Director, Research Center for Biotechnology and Medicine Policy	BIOTECH INC ‧Chairman, UNIVERSAL NEXT TECHNOLOGIES INC ‧Director, Taiwan Breast Cancer Foundation	Executive Assistant, Chairman’s Office	Ju Nee Yeo	First degree of kinship

16 -

Title	Nationality/ Place of Incorporation	Name	Gender/ Age	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Independent Director	R.O.C.	Ching Lung Lee	Male/ 71-80	August 03, 2021	3	June 29, 2009	–	–	–	–	–	–	–	–	‧Ph.D. in Horticulture, Leibniz University Hannover ‧Chairperson, Council of Agriculture, Executive Yuan ‧Chairman, Taiwan Fertilizer Co., Ltd. ‧National Policy Advisor to the President	‧Professor, National Taiwan University ‧Chair Professor, National Chung Hsing University ‧National Policy Advisor to the President ‧Chairman, BELX Bio-Pharmaceutical Co., Ltd. ‧Independent Director, VISGENEER INC	–	–	–	–
Independent Director	R.O.C.	Yau Yuan Wen	Male/ 71-80	August 03, 2021	3	June 20, 2018	–	–	–	–	–	–	–	–	‧Master Degree in Law, National Taiwan University ‧Administrative Chief Judge, Division-Chief Judge of Taiwan High Court ‧Chief Judge, Taiwan Miaoli District Court	‧Independent Director, AMIDA Technology, Inc.	–	–	–	–
Independent Director	R.O.C.	Hsin Yu Chou	Female/ 41-50	August 03, 2021	3	August 03, 2021	–	–	–	–	–	–	–	–	‧Bachelor Degree in Accounting, Aletheia University ‧Assistant General Manager, Crowe (TW) CPAs ‧Finance Manager, Senior Accounting Manager, Sabrina Fashion Industrial Corp.	–	–	–	–	–

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Title	Nationality/ Place of Incorporation	Name	Gender/ Age	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Director	R.O.C.	Hsiu Min Lin	Male/ 81-90	August 03, 2021	3	June 07, 1999	1,336,876	0.80	1,336,876	0.80	54,288	0.03	–	–	‧National Ilan Institute, Agriculture and Technology	–	–	–	–	–
Director	R.O.C.	Hsiu Chi Kuo	Male/ 71-80	August 03, 2021	3	June 07, 1999	2,064,382	1.23	1,569,382	0.94	437,555	0.26	–	–	‧Kainan Vocational High School ‧Chairman, En Yi Enterprise Co. ‧Director, General Manager, Glory Kingdom Corp.	‧Chairman, Glory Nutria Ltd. ‧Chairman, Vit-Gute Nutrition Ltd.	–	–	–	–
Director	R.O.C.	Ling Mo Chao	Male/ 71-80	August 03, 2021	3	June 29, 2009	1,498,547	0.89	1,489,547	0.89	271,000	0.16	–	–	‧Taichung Municipal Sha-Lu Industrial High School ‧Chairman, Giant Goal Leather MFG. Inc.	‧Chairman, Giant Goal Leather MFG. Inc.	–	–	–	–
Director	R.O.C.	Xing-Da Capital Corp.	－	August 03, 2021	3	June 07, 1999	15,470,464	9.22	15,470,464	9.22	–	–	–	–	–	–	–	–	–	–

18 -

Title	Nationality/ Place of Incorporation	Name	Gender/ Age	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Corporate	ROC	Xing-Da Capital Corp.	Male/	August	3	June 06,	640116	038	640116	038	665361	040			‧Ph.D. in Chemical and Biological Engineering, University of British Columbia ‧EMBA, International Business, National Taiwan University	‧Director, ZuniMed Biotech Co., Ltd. ‧Vice Chairman, SynCore Biotechnology Co., Ltd. ‧Director, SUNETIC BIOTECH INC ‧Director, Xing-Da Capital Corp. ‧Chairman, CanCap Pharmaceutical Ltd.	Chairman	Chih Wen Lee	First degree of kinship	－
Director Representative	...	Representative: Yi Ta Lee	51-60	03, 2021		2012	,	.	,	.	,	.	–	–	‧Director, Taiwan Research-based Biopharmaceutical Manufacturers Association ‧Supervisory Board Member, Medigene AG Germany	‧Representative, SynCore Biotechnology Europe GmbH ‧Director, Taiwan Bio Industry Organization ‧Independent Director, Bionet Corp. ‧Director, Research Center for Biotechnology and Medicine Policy	Executive Assistant, Chairman’s Office	Ju Nee Yeo	First degree of kinship

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Title	Nationality/ Place of Incorporation	Name	Gender/ Age	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Director	R.O.C.	Jehng Jer Guan	Male/ 61-70	August 03, 2021	3	August 03, 2021	–	–	–	–	13,000	0.01	–	–	‧Ph.D. in Graduate Institute for Sun Yat-Sen Thoughts, Chinese Culture University ‧Deputy Director-general, National Police Agency, Ministry of the Interior	–	–	–	–	–
Director	R.O.C.	Hung Chih Lin	Male/ 71-80	August 03, 2021	3	August 03, 2021	1,000,128	0.60	1,000,128	0.60	–	–	–	–	‧Bachelor Degree in Chemical and Materials Engineering, Chinese Culture University	‧Chairman, Daxie Boutique Department Store Co., Ltd. ‧Chairman, Jian-Sheng Co., Ltd.	–	–	–	–
Di	ROC	N Ch Y	Male/	August	3	August 03,	999763	059	999763	059	51095	003			‧China Medical University, Taiwan	‧Superintendent, NENG-CHUN DIABETES CLINIC	General Manager, China Affairs Office	Neng Yin Yu	Second degree of kinship	–
rector	...	eng un u	61-70	03, 2021		2021	,	.	,	.	,	.	–	–	~~‧~~President, Taiwanese Association of Diabetes Educators	‧Honorary President, Yilan Association of Diabetes Supporters	General Manager, Subsidiary company	Neng Yu Yu	Second degree of kinship

20 -

April 22, 2023

A. Major Shareholders of the Institutional Shareholders

	April 22, 2023
Name of Institutional Shareholders	Major Shareholders
Xing-Da Capital Corp.	INSIGHT INTERNATIONAL (50.22%), Ling Fang Kuo (21.86%), Yi Ta Lee (18.80%),○ Ping Lee (3.36%), ○ Jing Lee (3.36%), Chih Wen Lee (2.40%)

(A) Major Shareholders of the Company’s Major Institutional Shareholders

April 22, 2023

	April 22, 2023
Name of Institutional Shareholders	Major Shareholders
INSIGHT INTERNATIONAL	Yi Ta Lee (100%)

B. Information of Directors

(A) Professional Qualifications of Directors and Independence Analysis of Independent Directors

Criteria Name	Professional Qualification and Experiences	Independence Status	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
Director Chih Wen Lee	At least five years of related work experience in the business of the Company. Currently serves as the Chairman of Sinphar Pharmaceutical Co., Ltd. Not being a person of any conditions defined in Article 30 of the Company Act.	─	None
Director Hsiu Min Lin	At least five years of related work experience in the business of the Company. Not being a person of any conditions defined in Article 30 of the Company Act.	─	None

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Criteria Name	Professional Qualification and Experiences	Independence Status	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
Director Yi Ta Lee	At least five years of related work experience in the business of the Company. Not being a person of any conditions defined in Article 30 of the Company Act.	─	1
Director Hsiu Chi Kuo	At least five years of related work experience in the business of the Company. Not being a person of any conditions defined in Article 30 of the Company Act.	─	None
Director Ling Mo Chao	At least five years of related work experience in the business of the Company. Not being a person of any conditions defined in Article 30 of the Company Act.	─	None
Director Jehng Jer Guan	At least five years of related work experience in the business of the Company. Not being a person of any conditions defined in Article 30 of the Company Act.	─	None
Director Hung Chih Lin	At least five years of related work experience in the business of the Company. Not being a person of any conditions defined in Article 30 of the Company Act.	─	None
Director Neng Chun Yu	At least five years of related work experience in the business of the Company. Currently serves as the Superintendent of NENG-CHUN Diabetes Clinic. Not being a person of any conditions defined in Article 30 of the Company Act.	─	None

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Criteria Name	Professional Qualification and Experiences	Independence Status	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
Independent Director Ching Lung Lee	At least five years of related work experience in the business of the Company. Served as the Chairman of Taiwan Fertilizer Co., Ltd. Currently serves as the Professor of National Taiwan University, and Chair Professor of National Chung Hsing University. Specialty is agricultural biotechnology. Not being a person of any conditions defined in Article 30 of the Company Act.	1. Not an employee of the company or any of its affiliates. 2. Not a director or supervisor of the company or any of its affiliates. 3. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. 6. If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. 7. If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution. 8. Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. 9. Not a professional individual who is an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or institution that offers audit services or offers commercial, legal, financial, or accounting services for which he/she has received the total remuneration of less than NT$500,000 over the past two years to the Company or its affiliate, nor a spouse thereof. 10. Not having a marital relationship or a relative within the second degree of kinship to any other director of the Company.	1
Independent Director Yau Yuan Wen	At least five years of related work experience in the business of the Company. Served as Administrative to The Chief Judge, Division-Chief Judge of Taiwan High Court. Specialty is legal. Not being a person of any conditions defined in Article 30 of the Company Act.		1
Independent Director Hsin Yu Chou	At least five years of related work experience in the business of the Company. Served as the Finance Manager and Senior Accounting Manager of Sabrina Fashion Industrial Corp. Not being a person of any conditions defined in Article 30 of the Company Act.		None

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(B) Diversity and Independence of Board of Directors

a. Diversity of Board of Directors

The Company advocates and respects the diverse policy of Directors to improve corporate governance and promote the sound development of the composition and structure of the Board of Directors. The diverse guideline contributes to enhancing the overall performance of the Company. The members of the Board of Directors are hired based on merit, built up with cross-disciplinary complementary capabilities, and increase the seats of female Directors. According to the demands of operations, business model, and development, to strengthen Board competencies to achieve the goal of corporate governance, the following items are the capabilities the Board of the Company should possess:

(a) Basic conditions and values: Gender, age, nationality, and culture.
(b) Professional knowledge and abilities

Have the ability to make operational judgments, ability to perform accounting and financial analysis, ability to conduct management administration, ability to conduct crisis management, knowledge of the industry, an international market perspective, ability to lead, ability to make policy decisions, respective industry experiences and relative abilities.

Name	Diverse Core		Basic Composition	Basic Composition	Basic Composition			Professional	Knowledge and Abilities	Knowledge and Abilities	Knowledge and Abilities	Knowledge and Abilities
		Nationality	Gender	Age Range	Term of Independent Directors	Operational Judgments	Accounting and Financial	Management Administration	Lead and Policy Decision	Crisis Management	Knowledge of the Industry	International Market Perspective
Directors	Chih Wen Lee	R.O.C.	Male	71-80	─		─					
	Hsiu Min Lin	R.O.C.	Male	81-90	─		─					
	Hsiu Chi Kuo	R.O.C.	Male	71-80	─		─					
	Ling Mo Chao	R.O.C.	Male	71-80	─		─					
	Yi Ta Lee	R.O.C.	Male	51-60	─		─					
	Jehng Jer Guan	R.O.C.	Male	61-70	─	─	─	─				
	Hung Chih Lin	R.O.C.	Male	71-80	─		─					
	Neng Chun Yu	R.O.C.	Male	61-70	─		─					
Independent Directors	Ching Lung Lee	R.O.C.	Male	71-80	9-12	─	─					
	Yau Yuan Wen	R.O.C.	Male	71-80	4-6	─	─	─				
	Hsin Yu Chou	R.O.C.	Female	41-50	1-3				─			─

24 -

b. Independence of Board of Directors

The Company currently has 11 members on the Board of Directors, consisting 8 members of Directors and 3 members of Independent Directors (account for 27% of all Directors.) By the end of 2022, all the Independent Directors meet the regulatory requirements related to Independent Directors by the Securities and Futures Bureau, and Financial Supervisory Commission, and none of the Directors or Independent Directors are in violation of Subparagraph 3 and 4, Paragraph 3, Article 26 of the Company Act. The Board of Directors of the Company is independent (Professional Qualifications of Directors and Independence Analysis of Independent Directors is found on page 21). Education, gender, and work experience of each Director are listed in Information on Directors, found on page 16.

25 -

3.2.2 Management Team

													April 23, 2022 Unit: shares; %	April 23, 2022 Unit: shares; %	April 23, 2022 Unit: shares; %	April 23, 2022 Unit: shares; %
Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship			Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
General Manager	R.O.C.	Yu Liang Pei	Male	June 01, 2013	60,283	0.04	–	–	–	–	‧Department of Mechanical Engineering, China Junior College of Technology ‧Medical Representative Certification ‧Master Degree Credit Program in Business Administration, National Taipei University ‧Sales Assistant Manager, Sales Manager, Sinphar Pharmaceutical Co., Ltd. ‧Vice General Manager, Marketing Dept., Sinphar Pharmaceutical Co., Ltd. ‧Sales Director, Marketing Center, Sinphar Pharmaceutical Co.,Ltd.	‧Director, ZuniMed Biotech Co., Ltd.	–	–	–	–

26 -

Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chief R&D Officer	R.O.C.	Yi Ta Lee	Male	August 01, 2007	640,116	0.38	665,361	0.40	–	–	‧Ph.D. in Chemical and Biological Engineering, University of British Columbia ‧EMBA, International Business, National Taiwan University ‧Director, Taiwan Research-based Biopharmaceutical Manufacturers Association ‧Supervisory Board Member, Germany Medigene AG	‧Director, ZuniMed Biotech Co., Ltd. ‧Vice Chairman, SynCore Biotechnology Co., Ltd. ‧Director, SUNETIC BIOTECH INC. ‧Director, Xing-Da Capital Crop. ‧Chairman, CanCap Pharmaceutical Ltd. ‧Representative, SynCore Biotechnology Europe GmbH ‧Director, Taiwan Bio Industry Organization ‧Independent Director, Bionet Corp. ‧Director, Research Center for Biotechnology and Medicine Policy	Executive Assistant, Chairman’s Office	Ju Nee Yeo	Spouse	–

27 -

Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
General Manager, China Affairs Office	R.O.C.	Neng Yin Yu	Male	January 01, 2003	1,549,944	0.92	323,685	0.19	–	–	‧Department of Electronic Engineering, Xin-Pu Industrial College ‧Director, Taiwan Cosmetics Industry Association ‧Sales Junior Manager, Sales Assistant Manager, Sinphar Pharmaceutical Co., Ltd. ‧Assistant General Manager, Marketing Dept., Sinphar Pharmaceutical Co., Ltd.	‧Director, SUNETIC BIOTECH INC. ‧Director, Hangzhou Vitrum Healthy Food Co., Ltd. ‧Director, Hetian Tianli shasheng Pharmaceutical Development Co., Ltd.	General Manager, Subsidiary company	Neng Yu Yu	Second degree of kinship	–
General Manager, Subsidiary company	R.O.C.	Neng Yu Yu	Male	February 15, 2008	592,077	0.35	29,360	0.02	–	–	‧Department of Finance, Tamsui Oxford College ‧Master Degree in Business Administration, National Taipei University ‧Supervisor of Accounting Sector, Assistant Manager of Factory Division, Sinphar Pharmaceutical Co., Ltd. ‧Assistant Manager of Finance Division, Manager of Production Control Division, Sinphar Pharmaceutical Co., Ltd. ‧Assistant General Manager, Supply and Demand of Production Control Dept., Sinphar Pharmaceutical Co., Ltd.	‧General Manager, ZuniMed Biotech Co., Ltd.	General Manager, China Affairs Office	Neng Yin Yu	Second degree of kinship	–

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Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Executive Assistant, Chairman’s Office	Singapore	Ju Nee Yeo	Female	August 01, 2007	665,361	0.40	640,116	0.38	–	–	‧B.Eng., M.Eng., McGill University ‧General Manager, Vice General Manager, Sales & Marketing, CanCap Pharmaceutical Ltd. ‧Vice General Manager, Quality Steering Unit, Sinphar Pharmaceutical Co., Ltd.	–	Chief R&D Officer	Yi Ta Lee	Spouse	–
General Manager, Subsidiary company	R.O.C.	Chao Jih Wang	Male	November 26, 2013	2,000	–	3,785	–	–	–	‧Ph.D. in Graduate Institute of Life Sciences, National Defense Medical Center ‧Lecturer, Department of Pharmacy, National Defense Medical Center ‧Assistant Professor, National Defense Medical Center ‧Director, Sinphar Tian-Li Research and Development Institute	‧Executive Director, Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	–	–	–	–

29 -

Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Vice Chief R&D Officer	Canada	Jing Jing Justine Tang	Female	September 01, 2012	123	–	–	–	–	–	‧Research Doctoral of University of Nancy I, France (Science) ‧Pediatric Laboratory Researcher, Nancy Children's Hospital, France ‧Pediatrics Lecturer, Shanghai Second Medical University (affiliated to Shanghai Jiao-tong University) ‧Attending Physician, Department of Pediatrics, Central Hospital of Jing'an District, Shanghai ‧Department of Pediatrics, Shanghai Second Medical University (affiliated to Shanghai Jiao-tong University) ‧Assistant General Manager, R&D Project Unit, Sinphar Pharmaceutical Co., Ltd.	–	Assistant General Manager, General Manager Office	Yunn Tzer Lu	Second degree of kinship	–
General Manager, Marketing Center	R.O.C.	Chang Long Chen	Male	January 01, 2008	412	–	–	–	–	–	‧General Subjects, Kuang-Fu High School ‧Department of Business Administration, Nanya Institute of Technology ‧Sales Manager, Sales Assistant General Manager, Sinphar Pharmaceutical Co., Ltd. ‧Director, Marketing Dept., Sinphar Pharmaceutical Co., Ltd.	–	–	–	–	–

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Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Vice General Manager, Marketing Center	R.O.C.	Feng Chin Chang	Male	January 01, 2017	2,000	–	–	–	–	–	‧Bachelor Degree in Pharmacy, China Medical University, Taiwan ‧Master Degree in Business Management, Taichung University of Science and Technology ‧Pass Pharmacist of Higher Examination ‧Assistant Manager, Manager, Assistant General Manager, Sinphar Pharmaceutical Co., Ltd.	–	–	–	–	–
Assistant General Manager, Dept. of Planning of Pharmaceutical Product	R.O.C.	Chih Tsao Chang	Male	January 01, 2020	887	–	–	–	–	–	‧Master Degree in Graduate Institute of Pharmacy, National Defense Medical Center ‧Manager, Chinese Herbal Medicine R&D Dept., Sinphar Pharmaceutical Co., Ltd. ‧Senior Manager, Dept. of Planning of Pharmaceutical Product, Sinphar Pharmaceutical Co., Ltd.	–	–	–	–	–

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Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Assistant General Manager, Marketing Channel Dept.	R.O.C.	Chien Kuo Chang	Male	January 01, 2021	2,000	–	–	–	–	–	‧Department of Mechanical Engineering, Chien Hsin Institute of Technology ‧Vice General Manager, Hangzhou Vitrum Healthy Food Co., Ltd. ‧Assistant Project Manager, Marketing Dept. ‧Assistant Manager, Manager, Marketing Channel Division of Business Dept. 3	–	–	–	–	–
Assistant General Manager, Marketing Dept.	R.O.C.	Wen Fang Huang	Male	January 01, 2023	188	–	–	–	–	–	‧Bachelor Degree in Nutrition, Chung Shan Medical University ‧Junior Manager, Marketing Division ‧Manager, Health Supplement Division ‧Manager, Division of Planning of Health Supplement ‧Senior Manager, Marketing Channel Division	–	–	–	–	–

32 -

Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Assistant General Manager, General Manager Office	R.O.C.	Yunn Tzer Lu	Female	November 01, 1997	–	–	–	–	–	–	‧Ph.D. in Environmental Systems Engineering, Clemson University ‧Researcher, Development Center for Biotechnology ‧Assistant General Manager, Biotechnology R&D Dept. and Dosages Formulation Research Dept., Sinphar Pharmaceutical Co., Ltd.	–	Vice Chief R&D Officer	Jing Jing Justine Tang	Second degree of kinship	–
Assistant General Manager, Yilan Office	R.O.C.	Chien Ju Lin	Female	January 01, 2023	744,380	0.44	–	–	–	–	‧Bachelor Degree in Chemical Engineering, Chung Yuan Chiristian University ‧Junior Manager, Material R&D Sector ‧Senior Assistant Manager, Prouction Material Control R&D Division ‧Manager, Planning of Packaging Materials Division ‧Manager, Supply and Demand Dept. ‧Director, Production Control Center	–	–	–	–	–

33 -

Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Assistant General Manager	R.O.C.	Yi Mei Lou	Female	December 01, 2006	153,138	0.09	7,280	–	–	–	‧Department of International Trade, Taipei School of Commerce ‧Manager, Accounting Division, Sinphar Pharmaceutical Co., Ltd. ‧Assistant General Manager, Finance and Accounting Dept., Sinphar Pharmaceutical Co., Ltd.	–	–	–	–	–
Chief Financial Officer	R.O.C.	Chih Hsiao Chen	Male	August 11, 2015	7,000	–	–	–	–	–	‧EMBA, Biotechnology, Taipei Medical University ‧Bachelor Degree in Accounting and Information Technology, National Chung Cheng University ‧Assistant Manager, Assurance Service, PwC Taiwan ‧Manager, Finance and Accounting Dept., C.C.P. Contact Probes Co., Ltd. ‧Manager, Finance and Accounting Dept., Administration Dept., Audit Office, Quality Assurance and Quality Control Dept./ Executive Assistant to the Chairman, Dongguan C.C.P. Contact Probes Co., Ltd.	–	–	–	–	–

34 -

Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Managers Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Accounting Manager	R.O.C.	Li Jung Hsieh	Female	January 01, 2007	46,680	0.03	525	–	–	–	‧Department of Business Administration, Hsing Wu School of Commerce ‧Junior Manager, Assistant Manager, Accounting Division of Finance and Accounting Dept., Sinphar Pharmaceutical Co., Ltd.	–	–	–	–	–

Note: Wen Fang Huang and Chien Ju Lin have been appointed as Assistant General Manager of Marketing Department and Yilan Office respectively on January 01, 2023.

Yunn Tzer Lu, the Assistant General Manager of General Manager Office, resigned on June 22, 2022.

3.2.3 Where the General Manager or person of an equivalent post (the highest level manager) and Chairman of the Board of Directors are the same people, spouses, or relatives within the first degree of kinship, the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto must be disclosed

None

35 -

3.3 Remuneration Paid to Directors, Supervisors, and Management Team in the Most Recent Year

3.3.1 Remuneration for Directors and Independent Directors

2022 Unit: thousand shares; NT$ thousand; %

Title	Name				Remun	eration	eration			Ratio of Total Remuneration (A+B+C+D) to Net Income (%)	Ratio of Total Remuneration (A+B+C+D) to Net Income (%)	Rel	evant Remuner	ation Recei	ved by Directo	rs Who are Also Employees	rs Who are Also Employees	rs Who are Also Employees	rs Who are Also Employees	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Remuneration from ventures other than subsidiaries or from the parent company
		Base Compensation (A)		Severan	ce Pay (B)	Directors Compensation(C)		Allow	ances (D)			Salary, B Allow	onuses, and ances (E)	Severan	ce Pay (F)	Employee Compensation (G)
		The company	All companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company (Note)	Companies in the consolidated financial statements (Note)	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The co	mpany	Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
																Cash (Note)	Stock	Cash (Note)	Stock
Chairman	Chih Wen Lee	5,030	5,998	─	─	1,401	1,401	96	96	2.91	3.34	─	─	─	─	─	─	─	─	2.91	3.34	─
Director	Hsiu Min Lin	166	166	─	─	320	320	48	48	0.24	0.24	─	─	─	─	─	─	─	─	0.24	0.24	─
Director	Hsiu Chi Kuo	193	193	─	─	320	320	48	48	0.25	0.25	─	─	─	─	─	─	─	─	0.25	0.25	─
Director	Ling Mo Chao	166	166	─	─	320	320	48	48	0.24	0.24	─	─	─	─	─	─	─	─	0.24	0.24	─
Director	Xing-Da Capital Corp.	─	─	─	─	950	950	─	─	0.42	0.42	─	─	─	─	─	─	─	─	0.42	0.42	─
Corporate Director Representative	Xing-Da Capital Corp. Representative: Yi Ta Lee	336	336	─	─	─	─	48	48	0.17	0.17	2,333	3,205	─	─	8	─	8	─	1.21	1.60	─
Director	Hung Chih Lin	166	166	─	─	320	320	48	48	0.24	0.24	─	─	─	─	─	─	─	─	0.24	0.24	─
Director	Jehng Jer Guan	192	192	─	─	320	320	48	48	0.25	0.25	─	─	─	─	─	─	─	─	0.25	0.25	─
Director	Neng Chun Yu	166	166	─	─	320	320	48	48	0.24	0.24	─	─	─	─	─	─	─	─	0.24	0.24	─

36 -

Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Ratio of Total Remuneration (A+B+C+D) to Net Income (%)	Ratio of Total Remuneration (A+B+C+D) to Net Income (%)	Relevant Remuneration Received by Directo	Relevant Remuneration Received by Directo	Relevant Remuneration Received by Directo	Relevant Remuneration Received by Directo	rs Who are Also Employees	rs Who are Also Employees	rs Who are Also Employees	rs Who are Also Employees	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Remuneration from ventures other than subsidiaries or from the parent company
		Base Compensation (A)		Severance Pay (B)		Directors Compensation(C)		Allowances (D)				Salary, Bonuses, and Allowances (E)		Severance Pay (F)		Employee Compensation (G)
		The company	All companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company (Note)	Companies in the consolidated financial statements (Note)	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
																Cash (Note)	Stock	Cash (Note)	Stock
Independent Director	Ching Lung Lee	193	193	─	─	385	385	120	120	0.31	0.31	─	─	─	─	─	─	─	─	0.31	0.31	─
Independent Director	Yau Yuan Wen	193	193	─	─	385	385	120	120	0.31	0.31	─	─	─	─	─	─	─	─	0.31	0.31	─
Independent Director	Hsin Yu Chou	166	166	─	─	385	385	104	104	0.29	0.29	─	─	─	─	─	─	─	─	0.29	0.29	─
	1. Please describe the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration: The Company established Remuneration Committee in 2021. The remuneration of directors and independent directors is authorized by the Board of Directors to determine the level of payment in the industry at home and abroad. The operating scale and the current scale of the Company are positively related to operating performance and future risks. The regulation is reviewed by the Remuneration Committee and approved by the Board of Directors. 2. Except for the disclosure above, remuneration paid to the Company’s directors for their services to all the companies listed in the financial statements (e.g., serving as a non-employee adviser): None.

Note: On March 17, 2023, the Board of Directors has passed the resolution of remuneration distribution for directors amounting to NT$5.426 million and for employees amounting to NT$9.647 million. However, the proposal has not been reported and passed at the Shareholders’ Meeting and Remuneration Committee.

3.3.2 Remuneration for Supervisors

On August 3, 2021, the Company established the Audit Committee to replace Supervisors.

37 -

3.3.3 Remuneration for General Managers and Vice General Managers

2022 Unit: thousand shares; NT$ thousand; %

Title	Name	Salary(A)	Salary(A)	Severance Pay (B)	Severance Pay (B)	Bonuses and Allowances (C)	Bonuses and Allowances (C)	Employee Remuneration (D)	Employee Remuneration (D)	Employee Remuneration (D)	Employee Remuneration (D)	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Remuneration from ventures other than subsidiaries or from the parent company
		The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
								Cash (Note)	Stock	Cash (Note)	Stock
General Manager	Yu Liang Pei	2,006	2,006	─	─	1,610	1,610	8	─	8	─	1.61	1.61	─
Chief R&D Officer	Yi Ta Lee	1,038	1,758	─	─	1,295	1,447	8	─	8	─	1.04	1.43
General Manager, China Affairs Office	Neng Yin Yu	1,205	1,205	─	─	672	672	─	─	─	─	0.84	0.84
Executive Assistant, Chairman’s Office	Ju Nee Yeo	790	790	─	─	1,675	1,675	8	─	8	─	1.10	1.10
General Manager, Subsidiary company	Neng Yu Yu	601	2,065	─	─	1	1	8	─	8	─	0.27	0.92
General Manager, Marketing Center	Chang Long Chen	1,360	1,360	─	─	937	937	8	─	8	─	1.03	1.03

Note: On March 17, 2023, the Board of Directors has passed the resolution of remuneration distribution for employees amounting to NT$9.647 million. However, the proposal has not been reported and passed at the Shareholders’ Meeting and Remuneration Committee.

38 -

3.3.4 Managerial Officers with the Top Five Highest Remuneration Amounts

2021 Unit: thousands of shares; NT$ thousands; %

Title	Name	Salary(A)	Salary(A)	Severance Pay (B)	Severance Pay (B)	Bonuses and Allowances (C)	Bonuses and Allowances (C)	Employee Remuneration (D)	Employee Remuneration (D)	Employee Remuneration (D)	Employee Remuneration (D)	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Remuneration from ventures other than subsidiaries or from the parent company
		The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
								Cash (Note)	Stock	Cash (Note)	Stock
General Manager	Yu Liang Pei	2,006	2,006	─	─	1,610	1,610	8	─	8	─	1.61	1.61	─
Chief R&D Officer	Yi Ta Lee	1,038	1,758	─	─	1,295	1,447	8	─	8	─	1.04	1.43
Executive Assistant, Chairman’s Office	Ju Nee Yeo	790	790	─	─	1,675	1,675	8	─	8	─	1.10	1.10
General Manager, Marketing Center	Chang Long Chen	1,360	1,360	─	─	937	937	8	─	8	─	1.03	1.03
General Manager, Subsidiary company	Neng Yu Yu	601	2,065	─	─	1	1	8	─	8	─	0.27	0.92

39 -

Name of the Corporate Managers Distributing Employee Compensation

and the Status of Distribution

	2022 Unit: thousand shares; NT$ thousand; %	2022 Unit: thousand shares; NT$ thousand; %	2022 Unit: thousand shares; NT$ thousand; %	2022 Unit: thousand shares; NT$ thousand; %	2022 Unit: thousand shares; NT$ thousand; %	2022 Unit: thousand shares; NT$ thousand; %
	Title	Name	Employee Compensation -in stock	Employee Compensation -in cash	Total	Ratio of Total Amount to Net Income (%)
Corporate Managers	General Manager	Yu Liang Pei	─	112 (Note 1)	112	0.05
	Chief R&D Officer	Yi Ta Lee
	General Manager, China Affairs Office	Neng Yin Yu
	General Manager, Subsidiary Company	Neng Yu Yu
	General Manager, Subsidiary Company	Chao Jih Wang
	General Manager, Marketing Center	Chang Long Chen
	Vice General Manager, Marketing Center	Feng Chin Chang
	Assistant General Manager, Dept. of Planning of Pharmaceutical Product	Chih Tsao Chang
	Assistant General Manager, Marketing Channel Dept.	Chien Kuo Chang
	Assistant General Manager, Marketing Dept.	Wen Fang Huang (Note 2)
	Vice Chief R&D Officer	Jing Jing Justine Tang
	Assistant General Manager, Yilan Office	Chien Ju Lin (Note 2)
	Assistant General Manager	Yi Mei Lou
	Executive Assistant, Chairman’s Office	Ju Nee Yeo
	Chief Financial Officer	Chih Hsiao Chen
	Accounting Manager	Li Jung Hsieh

Note: 1. On March 17, 2023, the Board of Directors has passed the resolution of remuneration distribution for employees amounting to NT$9.647 million. However, the proposal has not been reported and passed at the Shareholders’ Meeting and Remuneration Committee.

Wen Fang Huang and Chien Ju Lin have been appointed as Assistant General Manager of Marketing Department and Yilan Office respectively on January 01, 2023.
40 -
3.3.5 Analysis of the proportion of total remuneration for Directors, Supervisors, General Managers, and Vice General Managers paid by the Company and the affiliated companies in the consolidated financial statement to the net profit after tax in the individual or parent company only financial statement in the recent two years, also, explain the remuneration policies, standards and combinations, the procedure of determining remuneration, and the relevance of operating performance and future risks

(A) Analysis of the proportion of total remuneration of Directors, Supervisors, General Managers, and Vice General Managers paid by the Company to the net profit after tax in the individual or parent company only financial statement

	2022 (%)	2021 (%)
The Company	11.73	51.36
Companies in the Consolidated Financial Statement	13.20	59.81

(B) Directors and Supervisors

The remuneration policies are issued in the Articles of Incorporation and approved by the Remuneration Committee and Shareholders’ Meeting.

When the Directors of the Company perform duties for the Company, regardless profit or loss, the Company shall offer remuneration. The Board of Directors is authorized to determine their remuneration which complies with their participation in the Company’s operation and their contribution and taking into consideration of the industry standards. If the Company earns a profit, it shall offer remuneration in accordance with the regulation in Article 19 of the Articles of Incorporation.

(C) General Managers and Vice General Managers

The policies of the remuneration that the Company offers to the General Managers and Vice General Managers are implemented following the Remuneration Guidelines, which are established by the Remuneration Committee. The remuneration of General Managers and Vice General Managers includes base salary and allowance. Bonuses are determined by considering operation performance and future risks.

41 -

3.4 Implementation of Corporate Governance

3.4.1 Operation of Board of Directors

A. There were six 【 A 】 Board Meetings held in 2022. The attendance status of the Directors is recorded in the following table.

Title	Name	Attendance in Person `【`B`】`	By Proxy	Attendance Rate in Person (%)`【`B/A`】`	Remarks
Chairman	Chih Wen Lee	6	─	100.00	─
Director	Hsiu Min Lin	5	1	83.33	─
Director	Hsiu Chi Kuo	5	1	83.33	─
Director	Ling Mo Chao	4	2	66.67	─
Corporate Director Representative	Xing-Da Capital Corp. Representative: Yi Ta Lee	6	─	100.00	─
Director	Hung Chih Lin	5	1	83.33	─
Director	Neng Chun Yu	3	3	50.00	─
Director	Jehng Jer Guan	6	─	100.00	─
Independent Director	Ching Lung Lee	6	─	100.00	─
Independent Director	Yau Yuan Wen	6	─	100.00	─
Independent Director	Hsin Yu Chou	6	─	100.00	─
Other mentionable items: 1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the Company’s response should be specified: (Please refer to page 44.) (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: None (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that requires a resolution by the board of directors: None 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, cause for avoidance, and voting should be specified: (1) On August 9, 2022, during the discussion of releasing the prohibition on Directors and managerial officers from participation in competitive business, the Director, Yi Ta Lee recused himself from the discussion and decision-making to avoid conflict of interest. Through the consultation of the chairperson, Chih Wen Lee, all the attending directors agreed to approve the proposal without objection.

42 -
(2) On December 13, 2022, during the discussion of distribution of year-end bonus in 2022, the Director, Yi Ta Lee recused himself from the discussion and decision-making to avoid conflict of interest. Through the consultation of the chairperson, Chih Wen Lee, all the attending directors agreed to approve the proposal without objection.
(3) On December 13, 2022, during the discussion of 2023 adjustment of annual remuneration, the Chairman, Chih Wen Lee and the Director, Yi Ta Lee recused himself from the discussion and decision-making to avoid conflict of interest. Through the consultation of the acting chairperson and the Independent Director, Yau Yuan Wen, all the attending directors agreed to approved the proposal without the objection.
TWSE/TPEx-listed companies are required to disclose the evaluation cycle and period, evaluation scope, evaluation method, and evaluation items of the self (or peer) evaluations conducted by the Board of Directors, and to fill out “Implementation Status of Board Evaluations”: (Please refer to page 46.)
Measures are taken to strengthen the functionality of the Board of Directors and implement status in current and recent years.
(1) The Board of Directors of the Company held six Board Meetings in 2022, in accordance with the Rules of Board of Director Meeting stating the regulation of the meeting shall be held in at least once every quarter to make the information known to the public and improve the information transparency.
(2) The Company shall announce the relative acts of competent authority, responsibilities, and duties of the members of the Board of Directors and the concept of ethical corporate management.
(3) Each Director was invited to actively participate in the course on corporate governance held this year. The course of education training was held in November of 2022. It was attended by Directors as a reference to the implementation of Company policy. Director who cannot participate in that course will attend the course held by Securities and Futures Institute.
(4) To improve the information transparency, when holding the Board Meeting, the Company will record the meeting in accordance with the regulation of the Board Meeting, or hold video conference to ensure the information flow is unimpeded.
43 -

B. Opinions Provided by Independent Directors to the Resolutions of the Board Meeting and Company Resolutions Regarding Opinions of Independent Directors

Date	Proposals	Matters Listed in Article 14-3 of the Securities and Exchange Act	Objections or Reservations Made by Any Independent Director
March 15, 2022	(1) Deficit Compensation and Remuneration Distribution for Directors and Employees in 2021	V	─
	(2) Proposal for Remuneration for Directors	V	─
	(3) Discussion on 2022 Remuneration Distribution for Directors and Employees	V	─
	(4) Proposal for 2021 Statement of Internal Control System	V	─
	(5) Amendment to Procedures for Acquisition and Disposal of Assets	V	─
	(6) The Contract Extension of Endorsements and Guarantees for SubsidiaryCompany	V	─
	(7) Amendment to Articles of Incorporation	V	─
	Opinions of Independent Directors: None
	Company Resolutions Regarding Opinions of Independent Directors: None
	Resolution: Approved by all attending Directors.
June 21, 2022	(1) Endorsements and Guarantees for Subsidiary Company	V	─
	Opinions of Independent Directors: None
	Company Resolutions Regarding Opinions of Independent Directors: None
	Resolution: Approved by all attending Directors.
August 9, 2022	(1) Release the Prohibition on Directors and Managerial Officers from Participation in Competitive Business	V	─
	Opinions of Independent Directors: None
	Company Resolutions Regarding Opinions of Independent Directors: None
	Resolution: Approved by all attending Directors.
November 8, 2022	(1) Credit Assessment of Accounts Receivable Between Subsidiaries	V	─
	Opinions of Independent Directors: None
	Company Resolutions Regarding Opinions of Independent Directors: None
	Resolution: Approved by all attending Directors.
December 13, 2022	(1) Distribution of Year-end Bonus in 2022	V	─
	(2) Adjustment to the Remuneration in 2023	V	─

44 -

Date	Proposals	Matters Listed in Article 14-3 of the Securities and Exchange Act	Objections or Reservations Made by Any Independent Director
	(3) Amendment to Internal Control System	V	─
	(4) Appointment of CPA of the Company	V	─
	(5) The Contract Extension of Endorsements and Guarantees for SubsidiaryCompany	V	─
	Opinions of Independent Directors: None
	Company Resolutions Regarding Opinions of Independent Directors: None
	Resolution: Approved by all attending Directors.
March 17, 2023	(1) 2022 Earnings Distribution Table and Distribution of Cash Dividends	V	─
	(2) 2022 Remuneration Distribution for Employees and Directors	V	─
	(3) Proposal for Remuneration for Directors	V	─
	(4) Proposal for 2023 Remuneration for Directors and Employees	V	─
	(5) Proposal for Statement of Internal Control System	V	─
	Opinions of Independent Directors: None
	Company Resolutions Regarding Opinions of Independent Directors: None
	Resolution: Approved by all attending Directors.

45 -

C. Implementation Status of Board Evaluation

(A)

(A)
Evaluation Cycle	Evaluation Period	Evaluation Scope	Evaluation Method	Evaluation Items
Once a year	January 1, 2022 to December 31, 2022	Board of Directors, Individual Directors, and Functional Committees	Internal self-evaluation by the Board of Directors and self-assessment by Directors.	Board performance evaluation: 1. Level of participation in company operations 2. Improvement of the quality of Board decisions 3. Board composition and structure 4. Appointment of directors and their continued advanced study 5. Internal controls
				Individual director performance evaluation: 1. Grasp company targets and missions 2. Understanding of the director's role and responsibilities 3. Level of participation in company operations 4. Internal relationship management and communication 5. Director's specialty and continued advanced study 6. Internal controls
				Functional committee performance evaluation: 1. Participation in company operations 2. Understanding of the responsibilities of functional committees 3. Improvement of the decision-making quality of functional committees 4. Composition of functional committees and member selection 5. Internal controls

(B) Evaluation Result

The Board of Directors and Functional Committees are working well. In addition to corporate operation, the directors take responsibilities for supervising the compliance with applicable laws and regulations, risk control, etc. The Company will continue to strengthen corporate governance based on the evaluation results from the Board and committees.

The 2022 performance evaluation result was presented at the Board Meeting on March 17, 2023.

46 -

3.4.2 Operation of Audit Committee

A. Audit Committee Members

The Audit Committee is composed of three Independent Directors. The Audit Committee is responsible for assisting the Board of Directors to supervise the Company of the implement on reporting procedure for accounting, auditing, finance and the quality and integrity of financial control. The term of the Committee member is from August 12, 2021 to August 2,

The information on Audit Committee members is as follows:

Title	Name	Professional Qualification and Experience
Independent Director	Ching Lung Lee	Please refer to page 23, Professional Qualifications of Directors and Independence Analysis of Independent Director.
Independent Director	Yau Yuan Wen
Independent Director	Hsin Yu Chou

B. Main duties of the Audit Committee

Adoption and amendment to the internal control system in accordance with the regulation of Article 14-1 of the Securities and Exchange Act.
Assessment of the effectiveness of the internal control system.
Adopt or amend the procedures for material financial or business activities such as acquisition or disposal of assets, derivatives trading, monetary loans to others, or providing endorsement or guarantees for others, pursuant to the regulations of Article 36-1 of the Securities and Exchange Act.
Matters in which a director is an interested party.
Material asset or derivatives transactions.
Material monetary loaning or endorsement, or provision of guarantees.
Public offering, issuance, or private placement of equity-type securities.
Appointment, dismissal, or compensation of certified public accountants.
Appointment and dismissal of chief finance officer, chief accounting officer, or chief internal auditor.
Annual financial statement and Q2 financial statement.
Any other material matters so required by the Company or the competent authorities.
47 -

C. Information on Operation of Audit Committee

A total of seven (A) Audit Committee meetings were held in the most recent fiscal year. The attendance of the independent directors was as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate in Person (%)	Remarks
Independent Director	Ching Lung Lee	7	─	100.00	─
Independent Director	Yau Yuan Wen	7	─	100.00	─
Independent Director	Hsin Yu Chou	7	─	100.00	─
Other mentionable items: a. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee, and the Company’s response to the Audit Committee’s opinion should be specified. (a) Matters referred to in Article 14-5 of the Securities and Exchange Act Date Session Motions Resolutions of the Independent Director The Company’s Response to the Audit Committee’s Opinion February 22, 2022 The fourth meeting of the first Committee 1. Internal Audit Report Presented by Chief Internal Auditor 2. Internal Audit Report in 2021 Agree Approved March 15, 2022 The fifth meeting of the first Committee 1. 2021 Business Report and Financial Statements 2. The Contract Extension of Endorsements and Guarantees for Subsidiary Company 3. Amendment to Procedures for Acquisition and Disposal of Assets Agree Approved May 10, 2022 The sixth meeting of the first Committee 1. 2022 Q1 Financial Statements 2. Internal Audit Report Presented by Chief Internal Auditor Agree Approved June 21, 2022 The seventh meeting of the first Committee 1. The Contract Extension of Endorsements and Guarantees for Subsidiary Company 2. Internal Audit Report Presented by Chief Internal Auditor Agree Approved

48 -

1. 2022 Q2 Financial Statements
The eighth 2. Proposal for Health Park Expansion
August 9, 2022 meeting of the first 3. Release the Prohibition on Directors and Managerial Officers from Participation in Agree	Approved
Committee Competitive Business
4. Internal Audit Report
The ninth 1. 2022 Q3 Financial Statements
November 8, 2022 meeting of the first 2. Assessment of Accounts Receivable Between Subsidiaries Agree	Approved
Committee 3. Internal Audit Report
1. Proposal for Establishing 2023 Plans for
Internal Audit Implementation
2. Amendment to Internal Control System
The tenth 3. Appointment of CPA of the Company in
December 13, 2022 meeting of the first 2023 4. The Contract Extension of Endorsements Agree	Approved
Committee and Guarantees of the Subsidiary
Company
5. Internal Audit Report Presented by Chief
Internal Auditor
(b) Other matters which were not approved by the Audit Committee but were approved by
two-thirds or more of all directors
None
b. If there are independent directors’ avoidance of motions in conflict of interest, the directors’
names, contents of motion, cause for avoidance, and voting should be specified: None
c. Communications between the independent directors, the Company's chief internal auditor,
and accountants (e.g., the material items, methods, and results of audits of corporate finance
or operations, etc.)
(a) The chief internal auditor could communicate with Independent Director directly and
there is good communication flow.
(b) In addition to presenting at the Board Meeting to report on audit operations to
Independent Directors and the follow-up reports in accordance with audit deficiencies,
the chief internal auditor shall also report the progress of implementation of the annual
audit plan and present the audit report at the Board Meeting.
(c) The Audit Committee of the Company is composed of all Independent Directors. The
CPAs shall communicate with Audit Committee regularly through meeting at least four
times every year, and present the status of the financial audit of the Company and the
result of the audit.
The CPAs shall also illustrate the update of the Accounting Standards, the adoption		of
new audit reports for the listed company’s financial statement and initial identification of
key audit matters, etc.

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3.4.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the Reasons

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Does the Company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?			Currently, the Company has not established the Corporate Governance Best-Practice Principles. However, Rules and Procedure of Shareholder Meetings, Rules and Procedures of Board of Directors Meetings, and an Internal Control System have been established. The essence of corporate governance is included in the Internal Control System of the Company and the relevant regulations, to improve corporate governance.	None
2. Shareholding structure and shareholders’ rights (1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes, and litigations, and implement these based on the procedure? (2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3) Does the company establish and execute the risk management and firewall system within its conglomerate structure?	  		(1) The Company has established the spokesperson system to deal with all shareholders’ questions and appointed a stock transfer agent to represent the Company to meet the demand of shareholders. (2) The Company collaborates with Securities & Stock Services Agent for collecting and updating the information of Directors, Corporate Managers, and the status of major shareholders holding more than 10% shares. (3) The Company has implemented the risk evaluations of the related company and established an appropriate firewall in accordance with laws.	None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(4) Does the company establish internal rules against insiders trading with undisclosed information?			(4) The Company has established “Procedures for Handling Material Inside Information and Prevention of Insider Trading” which is suitable for the Company’s Directors, Managers, and Employees, to set up procedures for handling material inside information and disclosure system to avoid inappropriate disclosure of information, also ensure the consistency and correctness of the information published by the Company.
3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop and implement a diversified policy for the composition of its members? (2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?			(1) When the Company establishes the composition of the Board members, member diversification is considered in various aspects. The Board members are hired based on merit. Please refer to “Diversity and Independent of Board of Directors.” (page 24-page 25) (2) In addition to establishing Remuneration Committee as required by law, the Audit Committee was established in August 2021. Also, the Company established Board-approved regulations for each committee. The Company setup an ESG Committee on May 10, 2022 to promote ESG development.	None

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Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(3) Does the company establish a standard to measure the performance of the Board and implement it annually, and are performance evaluation results submitted to the Board of Directors and referenced when determining the remuneration of individual directors and nominations for reelection? (4) Does the company regularly evaluate the independence of CPAs?	 		(3) The Company reviews the effectiveness of the Board regularly, and periodically enhances the level of corporate governance. Also, the Company has collaborated with a competent authority to establish the evaluation methods in the standard of self-evaluation of the Board in November 2019 and implements the performance evaluation of the Board and functional committee annually. According to Rules for Performance Evaluation of Board of Directors, the performance evaluation results shall serve as reference basis for selecting or nominating directors and the determination of individual’s salary and remuneration. The 2022 performance evaluation results were completed and presented at the Board Meeting on March 17, 2023. Please refer to page 46 of this annual report for the evaluation results. (4) The Company evaluates the independence of the CPA annually, ensuring that they are not stakeholders such as a director, shareholder, or person paid by the Company. If there is an appointed matter that the CPA is interested in or has stakeholders in it, the CPA shall avoid it and submit the result to the Board. The Board approved that the CPA, Ya Quan Zhang and Jin Shu Pan still comply with the standard of the independence evaluation (Table 1) on December 13, 2022, so the appointment continues.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
4. Does the company appoint a suitable number of competent personnel and a supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, assisting directors and supervisors with compliance, handling work related to meetings of the board of directors and the shareholders’ meetings, and producing minutes of board meetings and shareholders’ meetings)?			The Company approved the appointing Yi Mei Lou, the Assistant General Manager of Chairman Office, as Corporate Governance Officer on November 8, 2022. The main duties of Corporate Governance Officer are as follows: 1. Handle Board and Shareholders’ Meeting matters in accordance with the law: convene the meeting, provide agenda and notify the Directors 7 days in advance. Also, remind Directors about avoidance of motion in conflict of interest. 2. Prepare Board and Shareholders’ Meeting minutes: complete the meeting minutes within 20 days after the meeting. 3. Assist Directors in continued training and taking courses: arrange the courses according to industry characteristic of the Company and background of Directors. 4. Provide information to Directors for performing their functions. Corporate Governance Officer completed the courses held by Securities and Futures Institute on February21-22,2023.	None
5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?			The Company announces financial information and stock affairs on MOPS and corporate website to establish a communication channel with investors. The Company’s website has a dedicated section for stakeholders (e.g. customers, suppliers, public). All comments may be sent to the Company via e-mail or telephone.	None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?			The company has appointed shareholders’ affairs.	“SinoPac Securities Co., Ltd.” for	None
7. Information Disclosure (1) Does the Company have a corporate website to disclose both financial standings and the status of corporate governance? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesperson system, webcasting investor conferences)?	 		(1) The Company website ishttp://www.sinphar.com.tw ,with an investor relations section where shareholders can easily find financial and stock related information. Alternatively the public can search for the Company’s financial and stock related information on MOPS. The Company Spokesperson and Deputy Spokesperson communicate to public on behalf of the Company. (2) In accordance with the regulation, the Company has designated a person responsible for collecting information and disclosing the website. The website is in Chinese, English, and Simplified Chinese to facilitate timely disclosure of information to stakeholders. The Company has a spokesperson and a deputy spokesperson as required by regulation.		None
(3) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?			(3) The Company currently reports the financial statement and monthly operational status in accordance with the date formulated by the regulation of “Business Matters to be Handled by Issuers of Listed Securities”, but has not announced and reported the annual financial statements within two months after the end of the fiscal year and has not made announcements before the prescribed period.

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Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
8. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?			(1) Employee rights and employee wellness: The Company has established and announced work rules to meet the relevant labor acts. Moreover, the Company has established Welfare Committee and Trade Union to implement employee benefits programs. For any other relevant information, please refer to the section on labor relations in this annual report. (2) Investor relations, supplier relations, rights of stakeholders: the Company has built strong long-term relationships with shareholders and suppliers by providing timely information. (3) To ensure corporate governance implementation, the Company arranges for all Directors to attend related courses, and also updates Directors of any changes to relevant regulations. In 2022, the Directors completed the following courses: (1) Corporate Governance Practice and Case Study and (2) Insider Trading Regulation Practice and Case Study held by Taiwan Corporate Governance Association totaling 6 training hours (1) How to Supervise Company to Establish and Promote Comprehensive Risk and Management System and (2) Discussion for Human Resources and Placements of Employees After Mergers and Acquisitions held by Securities and Futures Institute each course consists of 6 training hours. (4)Purchasinginsurance for Directors: The Companyhas	None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status
	Yes	No	Abstract Illustration
			purchased insurance for all Directors. This gives Directors and Supervisors the peace of mind to make difficult decisions in corporate governance and attracts talents to become a part of the Board.
9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures: In 2022, the Company setup ESG Committee, provided English financial statements, and continued to maintain a diverse Board of Directors, which improved information transparency. For indicators which the Company did not score, the Company will continue to consider improvement measures.

Table 1. The Standard of CPA’s Independence Evaluation

Table 1. The Standard of CPA’s Independence Evaluation
Evaluation Item	Result	Independent
1 Whether the CPA and their family member have a direct or significant indirect financial interest relationship with the Company?	No	Yes
2 Whether the CPA has financing or guarantees with the Company or the Director of the Company?	No	Yes
3 Whether the CPA has a close business relationship and potential employment relationship with the Company?	No	Yes
4 Whether the CPA and their audit team members have served as Directors, Managers, or positions that have a significant influence on audit work in the Companyatpresent or in the last twoyears?	No	Yes
5 The CPA and their audit members have no business relations that have a significant influence on the independence of the Company’s Directors, Supervisors, and Managers.	No	Yes

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3.4.4 The Status of Establishing the Remuneration Committee

Established the Remuneration Committee in accordance with the regulation and the Independent Director serves as convener and chairperson.

A. The Information on Remuneration Committee Members

Criteria Name Position	Criteria Name Position	Professional Qualification and Experience	Independence Status	Number of Other Public Companies in Which the Individual is Concurrently Serving as a Remuneration Committee Member
Convener and Independent Director	Ching Lung Lee	1. Please refer to page 23, relevant content of “Independence Analysis of Independent Directors”. 2. The Committee Member, Fu Hsing Chang is a CPA. He possesses an extensive professional background in accounting and industry experience and currently serves as an Associate Professor in the Department of Accounting Information at the Chihlee University of Technology.	(1) Not an employee of the company or any of its affiliates. (2) Not a director or supervisor of the company or any of its affiliates. (3) Not a shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs. (5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. (6) If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. (7) If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution.	1
Independent Director	Yau Yuan Wen			1
Member	Fu Hsing Chang			3

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- (8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
- (9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided.
- (10) Not being a person who is a spouse or within the second degree of kinship with other directors.
B. Operation of the Remuneration Committee
(A) There are 3 members on the Remuneration Committee.
(B) Current Term: From August 12, 2021 to August 2, 2024.
(C) Attendance Status

A total of two Remuneration Committee meetings were held in the most recent fiscal year and the average attendance rate is 100%. The qualifications and attendance record of the Remuneration Committee members are as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate in Person (%) (B/A)	Remarks
Convener	Ching Lung Lee	2	–	100.00	–
Member	Yau Yaun Wen	2	–	100.00	–
Member	Fu Hsing Chang	2	–	100.00	–
The Duties of Remuneration Committee: The Committee shall fulfill the following obligations and report the suggestions to the Board. 1. Establish and periodically review the performance evaluation and remuneration policies, system, standards, and structure for directors and managerial officers. 2. Periodically evaluate and establish the remuneration for directors and managerial officers. The Operational Status of the Remuneration Committee: The information on meetings and motions of the Remuneration Committee are as follows:

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==> picture [464 x 242] intentionally omitted <==

----- Start of picture text -----

The Company’s Response
Remuneration
Motions Resolutions to the Remuneration
Committee
Committee’s Opinion
Proposal for performance evaluation of the Board of
Directors in 2021
The third
meeting of 2021 Remuneration Distribution for Employees and Approved by
the fifth Approved by all
Directors all committee
Committee attending Directors
members
on March Proposal for Remuneration for Directors
15, 2022
Percentage of Remuneration Distribution for Directors
and Employees in 2022
The fourth
meeting of Distribution of Insider Year-end Bonus in 2022
the fifth Approved by
Approved by all
Committee all committee
attending Directors
on members
December Adjustment to Remuneration of Insider in 2023
13, 2022
----- End of picture text -----

Other mentionable items:

If the Board of Directors declines to adopt or modifies a recommendation of the Remuneration Committee, it should specify the date of the meeting, session, the content of the motion, resolution by the Board of Directors, and the Company’s response to the remuneration committee’s opinion (e.g., if the remuneration passed by the Board of Directors exceeds the recommendation of the Remuneration Committee, the circumstances and cause for the difference shall be specified)

None

Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, the content of the motion, all members’ opinions, and the response to members’ opinion should be specified
None
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3.4.5 Implementation Status of Sustainable Development and Deviations from the “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies”

TWSE/TPEx Listed Companies”
Implementation Item			Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Does the company let the Board authorize and direct executive-level positions to take charge of setting up the structure of implementing sustainable development and establishing an exclusively (or concurrently) dedicated unit? (TWSE/TPEx Listed Companies shall disclose the implementation status, not comply or explain.)			1. On May 10, 2022, the Board established the “ESG Committee”. The committee focuses on ESG compliance in accordance to relevant laws and regulations and the Company’s development strategies. The committee plans to report to the Board once a year. 2. In accordance to the law, the “ESG Committee” plans to present to the Board a progress report on ESG every year.	None
2. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies? (Note 2) (TWSE/TPEx Listed Companies shall disclose the implementation status, not comply or explain.)			1. Each subsidiary company must abide by the applicable laws of registered location. Because the Company is the largest company by revenue amongst all related companies, so risk assessment policies and strategies will be mainly about the Company. 2. The Company has established risk management strategies based on local laws and regulations and industry practice. The illustration of risks and strategies after evaluation is as below:	None

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			Implementation Status	Implementation Status
Yes	No		Abstract Illustration
				Illustration 1. The Company abides by environmental regulations and ISO-14001:2015 standards in environmental protection and sustainability. 2. The Company implemented ISO-50001 to reduce carbon gas and green house gas emission, monitor water consumption, reduce waste and recycle, schedule regular maintenance of boiler to lessen environmental impact. 3. The Company has wastewater treatment facilities and water management system to prevent contaminants from entering into water, air and soil. The Company abides by occupational safety and health-related regulations as well as ISO45001 international standards, and is committed to building a safe and healthy workplace for its employees.
		Significant Issue	Risk Evaluation Item	Illustration
		Environment	Environmental Impact and Management	1. The Company abides by environmental regulations and ISO-14001:2015 standards in environmental protection and sustainability. 2. The Company implemented ISO-50001 to reduce carbon gas and green house gas emission, monitor water consumption, reduce waste and recycle, schedule regular maintenance of boiler to lessen environmental impact. 3. The Company has wastewater treatment facilities and water management system to prevent contaminants from entering into water, air and soil.
		Society	Occupational Safety	The Company abides by occupational safety and health-related regulations as well as ISO45001 international standards, and is committed to building a safe and healthy workplace for its employees.

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			Implementation Status	Implementation Status
Yes	No		Abstract Illustration
			Product Safety	1. All products are government and EU RoHS approved and are free of hazardous substances. To ensure the quality of customer service, the Company set up a customer service hotline and website, and conducts customer satisfaction survey every year. 2. The Company participates in the drug-injury relief system regularly as required by law.
		Corporate Governance	Law Compliance	1. The Company put in place governance structure and internal control system to ensure all employees and the operation comply with the relevant acts. 2. The Company applies for patent protection for all products developed by the Company.
			The function of the Board	1. Scheduled annual seminars for Directors to stay current with the latest policies and regulations. 2. Purchased directors' and officers' liability insurance toprotect them from claims

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Implementation Item				Implementation Status	Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No		Abstract Illustration
					which may arise from decisions and actions taken as part of their duties.
				Stakeholder Communication	1. To avoid the difference in position between stakeholders and the Company, which may lead to operating or litigation risks, the Company analyzes important stakeholders issues annually. 2. The Company has several methods to communicate with investors directly, including a dedicated investor e-mail address that the spokesperson responds to personally.
3. Environmental Issues (1) Does the company establish proper environmental management systems based on the characteristics of its industries?			The Company established an environmental management system according to ISO 14001:2015 and certified by a third party, the Taiwan Branch of BSI. The certificate is valid from January 20, 2023 to January 19, 2026.			None

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Implementation Item			Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have a low impact on the environment? (3) Does the company evaluate the potential risks and opportunities in climate change with regard to the present and future of its business, and take appropriate action to counter climate change issues?	 		In 2022, specific energy consumption (1,646 KLOE) increased by 24.3% compared to 2021 (1,324 KLOE). The Company will continue to monitor and make effort to achieve the goal. The goal for the next five years (2022-2026) is to decrease energy consumption by 5% from 2021 by 2026. In 2023, the Company will conduct “Energy saving improvement plan for steam system” in the factory, perform energy inventory, and gradually replace older equipment with newer models that have energy label. 1. ESG Committee is in charge of climate change management and is chaired by the Vice Chairman of the Company. The Committee will be responsible for managing and supervising climate change risk management. 2. Considering using the TCFD structure published by FSB as reference and considering the allocation of Company resources and industry-specific characteristics, the Company plans to focus on two major risks: environmental regulations and the increase in the cost of raw materials. 3. Controls for two major risks are: abide by and research relevant environmental regulations, invest in new equipment and production process, and produce certain raw materials,etc.	None None

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Implementation Item				Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No		Abstract Illustration
(4) Does the company take inventory of its greenhouse gas emissions, water consumption, and the total weight of waste in the last two years, and implement policies on greenhouse gas reduction, water reduction, or waste management?				2021: Greenhouse Gas- Direct Emissions: 656.87 tons Indirect Emissions: 8,142.18 tons Water Consumption- Raw Water: 100,633 tons Tap Water: 28,950 tons Waste- Hazardous Wastes: 11 tons Non-hazardous Wastes: 236.389 tons 2022 (Parent Company): Greenhouse Gas- Direct Emissions: 1,068.41 tons Indirect Emissions: 8,556.83 tons Water Consumption- Raw Water: 145,596 tons Tap Water: 42,798 tons Waste- Hazardous Wastes: 12.99 tons Non-hazardous Wastes: 204.52 tons 1. With eco-efficiencyand sustainable consumption in mind,the	None

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Implementation Item			Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			Company engages in the business operations, R&D, and production, in accordance with the following goals: (1) Reduce the resource and energy consumption of products and services. (2) Reduce the emission of pollutants, toxic substances, and waste, and dispose of waste in accordance with the laws. (3) Increase the recyclability and reusability of raw materials or products. (4) Increase durability of products. (5) Increase the efficacy of products and services. 2. The Company has wastewater treatment facilities and water management system to prevent contaminants from entering into water, air and soil.
4. Social Issues (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?			1. The Company and its subsidiaries comply with the relevant regulations of their respective operational locations, and refer to the “Universal Declaration of Human Rights”, and “Declaration of Fundamental Principles and Rights at Work” to create a safe and fair work place and to protect employees’ right. 2. Examples of proposal are summarized below: (1) The Company is unionized by law. A labor-management is convened everythree months,or sooner as needed.	None

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Implementation Item			Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			(2) Establish “Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment” and “Committee Against Sexual Harassment” to provide a harassment free workplace. (3) The Company set up SA8000-certificted J1-01 “Corporate Social Responsibility Code of Conduct” and regularly schedules seminars on this subject.
(2) Does the company have reasonable employee benefits measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries?			1. According to the Articles of Incorporation, when the Company has profit in a fiscal year, the Company shall distribute 2% to 8% of the current year's profit as employee remuneration. Employee benefits include: employee dividend, year-end bonus, holiday bonus, transportation allowance, travel subsidy, wedding and maternity cash gift, scholarship, gift or gift certificate for festivals. 2. Diversity and Equality in the Workplace: In 2022, 41.53% of management positions were held by women. Moreover, the Company established gender-neutral restrooms to promote gender equality and diversity. 3. The Company provides health check every year to protect employees’ health. 4. Organize employee welfare committee and labor union to improve labor-management relations and reach win-win	None

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Implementation Item			Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			situation.
(3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?			1. The Company established the Occupational Safety and Health Management System according to ISO 45001 and the sustainable verification by a third party, the Subsidiary in Taiwan of BSI. The certificate is valid from February 10, 2021 to February 9, 2024. 2. The Company targets possible occupational safety and health problems from working in the factory to provide effective solutions, and continues to educate employees on the importance of occupational safety and occupational hazard prevention. 3. The Company establishes and manages measurable target of occupational safety and health, and expands to include products and services related to occupational safety and health. Working Environment Monitoring To prevent harm caused by workplace hazardous materials and provide a safe and healthy environment, the Company conducts environment monitoringin the workplace twice ayear.	None

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Implementation Item			Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			To ensure workplace safety, the Company establishes relevant regulation for emergency preparedness and response. The emergency drill is held annually and fire safety training is held semiannually. In 2022, 32 people completed fire drill totaling 6 hours. Occupational health nurse arranges for an occupational medicine doctor to provide occupational health services and conduct “Four Major Plans for Occupational Health” in the factory.
(4) Does the company provide its employees with career development and training sessions?			1. The Company has a comprehensive career training system for all employees, including new employee training, professional training, and managerial training, etc. Employees are encouraged to continue education and learn about Company’s core values. 732 people completed career training in 2022 totaling 1,402 hours. 2. During the annual performance meeting, the supervisor will work with the employee to set up a personalized annual development plan. The plan may be adjusted through regular feedbacks to achieve optimal results.	None

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Implementation Item			Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(5) Do the company’s products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented?			Product labels are printed and affixed on a product in compliance with the international and Taiwan’s regulations and acts such as the PIC/S GMP Guide to Good Manufacturing Practice for Medicinal Products, Pharmaceutical Inspection Convention and Co-operation Scheme, ISO 22000 food safety management system, Halal Assurance Management System, certification of GMP for cosmetics and health supplements, also, accepts the authentication of the international organization regularly.	None
(6) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational safety and health or labor and human rights? If so, describe the results.			1. Supplier management policy set out the requirements for quality of product and service, delivery date, and pricing. Suppliers need to comply with environmental protection, safety and health requirements. The Company and suppliers work together to enhance corporate social responsibility and create a partnership for sustainable development. 2. Actual implementation: (1) The Company evaluates a new supplier, based on product quality, financial situation, pricing, health and safety, and environmental protection. The ones who passed the evaluation. (2) The Company requires that the approved suppliers are surveyed annually to ensure compliance with environmental protection, health and safety, human rights and related regulations.	None

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Implementation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			(3) The Company re-evaluates suppliers semiannually in accordance with supplier management policy. Each supplier is assigned a score, and based on the score, the supplier may be rewarded
5. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as sustainable development reports? Do the reports above obtain assurance from a third-party verification unit?			The Company self-requires to meet the highest and strictest standards set forth by the law; therefore, the Company did not prepare additional guidelines.	None
6. Describe the difference, if any, between actual practice and the sustainable development principles, if the company has implemented such principles based on the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies The Company abides by all relevant regulations, and setup ESG Committee responsible for sustainable development matters on May 10, 2022; therefore, the Company did not prepare additional guidelines.
7. Other useful information for realizing the implementation status of sustainable development practice 1. The Company is a long-term sponsor to the gymnastics, soccer and basketball teams of local universities, junior highs and high schools in Yilan, as well as a supporter of the symphonic band at Dongshan Elementary School. In addition to providing nutritional products, the Company sponsors instruments and travel to international competition. 2. The Company adopted the street lights of Zhongshan Village and Wanshan Village in Dongshan Township, Yilan County. The Company also adopted Renshan trails, together with Sinphar Health Area and Jhong Shan Agriculture Leisure Area become a tourist attraction.

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Implementation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
3. Since 2013, the Company continues to sponsor the events of ghost grappling and the Mazu Pilgrimage to support traditional festival. 4. Donate NTD 5 million over 5 years to Kaohsiung Medical University for students in need of financial assistance. Every year, the Company provides scholarship for outstanding School of Pharmacy graduates from Kaohsiung Medical University. 5. The Company is dedicated to caring for society and promoting health education on disease prevention by providing long-term sponsorship to various organizations, including Taiwan Breast Cancer Foundation, Taiwan Cancer Foundation, Taiwan Alzheimer’s Disease Association, Spinal Cord Injury Foundation, the Diabetes Association of the Republic of China (Taiwan) and Taiwan Yilan Association of Diabetes Supporters, and Youngsun Education Foundation. 6. The Company hosts biomedical forums and biotech camps, which act as a platform for medical professionals, academics, biotech experts to exchange and integrate ideas on current public health concerns, discover novel biomedical thinking, and provide a channel through which the public can communicate with the medical communicate with the medical community, and cultivate biotech seedling and talents. 7. Since 2015, all 1300 Sinphar Counters across Taiwan participate in the Dementia Friendly Store network developed by Taiwan Alzheimer’s Disease Association. When in contact with a lost elderly person, a Sinphar Counter member will proactively contact his/her family member or take him/her to a police station. 8. The Company donates to National Health Research Institutes and Formosa Cancer Foundation. The Company provides an allowance of new drug development and medical care and extends the choices of first-line treatment for pancreatic cancer to find out the best treatment for patients. 9. The Company participated in anti-drugs charitable activities to help raise public awareness on drug abuse and drug abuse prevention. 10. The Company donated to the Taiwan Oncology Society for cancer research and international cooperation in clinical treatment. 11. Each year, the Company, with the medical volunteers of universities and other charitable organizations, donates medicines and holds free clinics locally and aboard. The Company has sponsored 8 charitable organizations and thousands in count of drug donation. 12. Sinphar Counters hold 70 “Health Workshop” across Taiwan each year. Over 2500 have participated. 13. The Company holds annual “Sinphar Biomedical Forum” focusing on the care management of encephalopathy, breast cancer prevention, cardiovascular disease treatment, pancreatic cancer,and dementiaprevention. This forum,which attracts nearly1800participants,helps to introduce innovative

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Implementation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
biomedical thinking. 14. The Company held the “International Pancreatic Cancer Forum”. Invitees include internationally reknown pancreatic cancer specialists who shared their expertise and discussed the latest pancreatic cancer treatment. The forum was attended by more than 100 medical professionals and industry personnel and using media to promote cancer prevention awareness. 15. The Company sponsored Biochemical Technology Education Foundation to increase the visibility of the biochemical education industry in Taiwan internationally. 16. The Company sponsored medicine for the free clinics setup by Hualian Oral Hygiene Medical Service Corps of the Department of Dentistry of National Yang-Ming University and Penghu Medical and Social Service Corps of Taipei Medical University and Green Cross Medical Service Corps. 17. The Company sponsored National Taipei University International Volunteer Corps with medicine for free health care service in Nepal, free health care service in Nan’ao Township, and nutritional supplements to underprivileged indigenous people. 18. During the pandemic, the Company twice donated nutritional supplements and cash to epidemic prevention and health control professional and hospitals in Yilan. 19. The Company sponsored Yilan county sports teams with nutritional supplements and donated NT$5 million to Yilan Sports Education Funds. 20. From 2022-2024, the Company co-sponsors the Yilan Marathon with Yilan County government and donates of NT$ 8 million. 21. The Company is a long-term participant in the Yilan Green Expo, Children’s Folklore & Folkgame Festival held by the Yilan County government, and advocates for ecological conservation, sustainable future, and building a better environment for future generations.

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3.4.6 Fulfillment of Ethical Corporate Management and Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”

TWSE/TPEx Listed Companies”
Evaluation Item			Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Establishment of ethical corporate management policies and programs (1) Does the company have a Board-approved ethical corporate management policy and state in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy? (2) Does the Company have mechanisms in place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? (3) Does the company provide the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs above effectively and perform regular reviews and amendments?	  		(1) The Company follows the Company Act, Securities and Exchange Act, related regulations for TWSE/TPEx-Listed Companies, and commercial acts to implement the basis of ethical corporate management. (2) The Company established “Ethical Corporate Management Best Practice Principles” in March 2015, and announced them on the company website as a sign of commitment by the Board and management. (3) The Company requires that the Directors, Managers, and employees avoid unethical conduct and not offer and/or accept bribes. Ensure that Company’s interests are put before employee’s own interests.The Company offers	None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			several channels to report unethical conducts to regulatory affairs or management unit.
2. Fulfill operations integrity policy (1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (2) Does the company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations? (3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement them? (4) Does the company have effective accounting and internal control systems in place to implement ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct,or hire outside accountants toperform the audits?	   		(1) The Company conducts business activities fairly and equitably and considers the legality of business partners. (2) Chairman Office is responsible for supervising the implementation of ethical corporate management policy and periodically reports to the Board of its findings. (3) Ethical corporate management is of the foremost importance to the Company. All employees are required to follow relevant laws and code of ethics when conducting business (4) To protect investors’ interests, the Company has established internal control system, internal audit system, and management practices which internal auditors use as guidelines to verify implementation, and report to the Board and Audit Committee.	None None None None

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Evaluation Item			Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(5) Does the company regularly hold an internal and external educational training on operational integrity?			(5) The Company announces the importance of operational integrity semiannually during monthly employee meetings. This 10-15 minutes announcement takes place two times in Taipei with 170 attendees each time and twice in Yilan with 210 people in attendance each time.	None
3. Operation of the integrity channel (1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for a follow-up? (2) Does the company have in place standard operating procedures for investigating accusation cases, as well as follow-up actions and relevant post-investigation confidentiality measures? (3) Does the company provide proper whistleblower protection?	 		(1) The person (“the Coordinator”) receiving an integrity violation report will keep confidential the content of the report and the identity of the person filing the report. The report is sent by the Coordinator directly to the Chairman Office by email, through company’s website or by post. The Coordinator shall provide specific information for follow-up. (2) The Company will establish the standard for investigating an integrity violation report and ensure relevant confidentiality measures, and ensure that the person that files the report will be protected against retaliatory action. (3) The Company has whistleblower protection policy.	None It will be implemented as needed. None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
4. Strengthening information disclosure (1) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?			The Company discloses its ethical corporate management policies in the investor relations section of the website http://www.sinphar.com.tw. The public can also search MOPS for information on ethical corporate management of the Company.	None
5. If the company has established ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation: None.
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies). (1) To implement the basics of ethical corporate management policies, the Company operates under the Company Act, Securities and Exchange Act, Businesses Entity Accounting Act, related regulations for TWSE/TPEx Listed Companies, and other laws and decrees concerning business transaction. (2) The Company has set up the “Management Procedures for Preventing Insider Trading”, which specifies that directors, supervisors, managers, and employees are not allowed to reveal inside information to others or to inquire about non-public information that is irrelevant to his/her business scope.

3.4.7 Corporate Governance Guidelines and Regulations

MOPS: http://mops.twse.com.tw
Company’s Website: www.sinphar.com.tw

3.4.8 Other Important Information Regarding Corporate Governance

MOPS and Company’s website

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3.4.9 Internal Control System Execution Status

A. Statement of Internal Control System: Please refer to page 86 of the annual report.
B. If the Company appoints accountants to audit the internal control system, shall disclose the audit report: None

3.4.10 During the most recent fiscal year and the current fiscal year up to the date of printing of this annual report, any sanction imposed upon the company or its internal personnel for violation of internal control system provisions and principle deficiencies, punishment may make a great impact on shareholder’s rights and the securities price, the punishment, deficiency, and improvement status shall be de specified: None

3.4.11 Major resolutions of the Shareholders’ Meeting and the Board Meeting during the most fiscal year and the current fiscal year up to the date of printing of this annual report
A. Major Resolutions and Implementation Status of the Shareholders’ Meeting
- (A) 2021 Business Report and Financial Statements

Implementation Status:

The voting rights of the attending shareholders met the standard, and the proposal was approved.

(B) 2021 Proposal for Deficit Compensation

Implementation Status:

The voting rights of the attending shareholders met the standard, and the proposal was approved.

Implementation Status:

The voting rights of the attending shareholders met the standard, and the proposal was approved. The Board agreed on June 21, 2022 to implement cash distribution from capital surplus, and distributed cash on August 25, 2022. (Cash dividend: approximately NT$0.2 per share)

(D) Amendment to Articles of Incorporation

Implementation Status:

The voting rights of the attending shareholders met the standard, and the proposal was approved. In accordance with the regulations, the Company posted material information on MOPS and reported to Ministry of Economic Affairs.

(E) Amendment to Procedures for Acquisition and Disposal of Assets

Implementation Status:

(F) Amendment to the Rules and Procedures of Shareholders’ Meeting

Implementation Status:

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The voting rights of the attending shareholders met the standard, and the proposal was approved.

B. Major resolutions of the Board Meeting

Date	Major Resolutions
The First Meeting in 2022 March 15, 2022	1. 2021 Business Report and Financial Statements 2. 2021 Remuneration Distribution for Employees and Directors 3. Proposal for Remuneration for Directors 4. Proposal for Date and Agenda of 2022 Shareholders’ Meeting 5. 2021 Proposal for Deficit Compensation 6. Proposal for Cash Distribution from Capital Surplus 7. 2022 Procedure for Accepting the Proposals Submitted by Shareholders 8. Discussion on 2022 Remuneration Distribution for Directors and Employees 9. Proposal for 2021 Statement of Internal Control System 10. The Contract Extension of Endorsements and Guarantees for Subsidiary Company 11. Capital Reduction in Major Subsidiary, SynCore Biotechnology Co., Ltd. 12. Amendment to Procedures for Acquisition and Disposal of Assets 13. Proposal for Bank Financing 14. Amendment to Articles of Incorporation 15. Amendment to Rules and Procedures of Shareholders’ Meeting
The Second Meeting in 2022 May 10, 2022	1. 2022 Q1 Consolidated Financial Statements 2. Amendment to Agenda of Shareholders’ Meeting 3. Proposal for Establishing ESG Committee 4. Proposal for Bank Financing
The Third Meeting in 2022 June 21, 2022	1. Proposal for Setting the Ex-dividend Date of Cash Distribution from Capital Surplus in 2022 2. Proposal for Setting the Payment Date of Cash Distribution from Capital Surplus in 2022 3. Endorsements and Guarantees for Subsidiary Company 4. Proposal for Bank Financing 5. Proposal for Changes in Spokesperson and Deputy Spokesperson
The Fourth Meeting in 2022 August 9, 2022	1. 2022 Q2 Consolidated Financial Statements 2. Proposal for Release the Prohibition on Directors and Managerial Officers from Participation in Competitive Business 3. Proposal for Bank Financing

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Date	Major Resolutions
The Fifth Meeting in 2022 November 8, 2022	1. 2022 Q3 Consolidated Financial Statements 2. Hetian Tianli shasheng Pharmaceutical Development Co., Ltd.’s Credit Assessment of Accounts Receivable to Sinphar Tian-Li Pharmaceutical Co., Ltd. (Hangzhou) 3. The Appointment of Corporate Governance Officer 4. Proposal for Bank Financing
The Sixth Meeting in 2022 December 13, 2022	1. Distribution of Year-end Bonus in 2022 2. Adjustment to the Remuneration in 2023 3. 2023 Business Plan 4. Proposal for Establishing the 2023 Plans for Internal Audit Implementation 5. Amendment to Internal Control System 6. Appointment of CPA of the Company 7. Amendment to the Rules and Procedures of Board of Directors Meeting 8. Amendment to Procedures for Handling Material Inside Information and Prevention of Insider Trading 9. The Contract Extension of Endorsements and Guarantees for Subsidiary Company 10. Proposal for Bank Financing
The First Meeting in 2023 March 17, 2023	1. 2022 Business Report and Financial Statements 2. Proposal for Date and Agenda of 2023 Shareholders’ Meeting 3. 2022 Earnings Distribution Table and Distribution of Cash Dividends 4. 2022 Remuneration Distribution for Employees and Directors 5. Proposal for Remuneration for Directors 6. Proposal for 2023 Remuneration for Directors and Employees 7. 2023 Procedure for Accepting the Proposals Submitted by Shareholders 8. Proposal for Statement of Internal Control System 9. Capital Reduction in Major Subsidiary, SynCore Biotechnology Co., Ltd. 10. Proposal for Bank Financing

Note: Each ratification and discussion was approved by the attending Directors.

3.4.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None

3.4.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, General Manager, and Heads of Accounting, Finance, Internal Audit, Corporate Governance, and R&D: None
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3.5 Information on CPA Fees

3.5.1 Amount of Audit Fee and Non-audit Fee and Content of Non-audit Service

				Unit: NT$	Unit: NT$	thousand
Accounting Firm	Name of CPA	Period Covered by CPA’s Audit	Audit Fee	Non-audit Fee	Total	Remark
Crowe (TW) CPAs	Ya Quan Zhang	January 01, 2022- December 31, 2022	2,460	335	2,795	Note
	Jin Shu Pan	January 01, 2022- December 31, 2022

Note: Application fee for Investment Commission, MOEA: NT$35 thousand

Audit fee for subsidiary: NT$300 thousand

A. If the Company has changed Accounting Firm and the amount of audit fee is less than the previous fiscal year, the Company shall report the amount of the audit fee before and after changing and the replacement reason: None
B. If the audit fee is reduced by more than 10% compared to the previous year, the amount of reduction, proportion, and reasons shall be disclosed: None

3.6 Replacement of CPA

3.6.1 Regarding the former CPA

Not applicable.

3.6.2 Regarding the successor CPA

Not applicable.

3.6.3 If the former CPA has a different opinion, the successor CPA shall be consulted and obtained the written opinion on the matters to notify the former CPA to respond by letter within 10 days. The Company shall disclose the content of the reply letter from the former CPA

Not applicable.

3.7 The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or an affiliated enterprise

None

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3.8 Transfer and pledge of stock equity by directors, supervisors, managerial officers and holders of 10% or more of company shares

3.8.1 Changes in Shareholding of Directors, Supervisors, Managerial Officers, and Major Shareholders

				Unit:shares	Unit:shares
Title	Name	2022		As of March 31, 2023
		Shareholding Increase (Decrease)	Pledged Shares Increase (Decrease)	Shareholding Increase (Decrease)	Pledged Shares Increase (Decrease)
Chairman	Chih Wen Lee	─	─	─	─
Independent Director	Ching Lung Lee	─	─	─	─
Independent Director	Yau Yuan Wen	─	─	─	─
Independent Director	Hsin Yu Chou	─	─	─	─
Director	Hsiu Min Lin	─	─	─	─
Director	Hsiu Chih Kuo	(500,000)	─	─	─
Director	Ling Mo Chao	─	─	─	─
Director	Xing-Da Capital Crop.	─	─	─	(3,000,000)
Corporate Director Representative and Chief R&D Officer	Representative of Xing-Da Capital Crop., Yi Ta Lee	─	─	─	─
Director	Jehng Jer Guan	─	─	─	─
Director	Hung Chih Lin	─	─	─	─
Director	Neng Chun Yu	─	─	─	─
General Manager	Yu Liang Pei	─	─	─	─
General Manager, China Affairs Office	Neng Yin Yu	─	─	─	─
General Manager, Subsidiary Company	Neng Yu Yu	─	─	─	─
General Manager, Subsidiary Company	Chao Chih Wang	─	─	─	─
Vice Chief R&D Officer	Jing Jing Justine Tang	─	─	─	─

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Title	Name	2022	2022	As of March 31, 2023	As of March 31, 2023
		Shareholding Increase (Decrease)	Pledged Shares Increase (Decrease)	Shareholding Increase (Decrease)	Pledged Shares Increase (Decrease)
General Manager, Marketing Center	Chang Long Chen	─	─	─	─
Vice General Manager, Marketing Center	Feng Chin Chang	─	─	─	─
Assistant General Manager, Dept. of Planning of Pharmaceutical Product	Chih Tsao Chang	─	─	─	─
Assistant General Manager, Marketing Channel Dept.	Chien Kuo Chang	─	─	─	─
Assistant General Manager, Marketing Dept.	Wen Fang Huang (Note)	─	─	─	─
Assistant General Manager, General Manager Office	Yunn Tzer Lu (Note)	(18,000)	─	─	─
Assistant General Manager, Yilan Office	Chien Ju Lin (Note)	─	─	─	─
Executive Assistant, Chairman’s Office	Ju Nee Yeo	─	─	─	─
Assistant General Manager, Chairman’s Office	Yi Mei Luo	─	─	─	─
Chief Financial Officer	Chih Hsiao Chen	─	─	─	─
Accounting Manager	Li Jung Hsieh	─	─	─	─

Note: Yunn Tzer Lu, the Assistant General Manager of General Manager Office, resigned on June 22, 2022.

Wen Fang Huang and Chien Ju Lin have been appointed as Assistant General Manager of Marketing Department and Yilan Office respectively on January 01, 2023.

3.8.2 Shares Trading with Related Parties: None

3.8.3 Shares Pledge with Related Parties: None

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3.9 Information on Relationships among the Top Ten Shareholders

Relationship among the Top Ten Shareholders

Name	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Remark
	Shares	%	Shares	%	Shares	%	Name	Relationship
Xing-Da Capital Corp.	15,470,464	9.22	─	─	─	─	─	─	─
Xing-Da Capital Corp. Representative: Ling Fang Kuo	─	─	─	─	─	─	Chih Wen Lee	Spouse	─
Yung Chang Chang	4,073,000	2.43	─	─	─	─	─	─	─
Chih Wen Lee	3,149,791	1.88	1,799,725	1.07	─	─	Ling Fang Kuo	Spouse	─
Purzer Pharmaceutical Co., Ltd.	2,343,000	1.40	─	─	─	─	─	─	─
Purzer Pharmaceutical Co., Ltd. Representative: Chih Hui Lin	─	─	─	─	─	─	─	─	─
Arrowstreet (Delaware) Alpha Extension Fund L.P.	2,199,000	1.31	─	─	─	─	─	─	─
Ling Fang Kuo	1,799,725	1.07	3,149,791	1.88	─	─	Chih Wen Lee	Spouse	─
UNISUPER LTD as TRUSTEE for UNISUPER	1,676,000	1.00	─	─	─	─	─	─	─
Hsiu Chi Kuo	1,569,382	0.94	437,555	0.26	─	─	─	─	─
Neng Yin Yu	1,549,944	0.92	323,685	0.19	─	─	─	─	─
SPDR(R) Index Shares Funds - SPDR Portfolio Emerging Markets ETF	1,511,471	0.90	─	─	─	─	─	─	─

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3.10 Ownership of Shares in Affiliated Enterprises

March 31, 2023 Unit: shares; %

3.10 Ownership of	Shares in Affiliated Enterprises	Shares in Affiliated Enterprises	Shares in Affiliated Enterprises			March 31, 2023 Unit: shares;%	March 31, 2023 Unit: shares;%
Affiliated Enterprises	Ownership by the Company			Direct or Indirect Ownership by Directors and Managers		Total Ownership
	Property	Shares	%	Shares	%	Shares	%
CanCap Pharmaceutical Ltd.	Common Stock	2,140,000	88.43	─	─	2,140,000	88.43
	Preferred Stock	51,500	100.00	─	─	51,500	100.00
SUNETIC BIOTECH INC.	Common Stock	18,854,534	83.47	─	─	18,854,534	83.47
UNIVERSAL NEXT TECHNOLOGIES INC.	Common Stock	503,845	100.00	─	─	503,845	100.00
ZUNIMED BIOTECH CO., LTD.	Common Stock	10,300,000	100.00	─	─	10,300,000	100.00
SynCore Biotechnology Co., Ltd.	Common Stock	71,456,000	62.09	─	─	71,456,000	62.09
SynCore Biotechnology Europe GmbH	Common Stock	─	─	25,000	100.00	25,000	100.00

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Sinphar Pharmaceutical Co., Ltd.

Statement of Internal Control System

Date: December 31, 2022

The Company states the following with regard to its internal control system during the fiscal year 2022, based on the findings of a self-assessment:

The Company is fully aware that establishing, operating, and maintaining an internal control system is the responsibility of its Board of Directors and management, and such a system has been established. The purposes of the Internal Control System are to provide reasonable assurance for the effectiveness and efficiency of business operation (including profits, operation performance, and safeguard of asset security), the reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in the environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, however, and the Company takes corrective actions as soon as a deficiency is identified.
The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (the “Regulations.”) The internal control system judgment criteria adopted by the Regulations divide internal control system into five elements based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communications, and (5) supervision. Each element further contains several items. Please refer to the Regulations for details.
The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
Based on the findings of the above evaluations, the Company believes that as of December 31, 2022, its internal control system (including its supervision and management of subsidiaries), encompassing internal control for knowledge of the degree of operational effectiveness and efficiency objectives, reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws, is effectively designed and operating, and reasonably assures the achievement of the above-stated objectives.
This statement will become a major part of the content of the Company’s Annual Report and Prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
The statement has been passed by the Board Meeting of the Company held on March 17, 2023. All of the 11 attending Directors agreed with the content of the statement.

Sinphar Pharmaceutical Co., Ltd.

Chairman: Chih Wen Lee

General Manager: Yu Liang Pei

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Ⅳ. Company Shares and Fundraising

4.1 Capital and Shares

4.1.1 Sources of Capital

Unit: NT$; shares

						Unit: NT$;	Unit: NT$;	shares
Month/ Year	Par Value (NT$)	Authorized Capital		Paid-in Capital		Remark
		Shares	Amount (NT$)	Shares	Amount (NT$)	Sources of Capital	Capital Increased by Assets Other than Cash	Other
Aug. 2006	10	150,000,000	1,500,000,000	105,762,200	1,057,622,000	Capital increase by retained earnings NT$78,342,300	–	Note 1
Jun. 2008	10	150,000,000	1,500,000,000	106,624,200	1,066,242,000	Share warrant NT$8,620,000	–	Note 2
Sep. 2008	10	150,000,000	1,500,000,000	106,893,200	1,068,932,000	Share warrant NT$2,690,000	–
Nov. 2008	10	150,000,000	1,500,000,000	106,919,200	1,069,192,000	Share warrant NT$260,000	–
May. 2009	10	150,000,000	1,500,000,000	112,989,488	1,129,894,880	Share warrant NT$4,670,000 and convertible bonds transformation NT$56,032,880	–
Sep. 2009	10	150,000,000	1,500,000,000	114,483,134	1,144,831,340	Share warrant NT$1,920,000 and convertible bonds transformation NT$13,016,460	–
Dec. 2009	10	150,000,000	1,500,000,000	118,262,536	1,182,625,360	Share warrant NT$3,290,000 and convertible bonds transformation NT$34,504,020	–
Mar. 2010	10	150,000,000	1,500,000,000	120,950,732	1,209,507,320	Share warrant NT$2,130,000 and convertible bonds transformation NT$24,751,960	–
Jun. 2010	10	150,000,000	1,500,000,000	120,988,732	1,209,887,320	Share warrant NT$380,000	–
Aug. 2010	10	250,000,000	2,500,000,000	125,223,338	1,252,233,380	Capital increase by retained earnings NT$42,346,060	–	Note 3

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Month/ Year	Par Value (NT$)	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark
		Shares	Amount (NT$)	Shares	Amount (NT$)	Sources of Capital	Capital Increased by Assets Other than Cash	Other
Sep. 2010	10	250,000,000	2,500,000,000	127,471,969	1,274,719,690	Share warrant NT$5,840,000 and convertible bonds transformation NT$16,646,310	–	Note 2
Dec. 2010	10	250,000,000	2,500,000,000	127,651,162	1,276,511,620	Share warrant NT$1,270,000 and convertible bonds transformation NT$1,270,000	–
Mar. 2011	10	250,000,000	2,500,000,000	127,768,162	1,277,681,620	Share warrant NT$1,170,000	–
Jul. 2011	10	250,000,000	2,500,000,000	127,903,162	1,279,031,620	Share warrant NT$1,350,000	–
Oct. 2011	10	250,000,000	2,500,000,000	128,851,162	1,288,511,620	Share warrant NT$9,480,000	–	Note 2
Dec. 2011	10	250,000,000	2,500,000,000	148,851,162	1,488,511,620	Capital increase by cash NT$200,000,000	–	Note 4
Feb. 2012	10	250,000,000	2,500,000,000	149,174,162	1,491,741,620	Share warrant NT$3,230,000	–	Note 2
Mar. 2012	10	250,000,000	2,500,000,000	149,325,162	1,493,251,620	Share warrant NT$1,510,000	–	Note 2
Jul. 2014	10	250,000,000	2,500,000,000	161,271,175	1,612,711,750	Capital increase by retained earnings NT$119,460,130	–	Note 5
Jul. 2016	10	250,000,000	2,500,000,000	167,722,022	1,677,220,220	Capital increase by retained earnings NT$64,508,470	–	Note 6

Note 1: The capital increased by retained earnings is NT$78,342,300 in July, 2006. Approved by FSC on July 5, 2006, with No. Financial-Supervisory-Securities-I-0950128602.

Note 2: The Company issued 5,000 units of employee stock warrant, a total of 5,000,000 shares was approved by FSC on July 27, 2005, with No. Financial-Supervisory-Securities-I-0940130577. The first Secured Corporate Bond Issue was issued in April, 2006 with 3500 shares for a total of NT$350 million and was approved by FSC on April 11, 2008, with No. Financial-Supervisory-Securities-I-0970013748.
Note 3: The capital increased by retained earnings is NT$42,346,060 in June, 2010. Approved by FSC on June 15, 2010, with No. Financial-Supervisory-Securities-I-0990031049.
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Note 4: The Company issued new share of NT$200,000,000 for cash capital increase in October, 2011. Approved by FSC on October 28, 2011, with No. Financial-Supervisory-Securities-I-1000050459.
Note 5: The Company increased capital by retained earnings and issued new shares for NT$119,460,130. Approved by FSC on July 24, 2014, with No. Financial-Supervisory-Securities-1030027866.
Note 6: The Company increased capital by retained earnings and issued new shares of NT$64,508,470 and was declared to FSC.

April 22, 2023 Unit: shares

Share Type		Authorized Capital		Remark
	Issued Shares	Un-issued Shares	Total Shares
Registered Common Shares	167,722,022	82,277,978	250,000,000	–

Note 1: The par value is NT$10 per share.

Information for shelf registration: Not applicable.

4.1.2 Status of Shareholders

April 22, 2023 Unit: shares; people; %

Status Amount	Government	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	–	4	197	56,323	90	56,614
Shareholding (shares)	–	373,637	19,208,503	138,369,954	9,769,928	167,722,022
Percentage	–	0.22	11.46	82.49	5.83	100.00

Note: NT$10 per share.

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4.1.3 Shareholding Distribution Status

A. Common Shares

Common Shares
	April 22, 2023 Unit: shares; %
Class of Shareholding (Unit: shares)	Number of Shareholders	Shareholding (shares)	Percentage
1-999	35,102	1,417,977	0.85
1,000-5,000	17,903	33,822,904	20.17
5,001-10,000	1,968	15,261,609	9.10
10,001-15,000	552	6,996,228	4.17
15,001-20,000	333	6,209,519	3.70
20,001-30,000	289	7,398,021	4.41
30,001-40,000	115	4,091,657	2.44
40,001-50,000	78	3,592,766	2.14
50,001-100,000	137	9,717,528	5.79
100,001-200,000	58	8,053,504	4.80
200,001-400,000	35	10,147,361	6.05
400,001-600,000	13	6,418,430	3.83
600,001-800,000	8	5,549,850	3.31
800,001-1,000,000	7	6,478,067	3.86
1,000,001 or over	16	42,566,601	25.38
Total	56,614	167,722,022	100.00

B. Preferred Shares: The Company did not issued preferred shares.

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4.1.4 List of Major Shareholders

April 22, 2023 Unit: shares; %

Shareholding Shareholders’ Name	Shares	Percentage
Xing-Da Capital Crop.	15,470,464	9.22
Yung Chang Chang	4,073,000	2.43
Chih Wen Lee	3,149,791	1.88
Purzer Pharmaceutical Co., Ltd.	2,343,000	1.40
Arrowstreet (Delaware) Alpha Extension Fund L.P.	2,199,000	1.31
Ling Fang Kuo	1,799,725	1.07
UNISUPER LTD as TRUSTEE for UNISUPER	1,676,000	1.00
Hsiu Chi Kuo	1,569,382	0.94
Neng Yin Yu	1,549,944	0.92
SPDR(R) Index Shares Funds - SPDR Portfolio Emerging Markets ETF	1,511,471	0.90

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4.1.5 Information on Market Price, Net Worth, Earnings, and Dividends per Share in the Most Recent Two Years

Unit: NT$; thousand shares

				Unit: NT$;	thousand shares
Items	Year		2021	2022	January 1, 2023-March 31, 2023 (Note 4)
Market Price per share	Highest Market Price		47.00	36.90	33.40
	Lowest Market Price		26.10	27.25	30.00
	Average Market Price		31.73	29.54	31.64
Net Worth per share	Before Distribution		16.23	17.47	17.96
	After Distribution		16.03	Note 6	–
Earnings per Share	Weighted Average Shares (thousand shares)		167,722	167,722	167,722
	Earnings per Share		(0.23)	1.34	0.48
Dividends per Share	Cash Dividends		0.2 (Note 5)	1 (Note 6)	–
	Stock Dividends	Dividends from Retained Earnings	–	–	–
		Dividends from Capital Surplus	–	–	–
	Accumulated Undistributed Dividends		–	–	–
Return on Investment	Price/Earnings Ratio (Note 1)		137.96	22.04	–
	Price/Dividend Ratio (Note 2)		158.65	(Note 6)	–
	Cash Dividend Yield (Note 3)		0.63	(Note 6)	–

Note 1: Price/Earnings Ratio = Average Market Price/Earnings per Share.

Note 2: Price/Dividend Ratio = Average Market Price/Cash Dividends per Share.

Note 3: Cash Dividend Yield = Cash Dividends per Share/Average Market Price.

Note 4: Net Worth per Share and Earnings per Share shall be filled in the information audited by CPA during the most recent quarter as of the printed date. For other columns, the Company shall fill in the information in the current year as of the printed date.
Note 5: The Company distributed cash dividends in 2021 of NT$33.544 million from capital surplus. Note 6: The Company distributed cash dividends in 2022 of NT$167.722 million from retained earnings.
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4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

If the Company has earnings, after offsetting any loss from prior year and paying all taxes and dues, it shall be set aside 10% as legal reserve. However, when the legal reserve amounts reach or exceed paid-in capital of the Company, it shall not be set aside. The remaining earnings shall be set aside or added to the reversal of special reserve in accordance with regulation. The remaining earnings can be distributed along with prior accumulated unappropriated retained earnings. The Board of Directors will plan for the earnings distribution proposal. The proposal will be discussed at the Shareholders’ Meeting for the distribution of dividend for shareholders. The dividend policy takes into consideration current and future development plans, capital expenditure budget, investment environment, fund demand, domestic and foreign competition and balance the interest of shareholders. The dividend can be distributed as cash or stock in accordance with distributed earnings and it shall not be less than 10% of distributed earnings. Cash dividend shall be no less than 20% of the total dividend.

B. Proposed Distribution of Dividend

The proposal for 2022 Earnings Distribution was passed by the Board Meeting on March 17, 2023. After setting aside legal reserves of NT$23,372,362 and special reserves of NT$30,291,990, the Company allocates cash dividends of NT$167,722,022 from retained earnings available for distribution. The cash dividend will be NT$1 per share. The proposal has not been discussed at the Shareholders’ Meeting yet.

4.1.7 The impact of the proposed allocation of free shares on the company’s operating and performance and earnings per share

The Company has not implemented allocation of free shares in this year; therefore, it is not applicable.

4.1.8 Compensation of Employees and Directors

A. Information Relating to Compensation of Employees and Directors Stated in the Articles of Incorporation

If the Company has a profit for the reported year, 2%~8% of profit shall be allocated for remuneration for qualified employees, who meet certain criteria, and the method of allocation, in stock or cash, to be decided by the Board. The Company may set aside no more than 5% of profit as the remuneration of Directors. The distribution ratio for the current period will be discussed at the Board Meeting. The proposal for remuneration distribution for employees and directors shall be reported at the Shareholders’ Meeting.

If the Company has accumulated loss, it shall retain the amount for offsetting in advance, and then distribute the compensation of Employees and Directors in accordance with the aforementioned percentage.

B. For 2022, the Board decided the estimated percentage of compensation of employees and directors is 3.2% and 1.8%, respectively. The detail of the distribution has not been
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passed by the Remuneration Committee and the Board yet.

C. Status of Remuneration Distribution Approved in the Board of Directors Meeting
(1) If the amount of remuneration distributed for employees and directors in cash or stock is different from the estimated amount, the Company shall disclose the variance, reasons and status:

The Board passed the resolution of remuneration distribution for Employees and Directors will be NT$9,646,863 and NT$5,426,360 in cash on March 17, 2023. The amount is same as the estimation.

(2) The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: None
D. Status of 2021 Compensation Distribution of Employees and Directors:

Remuneration Distribution in 2021:

Employee Remuneration in cash: NT$0

Employee Remuneration in stock: NT$0

Directors and Supervisors Remuneration: NT$0

The amount is same as the amount that approved by the Board.

4.1.9 Buy-back of Treasury Stock

None

4.2. Corporate Bonds

None

4.3 Preferred Shares

None

4.4 Global Depository Receipts

None

4.5 Employee Stock Options

None

4.6 New Restricted Employee Shares

None

4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions

None

4.8 Financing Plans and Implementation

4.8.1 The previous plan of implementation of capital increase, expected progress, and the possible benefit that will be created

None

4.8.2 Plan and Implementation Status

None

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V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

A. Main Areas of Business Operations

C802041	Manufacture of Drugs and Medicines
F108021	Wholesale of Western Pharmaceutical
F208021	Retail Sale of Western Pharmaceutical
C802051	Manufacture of Chinese Medicines
F108011	Wholesale of Traditional Chinese Medicine
CF01011	Medical Devices Manufacturing
F108031	Wholesale of Medical Devices
F208031	Retail Sale of Medical Apparatus
C102010	Manufacture of Dairy Products
C802100	Cosmetics Manufacturing
F108040	Wholesale of Cosmetics
F208040	Retail Sale of Cosmetics
C802060	Veterinary Drug Manufacturing
F107070	Wholesale of Veterinary Drugs
F207070	Retail Sale of Veterinary Drugs
C201010	Feed Manufacturing
F103010	Wholesale of Animal Feeds
F202010	Retail Sale of Feeds
C801110	Fertilizer Manufacturing
F107050	Wholesale of Fertilizer
F207050	Retail Sale of Fertilizer
C106010	Grain Husking, Manufacture of Grain Mill Products,
	Starches and Starch Products
C104010	Manufacturing of Sugar Confectionery
C199990	Manufacture of Other Food Products Not Elsewhere
	Classified
C802090	Manufacture of Cleaning Preparations
F107030	Wholesale of Cleaning Supplies
F207030	Retail Sale of Cleaning Supplies
C110010	Beverage Manufacturing
F102040	Wholesale of Nonalcoholic Beverages
F102170	Wholesale of Foods and Groceries
F203010	Retail Sale of Food, Grocery, and Beverage
F501030	Beverage Shops
A102050	Crops Cultivation

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A101030 Growing of Special Crops A101040 Growing of Edible Fungi F201010 Retail Sale of Agricultural Products C113020 Alcohol Products Semi-Finished Manufacturing F208050 Retail Over-the-counter drugs class B F401010 International Trade J303010 Magazine (Periodical) Publishing IZ99990 Other Industrial and Commercial Services I101090 Food Consulting IC01010 Medicine Inspection IG01010 Biotechnology Services J202010 Industry Innovation and Incubation Services E604010 Machinery Installation EZ05010 Instrument and Meters Installation Engineering F207200 Retail Sale of Chemical Feedstock F107200 Wholesale of Chemical Feedstock F107990 Wholesale of Other Chemical Products F399040 Retail Sale No Storefront ZZ99999 All business activities that are not prohibited or restricted by law, except those that are subject to special approval.

B. Operating Proposition

The products sold by the Company are divided into drugs, functional food, and others. The following table is the sales revenue proportion in 2022.

The following table is the sales revenue proportion in 2022.	The following table is the sales revenue proportion in 2022.	The following table is the sales revenue proportion in 2022.
Unit: NT$ in thousands; %
Product Category	Total Sales	(%) of Total Sales
Drugs	1,896,475	66.39
Functional Food	860,087	30.11
Others	100,089	3.50
Total	2,856,651	100.00

Note: The above amount is net sales.

C. Main Products and Services

(A) Product Categories

The products of the Company include semi-solid preparations (ointment, gel, cream), solid dosage forms (soft/hard capsule, sugar-coated tablet, film-coated tablet, suppository, powder/granules, tablet, gummy), liquid agent (internal/external use), eye

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drops, injections (parenteral, powder), cosmetics, functional food, natural botanical extracts, and plastic medical containers.

(B) Target Market
a. Sell the products directly to medical centers, regional hospitals, district hospitals, group practice centers, clinics, dental clinics, pharmacies, chain pharmacies, and drug stores.
b. Sell health supplements and medical cosmetology products to government hospitals, armed forces hospitals, pharmacies, and shopping channels through distributors.
c. Commissioned to manufacture products and sell them to direct marketers and American hypermarket.
d. Self-operated import and export, and sold products through export distributors or agents.
e. Commissioned by specialized marketing companies to manufacture drugs, functional food, cosmetics, and medical devices.

D. New Products and Services Development

(A) Research and Development Results
a. Food: 9 products
b. Cosmetics: 1 product
c. Drugs: 1 product
d. Product Improvement: 67 items
e. 13 Technical Projects

f. Research and Development Status:

Item	Category		Indication/
		Code		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.
			Brain Health/	FDA.
		ST01
			Vitality/	Preparing for clinical trial.

			Health food	Acquired the health food certification for anti-aging.

2	Botanical new drugs
			Drugs for	Approved for phase II clinical trial by TFDA and U.S.
		ST02	chronic stable	FDA.
			angina	Follow-up development is in progress

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Item	Category		Indication/
		Code		R&D Progress/Current Situation
			Application

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.

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.
			Head and neck
		SB01		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.

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5.1.2 Industry Overview

A. Current Status

According to the statistics in The State of World Population 2022 published by UNFPA, the global average life expectancy was 73.5 years, which was an extraordinary increase to 40 years in 1900. In Taiwan, according to the data published by the Ministry of the Interior in 2022, the average life expectancy was 80.9 years, specifically 77.7 years for men and 84.3 years for women. Compare to global average life expectancy, male and female average life expectancy in our country were respectively 7.5 years and 9.3 years higher than the global average. The upward trend in life expectancy is a result of better healthcare, healthier lifestyle, attention to food safety, and an increase in physical activities.

As the aging society brings social and economic challenges, it also creates market opportunities for the pharmaceutical and healthcare industries, such as a growing demand for geriatric medical care and chronic diseases. Additionally, the pharmaceutical industry continues to expand as people seek to prolong their health through consuming drugs and health foods.

According to IQVIA statistics, the scale of the global pharmaceutical market is US$1.4 trillion in 2021, compared to US$1.27 trillion in 2020, an increase of nearly 12.4%. It is expected that the scale in 2026 will reach US$1.7 trillion. The global pharmaceutical market has been influenced by individual country’s healthcare insurance system, budgetary concerns and cost controls, and consumers’ budget for out-of-pocket services. Therefore, the market for new drugs and generic drugs and drug price controls will affect future global pharmaceutical market scale. Overall it will be a growing market at a slower pace.

Despite the government controlling the medical expenses through adjusting insurance rates, new policy for copayment, and adjusting NHI drug prices, the pharmaceutical market has maintained steady growth over the years. According to IQVIA, Industrial Information of DCB, and Research Team of ITIS, the market scale of pharmaceuticals in our country in 2021 is NT$221.31 billion, growing 4.0% compared to the preceding year, because several expensive new drugs and new treatments have been included in NHI, and costly new drugs continue to enter copayment market. It is anticipated that with the increasing aging population leading to higher demands for anticancer and chronic disease drugs and treatments, the domestic pharmaceutical market will also be steadily growing.

However, several factors have affected drug price and quantity produced of domestic pharmaceutical companies in recent years, namely, the cost of research and development of new drugs, the increase of production cost after implementing PIC/S GMP, competition

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from imported drugs, the restriction of the New Patent Act, and the drug price survey. These factors caused a decline in revenue and profit.

The total amount of NHI payment has been increasing annually, from NT$553.1 billion in 2013 to NT$809.5 billion in 2022, of which drug payment accounted for 25-30%. Out of the total drug payment, only 25% were to domestic pharmaceutical companies, while the remainder was paid to global pharmaceutical companies. According to the data of IQVIA, the total sales of drugs of the top 20 domestic pharmaceutical companies in Taiwan amounted to NT$142.2 billion in 2021, accounting for about 64.3% of total sales of Taiwan pharmaceutical companies. Among the top 20 pharmaceutical companies, there were 18 global pharmaceutical companies, accounting for 60.9% of the Taiwan pharmaceutical market. And there were only 2 domestic pharmaceutical companies, and their total sales were NT$7.47 billion, accounting for 3.4% of domestic sales.

The pharmaceutical industry is high in capital expenditure, requires advanced technology, and needs skilled professionals. Take the U.S. as an example, developing a new drug may take 10 to12 years and cost US$250 million to US$350 million. Because domestic pharmaceutical companies are smaller than global pharmaceutical companies and the staggering cost of new drug development, most domestic pharmaceutical companies produce generic drugs. In recent years, there is an increasing number of companies becoming involved in new drugs development.

The government implemented PIC/S GMP standard to ensure that Taiwan’s pharmaceutical manufacturing quality is consistent with international standards. So far over 130 companies are PIC/S GMP compliant and many have also passed the EU, the USA, and Japan inspection. Domestic pharmaceutical companies invested billions of dollars (NT$) in software and hardware to meet regulation requirements and remain competitive internationally. On the other hand, imported generic drugs can bypass the PIC/S GMP inspections, do not need to conduct bioequivalence study and are duty-free, thus creating a less advantageous business environment for domestic companies.

In light of unfair competition and NHI drug price suppression, domestic pharmaceutical companies are likely to produce health supplements and cosmetology products in addition to drugs to increase sales revenue. Furthermore, to decrease operational costs, domestic pharmaceutical companies may collaborate with, merge with, or acquire companies overseas.

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B. Industry Development

Biotechnological and pharmaceutical products are closely related to public health, since they are mainly used for treating illnesses and preventive health care, as such, product safety and efficacy are especially important. Economic growth, aging population and world information flow have created a demand for high quality pharmaceutical products and that in turn, is driving a continuous annual revenue growth of the pharmaceutical manufacturing industry.

As the government establishes the “Biotechnology and Pharmaceutical Industries Promotion Office” under the Ministry of Economic Affairs, it is simultaneously promoting the development of pharmaceutical manufacturing industry and gradually setting up a complete database of the pharmaceutical industry. In recent years, there is a worldwide trend on natural products, which leads to a growing demand for Chinese herbal medicine R&D, business opportunities, and government recognition on this market. However, the application of Chinese herbal medicine still needs scientific verification, clinical trial, and patent protection. This will be a subject that the domestic pharmaceutical industry needs to further explore or actively participate in development in the future. At present, both domestic and imported drugs are developing towards the PIC/S GMP standard, and the PIC/S GMP system complies with the specifications of the Pharmaceutical Inspection Convention and Co-operation Scheme, which is practiced currently in the EU, a higher requirement than cGMP. This ensures a spotless plant and quality drugs and protects the employees and the environment against pollution.

C. Relationship with Upstream, Midstream and Downstream Companies

Upstream: Raw material. The raw materials for western medicines include general chemicals, natural plants, animals, minerals, microbial strains, and relevant tissues and cells, etc. Among them, general chemicals are used the most. For traditional Chinese medicine, majority of raw materials are plants, while animals and minerals are in the minority. With advancement in biotechnology, using gene transfer, scientists have obtained many examples of genetically modified animals and plants, so in the future, plants can be directly cultivated or animals can be raised to produce medicines.

Midstream: API manufacturing and Chinese herbal medicinal materials processing. API manufacturer includes organic chemical synthesis, natural product extraction, microbial fermentation, or synthesis post-fermentation, and genetic engineering which generates purification from modified cell fermentation, etc. for example, biochip, biologic diagnostic reagents. The processing of Chinese

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medicinal materials is mainly based on the processing of medicinal plants.

Downstream: Pharmaceutical manufacturing industry mainly combines API with

pharmaceutical adjuvant, such as excipients, disintegrating agents, adhesives, and lubricants etc., and to create products in easy to use dosage forms. The manufacturing process shall comply with PIC/S GMP standards, to ensure the stability of product quality, and conform to the necessary conditions of safety, stabilization, and efficacy. In addition to making Chinese medicine in traditional Chinese medicinal dosage forms such as pill, paste, pellet, and powder etc., more and more manufacturers are producing Chinese medicines in western medicine dosage form. Chinese and western medicines are distributed through hospitals, pharmacies, prescriptions, or indicated by clinic doctors for patients or consumers to use.

D. Product Competition

The products of the Company are divided into categories of drugs, functional foods, and others.

The R&D Subsidiary, SynCore, is conducting phase I, II, and III clinical trials of anticancer drugs. The Company has establish a foothold in the local market with private brands by combining exclusive patented ingredients and technologies to make functional foods and is gradually expanding into international brands. Furthermore, the Company has been receiving orders from global manufacturers and gradually earning global recognition with its high-technology and high-quality products.

In terms of sales channel, domestic pharmaceutical companies have a larger market share in pharmacies and clinics, while global pharmaceutical companies and imported drugs have a larger market share in hospitals because of the hospitals prefer to use imported drugs. The Company maintains a balanced development in clinics, hospitals, and pharmacies for many years. Currently, the Company is focused on R&D, import agents and adjusting marketing strategies, increasing the development of hospitals, concentrating on operations, and managing pharmacy sales channel.

E. Product Trends

The global demand for pharmaceuticals continues to rise throughout a hundred years of pharmaceutical industry development. As the population grows and ages, people become aware of the importance of good health. As a result, more and more people start to exercise, diet, and take health supplements. However, there are still many serious diseases that cannot be treated. Therefore, the prospect of new drugs is highly anticipated, and

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governments of various countries have also begun to list biotechnology new drugs as key development industry.

In recent years, the government actively promotes the biotechnology pharmaceutical industry. Since the approval of Act for the Development of Biotech and New Pharmaceuticals Industry, many companies have obtained the certification under the Act. Relevant policies such as tax benefits, tax credits for R&D investment, and deregulation are incentives for companies to invest in the research and development of biotech. In 2009, Executive Yuan passed “Taiwan Diamond Action Plan for Biotech Takeoff”, the content included four strategy development directions, establishing Taiwan Supra Integration & Incubation Center, biotech venture capital, Taiwan Food and Drug Administration (TFDA), and R&D center. Moreover, it established three major biotechnology parks, including Hsinchu Biomedical Science Park, and Southern Taiwan Science Park Precision Health Cluster to achieve a critical mass in the biotechnology industry and to continue to set up medical products regulations that could connect with the rest of the world. It is hoped that the actions could bring about the growth of the domestic biotechnology and medicine industry. On the other hand, through the implementation of the Act for the Development of Biotech and New Pharmaceuticals Industry, the government provides favorable innovation conditions to relevant pharmaceutical manufacturers. Through the preferential measure of a tax credit on investment, manufacturers are encouraged to actively invest in research and development of new drugs.

Developing biotech and new drugs require a vast sum of fund, technologies, and talents. Although Taiwan has many biotechnology talents, the scale of enterprises is not as large as global pharmaceutical corporations to have an abundance of capital and revenue to acquire new drugs and technologies. Additionally, the gross production value of the domestic medical industry is insufficient to support the development of new drugs.

At the same time, the development process of new drugs is full of uncertainties. Thus, it is still in the embryonic stage. In addition to requiring policy support from the government, we hope that the public is not influenced by the negative news of individual cases that may lead to adverse impact on the industry. With the support of talents, capital markets, and policies in Taiwan, we strive to manufacture world-class new drugs to give back to investors and contribute to human health.

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5.1.3 Technology and R&D Overview

A. Business Technical Level and R&D

(A) Establish core technology

An important strategy for the R&D Center of the Company is “innovation, integration, and talent training”. To establish a core technology platform and develop private-brand products through complete equipment and professional training.

(B) Physical technology and skills

a. Continue to develop anticancer drugs and to obtain patent licensing products for chronic disease.
b. The Company selects suitable Chinese herbal medicine to cooperate with well-known universities in Europe and North America and research institutions to carry out the combination of production, learning, research and market for the Chinese market.
c. The traditional Chinese medicine extracts were successfully developed by the Chinese herbal medicine R&D group of the Company.

(a) Lipucan®

Available in stores and other channels. It has obtained patent protection in several countries, and the health food certification of anti-allergic and immunoregulation approved by the Ministry of Health and Welfare. It is the first product in Taiwan to exclusively master the biotechnology achievements from raw material R&D to production.

(b) TianLife®

This patent protected product is available in stores and other channels and sold in several countries. The raw materials come from Good Agricultural Practices (GAP) compliant organic farms. Memoregain Capsules are made with TianLife® and have obtained patent protection in several countries and health food certification for anti-aging by the Ministry of Health and Welfare. It is the only anti-aging health food awarded both the “25th National Biotechnology and Medicine Care Quality Award” and “Symbol of National Quality”, and won ten awards domestically and abroad.

(c) Protygold®

Walnut Oligopeptide Protygold® is small molecule organic active peptide developed by Sinphar Tian-Li. It has nine global/PCT patents, five SCI

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publications, seven in vivo/in vitro tests, and one IRB approved. It has won the 2019 World Pharmaceutical Raw Materials China Exhibition (CPHI) Herbal Extract Product Innovation Award. This peptide has been proven to enhance memory and learning, and improve sleep quality. This product has been launched in Taiwan.

(d) Since its establishment, the subsidiary, SynCore has developed five new drugs under clinical stages (see Table 1), including two anticancer drugs, SB01 and SB02 which are technology transfer from National Health Research Institutes (NHRI). They are now respectively under phase II clinical trials. The drug for external genital wart, SB03 (Veregen® ), from Germany Biotech Company, Medigene, was launched in the fourth quarter of 2013. The drug for age-related macular degeneration, SB04, was a technology transfer from an U.S. company, MacuCLEAR, has been approved by the U.S. FDA for phase II/III clinical trials. Also, in February 2012, it has been approved by the Taiwan TFDA to conduct phase II/III clinical trials. SB05 from Germany Medigene Biotech Company is currently conducting phase III clinical trials of Triple-Negative Breast Cancer and Pancreatic Cancer. SB05PC (EndoTAG® -1), which is targeted to treat Pancreatic Cancer, is conducting phase III clinical trials in eight countries, and completed the final analysis in October 2021 for phase III and second-line clinical trial in seven countries in the U.S., Europe and Asia. The phase III clinical trial of first-line drugs in China has also began to treat patients in February 2022, and the implementation has been successfully launched.
(e) Obtain the complete developing rights of the liposome EndoTAG® -1 technology platform.
(f) Obtain the global technology developing rights of the ophthalmic device, FloM-S (choroid blood flow meter).

B. R&D Expenses Invested in the Past Two Years

Unit: NT$ thousand

Year	2022	2021
R&D Expenses	272,163	511,881

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C. Successfully Developed Technology and Products

(A) Approved bioavailability, bioequivalence (BA and BE), and latest listing or dosage form improved products.
a. Sincoxib Capsules: non-steroidal anti-inflammatory drug
b. Cynlis Film Coated Tablets: erectile dysfunction drug
c. Gefissa Film Coated Tablets: anticancer drug
d. LIPOZOL Tablets: hypolipidemic agents
e. Chymsum Tablets: gastrointestinal drug
f. New Hydrocortisone Cream: anti-inflammatory
g. Atropine (0.01%) Eye Drops: near-sightedness prevention
(B) Products with health food certification
a. Niangjia Lipucan® Capsules: improve allergic conditions, immunoregulation
b. High Quality Plus Fish Oil Soft Capsules: modulation of blood lipids
c. Steady-Fiber Granulse: modulation of blood sugar
d. Migus Phyto-Protein Powder: modulation of blood lipids (cholesterol-lowering)
e. Memoregain Capsules: antiaging
f. Potent Plus Soft Capsules: antifatigue

(C) Funtional Food

a. Migus: a series of health food based on vegetable protein.
b. QH Potent Plus Soft Capsules:

Contains patented active Q10, which could be directly utilized by the body, and contains vitamin B1 to help to maintain heart health.

c. Sesame plus E Soft Capsules:
Contains Japanese glutamic acid fermentation (including GABA) which is manufactured by patented fermentation technology. The product could help people sleep better and maintain youthfulness and energy level.
d. Clever Peptide Soft Capsules:

Made with Sinphar exclusive material, Protygold, which contains glutamic acid and arginine. The product could help people increase concentration.

e. Bitter Melon Peptide plus Capsules:
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Made for people who prefer to eat starch but worry about blood sugar levels. The main exclusive formula is BFTOZ, can help manage blood sugar and improve the viability of insulin.

f. Sinphar Ganoderma Cordyceps Capsules:

For people who want to strengthen it. The product has the active ingredient, Ganoderma Lucidum, which contains polysaccharide in the effective dose for immunomodulatory health food. The Company uses light environmental stress cultivation technology to produced high concentration of cordycepin. It is the first choice for boosting immune system.

5.1.4 Long-term and Short-term Development

A. Short-term Business Plan

(A) Manufacturing

The Company has established an automated isolated injectable assembly line, and a self-contained solidification excipient production line to provide a more extensive product service and prepare for expanding market.

The Company has implemented ASPROVA (Advanced Planning & Scheduling System), WMS (Warehouse Management System), and RPA (Robotic Process Automation). The automated reminder of these systems help to reduce human error, improve production efficiency and turnover rate, reduce cost, and improve product quality.

The Company expands quality control manpower, improves employee training, implements personnel review and evaluation, and establishes clear chain of responsibility to strictly implement product quality monitoring.

The Company setup an internal quality committee to discuss each problem relevant to expiration period and packaging specification, and contracts external quality agency to routinely review product quality and process to strengthen quality management system.

(B) Marketing

a. Through Sinphar Counters, the Company quickly builds a popular image of “health” and through the establishment of brand differentiation, the Company continues to maintain a relative competitive advantage.
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b. Internationally: Aim to globalize local brands.

Domestically: Aim to work closely with channels, making hospital like clinic, clinic like pharmacy, pharmacy like convenient store.

c. Plan sales channel according to different product lines:

As the market shifts due to NHI policy changes and increase health awareness by the public, the Company designs products catering to different markets.

d. Continue to expand the number of visitors to Sinphar Health Park, build the brand image with experiential marketing, and educate consumers about Sinphar’s brand value.

(C) Research and Development

a. Introduce new technology to improve the effectiveness and accuracy of process control and enhance the reliability of manufacturing.
b. Although powder form has the advantage of convenience, the disadvantage is that traditional canned package is not suitable for travel. The Company will develop a new package format for convenience and improve product safety.
c. Increase the absorption rate of products for the introduction of active ingredient.
d. Introduce detectors and new analytical techniques to shorten the analysis time, improve analysis methods, and shorten the time of product development.

B. Long-term Business Plan

The long-term business plan is focused on the development of new drugs, anticancer agents, and patented natural products, expanding marketing channels, and establishing product image. The long-term business plans are as below.

(A) Manufacturing

a. Comply with the regulations of the Pharmaceutical Inspection Convention and Co-operation Scheme (PIC/S), increase pharmaceutical efficiency and quality, and set up anticancer agent plant to comply with Pharmaceutical Regulations of Japan.
b. Introducing MES (Manufacturing Execution System) and SCADA (Supervisory Control and Data Acquisition). Through the improvement of systems, after the production and logistics network, collect a large quantity of data, the operating efficiency could be improved by AI analysis, decision making, and adjustment of production process parameter optimization and production management. Optimize work procedures to improve the quality of the workforce and move forward with the
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goal of Industry 4.0.

(B) Marketing

a. Look for equipment abroad that can provide better production capacity and the latest technology.
b. Introduce global brand drugs which have differentiation and clinical value. Expand current product line and increase market share through joint marketing and technology licensing.
c. Effectively improve sales management, streamline shipping process and improve competitiveness.
d. Through budgeting, target suitable products and marketing campaigns such as media or public relations. At the same time, the Company develops e-commerce with digital marketing to capture specific consumers.
e. Establish diversified collaboration directions and items, actively look for global partners. Combine the resource of the logistics center with agent bestsellers can further enhance the depth and breadth of the Company's brand in the world and grasp the market pulse to develop and promote competitive products. The Company can sell different categories of the product of pharmaceuticals and health food in different channels by adopting a division of marketing.
f. The Company introduces, develops, and markets natural products, to create patent protected functional foods that stand out in the market.
(C) Research and Development
a. Continue to develop anticancer drugs and obtain the patent licensing of products for chronic.
b. Continue to develop and apply nanotechnology, and set up the goal of functional food, healthy food, prescription drug, and generic drugs.
c. Continue to develop new drugs of Chinese herbal medicine. The existing products are in their respective stage of new drug R&D. In addition to continuing to develop new projects, the existing R&D projects will move toward international R&D.
d. Continue to collaborate with R&D center in a related business in Hangzhou to perform R&D projects for China herbal medicine in the long term.
e. Continue to apply the advantages of China market and the place of origins of Chinese herbal medicine, select suitable phytonutrients in Chinese herbal medicine to develop
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drugs and healthy food to conduct clinical trials and effectiveness evaluation to obtain certification.

f. Train talents that can coordinate business with multinational clinical trials, application of regulations review, and international licensing to improve the competitiveness of the Company.
g. Implement the collaboration of new drugs and international licensing cases to receive the licensing fee to increase revenue.
h. Establish a collaborative platform of new drug clinical trials in Taiwan and China to improve the effectiveness of new drug clinical trials.

5.2 Market and Sales Overview

5.2.1 Market Analysis

[Sales Region]

The Company’s products are sold mainly in Taiwan; products consist of drugs, functional food, medical devices, and cosmetics. Also, the Company is also original equipment manufacturer for multi-national direct marketing companies and exports products to several countries. The subsidiary in China engages in the production and sales of phytonutrient extracts with patent protection of patented raw materials of Chinese herbal medicine. The sales region includes China and other countries.

Unit: NT$ thousand; %

Year Target	2022	2022	2021	2021
	Amount	%	Amount	%
Domestic	2,551,798	89.33	2,193,713	90.15
Export	304,853	10.67	239,803	9.85
Total	2,856,651	100.00	2,433,516	100.00

[Market Share]

According to the statistics by the Department of Statistics of the Ministry of the Interior until the end of December 2022, the population in our country was about 23.264 million. The population trend was of an aging population. The proportion of the population aged above 65 in 2022 was 17.56%, which was a significant increase compared to 10% in 2006. As a result of the population proportion of middle-aged and elderly adults being relatively higher, the population structure was going to be an aging society. With the advancement in technology and internet communication, health care information has become one of the popular topics.

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As the estimation by Biotechnology Development Center in 2022, the output value of the domestic pharmaceutical industry will be NT$84.65 billion. The proportion of the Company is about 2.09%.

[Supply and Demand Condition and Growth of Future Market]

With an aging society and NHI pharmaceutical purchase policy, the market for drugs and functional food are expected to flourish. The nondrug market continues to experience dramatics growth with the generalization of open chain pharmacies. Market positioning and market segmentation of drugs becomes more transparent in the future. The Company’s high quality products with exceptional marketing strategies will give the Company a competitive edge and increase market share.

[Competitive Niche]

A. The production scale and management capability of the Company could effectively reduce the production and marketing cost to create the competitive advantage of “cost leader”.
B. The Company collaborates with national pharmacies to establish Sinphar Counters, and maintains a relationship with primary care networks in various regions, district hospitals, and regional hospitals. Each medical center continues to develop and cooperate with the distributor to expand the products of the Company for a more flexible marketing strategy.
C. Through natural products R&D, the Company has obtained patents in several countries and controlled exclusive technology and materials which could be used in functional food and medical cosmetology products, giving the Company an advantage in differentiation competitiveness.

[Favorable and Unfavorable Factors in the Long Term]

A. Favorable Factors

(A) The Company has diversified and comprehensive product lines.
a. The categories of products are diversified

The Company develops, manufactures, and sells a comprehensive category of products, and manufactures functional foods for global companies. Product lines include prescription drugs, over-the-counter drugs, cosmetics, functional food, natural botanical extracts, and medical devices.

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b. Balanced development of drugs and non-drugs

(a) Drugs

The Company’s drug products are used for different types of treatments, and has a proprietary manufacturing technology for special soft gelatin capsules. The planned anticancer (for injectable and solids) and eye drop production facilities are certified by domestic and Japanese health authorities. In addition to producing existing drugs, the Company lists prescription drugs for chronic diseases as the key focus for future development. Some factors affecting the upward trend in market growth for out-of-pocket non-prescription drugs are the aging population, changes in lifestyle, availability of health related knowledge.

(b) Non-drugs

The Company has a unique advantage in its government-certified health food and medical cosmetology products, which are developed with Company R&D exclusive patented raw material. The Company has also successfully developed protein vegan powder nutritional supplements and is the approved manufacturer for several international companies. The Company’s products are exported to other countries around the world. Through horizontal diversification, the Company produces and sells more than one hundred of products. Some products obtained FDA health food permit numbers, such as Memoregain Capsules. These products give the Company a competitive edge over others in the industry.

(B) The Company has a complete medical devices and container product line. Specialized containers and medical devices that meet the quality of biotechnology industry are sold to others, while reducing the costs of such items for the Group internally.
(C) Exceptional channel marketing and manufacturing collaboration with international manufacturers.
(D) Favorable corporate image
a. Sinphar Potent Plus Soft Capsules are made with a unique anti-fatigue formula and was awarded the US invention patent certification in March 2020. (Patent No. US10485836B2)
b. Niangjia Lipucan® Capsules developed and produced by Sinphar were awarded the “Nutraceutical Innovation Award” from the Health Food Society of Taiwan in May 2020.
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c. SynCore Bio’s SB05PC (EndoTAG® -1) was awarded the 2020 Taipei Biotechnology Award-Innovative Technology Award-Excellence Award in July 2020.
d. The research results of Sinphar exclusive patented Poria cocos extract (Lipucan® ) have been published in “Life (Basel) in February 2021. 2021 Feb 1;11(2):111” and “Life (Basel). 2021 Apr 21;11(5):372”.
e. Sinphar Tian-Li combined Cistanche Tubulosa extracts and Lipucan into a brain-beneficial product and obtained the patent licensing of “a complex with improving memory” from China, allowing the patent portfolio planning of Sinphar plant extracts to expand into new areas and increase intangible assets in April 2021. (Patent No. ZL 2018 1 0691573.1)
f. SynCore Bio’s CysLute EX Capsules received both gold awards at America’s Science & Invention Expo and the ⅩⅤ International Warsaw Invention Show in November 2021. It’s the only one of the lutein health supplements in Taiwan that received gold awards.
g. The subsidiary, SynCore Bio, was awarded bronze medal in pharmaceutical category for the “2021 Pharmaceutical Technology Research Development Award” held by Ministry of Health and Welfare in December of 2021.
h. Sinphar “Memoregain Capsules” was awarded a gold medal in the 2022 Moscow International Salon of Inventions and Innovative Technologies ARCHIMEDES and the U.S. special award. Additionally, it was also the silver medal winner in Monde Selection of International Institute for Quality Selections.
i. Sinphar “Memoregain Capsules” was awarded Symbol of National Quality in health food section in September 2022.
j. Sinphar “Memoregain Capsules” was awarded the 19th The National Brand Yushan Award in October 2022.
k. Sinphar “Memoregain Capsules” was awarded bronze medal in National Healthcare Quality Award in December. It’s the only health food that won the award in 2022.
(E) Powerful R&D Team

The R&D Center hires professors, doctorates, masters, experts, and scholars to be an integral part of the R&D team. The team works to meet business demands, strengthens product R&D and improvement, expand product lines, and develop patentable drugs.

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B. Unfavorable Factors

(A) Unfavorable operating factors are mainly due to the COVID-19 pandemic and global political and economic situation, and volatility to overall domestic pharmaceutical industry caused by changes to NHI policy and pharmacy channel integration. Specifically as follows:
a. Marketing
(a) To control the cost of NHI, the government tightened drug price management and made an unreasonable price difference between domestic drugs and imported drugs. Thus the profits of the Company have been reduced.
(b) As the NHI implemented 2nd generation policy and overall economics downturn,
- along with the changes to pharmacy operational business model, the Company faces an increased product competition.
b. Manufacturing
(a) The categories of products are diversified; therefore, production cost management is relatively higher.
(b) These factors dramatically boost production and operating costs: the supply chain disruption caused by the pandemic and Russian-Ukrainian War caused the global raw materials and shipping prices to spike and the persistent increase in domestic salary.
(c) It is difficult to train technical talents, causing the lack of skilled workers appear hence influence sales revenue.
c. Research and Development

Difficulties in hiring and cultivating talents. Need to establish the long term plan.

(B) Specific solutions
a. Marketing
(a) In addition to developing drugs with high added value, the Company continues to develop new over-the-counter drugs to share the market risk of falling NHI drug prices.
(b) Add products in the bioequivalence and high added value categories to increase profit.
(c) Through the subsidiaries in Canada and China, find technical and marketing collaboration and increase export sales revenue.
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(d) Utilize the production and marketing network of the subsidiary, Sinphar Tian-Li, to obtain the China drug and non-drug license and product export.
(e) Utilize global manufacturing and marketing advantage to convert to flexible product development, and focus on increasing sales channel coverage.
(f) Promote to increase the number of visitors to Sinphar Health Park:

Tour groups travel to the Company’s Yilan Health Park and attend health related seminars. Pharmacists and nutritionists regularly share information on health and on using drugs safely, at the same time answer questions related to products. The Company builds consumer loyalty with members through the exchange of conversations, new products samples, and lottery draw games.

b. Manufacturing
(a) Actively modify production line, achieve foreign certifications, and participate in global professional exhibitions for international OEM opportunities.
(b) Signed OEM contracts with U.S. and Japanese manufacturers, which is conducive to introducing technology, improve the utilization rate of equipment, and increase sales performance.
(c) Look for opportunities to collaborate with upstream manufacturers domestically and aboard to ensure the quality and stability of the upstream source materials. Additionally, increase safety stocks to prevent material shortage or out-of-stock.
(d) Implement smart factories, introduce digital integrated management systems, and automatic tracking record interpretation to reduce human error, and create more efficient production lines.
c. Research and Development

As a part of the Company’s global business strategy, the Company continuously introduces new concepts, new technologies and new practices in cooperation with European new drug companies to enhance its international research and development capabilities. The R&D Center of the Company controls the core technology and combines the resources of each subsidiary.

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5.2.2 Production Procedures and Important Uses of Main Products

A. Important Uses of Main Products

Main Products	Important Uses
Drugs	Treat, repair, prevent, relieve, and antagonize the cause of the disease, injury, and discomfort to help the body recover.
Functional Food	Functional food and health supplements were developed for strengthening the immune system.
Others	1. Products for topical (cuticle, skin, hair) care, to maintain beauty, cleanliness, protection and etc. 2. Medical devices and containers for assisting, implementing, and coordinatingwith treatment.

B. Production Procedures of Main Products

(A) Capsule

==> picture [440 x 158] intentionally omitted <==

(B) Liquid

==> picture [470 x 169] intentionally omitted <==

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5.2.3 Supply Status of Main Materials

The raw materials of the Company are purchased domestically and imported. The Company has a close collaboration relationship with domestic suppliers. Foreign materials are mainly imported through traders. There are many alternative suppliers for this industry, and as a result, vendors are not spread out. Vendors are selected according to transaction requirements and the quality of materials supplied. With decentralized sources, the Company has not experience material supply shortage.

5.2.4 Clients Accounting for 10% of Sales (Purchase) or More in the Last Two Years

A. Sales: No client accounted for 10% of sales or more in the last two years.
B. Purchase: No supplier accounted for 10% of purchase or more in the last two years.
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5.2.5 Production in the Last Two Years

Unit: NT$ thousand

5.2.5 Production in the	5.2.5 Production in the	5.2.5 Production in the	Last Two Years	Last Two Years	Last Two Years	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Year Output Major Product			2022			2021
Category	Item	Unit	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Drug	Oral solution	L	1,540,000	860,045	91,657	1,540,000	820,940	89,917
	Solution for external use	L	960,000	930,861	150,477	960,000	899,636	140,765
	Injection	L	2,500	1,463	61,483	2,500	1,817	75,483
	Suppository	thousand suppository	3,000	2,256	5,409	3,000	1,875	4,509
	Ointment	kg	350,000	316,939	217,026	350,000	302,785	206,255
	Soft capsule	thousand capsule	18,000	19,024	20,142	18,000	18,982	20,119
	Hard capsule	thousand capsule	50,000	23,713	19,581	50,000	28,625	22,001
	Tablet	thousand tablet	720,000	738,240	297,302	720,000	652,460	259,747
	Granular powder	kg	40,000	94,311	103,646	40,000	117,550	89,498
	Eye drop	L	100,000	78,745	65,460	100,000	55,897	49,923
	Other		─	─	8,096	─	─	─
	Subtotal	Note	─	─	1,040,279	─	─	958,217
Functional Food	Oral solution	L	18,000	37,580	10,084	18,000	29,308	7,788
	Soft capsule	thousand capsule	250,000	81,231	195,489	250,000	86,008	213,958
	Gummy	kg	9,000	1,195	409	9,000	834	290
	Hard capsule	thousand capsule	423,000	37,914	60,454	423,000	42,846	54,686
	Tablet	thousand tablet	700,000	89,331	120,158	700,000	69,702	88,964
	Granular powder	kg	4,000,000	241,237	199,180	4,000,000	214,264	163,181
	Other		─	─	907	─	─	457
	Subtotal	Note	─	─	586,681	─	─	529,324
Others	Subtotal	Note	─	─	141,519	─	─	141,698
	Total		─	─	1,768,479	─	─	1,629,239

Note: The units of measure for the major products are different; thus the amount cannot be summed up.

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5.2.6 Sales in the Last Two Years

Unit: NT$ thousand

Year Sales Main Product	Year Sales Main Product	Year Sales Main Product	2022	2022	2022	2022	2021	2021	2021	2021
			Domestic		Export		Domestic		Export
Category	Item	Unit	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Drug	Injection	L	2,065	86,946	─	─	1,913	85,412	─	─
	Tablet	thousand tablet	790,689	523,080	20,080	39,657	624,184	381,303	7,938	29,515
	Hard capsule	thousand capsule	28,285	37,479	72	279	18,855	26,114	62	661
	Soft capsule	thousand capsule	21,660	45,928	─	─	17,028	33,763	─	─
	Granular powder	kg	34,281	112,957	9,578	113,619	34,242	95,726	5,932	66,564
	Eye drop	L	70,792	82,801	240	618	61,899	78,347	151	323
	Ointment	kg	356,097	509,518	2,370	3,716	323,044	456,922	1,848	2,968
	Internal solution	L	873,700	115,005	5,483	1,077	840,494	105,629	6,695	1,219
	Solution for external use	L	892,426	212,169	6,237	3,133	900,800	200,601	5,443	2,511
	Suppository	thousand suppository	1,907	7,138	393	1,355	1,965	7,113	157	526
	Subtotal	Note	─	1,733,021	─	163,454	─	1,470,930	─	104,287
Functional Food	Internal solution	L	10,571	3,758	91	40	30,585	15,720	540	366
	Soft Capsule	thousand capsule	82,420	349,467	14	92	76,394	327,321	33	272
	Gummy	kg	─	─	1,195	474	(340)	(144)	1,174	452
	Tablet	thousand tablet	87,195	154,811	2,918	4,903	60,669	110,055	2,203	3,464
	Hard capsule	thousand capsule	25,330	118,258	9,558	15,636	29,411	84,144	11,944	16,915
	Granular powder	kg	64,724	92,452	146,645	120,196	64,976	90,965	147,291	114,019
	Subtotal	Note	─	718,746	─	141,341	─	628,061	─	135,488
Others	Subtotal	Note	─	100,031	─	58	─	94,722	─	28
	Total		─	2,551,798	─	304,853	─	2,193,713	─	239,803
	Net Sales		2,856,651				2,433,516

Note: The units of measure for the major products are different; thus the amount cannot be summed up.

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5.3 Employees’ status from the two most recent fiscal year up to the printing date of this annual report

					Unit:people;% As of March 31,2023 60 361 527 948 41 10.5 1.5 9.2 56.3 24.9 8.1
		Year	2021	2022	As of March 31,2023
Number of Employees		Executives	59	55	60
		Production Personnel	312	335	361
		Other Employees	533	551	527
		Total	904	941	948
Average Age			39.8	40	41
Average Years of Service			10.5	10.4	10.5
Education (%)	Ph.D.		1.8	1.5	1.5
	Master		10.8	9.4	9.2
	Bachelor’s Degree		54.8	55.7	56.3
	Senior High School		25.3	24.8	24.9
	Below Senior High School		7.6	8.6	8.1

5.4 Environmental Protection Expenditure

5.4.1 Total Losses

Any losses suffered by the Company in the most recent fiscal year and up to the annual report publication date due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in the environmental inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions):

Disposition date	September 16, 2022
Disposition reference numbers	Official document of environment and water issued by government No. 1110032550A, No. 1110032550B, No. 1110032550C, No. 1110032550D
The articles of law violated	Paragraph 1, Article 14 and Paragraph 2, Article 21 of Water Pollution Control Act
Detail of violation	The actual wastewater treatment procedure was different from the content of discharge permit of sewage. Also, the actual quantity of discharged wastewater exceeded the permission quantity for many days.
Punishment	Fine of NT$213 thousand

5.4.2 Countermeasures and Estimate Amount for Future Environmental Protection

As the result of the incident, the Company established wastewater treatment plant to collect the wastewater (sewage) during production. The Company will submit modification to the permit and the equipment at the same time. The estimated cost of commission for a permit modification is nearly NT$120,000. Each environmental protection equipment has been

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maintained regularly since its purchase. In addition to complying with government regulations and submitting inspection reports quarterly, the Company tests the equipment aperiodically. The Company will strengthen personnel training, calibrate the instruments, and comply with the updates on environmental regulations.

5.5 Labor Relations

5.5.1 Employee welfare, advanced studying, training, implementation of the retirement system, collective agreement, and protection of employee rights

A. In order to coordinate labor-management relations, promote labor-management cooperation, and improve work efficiency, especially in terms of labor conditions and employee rights, such as hiring, working hours, attendance, leave, rewards and demerits, promotions, etc., in addition to complying with relevant government laws and regulations, the Company pays labor insurance and national health insurance in accordance with the law, and allocates employee welfare funds and retirement reserves, organizes employee welfare committees and retirement reserve supervision committees, and contributes to employee benefits and retirement services as a whole. Labor-management meeting is held at least once every three months to listen to employee feedback and seek solutions, so labor-management relations have always been harmonious.
B. To provide employees with financial stability, the Company has complied with the laws: employees who started working on or after July 1, 2005 and the employees who started working before July 1, 2005 that choose the new labor pension system, their pension uses defined contribution plan. As of December 31, 2022, the estimated allocation of defined benefit plan for the next year is NT$1.136 million. The amount of pension allocated by the Company every month shall not be less than six percent of the employee’s salary. For an employee who voluntarily contributes to the pension, the Company shall allocate the pension to the Bureau of Labor Insurance according to the employee’s instructed percentage of salary and deposit the amount in an individual retirement account. For the employee that was employed before July 1, 2005 and chooses to continue using the old labor pension system after July 1, 2005 and the employee that was employed before July 1, 2005 and converted to the new labor pension system after July 1, 2005, the Company shall contribute to the pension based on their years of employment and deposit it to the account of the Department of Trusts, Bank of Taiwan. The pension shall be calculated in accordance with Labor Pension Act and be given to retired employees when they retire. The foreign subsidiary shall pay for social insurance like healthcare, pension, and retirement every month in accordance with local government regulations.
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C. Other benefits

(a) Employee benefits

In addition to regularly holding events for employees’ to de-stress at work, Employee Benefits Committee provides the following:

a. Insurance: The Company has purchased group accident insurance for employees.
b. Allowance: Including weddings and funerals, scholarships and grants for

employees’ children, employees’ activities, and travels.

c. Bonus and gifts: Providing holiday bonuses, voucher for birthday and Labor Day, and Moon Festival gift box.

d. Travel aboard: For those employees who work in the office and who work for ten

 - years, twenty years, and thirty years, the Company provides a travel allowance for overseas travel.

e. The Company holds a monthly conference and dines together aperiodically.
- Supervisor may invite new employee to a meal to hear feedback and improve inclusiveness.
(b) Education and training system

The Company encourages employees to continue learning and sharing experiences, also improves technical talent development. Course schedule below:

Training Category	Training Category	Training Category	Content of Course
New Employee Orientation	General Employee	General Training	Occupational safety and health training, Good Manufacturing Practice (PIC/S GMP concept), administration, and general regulation of the factory.
		Professional Training	Each department provides professional training to new employees before theybegin working.
	Sales Representative	General Training	Training for occupational safety and health, administration, salesperson marketing ethics and laws. Visiting and receiving an introduction to factory.
		Professional Training	Sales and marketing course, accounting course, fundamental pharmacology, introduction to quality certification, health food and nutritional science, introduction to products, relevant courses of schedule/ client/product management.
	Supervisors	General Training	Occupational safety and health training, PIC/S GMP concept, personnel administration, general management regulation of plant area,relevant courses of environmental safety.
		Training for Supervisors	Introduction to group and supervisors, personnel system, official documents handling
On-the-job Training	Internal Training		Annual training plan for each department (implemented monthly), trainingbyequipment manufacturer.
	External Training		Professional training/ announcement/ seminar/ certification course
	Supervisors		Encourage supervisors to enroll in in-service master’s program
Project Training			Large-scale training and law training will be held annually.

122 -
(c) To protect labor rights and facilitate the communication between labor and management, the Company has established a company union. Matters of flexible working hours, overtime, shift work, and women’s night work overtime are brought up to the union and the Company will implement them after approval. This strengthens labor-management relations and facilitates changes to workplace conditions and provides benefits to union members.
(d) Over the years, the Company systematically promotes employee health and wellness and provides a healthy workplace. Below are some positive results.
- ⅰ. Weight loss competition amongst employees
- ⅱ. The Company establishes a smoking area and encourages employees to quit smoking and has obtained the tobacco control badge by the Bureau of Health Promotion. Also, the Company provides health checks annually to protect employees’ well-being.
- ⅲ. Continues to promote zero-accident workplace and implement inter-departmental contest for workplace safety awareness.
- ⅳ. The Company provides recreational facilities such as a gym, a golf driving range, cherry blossom park, crab park, and spirit café. Also, the Company, in partnership with Public Health Bureau, holds walks, provides gift certificates, and sponsors Yilan Marathon to promote employees’ and local residence’s health.
- ⅴ. Received an award of excellence for breastfeeding room contest by Public Health Bureau, Yilan County.
- ⅵ. The Company cares about every employee and is a healthy sustainable workplace. The Company was a receiver of the national excellence award of the national excellence award for healthy workplace held by the Health Promotion Administration and Council of Labor Affairs.
5.5.2 Any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to labor disputes (including labor inspection results found in violation of the Labor Standards Act, specifying the disposition dates, disposition reference number, the articles of law violated, and the content of the dispositions)

None

5.5.3 Countermeasures and Estimate Amount for Labor Disputes

There has not been a loss due to labor disputes since the Company’s establishment, and the Company will continue to maintain labor management harmony and a good working environment. The Company has education and training plans to improve the employees’ knowledge and experience as the Company grows.

123 -

5.6 Information Security Management

5.6.1 State the information security risk management framework, the information security policy, the specific management plan, and the resources invested in the information security management, etc.

[Information Security Policy]

To improve information security policy, to strengthen and ensure the security of information, system, device, and communication network, and to reduce the risks of information assets being stolen, improperly used, leaked, tempered with, damaged due to human errors and/or natural disaster. The Company has complied with the requirement of Information Security Management System (ISO 27001) to establish relevant organization, management plan, and notification procedure to ensure the confidentiality, integrity, and availability of information assets.

==> picture [133 x 67] intentionally omitted <==

[Information Security Management Organization]

Information Security Management Committee

Responsible for establishing and implementing the information security management system of the Company.

Department of Information Technology

Responsible for implementing the education and training of information security and announcing information security policy.

Department of Human Resources

In charge of arranging and tracking the implementation of the education and training of information policy.

==> picture [264 x 186] intentionally omitted <==

----- Start of picture text -----

Convener,
Deputy Convener,
Execeutive
Secretary
Information
Security
Management
Committee
Information
Document
Security Incident Control Team Audit Team
Response Team
----- End of picture text -----

124 -

[Information Security Management Program]

Comply with the laws

The relevant acts and regulations of “Information Standard ISO/IEC 27001” shall be

complied with when conducting business.

Establish information security organization

Establish an information security management committee in charge of establishing and implementing the information security management system of the Company.

Implement education and training of information security

Implement education and training of information security related to business to announce information security policy and relevant regulations.

Application of resource

Establish an information security management mechanism that considers information security before utilizing a new service or system, and to optimize the distribution and use of limited resource to prevent danger to system security and resolve key security problems.

Establish physical security monitoring

Establish physical environmental security protective device and maintain it regularly.

Establish authorization management

Clarify the access permission of information systems, internet service, and sensitive information.

Sustainable business operation

Establish a sustainable operation plan of information security and practical exercise for it to ensure the Company can continue to operate after suffering an incident.

Continuous improvement

Formulate and implement an internal audit of information security to implement the

information security management system, and implement corrective and preventive actions for outstanding issues.

Establish information security culture

All personnel have the responsibility to maintain information security and shall comply with the relevant regulations of information security management.

125 -

[Information Security Notification Procedure]

The information security notification procedure of the Company is as below. The notification and treatment of information security cases shall comply with the regulation of

the procedure.

==> picture [420 x 237] intentionally omitted <==

[Resources Invested in Information Security Management]

Dedicated personnel

Establish an information security management committee that convenes management

review meeting regularly to assess relevant information security issues.

Relevant certification

The Company obtained the ISO 27001 certificate. There is no significant deficiency in information security auditing.

Education and training

Conduct information security policy announcement for new employees and social engineering drill regularly.

5.6.2 Any losses suffered by the Company in the most recent fiscal year and up to the annual report publication date due to significant information security cases, its

possible influences, and countermeasures. If it can’t be reasonably estimated, the factor that can’t be reasonably estimated shall be illustrated.

None

126 -

5.7 Important Contract

Agreement	Counterparty	Period	Major Contents	Restrictions
Exclusive License Agreement	National Health Research Institutes	August 8, 2008 until the longest term of the granted patents	Authorized global development, sale, and relevant rights of SB01, SB02.	None
Exclusive License Agreement	Medigene AG Germany	May 18, 2011 until 10 years after product launch	Authorized the rights of exclusive manufacturing and sale of Veregen® in Taiwan. Also, increased the exclusive license areas in Asia (excluding China and South Korea), New Zealand, and Australia.	None
Exclusive License Agreement	MacuCLEAR Inc. U.S.	October 27, 2011 until the longest term of the granted patents	Authorized the rights of exclusive manufacturing and sale of SB04 in Asia and Australia.	None
Exclusive License Agreement	AJU Pharm South Korea	May 27, 2015 until terminated by mutual agreement	Authorized exclusive sales rights of SB04 in South Korea and the sole commercialization rights after products are launched.	None
Technology and Intellectual Property Rights Transfer Agreement	Medigene AG Germany	From December 17, 2015	Obtain complete the technology platform and technology and intellectual property rights of EndoTAG® , including developing a different indication of the original item, the new indication of the new item, and development rights of the new technology platform derivative.	None
Co-development Agreement	Y-YBar Switzerland	From November 8, 2016	Co-development of new FLoM-S technology and its commercialization.	None
Topical Ointment Technical Cooperation	Mitsui Pharmaceuticals Inc. Japan	From July 15, 1997	Technology provided by Mitsui	None
Distribution Agreement	Shou Chan Industrial Co., Ltd. Macau	August 18, 2015 until terminated by mutual agreement	Shou Chan Industrial Co., Ltd. Macau is authorized non-exclusive distribution rights of Veregen® in Macau.	None
Distribution Agreement	Watson’s Personal Care Stores (Taiwan) Co., Limited	January 1, 2023-Decemeber 31, 2023	Selling functional products	None
Distribution Agreement	President Drugstore Business Corporation	January 1 2023-December 31, 2023	Selling functional product	None
Commission Agreement	Company H	From March 31, 2018	Commissioned products	None
Commission Agreement	Company G	From April 15, 2018	Commissioned products	None
Commission Agreement	Company E	From February 12, 2015	Commissioned products	None

127 -

Agreement	Counterparty	Period	Major Contents	Restrictions
Commission Agreement	Company D	From January 1, 2015	Commissioned products	None
Commission Agreement	Company A	From November 1, 2010	Commissioned products	None
Commission Agreement	Takeda Pharmaceuticals Taiwan Ltd.	From July 1, 2003	Commissioned products	None
Commission Agreement	Taiwan Shionogi & Co., Ltd.	From February 7, 2012	Commissioned products	None
Long-term Loan Agreement	Bank of Taiwan Lou Tung Branch	October 21, 2022-October 21, 2024	Credit and secured loan	None
Long-term Loan Agreement	Bank of Taiwan Lou Tung Branch	October 29, 2013-October 29, 2028	Land and construction mortgage loan	None
Long-term Loan Agreement	Bank of Taiwan Lou Tung Branch	July 27, 2020-July 27, 2027	Machinery mortgage loan	None
Long-term Loan Agreement	First Commercial Bank Su'ao Branch	December 6, 2011-December 6, 2026	Land and construction mortgage loan	None
Long-term Loan Agreement	First Commercial Bank Su'ao Branch	November 10, 2022-November 10, 2024	Credit and secured loan	None
Long-term Loan Agreement	Mega International Commercial Bank Yilan Branch	January 30, 2022-January 29, 2024	Land and construction mortgage loan	None
Long-term Loan Agreement	Taiwan Business Bank Co., Ltd. Su'ao Branch	March 28, 2023-March 28, 2025	Credit and secured loan	None

128 -

Ⅵ. Financial Information

6.1 Most Recent Five Years Concise Balance Sheet and Statement of Comprehensive Income

6.1.1 Condensed Balance Sheet and Composite Income Statement-Based on IFRS

A. Condensed Balance Sheet

Unit: NT$ thousand

Year Item	Year Item	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	2023 as of March 31 (Note 1)
		2018	2019	2020	2021	2022
Current Assets		2,121,733	2,261,999	2,539,635	2,703,349	2,778,451	2,567,736
Property, Plant, and Equipment		3,346,664	3,301,829	3,266,623	3,203,902	3,119,747	3,106,854
Intangible Assets		217,937	190,353	157,530	117,296	86,983	83,769
Other Assets		191,793	162,343	163,127	196,384	200,010	210,933
Total Assets		5,878,127	5,916,524	6,126,915	6,220,931	6,185,191	5,969,292
Current Liabilities	Before Distribution	889,302	1,155,803	1,329,897	1,534,499	1,445,911	1,172,229
	After Distribution	906,074	1,189,348	1,363,441	1,568,043	(Note 2)	–
Non-current Distribution		1,565,999	1,557,910	1,653,195	1,609,249	1,522,432	1,506,747
Total Liabilities	Before Distribution	2,455,301	2,713,713	2,983,092	3,143,748	2,968,343	2,678,976
	After Distribution	2,472,073	2,747,258	3,016,636	3,177,292	(Note 2)	–
Equity Attributable to Owners of the Parent		2,926,094	2,783,151	2,744,430	2,722,239	2,930,230	3,012,955
Capital Stock		1,677,221	1,677,221	1,677,221	1,677,221	1,677,221	1,677,221
Capital Surplus		1,045,948	959,019	941,391	963,516	929,972	929,972
Retained Earnings	Before Distribution	279,754	275,809	244,809	210,681	444,405	524,520
	After Distribution	262,982	242,264	211,265	177,137	(Note 2)	–
Other Equity Interest		(76,829)	(128,898)	(118,991)	(129,179)	(121,368)	(118,758)
Treasury Stock		–	–	–	–	–	–
Non-controlling Interest		496,732	419,660	399,393	354,944	286,618	277,361
Total Equity	Before Distribution	3,422,826	3,202,811	3,143,823	3,077,183	3,216,848	3,290,316
	After Distribution	3,406,054	3,169,266	3,110,279	3,043,639	(Note 2)	–

Note 1: The financial data for 2018-2022 and Q1 in 2023 have been certified or audited by CPA. Note 2: The proposal for 2022 earnings distribution has not been resolved by Shareholders’ Meeting yet.

129 -

B. Condensed Individual Balance Sheet

Unit: NT$ thousand

		Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Year Item		Financial Summary for The Last Five Years (Note 1)
		2018	2019	2020	2021	2022
Current Assets		1,299,046	1,425,833	1,481,192	1,644,160	1,994,225
Property, Plant, and Equipment		2,100,464	2,109,145	2,062,419	2,065,639	2,020,278
Intangible Assets		31,765	39,000	41,162	35,028	28,466
Other Assets		1,761,442	1,706,103	1,699,279	1,642,520	1,557,252
Total Assets		5,192,717	5,280,081	5,284,052	5,387,347	5,600,221
Current Liabilities	Before Distribution	766,971	983,105	929,263	1,090,824	1,179,327
	After Distribution	783,743	1,016,650	962,807	1,124,368	(Note 2)
Non-current Liabilities		1,499,652	1,513,825	1,610,359	1,574,284	1,490,664
Total Liabilities	Before Distribution	2,266,623	2,496,930	2,539,622	2,665,108	2,669,991
	After Distribution	2,283,395	2,530,475	2,573,166	2,698,652	(Note 2)
Equity Attributable to Owners of the Parent		2,926,094	2,783,151	2,744,430	2,722,239	2,930,230
Capital Stock		1,677,221	1,677,221	1,677,221	1,677,221	1,677,221
Capital Surplus		1,045,948	959,019	941,391	963,516	929,972
Retained Earnings	Before Distribution	279,754	275,809	244,809	210,681	444,405
	After Distribution	262,982	242,264	211,265	177,137	(Note 2)
Other Equity Interest		(76,829)	(128,898)	(118,991)	(129,179)	(121,368)
Treasury Stock		–	–	–	–	–
Non-controlling Interest		–	–	–	–	–
Total Equity	Before Distribution	2,926,094	2,783,151	2,744,430	2,722,239	2,930,230
	After Distribution	2,909,322	2,749,606	2,710,886	2,688,695	(Note 2)

Note 1: The financial data for 2018-2022 have been certified and audited by CPA.

Note 2: The proposal for 2022 earnings distribution has not been resolved by the Shareholders’ Meeting yet.

130 -

C. Condensed Composite Income Statement-Based on IFRS

Unit: NT$ thousand

Year Item	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	Financial Summary for The Last Five Years (Note 1)	2023 as of March 31 (Note 1)
	2018	2019	2020	2021	2022
Operating Revenue	2,215,837	2,394,589	2,388,452	2,433,516	2,856,651	771,018
Gross Profit	825,382	940,845	875,533	888,707	1,091,300	287,196
Operating Income (Loss)	(119,296)	(146,970)	(122,197)	(182,770)	197,335	87,708
Non-operating Income and Expenses	31,615	60,264	4,424	(1,755)	47,711	5,835
Income (Loss) Before Tax	(87,681)	(86,706)	(117,773)	(184,525)	245,046	93,543
Net Income (Loss) from Continuing Operation	(123,005)	(147,922)	(172,559)	(204,959)	164,174	70,470
Loss from Discontinued Operation	–	–	–	–	–	–
Net Income (Loss)	(123,005)	(147,922)	(172,559)	(204,959)	164,174	70,470
Other Comprehensive Income (Income After Tax)	(59,730)	(73,687)	9,747	(10,502)	17,830	2,998
Total Comprehensive Income	(182,735)	(221,609)	(162,812)	(215,461)	182,004	73,468
Net Income Attributable to Owners of the Parent	8,785	13,961	(28,510)	(38,135)	224,644	80,115
Net Income Attributable to Non-controlling Interest	(131,790)	(161,883)	(144,049)	(166,824)	(60,470)	(9,645)
Comprehensive Income Attributable to Owners of the Parent	(29,595)	(39,242)	(21,093)	(44,316)	241,535	82,725
Comprehensive Income Attributable to Non-controlling Interest	(153,140)	(182,367)	(141,719)	(171,145)	(59,531)	(9,257)
Earnings Per Share	0.05	0.08	(0.17)	(0.23)	1.34	0.48

Note 1: The financial data for 2018-2022 and Q1 in 2023 have been certified and audited by CPA.

Note 2: Based on weighted average shares outstanding in each year.

131 -

D. Condensed Composite Individual Income Statement-Based on IFRS

Unit: NT$ thousand

	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Year Item	Financial Summary for The Last Five Years (Note 1)
	2018	2019	2010	2011	2022
Operating Revenue	1,930,023	2,128,200	2,148,886	2,157,258	2,511,206
Gross Profit	705,111	812,010	770,047	765,528	933,995
Operating Income (Loss)	162,339	239,985	248,357	227,081	309,609
Non-operating Income and Expenses	(122,321)	(168,204)	(224,472)	(249,635)	(23,217)
Net Income (Loss) Before Tax	40,018	71,781	23,885	(22,554)	286,392
Net Income (Loss) from Continuing Operation	8,785	13,961	(28,510)	(38,135)	224,644
Loss from Discontinued Operation	–	–	–	–	–
Net Income (Loss)	8,785	13,961	(28,510)	(38,135)	224,644
Other Comprehensive Income (Income After Tax)	(38,380)	(53,203)	7,417	(6,181)	16,891
Total Comprehensive Income	(29,595)	(39,242)	(21,093)	(44,316)	241,535
Net Income Attributable to Owners of the Parent	8,785	13,961	(28,510)	(38,135)	224,644
Net Income Attributable to Non-controllingInterest	–	–	–	–	–
Comprehensive Income Attributable to Owners of the Parent	(29,595)	(39,242)	(21,093)	(44,316)	241,535
Comprehensive Income Attributable to Non-controllingInterest	–	–	–	–	–
Earnings Per Share	0.05	0.08	(0.17)	(0.23)	1.34

Note 1: The financial data for 2018-2022 have been certified and audited by CPA.

Note 2: Based on weighted average shares outstanding in each year.

6.1.2 Important Matters Influenced the Consistency of Preceding Financial Statements

None

6.1.3 CPAs’ Opinion from 2018-2022

Name	Accounting Firm	Audit Opinion
Qing Chen and Jin Shu Pan	Crowe (TW) CPAs	Unqualified Opinion
Qing Chen and Jin Shu Pan	Crowe (TW) CPAs	Unqualified Opinion
Qing Chen and Jin Shu Pan	Crowe (TW) CPAs	Unqualified Opinion
Ya Quan Zhang and Jin Shu Pan	Crowe (TW) CPAs	Unqualified Opinion
Ya Quan Zhang and Jin Shu Pan	Crowe (TW) CPAs	Unqualified Opinion

132 -

6.2 Most Recent Five Years Financial Analysis

6.2.1 Financial Analysis

Item	Year	Financial Analysis for The Last Five Years	Financial Analysis for The Last Five Years	Financial Analysis for The Last Five Years	Financial Analysis for The Last Five Years	Financial Analysis for The Last Five Years	2023 as of March 31 (Note 1)
		2018	2019	2020	2021	2022
Financial Structure (%)	Debt Ratio	41.77	45.87	48.69	50.54	47.99	44.88
	The Ratio of Long-term Capital to Property, Plant, and Equipment	149.07	144.18	146.85	146.27	151.91	154.40
Solvency (%)	Current Ratio	238.58	195.71	190.96	176.17	192.16	219.05
	Quick Ratio	174.23	131.99	125.40	120.42	133.77	140.36
	Interest Earned Ratio	-3.29	-2.75	-3.80	-6.44	9.81	12.27
Operating Performance	Accounts Receivable Turnover (times)	4.08	4.05	4.46	4.65	4.47	4.54
	Average Collection Period	89.46	90.12	81.84	78.49	81.66	80.40
	Inventory Turnover (times)	2.75	2.76	2.42	2.24	2.46	2.52
	Accounts Payable Turnover (times)	5.10	5.05	5.04	4.62	4.16	4.48
	Average Days in Sales	132.73	132.25	150.83	162.95	148.37	144.84
	Property, Plant, and Equipment Turnover (times)	0.66	0.72	0.73	0.75	0.90	0.99
	Total Assets Turnover (times)	0.37	0.41	0.40	0.39	0.46	0.51
Profitability	Return on Total Assets (%)	-1.79	-2.19	-2.54	-3.00	3.01	5.08
	Return on Stockholders’ Equity(%)	-3.49	-4.47	-5.44	-6.59	5.22	8.66
	Pre-tax Income to Paid-in Capital (%)	-5.23	-5.17	-7.02	-11.00	14.61	22.31
	Profit Ratio (%)	-5.55	-6.18	-7.22	-8.42	5.75	9.14
	Earnings Per Share (NTD)	0.05	0.08	-0.17	-0.23	1.34	0.48
Cash Flow	Cash Flow Ratio (%)	8.94	(Note 1)	11.01	8.83	29.44	5.73
	Cash Flow Adequacy Ratio (%)	47.70	40.45	34.51	39.22	53.35	61.22

133 -

	Cash Reinvestment Ratio (%)	0.70	-1.48	1.67	1.49	5.51	0.93
Leverage	Operating Leverage	-8.09	-6.56	-7.82	-5.55	6.48	3.21
	Financial Leverage	0.85	0.86	0.83	0.88	1.16	1.10
Note 1: The 2019 cash flow statement had a great amount of net cash flow from operating activity, and thus it cannot be counted and analyzed. Analysis of financial ratio differences for the last two years: 1. Interest earned ratio, return on stockholders’ equity, pre-tax income to paid-in capital, earnings per share, return on total assets, and profit ratio are more than corresponding period due to the increase in the net income before tax in this period. 2. The increase in property, plant, and equipment turnover compared with the same period was mainly due to the increase in net sales. 3. The increase in cash flow ratio, cash flow adequacy ratio, and cash reinvestment ratio compared with the same period was mainly due to the increase in cash flow from operating activities. 4. The increase in operating leverage and financial leverage compared with the same period was mainly due to net operating income in this period.

134 -

Individual Financial Analysis

Individual	Financial Analysis
Item	Year	Financial Analysis for The Last Five Years
		2018	2019	2020	2021	2022
Financial Structure (%)	Debt Ratio	43.65	47.29	48.06	49.47	47.68
	The Ratio of Long-term Capital to Property, Plant, and Equipment	210.70	203.73	211.15	208.00	218.83
Solvency (%)	Current Ratio	169.37	145.03	159.39	150.73	169.10
	Quick Ratio	121.18	95.85	98.93	96.97	113.84
	Interest Earned Ratio	3.12	4.43	2.15	-0.01	12.45
Operating Performance	Accounts Receivable Turnover (times)	4.08	4.16	4.57	4.61	4.33
	Average Collection Period	89.46	87.74	79.87	79.18	84.3
	Inventory Turnover (times)	3.49	3.30	2.78	2.52	2.69
	Accounts Turnover Payable (times)	4.83	4.93	5.01	4.69	4.22
	Average Days in Sales	104.58	110.60	131.29	144.84	135.69
	Property, Plant, and Equipment Turnover (times)	0.90	1.01	1.03	1.05	1.23
	Total Assets Turnover (times)	0.37	0.41	0.41	0.40	0.46
Profitability	Return on Total Assets (%)	0.45	0.59	-0.22	-0.38	4.45
	Return on Stockholders’ Equity (%)	0.29	0.49	-1.03	-1.40	7.95
	Pre-tax Income to Paid-in Capital (%)	2.39	4.28	1.42	-1.34	17.08
	Profit Ratio (%)	0.46	0.66	-1.33	-1.77	8.95
	Earnings Per Share (NTD)	0.05	0.08	-0.17	-0.23	1.34
Cash Flow	Cash Flow Ratio (%)	36.79	29.95	40.05	28.93	39.57
	Cash Flow Adequacy Ratio (%)	136.71	173.62	181.69	173.79	162.55
	Cash Reinvestment Ratio (%)	4.53	4.46	6.01	4.96	7.28
Leverage	Operating Leverage	4.97	3.34	3.29	3.69	3.22
	Financial Leverage	1.13	1.10	1.09	1.11	1.09
Analysis of financial ratio differences for the last two years: 1. Interest earned ratio, return on total assets, return on stockholders’ equity, pre-tax income to paid-in capital, profit ratio, and earnings per share are more than corresponding period due to the increase in net income before tax in this period. 2. The increase in cash flow ratio and cash reinvestment ratio compared with the same period was mainly due to the increase in cash flow from operating activities in this period.

135 -

Note 1: The data has been audited by CPA.

Note 2: The calculation formulas of the table are as below:

1. Financial Structure

(1) Debt ratio = Total liabilities / Total assets
(2) Ratio of long-term capital to property, plant and equipment = (Total equity + Non-current liabilities) / Net property, plant and equipment
Solvency
(1) Current ratio = Current assets / Current liabilities
(2) Quick ratio = (Current assets − Inventory − Prepaid expenses) / Current liabilities
(3) Interest earned ratio = Net income before tax and interest / Interest expense
Operational Performance
(1) Accounts receivable turnover (including accounts receivable and notes receivable resulting from the business operation) = Net sales / Average balance of account receivable (including accounts receivable and notes receivable resulting from the business operation)
(2) Average collection period = 365 / Accounts receivable turnover
(3) Inventory turnover = Cost of goods sold / Average inventory
(4) Account payable turnover (including accounts payable and notes payable resulting from the business operation) = Cost of goods sold / Average account payable (including accounts payable and notes payable resulting from the business operation)
(5) Average days in sales = 365 / Inventory turnover
(6) Property, plant, and equipment turnover = Net sales / Net property, plant, and equipment
(7) Total assets turnover = Net sales / Average total assets
Profitability
(1) Return on total assets = [Net income + Interest expense × (1 − Tax rate)] / Average total assets
(2) Return on stockholders’ equity = Net income / Average net shareholders’ equity
(3) Profit ratio = Net income / Net sales
(4) Earnings per share = (Income attributable to owners of the parent − Preferred stock dividend) / Weighted average stock shares issued

5. Cash Flow

(1) Cash flow ratio = Net cash flow from operating activities / Current Liabilities
(2) Cash flow adequacy ratio = Net cash flow from operating activities / (Capital expenditure + Inventory increase + Cash dividend) within five years
(3) Cash reinvestment ratio = (Net cash flow from operating activities − cash dividend) / (Gross property, plant, equipment + Long-term investment + Other non-current assets + Working capital)
Leverage
(1) Operating leverage = (Net operating income − Operating variable cost and expense) / Operating income
(2) Financial leverage = Operating income / (Operating income − Interest Expense)
136 -

6.3 Audit Committee’s Review Report in the Most Recent Year

Please refer to page 137 of the annual report.

6.4 Consolidated Financial Statements in the Most Recent Year

Please refer to page 138 of the annual report.

6.5 Parent Company Only Financial Statement in the Most Recent Year Audited by CPA

Please refer to page 208 of the annual report.

6.6 If the Company or Related Companies Experienced Financial Turnover Difficulties up to the Printing Date of this Annual Report

None

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

137 -

Sinphar Pharmaceutical Co., Ltd.

Representation Letter

The entities that are required to be included in the combined financial statements of Sinphar Pharmaceutical Co., Ltd. as of and for the year ended December 31, 2022 under the Criteria Governing the Preparation of Affiliation Report, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10 “ Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Sinphar Pharmaceutical Co., Ltd. and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

Sinphar Pharmaceutical Co., Ltd.

Chairman,

Chih Wen Lee

March 17, 2023

138 -

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.

139 -

Our key audit procedures in response

Our procedures in relation to cash and cash equivalent included:

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”.
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:

Understand and evaluate the design and implementation of the internal control in relation to inventory.
Perform inventory counts, to identify if there are any inventories which are obsolete or damaged.
Obtain Inventory aging reports to analyses the changes in inventory age, and check the records of
inventory changes to verify the correctness of inventory.
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.
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:

Evaluate the design and implementation of the internal control in relation to the revenue recognition.
140 -
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.
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:

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

141 -

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:

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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.
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.
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.
142 -

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.

143 -

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.

144 -

Sinphar Pharmaceutical Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars)

ITEM	Note	2022	%
		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.

145 -

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.

146 -

Sinphar Pharmaceutical Co., Ltd and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Sinphar Pharmaceutical Co., Ltd and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)	Sinphar Pharmaceutical Co., Ltd and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)	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
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.

147 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2022 and 2021

(Amounts in Thousands of New Taiwan Dollars , Unless Specified Otherwise ）

1.GENERAL INFORMATION

Sinphar Pharmaceutical Co., Ltd. (Sinphar) was incorporated in the Republic of China (“R.O.C.”) on July 2, 1977. Sinphar mainly engages in the production, processing and trading of various medicines, Chinese medicines, medical cosmetic products and nutrients. The main operations of Sinphar and its subsidiaries (collectively as “the Group”) are described in the Note 4(3.). Sinphar is the Group’s ultimate parent company.

Sinphar’s shares have been listed on the Taipei Exchange since October 17, 2000. On August 26, 2002, Sinphar’s stocks were approved for listing on the Taiwan Stock Exchange. The address of its registered office and principal place of business is No.84, Zhongshan Rd., Dongshan Township, Yilan County, Taiwan.

The consolidated financial statements are presented in the Group's functional currency, New Taiwan Dollars.

APPROVAL OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 17, 2023.

APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

New standard, interpretation and amendments to the IFRSs endorsed by the FSC for application starting from 2022:

from 2022:
New Standards,Interpretations and Amendments Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts—Cost of Fulfilling a Contract” Amendments to IFRS 3 “Reference to the Conceptual Framework” Annual Improvements to IFRS Standards 2018–2020	Effective Date Announced by IASB(Note 1)
	January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4) January 1, 2022 (Note 5)

Note 1: Unless stated otherwise, the New IFRSs above are effective for annual periods beginning on or after their respective effective dates.
Note 2: An entity shall apply these amendments retrospectively, but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments.
Note 3: An entity shall apply these amendments to contracts for which it has not yet fulfilled all its obligations on January 1, 2022.
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Note 4: These amendments apply to business combinations whose acquisition date occur during the annual reporting periods beginning on or after January 1, 2022.
Note 5: An entity shall apply the Amendment to IFRS 9 to financial liabilities that are modified or exchanged during the annual reporting periods beginning on or after January 1, 2022. An entity shall apply the Amendment to IAS 41 to fair value measurements for annual reporting periods beginning on or after January 1, 2022. An entity shall apply the Amendment to IFRS 1 for annual reporting periods beginning on or after January 1, 2022.
A. Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”

The amendments set out that proceeds from selling items produced while bringing an item of property, plant and equipment to the location and condition necessary for them to be capable of operating in the manner intended by management shall not be recognized as a deduction of the asset. Instead, the proceeds from selling such items and the costs of those items, measured in accordance with IAS 2, shall be recognized in profit or loss in accordance with applicable IFRS Standards. Additionally, the amendments clarify that costs of testing whether the asset is functioning properly is the costs of assessing whether the technical and physical performance of the asset is such that it is capable of being used in the production or supply of goods or services, for rental to others, or for administrative purposes.

The amendment is applicable to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the January 1, 2021 (beginning of the earliest period) presented in the consolidated financial statements in which the entity first applies the amendment. The Group shall recognize the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of that earliest period presented, and restate the information of the comparing period.

B. Amendments to IAS 37“Onerous Contracts ─ Cost of Fulfilling a Contract”

The amendments set out that, when determining whether a contract is onerous, the cost of fulfilling a contract comprises (a) the incremental costs of fulfilling that contract—for example, direct labor and materials; and (b) an allocation of other costs that relate directly to fulfilling contracts—for example, an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling that contract among others.

C. Amendments to IFRS 3 “Reference to the Conceptual Framework”

The amendments update a reference to the Framework in IFRS 3 and require the acquirer shall determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date within the scope of IFRIC 21.

D. Annual Improvement to IFRS Standards 2018-2020

The annual improvement amends several standards. Among which, the Amendment to IFRS 9 clarifies that, in determining whether an exchange or modification of the terms of a financial liability is substantially different from those of the original liability, only fees paid net of fees received between the Group (the borrower) and the lender for the new or modified contract, including fees paid or received by either the Group or the lender on the other’s behalf, shall be included in the ‘10 per cent’ test of the discounted present value of the cash flows under the new terms.

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The Group evaluates there is no significant impact on its financial position and financial performance as a result of the initial adoption of the standards or interpretations.

(2) Effect of amendments to new issuance or amendments to IFRSs endorsed by FSC but not yet adopted by the Group:

New standards, interpretations and amendments to the IFRSs endorsed by the FSC for application starting from 2023:

New Standards, Interpretations and Amendments Effective Date Announced by IASB Amendments to IAS 1 “Disclosures of Accounting Policies” January 1, 2023 (Note 1) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 2) Amendments to IAS 12“Deferred Tax Related to Assets January 1, 2023 (Note 3) and Liabilities Arising from a Single Transaction”

Note1: The amendments are applied for annual periods beginning on or after January 1, 2023.

Note2: These amendments apply to changes in accounting estimates and changes in accounting policies that occur during annual reporting periods beginning on or after January 1, 2023.
Note3: Except for deferred taxes for temporary differences associated with lease and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.
A. Amendments to IAS 1 “Disclosures of Accounting Policies”

This amendment clarifies that accounting policy information may be evaluated to be material due to the scale or nature of the related transactions, other events or conditions and needed to be disclosed. If the scale or nature of the transactions, other events or conditions are evaluated to be immaterial, and then the disclosure would be not necessary. However, the conclusion which accounting policy information is not significant, does not affect the relevant disclosures required by other IFRS standards.

B. Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define accounting estimates as monetary amounts in financial statements that are subject to measurement uncertainty and clarify that a change in measurement techniques or inputs used to develop an accounting estimate is a change in accounting estimates unless the change is due to an error from prior periods.

C. Amendments to IAS 12 “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”

The amendments narrow the exemption extent in paragraphs 15 and 24 of IAS 12 for an entity from recognizing a deferred tax asset or liability in particular circumstances. In particular, the exemption does not apply to a transaction that gives rise to equal taxable and deductible difference at the time of the transaction. At the initial application of the amendments, an entity shall, at the beginning of the earliest comparative period presented, recognise deferred taxes for all deductible and taxable temporary differences associated with (i) lease and (ii) decommissioning liabilities and recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.

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The Group evaluates there is no significant impact on its financial position and financial performance as a result of the initial adoption of the standards or interpretations.

(3) New IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed and issued into effect by the FSC.

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs endorsed by the FSC are as follows:

endorsed by the FSC are as follows:

New Standards,Interpretations and Amendments Effective Date Announced
byIASB

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture”
Amendments to IFRS 16 “Lease liability in a Sale and Leaseback”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17

Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9－
Comparative Information”
Amendments to IAS 1 “Classification of Liabilities as Current or Non-
Current”
Amendments to IAS 1 “Non-current Liabilities with Covenants” To be determined by IASB
January 1, 2024
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

As of the date of the consolidated financial statements authorized for issue, the Group continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Group completes the evaluation.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The main accounting policies used in the preparation of the consolidated financial report are explained below. Unless otherwise stated, these policies apply consistently throughout all reporting periods.

(1.) Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC.

(2.) Basis of Preparation the Consolidation Financial Statement
A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
- (A.) The financial assets and liabilities measured at fair value through profit and loss (including derivative financial instruments).
- (B.) The financial assets measured at fair value through other comprehensive income.
- (C.) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in compliance with IFRSs endorsed by FSC requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in process of applying the Group’s accounting policies. The areas involving a high degree of judgment or
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complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3.) Basis of Consolidation
A. The basis for the preparation of consolidated financial statements
- (A.) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are the entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (B.) All intra-company transactions, balances, and unrealized gains or losses are eliminated in full on consolidation. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- (C.) Profit or loss and each component of other comprehensive income are attributed to the shareholders of the parent and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
- (D.) Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control of the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in subsidiaries. Any difference between the amount of the non-controlling interests adjusted and the fair value of the consideration paid or received is recognized directly in equity.
- (E.) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. The subsidiaries included in the consolidated financial statements:

Name of the Investor Sinphar Pharmaceutical Co., Ltd. Sinphar Pharmaceutical Co., Ltd	Name of subsidiaries CANCAP PHARMACEUTICAL LTD. SUNETIC BIOTECH INC.	Main Business Production and sale of healthy food Investment business	Percentage of Ownership	Percentage of Ownership
			31-Dec-22 88.43% 83.47%	31-Dec-21
				88.43% 83.47%

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Percentage of Ownership

Name of the Investor Sinphar Pharmaceutical Co., Ltd Sinphar Pharmaceutical Co., Ltd Sinphar Pharmaceutical Co., Ltd SynCore Biotechnology Co., Ltd. SUNETIC BIOTECH INC. Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	Name of subsidiaries UNIVERSAL NEXT TECHNOLOGIES INC. ZuniMed Biotech Co., Ltd. SynCore Biotechnology Co., Ltd. SynCore Biotechnology Europe GmbH Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) Hetian Tianli shasheng Pharmaceutical Development Co., Ltd. Hangzhou Vitrum Healthy Food Co., Ltd.	Main Business Investment business Production and sale of medical appliances New drug and biotechnology service New drug development and biotechnology service Production and sales of raw materials, pharmaceuticals, etc. Scientific research and production and sales of shasheng Pharmaceutical Sale of cosmetics and healthy food	31-Dec-22 100.00% 100.00% 62.09% 100.00% 100.00% 91.00% 100.00%	31-Dec-21
				100.00% 100.00% 62.09% 100.00% 100.00% 91.00% 100.00%

C. Subsidiaries not included in the consolidated financial statements: None
D. Adjustments for subsidiaries with different balance sheet dates: None
E. Significant restrictions: None
F. Subsidiaries hold the securities issued by the parent company: None
G. Subsidiaries that have material non-controlling interests to the Group:

		Proportion of equity	and voting rights held
		by non-controlling interests
Subsidiary	Location	31-Dec-22	30-Dec-21
SynCore Biotechnology Co., Ltd.	Taiwan	37.91%	37.91%
SUNETIC BIOTECH INC.	Mauritius	16.53%	16.53%
		Profit or loss allocated to non-controllinginterests
	For the Year Ended		For the Year Ended
Subsidiary	December 31,2022		December 31,2021
SynCore Biotech Co., Ltd.	( $	71,516 ) ( $	171,452 )
SUNETIC BIOTECH INC.
(Excluding non-controlling interest
held by the subsidiary)		12,123	4,849
Others	(	1,077 ) (	221 )
Total	($	60,470 ) ($	166,824 )

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Non-controlling interests	Non-controlling interests	30-Dec-21 $ 168,087 175,242 11,615 $ 354,944
Subsidiary SynCore Biotech Co., Ltd SUNETIC BIOTECH INC. (Excluding non-controlling interest held by the subsidiary) Others Total	31-Dec-22 $ 94,585 181,325 10,708 $ 286,618

Please refer to Note 13 and Table 4 for information on the subsidiaries’ main business locations and countries of registrations.

Summarized financial information of the subsidiaries:

(1) Balance Sheet

SynCore Biotechnology Co., Ltd. and Subsidiaries

ITEM			31-Dec-22		31-Dec-21
Current assets		$	348,233	$	710,705
Non-current assets			88,415		113,733
Current liabilities	(		186,644 ) (		381,518 )
Non-current liabilities	(		992 ) (		`－`)
Equity		$	249,012	$	442,920
Equity attributed to`：`
Sinphar (note 1)		$	154,941	$	275,347
Non-controlling interests			94,585		168,087
IFRS16 adjustments (note 2)	(		514 ) (		514 )
		$	249,012	$	442,920

Note 1 ： The rental expenses of property and building as of December 31, 2022 and 2021 were NT $522 thousand and NT $420 thousand, respectively. These transactions between the consolidated companies and the time difference of revenue recognition were eliminated for the preparation of consolidated report.

Note 2 ： They were property and building leased from the parent company. Since these were intercompany transactions, the accumulative effects aroused from the first application to IFRS 16 were eliminated for the preparation of the consolidated financial statement.

SUNETIC BIOTECH INC. and Subsidiaries

ITEM			31-Dec-22		31-Dec-21
Current assets		$	418,420	$	340,766
Non-current assets			780,983		804,576
Current liabilities	(		62,780 ) (		39,379 )
Non-current liabilities	(		22,343 ) (		25,709)
Equity		$	1,114,280	$	1,080,254
Equity attributed to`：`

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SUNETIC BIOTECH INC. and Subsidiaries

ITEM Sinphar Non-controlling interests Non-controlling interests of the subsidiaries	31-Dec-22 $ 921,424 182,472 10,384 $ 1,114,280	31-Dec-21 $ 892,264 176,699 11,291 $ 1,080,254

(2) Statements of comprehensive incomes

SynCore Biotechnology Co., Ltd. and Subsidiaries

		For the Year Ended	For the Year Ended	For the Year Ended	For the Year Ended
ITEM		December 31,2022		December 31,2021
Revenue		$	15,857	$	6,939
Net loss	(	$	188,666 ) (	$	458,597 )
Other comprehensive loss	(		5,242 ) (		7,562 )
Total comprehensive loss	(	$	193,908) (	$	466,159)
Net loss attributable to`：`
Sinphar (Note)	(	$	117,150 ) (	$	287,145 )
Non-controlling interests	(		71,516) (		171,452 )
	(	$	188,666) (	$	458,597 )
Total comprehensive loss
attributable to`：`
Sinphar (Note)	(	$	120,406 ) (	$	291,834 )
Non-controlling interests	(		73,502 ) (		174,325)
	(	$	193,908) (	$	466,159)

Note ： The rental expenses of property and building for the years ended December 31, 2022 and 2021 were NT $102 thousand and NT $286 thousand, respectively. These transactions between the consolidated companies and the time difference of revenue recognition were eliminated for the preparation of consolidated report.

SUNETIC BIOTECH INC. and Subsidiaries

		For the Year Ended	For the Year Ended	For the Year Ended	For the Year Ended
ITEM		December 31,2022		December 31,2021
Sales Revenue		$	328,520	$	276,066
Net Profit		$	71,464	$	34,537
Net loss attributable to non-
controlling interests	(		1,077 ) (		221 )
Net Profit			70,387		34,316
Other comprehensive income (loss)			16,839(		8,309)
Total comprehensive income		$	87,226	$	26,007

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SUNETICBIOTECH	SUNETICBIOTECH	SUNETICBIOTECH	INC.andSubsidiaries	INC.andSubsidiaries
		For the Year Ended		For the Year Ended
ITEM		December 31,2022		December 31,2021
Net profit attributable to`：`
Sinphar		$	59,651	$	28,827
Non-controlling interests			11,813		5,710
Non-controlling interests of
the subsidiaries	(		1,077 ) (		221 )
		$	70,387	$	34,316
Total comprehensive income
attributable to`：`
Sinphar		$	73,565	$	21,965
Non-controlling interests			14,568		4,351
Non-controlling interests of
the subsidiaries	(		907 ) (		309)
		$	87,226	$	26,007
Statements of Cash Flows
SynCore BiotechnologyCo., Ltd and Subsidiaries
ITEM			2022		2021
Net cash used in operating activities	(	$	209,612 ) (	$	229,860 )
Net cash used in investing activities	(		1,031 ) (		1,637 )
Net cash generated from (used in)
financing activities	(		73,212 )		245,310
Effect of exchange rate			30 (		76 )
Net increase (decrease) in cash and
cash equivalents	(	$	283,825 )	$	13,737
Dividends paid to non-controlling
interests		$	`－`	$	`－`
SUNETIC BIOTECH			INC. and Subsidiaries
ITEM			2022		2021
Net cash generated from operating
activities		$	165,768	$	57,579
Net cash generated from (used in)
investing activities			29,329 (		10,054 )
Net cash used in financing activities	(		53,197 ) (		39,621 )
Effect of exchange rate			5,011 (		1,801 )
Net increase in cash and cash
equivalents		$	146,911	$	6,103
Dividends paid to non-controlling
interests		$	8,795	$	6,177

(3) Statements of Cash Flows

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(4.) Foreign Currencies

A. Foreign currency transaction

Transactions in currencies other than the Group’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated. Except for financial instruments at FVTOCI, financial instruments that are designated as foreign operation net hedge or qualified as cash flow hedge, the retranslation foreign exchange differences are recognized in other comprehensive income. In other cases, the exchange differences are recognized in profit and loss.

B. Translation of foreign operation

For the purpose of preparing consolidated financial statements, the functional currencies of the Group and the foreign entities (including subsidiaries, associates, joint ventures and branches in other countries that use currency different from the currency of the Group) are translated into the presentation currency - the New Taiwan dollar as follows: assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; profits and losses items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation involving the loss of control, joint venture or significant influence over the foreign operation, all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the noncontrolling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

(5.) Classification of Current and Noncurrent Assets and Liabilities
A. Assets that meet one of the following criteria are classified as current assets:
- (A.) Assets that expected to be realized or intended to be sold or used within normal operating cycle;
- (B.) Assets held primarily for the purpose of trading;
- (C.) Assets that are expected to be realized within 12 months after the reporting period; and
- (D.) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle liabilities more than twelve months after the balance sheet date.

Assets that are not classified as current are classified as non-current.

B. Liabilities that meet one of the following criteria are classified as current liabilities:
(A.) Liabilities expected to be paid off within normal operating cycle;
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(B.) Liabilities held primarily for the purpose of trading;
(C.) Liabilities due to be settled within 12 months after the reporting period (It is still a current liability even if a long-term refinancing or rearrangement of payment agreement is completed after the balance sheet date and before the financial report is approved,); and
(D.) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Liabilities that are not classified as current are classified as non-current.

(6.) Cash and Cash Equivalent

Cash and cash equivalent includes cash on hand, bank deposit and short-term, highly liquid investment that are readily convertible to know amount of cash and which are subject to an insignificant risk of change in value. Time deposits with original maturities within 1 year from the closing date that meet the definition above and are held for purpose of meeting short-term cash commitments in operations are classified as cash equivalent.

(7.) Financial Instruments

Financial assets and financial liabilities are recognized in balance sheets when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

A. Financial assets

(A.) Measurement category

The Group adopts trade-date accounting to recognize financial assets.

Financial assets are classified as financial assets at FVTPL, financial assets at amortized cost, and equity investments at FVTOCI.

a. Financial assets at FVTPL

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL including equity investments not designated as at FVTOCI and debt instruments that do not meet the criteria of amortized cost or the FVTOCI.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss including relevant dividend or interest income. Fair value is determined in the manner described in Note 12(3).

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b. Equity investment at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

c. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

(a.) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
(b.) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets measured at amortized cost are measured at carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(a.) Purchased or originated credit-impaired financial assets, for those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(b.) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets, for those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.
(B.) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses (“ECL”) on financial assets at amortized cost (including accounts receivable).

The loss allowance for accounts receivable is measured at an amount equal to lifetime ECL. For other financial assets, when the credit risk on the financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to 12month ECL. If there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to lifetime ECL.

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ECL reflects the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Group recognizes an impairment loss for aforementioned financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

(C.) Derecognition of financial assets

The Group derecognizes a financial asset when one of the following conditions is met:

a. The contractual rights to receive the cash flows from the financial asset expire.
b. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
c. The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

The difference between the book value and the price of financial assets at amortized cost will be recognized to profit or loss on disposal of the financial assets. The cumulative gain or loss of the investments in equity instruments at FVTOCI will not be reclassified to profit or loss on disposal of the equity investments. Instead, they will be transferred to retained earnings.

B. Financial liabilities

(A.) Subsequent measurement

Except for the following, financial liabilities measured at amortized cost are measured using the effective interest rate method after initial recognition.

a. Financial liabilities at FVTPL are financial liabilities held for trading or financial liabilities designated upon initial recognition as at FVTPL. Repurchase currently, and the derivative financial instruments unless financial guarantee contract and designated and effective as a hedging instrument, are classified financial liabilities held for trading. The Group designates the financial liabilities upon initial recognition as at FVTPL when the financial liabilities accord to one of the followings:
(a.) Mixed (combined) contract; or
(b.) Eliminates or significantly reduces measurement or recognition; or
(c.) A tool to manage and evaluate its performance on a fair value basis in accordance with a written risk management policy.
b. Financial liabilities at FVTPL are stated at fair value upon initial recognition, related transaction costs and any gain or loss arising on remeasurement are recognized in profit or loss.
c. A financial liabilities that designated as financial liabilities measured at FVTPL, which amount of change in fair value resulting from a change in credit risk, is recognized as other comprehensive income, and that will not be reclassified subsequently to profit or loss. The
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amount of the remaining fair value change in the liability is reported in the profit and loss. However, if the aforementioned accounting treatment triggers or exacerbates the improper accounting ratio, the full profits or losses of the liability are reported in the profit or loss.

(B.) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When derecognition of financial liabilities, the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, are recognized in profit or loss.

C. Modification of Financial Instruments

When the contractual cash flows of a financial instrument are renegotiated or modified and the renegotiation or modification does not result in the derecognition of that financial instrument, the Group recalculates the gross carrying amount of the financial asset or the amortized cost of the financial liabilities using the original effective interest rate and recognises a modification gain or loss in profit or loss. Any costs or fees incurred adjust the carrying amount of the modified financial instrument and are amortised over the remaining term of the modified financial instrument. If the renegotiation or modification results in that the derecognition of that financial instrument is required, then the financial instrument is derecognized accordingly.

If the basis for determining the contractual cash flows of a financial asset or financial liability changes resulting from interest rate benchmark reform and the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis, the Group applies the practical expedient to account for that change as a change in effective interest rate. If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Group first applies the practical expedient aforementioned to the changes required by interest rate benchmark reform, and then applies the applicable requirements to any additional changes to which that practical expedient does not apply.

(8.) Inventories

Inventories, under a perpetual system, are measured at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity), excluding borrowing costs. The item-by-item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(9.) Agriculture (biological assets and agricultural products)

Agricultural activities are the management of the biological transformation and harvesting of biological assets for sale, conversion into agricultural products or conversion into additional biological assets. Biological assets are measured at fair value less costs of disposal. However, biological assets may be measured at cost less accumulated depreciation if the fair value cannot be obtained from the active market, on the alternative option of the fair value clearly unreliable. Agricultural products harvested from biological assets shall be measured at the fair value less costs to sell.

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Gains or losses on initial recognition of biological assets measured at fair value less cost to sell, and gains

or losses arising from changes of biological assets in the fair value less cost to sell are included in profit or loss in the period in which they occur.

The agricultural activities of the Group are the cultivation of the parasitic plant Cistanche tubulosa, which is mainly used as raw materials for the finished products of the Group.

(10.) Property, Plant and Equipment

A. Property, plant and equipment (including bearer plants) are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. For property, plant and equipment under construction, sample produced from testing whether the asset is functioning properly before its intended use are measured at lower of the costs or net realizable value. Proceeds from selling such an item and the cost of the item are recognized in profit or loss.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. The carrying amount of the replaced component is derecognized. All other repairs and maintenance expense are recognized in profit or loss as incurred.
C. Except for land, which is not depreciated, other items of property, plant and equipment are measured at cost, the depreciable amount shall be allocated by the straight-line method over its useful life. Depreciation methods, useful lives, and residual values are reviewed at the end of each reporting period. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in accounting estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows: Buildings: 4~55 Years

Machinery: 2~18Years

Transportation: 2~10 Years

Office Equipment: 3~15 Years

Other Equipment (including bearer plants): 2~10 Years

D. If an item of property, plant and equipment or any significant component is disposed or there is no future economic benefit flow to the Group, the carrying amount is derecognized in profit and loss. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized in profit and loss.

(11.) Leases

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. For a contract that contains a lease component and non-lease component, the Group allocates the total contractual consideration to the lease component on the basis of each single lease component price and the summarized price of non-lease components.

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(A.)The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.

Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. However, if the ownership of the underlying assets is transferred to the Group by the end of the lease terms or if the costs of right-of-use assets reflect that the Group will exercise a purchase option, the Group depreciates the right-of-use assets from the commencement dates to the end of the useful lives of the underlying assets.

(B.)The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

(12.) Intangible Assets

A. Intangible assets acquired separately (with finite useful lives)

Intangible assets acquired from government grants are measured at fair value. Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis as follow.

(A.)Computer Software:1~10 Years
(B.)Technology: 10~20 Years
(C.)License: The duration of patent right and the duration of the contract whichever is shorter

The estimated useful life, residual value, and amortization period and method are reviewed at the end

of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.

B. Internally-generated intangible assets - research and development expenditure
(A.)Expenditure on research activities is recognized as an expense in the period in which it is incurred except for the goodwill or intangible assets from business combination.
(B.)An internally-generated intangible asset arising from the development phase of an internal project is recognized if, and only if, all of the following conditions have been demonstrated:
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- (a.)The technical feasibility of completing the intangible asset so that it will be available for use or sale;
- (b.)The intention to complete the intangible asset and use or sell it;
- (c.)The ability to use or sell the intangible asset;
- (d.)When the intangible asset could generate probable future economic benefits;
- (e.)The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
- (f.)The ability to measure reliably the expenditure attributable to the intangible asset during its development.
(C.) Capitalized intangible assets in development phase are stated at cost, less accumulated amortization and accumulated impairment loss. Intangible assets with indefinite useful lives that are not amortizable.
(D.) The assessment of intangible assets with indefinite life is reviewed annually to determine whether the useful lives of intangible asset with indefinite life continues to be with indefinite life. If not, the change in useful life from infinite to finite is recorded as change in accounting estimate.
C. Disposal of the assets

Any gain or loss arising from the disposal of the assets is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognized in profit or loss.

(13.) Impairment of Non-Financial Assets

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding inventories and deferred tax assets, to determine whether there is any indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

The Group assesses at each reporting date whether is an indication that an asset other than goodwill may be impaired. If circumstances indicate that previously recognized impairment losses may no longer exist or may have decreased, the Group reassesses the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimate of an asset which in turn increase the recoverable amount since the last impairment loss was recognized. The reversal is limited to that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortization had no impairment loss been recognized for the asset in prior years.

Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and recognize impairment loss if the carrying amount less than the recoverable amount.

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For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or group of cash-generating units) that are expected to benefit from the synergies of the combination. If the carrying amount of a cash-generating unit exceeds its recoverable amount, an impairment loss is to be recognized. The impairment loss is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit, then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses related to goodwill cannot be reversed in future periods.

(14.) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation from past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date. The discount rate shall be a pre-tax rate that reflect current market assessment of the time value and the risk specific to the liability. Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as interest expense. Future operating loss is not recognized as provisions.

(15.) Employee Benefits
A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

B. Pensions

(A.) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund from the plan or a reduction in future contributions to the plan.

(B.) Defined benefit plans
- a. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current or prior period(s). The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is estimated annually by independent actuaries using the projected unit credit method.
- b. Remeasurements of defined benefit plans are recognized in other comprehensive income as incurred and are recorded as retained earnings.
- c. Past-service costs are recognized immediately in profit or loss.
C. Employee’s compensation and directors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligations and those amounts can be reliably estimated. Any difference between the amount accrued and the amount actually distributed is accounted for a change in accounting estimate.

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D. Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognize any related restructuring costs. The benefits expected to be due more than 12 months after balance sheet date should be discounted to the present value.

(16.) Taxation

A. Income tax expenses include both current taxes and deferred taxes. Except for expenses related to the items recognized in other comprehensive income or directly in equity, all current and deferred taxes shall be recognized in profit or loss.
B. The current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of each reporting period in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. According to Income Tax Act in the R.O.C., income tax on unappropriated earnings is expensed in the year the shareholders’ meeting approved the appropriation of earnings which is the year subsequent to the year the earnings are generated.
C. Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. A deferred tax liability is not recognized on taxable temporary differences arising from the initial recognition of goodwill. If a temporary difference arises from the initial recognition (other than a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, the resulting deferred tax asset or liability is not recognized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.
D. Deferred tax assets arising from deductible temporary differences, unused loss carry forward and unused tax credits are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period.
E. Current income tax assets and liabilities are offset and the net amount reported at the end of the reporting period when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset at the end of the reporting period when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same tax authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
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F. Tax credit resulting from acquisitions of equipment or technology, research and development expenditures, employee training, and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(17.) Revenue

The Group identifies the contract with the customers, and recognizes revenue when performance obligations are satisfied.

A. Revenue from sale of goods

Revenue from the sale of goods is mainly from sale of medical product. When a customer obtains control of promised goods, at which time the goods are delivered to the customer's specific location and performance obligation is satisfied.

B. Royalties

Royalties are the rights of using intellectual property in authorized duration. The received royalties are recognized in royalty revenue on a time basis over the period of the authorization.

C. Technical service

The Group provides research and development technology test services. Revenue from services is recognized as revenue during the period when services are provided to customers. If the services rendered exceed the payment, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized.

The Group’s estimates of revenue, costs and completion degree are revised with the test situation. Any income and cost increase or decrease caused by the estimated changes will be reflected in profit or loss during the period when the revision situation is known to the management.

(18.) Borrowing costs

The borrowing cost directly attributable to the acquisition, construction or production of a qualified assets, is capitalized as part of the cost of the assets until substantially all necessary activities to reach the intended use or status for sale of the assets have been completed.

To the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset, the entity shall determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

Except for the aforementioned, all other borrowing costs are recognized as profit or loss in the period in which they are incurred.

(19.) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.

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Government grants that are deemed as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future costs are recognized in profit or loss in the period in which they are receivable.

(20.) Earnings per Share

The Group discloses the basic and diluted earnings per share attributable to ordinary equity holders of Sinphar. The calculation of basic earnings per share is based on the profit or loss attributable to the ordinary shareholders of Sinphar divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit or loss attributable to ordinary shareholders of Sinphar divided by the weighted-average number of ordinary shares outstanding after adjustment for the effect of all dilutive potential ordinary shares.

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, the management is required to make judgments, estimations, and assumptions about the uncertain situation. The estimates and associated assumptions are based on historical experience and other factors considered relevant. Actual results may differ from these estimates.

The Group considers the economic implications of the Covid-19 pandemic, changes in climates and related governmental policies and regulations, the conflicts between Ukraine and Russia as well as related international sanctions, inflation and volatility in interest rate when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

In the preparation of the consolidated financial statements, the critical accounting judgments the Group has made and the major sources of estimation and assumption uncertainty are described as follows:

A. Critical accounting judgments

Business model assessment for financial assets

The Group determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment involves judgment and consideration of all relevant evidence, such as how the performance of the assets is evaluated, the risks that affect the performance of the assets, and how the managers of the assets are compensated. The Group constantly assess the adequacy of its business model and monitors financial assets measured at amortized cost and debt investments measured at fair value through other comprehensive income. When these assets are derecognized prior to their maturity, the Group reviews the reasons for their disposal and whether the reasons are consistent with the objective of the business for which the assets were held. If the objective of the business for an asset is changed, the classification of the asset is prospectively changed from the reclassification date.

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B. Critical accounting estimates and assumptions

(A.)Revenue Recognition

Sales revenue, excluding related estimated sales returns, discounts and other similar allowance, is recognized when the control of goods or services is transferred to the customer and the Group satisfies it performance obligation. The Group estimates sales returns and allowance based on historical experience and other known factors. The Group assesses the reasonableness of the estimates periodically.

(B.)Estimated impairment of financial assets

The provision for impairment of accounts receivables, debt investments, and financial guarantee contracts is based on assumptions on default risk and expected loss rates. The Group makes these assumptions and selects inputs for impairment calculation based on the Group’s historical experience and existing market conditions, as well as forward looking information. If the future cash inflows are less than expected, a material impairment loss may arise. Please refer to Note 6(5.)for the assumption and input data.

(C.)Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. The management considers current market and historical experience on specific future product demand for evaluation basis, and charge of these factors may significantly affect the results.

(D.)The useful life of property, plant and equipment

Property, plant and equipment are amortized on a straight-line basis, and the Group periodically evaluates the useful life and residual value of property, plant and equipment. If there is a significant change in the relevant estimates, it will be adjusted in the current period of the change and in subsequent years.

(E.)Impairment assessment of tangible and intangible assets (Goodwill excluded)

In the process of evaluating the potential impairment of tangible and intangible assets other than goodwill, the Group is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific assets groups with consideration of any changes in these estimates based on changes economic conditions or business strategies could result in significant impairment charges or reversal in future years.

(F.)Realisability of deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. If future generated profit less than expected, there would be significant reversed of deferred tax assets recognized as profit and loss when occurred.

6. DETAILS OF SIGNIFICANT ACCOUNTS

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(1.) Cash and Cash Equivalents

Cash and Cash Equivalents
ITEM Cash on hand Check deposits Demand deposits Cash equivalent Time deposits (Investments with original maturities less than 1 year) Total	31-Dec-22 $ 3,666 2,129 826,370 405,391 $ 1,237,556	31-Dec-21
		$ 3,444 1,413 764,923 425,005
		$ 1,194,785

A. The Group trades with a variety of financial institutions all with high credit quality to disperse credit risk, and the management expects that the probability of counterparty default is remote.
B. The cash and cash equivalents were not pledged.
(2.) Financial Assets at Fair Value through Profit or Loss

ITEM
Financial assets mandatorily measured at
fair value through profit or loss, current
Beneficiary certificates		$	6,475 $	6,475
Valuation adjustments			185	185
Total		$	6,660 $	6,660
Financial assets mandatorily measured at
fair value through profit or loss, non-
current
Overseas unlisted preferred shares		$	4,844 $	4,844
Valuation adjustments	(		4,844 ) (	4,844 )
Total		$	－$	－

A. The Group invested in the preferred stocks of PHYTOCEUTICA INC., it is not entitled to other rights of ordinary shares, except for that dividends and distribution of residual assets preferred over ordinary shares.
B. As of December 31, 2022 and 2021, the financial assets at fair value through profit or loss was not pledged or held as collateral.
C. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.
(3.) Financial Assets at Amortized Cost

) Financial Assets at Amortized Cost
ITEM Current: Foreign investments Structural deposits Interest Rate	31-Dec-22 $ －－	31-Dec-21
		$ 43,440
		2.00%~3.45%

A. As of December 31, 2022 and 2021, the financial assets at amortized cost were not pledged or held as
170 -

collateral.

B. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.
(4.) Notes Receivable, Net

) Notes Receivable, Net
ITEM			31-Dec-22		31-Dec-21
Notes receivable		$	179,489	$	160,351
Less: Allowance for impairment loss	(		353 ) (		1,063 )
		$	179,136	$	159,288

A. As of December 31, 2022 and 2021, the notes receivable were not pledged.
B. Please refer to table below for the information about the disclosures on allowance for impairment loss on notes receivable.
(5.) Accounts Receivable, Net

) Accounts Receivable, Net
ITEM		31-Dec-22		31-Dec-21
Accounts receivable
Gross Carrying Amount measured at amortized cost	$	512,746	$	439,157
Less: Allowance for impairment loss	(	6,693 ) (		5,473)
	$	506,053	$	433,684

A. The Group’s average credit terms of accounts receivable were 30 to 210 days, which was determined with factors of customers’ industrial environment, business scales and profitability.
B. The accounts receivables were not pledged.
C. The Group applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for all notes receivable and accounts receivable. The lifetime expected credit losses on accounts receivables are estimated by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions. According to the past experience of credit loss, there is no significant difference between different customer categories, thus the provision matrix doesn’t further distinguish customer categories, and is set up the expected credit loss ratio by the past due days.

The following table detailed the loss allowance of notes receivables and accounts receivables based on the Group’s provision matrix.

December 31,2022 Not past due 0 to 60 days 61 to 120 days 121 to 180 days Over 181 days Total	Expected Credit Loss Ratio 0%~1% 5% 30% 50% 100%	Gross Carrying Amount $ 671,937 11,495 3,915 952 3,936 $ 692,235	Loss Allowance (Lifetime ECL) $ 885 575 1,174 476 3,936 $ 7,046	Amortized Cost
				$ 671,052 10,920 2,741 476 `－`
				$ 685,189

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December 31,2021 Not past due 0 to 60 days 61 to 120 days 121 to 180 days Over 181 days Total	Expected Credit Loss Ratio 0%~1% 5% 30% 50% 100%	Gross Carrying Amount $ 583,636 4,825 7,486 310 3,251 $ 599,508	Loss Allowance (Lifetime ECL) $ 643 241 2,246 155 3,251 $ 6,536	Amortized Cost
				$ 582,993 4,584 5,240 155 `－`
				$ 592,972

D. The movements of the loss allowances of notes receivable and accounts receivable, including those from related parties, were as follows:

from related parties, were as follows:
		For the Year Ended			For the Year Ended
		December 31,2022			December 31,2021
Balance on January 1		$	6,536		$	4,379
Add: Recognition of impairment losses			467			2,536
Less: Uncollectable amount written-off	(		`－`)	(		366 )
Foreign exchange gains and losses			43	(		13)
Balance at December 31		$	7,046		$	6,536

E. These amounts were recognized without considering other credit enhancements held by the Group. The Group writes off accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. However, the Group continues to engage in enforcement activity to recover the receivables due. Any recovered amounts are recognized in profit or loss. The Group has written off $366 thousand of accounts receivable in 2021.
F. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.
(6.) Inventories

Inventories
ITEM Merchandise Finished goods Work in process Raw materials Materials Total	31-Dec-22 $ 1,039 268,401 145,492 275,972 46,109 $ 737,013	31-Dec-21
		$ 1,102 338,234 90,127 229,437 38,493
		$ 697,393

A. Cost of Revenue related to inventories recognized in profit or loss as follows:

			For the Year Ended December31	For the Year Ended December31	For the Year Ended December31
ITEM			2022		2021
Cost of Goods Sold		$	1,741,768	$	1,517,336
Unrealized loss on inventories			8,111		4,648
Loss on inventory scrapped			17,325		24,524
Others	(		1,853 ) (		1,699)
Total		$	1,765,351	$	1,544,809

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B. From September to October, 2020, the Group failed to meet the standards and regulations of the Food and Drugs Administration in the stability study testing. The Group therefore was prohibited from manufacturing, selling the related products, and was requested to retrieve the distributed product from the market of the related 6 products. As a result, the Group enlarged the scope of inspections of all products and voluntarily recalled 17 related products and carried out different refinement plans to ensure the mistakes would be resolved effectively.

The Group made adjustments to the related asset items, liability items and income in the consolidated financial statements for the year ended 2022 and 2021 in regard to the incident as follows.

(A.) Inventory

For the year ended 2021, the Group increased the cost of recycled products NT$1,144 thousand. Recycling products mainly from export customers, scrapped the inventory and recognized cost of goods sold simultaneously. There were scrapped and recalled goods cost amounted to NT$6,786 thousand.

The Group continued to implement the improvement plan and reported to the relevant authority. After having the stability test data that can support the prescribed validity period and ensuring the product quality is safe, the production and shipment of products was resumed in 2022. For the year ended 2022 and 2021.The Group reversed NT$472 thousand and NT$8,433 thousand for loss on inventory market price decline, respectively.

As of December 31, 2021, the different batches of recycled products NT$472 thousand were unavailable for sale. Due to the uncertainty of products available for sale, the Group recognized as unrealized loss on inventories.

(B.) Refunds Liability

As of Dec 31, 2021, the actual amounts of refunds to the customers were amounted to NT$33,505 thousand. They were written-off in the accounts receivables and recorded in accounts payables or advance sales receipts.

(C.) Other losses

The related expenses aroused from the recall of the product during 2021 was NT$786 thousand.

C. No inventories were pledged or held as collateral.

(7.) Prepayments

ITEM Payments in Advance Offset Against Business Tax Payable Office Supplies Other Prepayments Total	31-Dec-22 $ 49,243 31,427 18,053 8,449 $ 107,172	31-Dec-21 $ 28,828 29,146 94,400 5,695 $ 158,069

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(8.) Financial Assets at FVTOCI – non-current

Financial Assets at FVTOCI – non-current
ITEM			31-Dec-22	31-Dec-21
Equity instruments
Domestic unlisted ordinary shares		$	9,676 $	`－`
Foreign listed shares			37,102	37,102
Overseas unlisted preferred shares			36,409	36,409
Subtotal			83,187	73,511
Valuation adjustments	(		58,492 ) (	53,152 )
Total		$	24,695 $	20,359

A. These investments in equity instruments were held for long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believed that recognizing short-term fluctuations from these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.
B. The financial assets at FVTOCI were not pledged or held as collateral.
C. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.
(9.) Property, Plant and Equipment

										Unfinished
									Construction
										and
										Equipments
								Other		Pending
			Land		Buildings	Machinery	Equipment			Acceptance		Total
Cost
1-Jan-22		$	717,584	$	2,882,399 $ 1,649,927		$	309,851	$	66,323	$	5,626,084
Additions			`－`		11,877	17,757		21,231		37,271		88,136
Disposals	(		`－`) (		78) (	7,519) (		1,354) (		`－`) (		8,951`）`
Reclassification			`－`		19,777	23,103		5,376 (		30,972)		17,284
Effect of exchange rate
change			`－`		12,589	7,670		944		`－`		21,203
31-Dec-22		$	717,584	$	2,926,564 $ 1,690,938		$	336,048	$	72,622	$	5,743,756
Accumulated depreciation
and Impairment
1-Jan-22		$	`－`	$	1,031,583 $ 1,147,486		$	243,113	$	`－`	$	2,422,182
Depreciation			`－`		87,941	94,573		17,693		`－`		200,207
Disposals	(		`－`) (		27) (	6,617) (		1,253) (		`－`) (		7,897 )
Effect of exchange rate
change			`－`		3,438	5,245		834		`－`		9,517
31-Dec-22		$	`－`	$	1,122,935 $ 1,240,687		$	260,387	$	`－`	$	2,624,009
Cost
1-Jan-21		$	717,368	$	2,866,199 $ 1,594,074		$	304,973	$	29,019	$	5,511,633
Additions			216		12,292	23,815		7,665		36,263		80,251
Disposals	(		`－`) (		578) (	8,947) (		6,507) (		`－`) (		16,032 )
Reclassification			`－`		10,955	45,426		4,264		1,160		61,805
Effect of exchange rate
change			`－`(		6,469 )(	4,441)(		544)(		119) (		11,573)
31-Dec-21		$	717,584	$	2,882,399 $ 1,649,927		$	309,851	$	66,323	$	5,626,084

174 -

												Unfinished
											Construction
												and
												Equipments
										Other		Pending
			Land			Buildings		Machinery	Equipment			Acceptance			Total
Accumulated Depreciation
and Impairment
1-Jan-21		$		`－`	$	946,565	$	1,064,035	$	234,410	$	`－`		$	2,245,010
Depreciation				`－`		86,840		93,957		15,555		`－`			196,352
Disposals	(			`－`) (		218) (		7,414) (		6,370) (		`－`)	(		14,002 )
Effect of exchange rate
change				`－`(		1,604) (		3,092) (		482)		`－`	(		5,178)
31-Dec-21		$		`－`	$	1,031,583	$	1,147,486	$	243,113	$	`－`		$	2,422,182
CarryingAmount
31-Dec-22		$	717,584		$	1,803,629	$	450,251	$	75,661	$	72,622		$	3,119,747
31-Dec-21		$	717,584		$	1,850,816	$	502,441	$	66,738	$	66,323		$	3,203,902

A. Property, plant and equipment were pledged as collateral for both long-term and short-term loans, please refer to Note 8.
B. As of December 31, 2022 and 2021, the Group acquired agricultural lands from non-related parties for the purpose of plant planning which could not be registered ownership of the Group. The acquisition cost was NT$23,184 thousand, and the land was registered in the name of Shu Fei Yu. To protect the interest of the Group, the mortgage right of the land was registed belong to the Group.
(10.) Right-of-Use Assets

ght-of-Use Assets
						Land
						Accumulated
			Cost			Depreciation	Carrying	Amount
1-Jan-22		$		21,801	( $	1,892)	$	19,909
Additions				`－`	(	642) (		642)
Effect of Exchange Rate
Changes				321	(	26)		295
31-Dec-22		$		22,122	($	2,560)	$	19,562
1-Jan-21		$		21,967	( $	1,271)	$	20,696
Addition				`－`	(	630) (		630)
Effect of Exchange Rate
Changes	(			166)		9(		157)
31-Dec-22		$		21,801	( $	1,892)	$	19,909

A. The Group signed a contract with the Ministry of Land and Resources of the People's Republic of China, in 2003; the Group acquired the right-of-use of the lands in Yuhang development zone and Ka Zi Na Ke development zone for the purpose of setting up plants and agricultural usage. It was amounted for RMB $7,544 thousand for the right of usage for 50 years.
B. The right-of-use assets were pledged as collateral for both long-term and short-term loans, please refer to Note 8.
175 -

C. As of December 31, 2022, there was no indication that the right-of-use assets were impaired, therefore the Group did not assess impairment.

(11.) Intangible Assets

tangible Assets
								Technology
		Trademarks				Software		licenses		Total
Cost
1-Jan-22		$	2,427		$	95,831	$	347,941	$	446,199
Additions			`－`			11,138		`－`		11,138
Disposals	(		`－`)	(		15,130) (		`－`) (		15,130 )
Effect of foreign currency
exchange difference			36			`－`		`－`		36
31-Dec-22		$	2,463		$	91,839	$	347,941	$	442,243
Accumulated Depreciation
and Impairment
1-Jan-22		$	2,369		$	60,098	$	266,436	$	328,903
Depreciation			17			18,012		23,423		41,452
Disposals	(		`－`)	(		15,130) (		`－`) (		15,130 )
Effect of foreign currency
exchange difference			35			`－`		`－`		35
31-Dec-22		$	2,421		$	62,980	$	289,859	$	355,260
Cost
1-Jan-21		$	2,445		$	82,178	$	349,335	$	433,958
Additions			`－`			16,286		`－`		16,286
Disposals	(		`－`)	(		2,757) (		1,394 ) (		4,151 )
Reclassification			`－`			124		`－`		124
Effect of foreign currency
exchange difference	(		18)			`－`		`－`(		18 )
31-Dec-21		$	2,427		$	95,831	$	347,941	$	446,199
Accumulated Depreciation
and Impairment
1-Jan-21		$	2,370		$	40,811	$	233,247	$	276,428
Depreciation			16			22,044		34,583		56,643
Disposals	(		`－`)	(		2,757) (		1,394 ) (		4,151 )
Effect of foreign currency
exchange difference	(		17)			`－`		`－`(		17 )
31-Dec-21		$	2,369		$	60,098	$	266,436	$	328,903
Carrying Amount
31-Dec-22		$	42		$	28,859	$	58,082	$	86,983
31-Dec-21		$	58		$	35,733	$	81,505	$	117,296

176 -
A. The software was pledged as collateral for both long-term loans, please refer to Note 8.
B. The aforementioned technology licenses were licensed by the National Health Research Institutes (NHRI) and were acquired from a Germany company “Medigene”. The main purpose of these technologies were to develop new drug for anticancer.
(12.) Short-term loans

rt-term loans
Category Unsecured Loans Secured loans Total Category Unsecured Loans Secured loans Total	31-Dec-22
	Amount Interest rate $ 420,000 1.44%~2.32% 27,000 1.79%~2.03% $ 447,000 31-Dec-21	Interest rate
	Amount $ 560,000 27,000 $ 587,000	Interest rate
		0.77%~1.41% 1.29%~1.50%

The Group pledged some of its property, plant and equipment as well as other financial assets as collaterals for short-term borrowings. Please refer to Note 8 for more information.

(13.) Long-Term Borrowings and Current Portion of long-term borrowings

Items		31-Dec-22		31-Dec-21
Secured Loans	$	1,205,052	$	894,159
Unsecured Loans		260,907		650,865
Subtotal		1,465,959		1,545,024
Less: current portion	`（`	50,341) (		59,070)
Total	$	1,415,618	$	1,485,954
Interest Rate		1.525%~2.283%		0.80%~1.603%

Please refer to Note 8 for collaterals pledged for long-term borrowings.

(14.) Long-Term Payables and Current Portion of long-term borrowings

Due to the acquisition of energy-saving equipment, the future installments payables are as follows.( As of December 31, 2022:None.)

Current Less than 1 year		31-Dec-21
	Long-term Payables total $ 2,223	Future expenses $ 10	PV of long term Payables
			$ 2,213

(15.) Retirement Benefit Plans

Defined contribution plans

A. The employee pension plan under the Labor Pension Act of the R.O.C. (the Act) is a defined contribution plan. Pursuant to the plan, the Group and its domestic subsidiaries make monthly contributions of 6% of each individual employee’s salary or wage to employees’ pension accounts.
177 -

Pension benefits for employees of subsidiaries overseas were provided in accordance with the local regulations. NT$21,620 thousand and NT$20,464 thousand were contributed by the Group for the years ended December 31, 2022 and 2021, respectively.

B. Pension benefits for employees of subsidiaries overseas were provided in accordance with the local regulations. NT$6,587 thousand and NT$6,127 thousand were contributed by the Group for years ended December 31, 2022 and 2021, respectively.

Defined benefit plan

The Group and its domestic subsidiaries have defined benefit pension plans in accordance with the Labor Standards Law of the R.O.C. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Group contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited in Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. The Group would assess as the balance in the aforementioned labor pension reserve account by the end of each year. If the account balance is not enough to pay the pension to the labors expected to be qualified for retirement in the next year, the Group will make contribution for the deficit by next March. The pension fund is managed by the government’s designated authorities and the Group has no right to influence their investment strategies.

A. Amounts recognized in the consolidated balance sheets were as follows:

ITEM			31-Dec-22				31-Dec-21
Present value of defined	$					$
			165,248				171,779
benefit obligations
Fair value ofplan assets	(		129,270	)	(		120,890	)
Net defined benefit		$	35,978			$ 50,889
liability			35,978				50,889

B. Movements of net defined benefit liabilities were as follows:

B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:

	For the Year Ended December31,2022
			Present value of	Fair value of plan Net defined benefit
			defined benefit				Fair value of plan			Net defined benefit
ITEM			obligations				asset			liability
BALANCE at JANUARY 1 $ Service cost: Current service cost Interest expense (revenue)		$	171,779		(	$	120,890	)	$	50,889

Service cost:

Current service cost			1,075				`－`			1,075

Interest expense (revenue)			1,182		(		832	)		350

Recognized in profit or loss			2,257		(		832	)		1,425

Remeasurement on the net
defined benefit liability:
Return on plan assets
Actuarial (gains) losses
Actuarial loss arising from
changes in demographic
assumptions
Actuarial (gain) loss
arising from changes in
financial assumptions

178 -

For the Year Ended December 31, 2022

	For the Year Ended December31,2022	For the Year Ended December31,2022	For the Year Ended December31,2022	For the Year Ended December31,2022	For the Year Ended December31,2022	For the Year Ended December31,2022	For the Year Ended December31,2022	For the Year Ended December31,2022	For the Year Ended December31,2022
ITEM		Present value of	Fair value of plan Net defined benefit
		defined benefit			Fair value of plan			Net defined benefit
		obligations			asset			liability
Actuarial loss arising from experience adjustments	9,861 `－` 9,861
								9,861
Components of defined benefit costs recognized in other comprehensive income	395 ( 9,475 ) ( 9,080 )

		395		(		)	(	9,080	)
Pension fund contribution	(	`－`		(	7,256	)	(	7,256	)
Paid Pension		9,183	)		9,183		(	`－`	)
Balance at December 31	$	165,248		( $	129,270	)	$	35,978


	For the Year Ended December31,2021
ITEM		Present value of	Fair value of plan Net defined
		defined benefit			Fair value of plan			Net defined
		obligations			asset			benefit liability
BALANCE at JANUARY 1 Service cost: Current service cost Interest expense(revenue)	$	182,749	(	$	117,934	)	$	64,815

		1,469			`－`			1,469
		542	(		350	)		192
Recognized in profit or loss		2,011	(		350	)		1,661
Remeasurement on the net defined benefit liability: Return onplan assets Actuarial(gains)losses Actuarial loss arising from changes in demographic assumptions Actuarial (gain) loss arising from changes in financial assumptions ( Actuarial loss arising from experience adjustments	`－` ( 1,855 ) ( 1,855 ) 294 `－` 294 6,939 ) `－` ( 6,939 ) 4,493 `－` 4,493
								4,493
Components of defined benefit costs recognized in other comprehensive income (	2,152 ) ( 1,855 ) ( 4,007 )

		2,152				) (		4,007	)
Pension fund contribution Paid Pension (		`－`	(		11,431	) (		11,431	)
		10,829	)		10,680	(		149	)
Balance at December 31	$	171,779	(	$	120,890	)	$	50,889

C. The defined benefit plan as of the year ended 2022 and 2021 were summarized by functions as follows:

Operation Costs Selling Expense Administrative Expense Research and Development Expense	31-Dec-22 $ 648 408 293 76 $ 1,425	31-Dec-21
		$ 766 454 354 87
		$ 1,661

179 -
D. Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:
(A.) Investment risk

The pension funds are invested in equity and debt securities, bank deposits, etc. at the discretion of the Bureau of Labor Funds of Ministry of Labor, or under the mandated management. However, under the Labor Standards Law, the rate of return on plan assets shall not be less than the average interest rate on a two-year time deposit published by the local banks.

(B.)Interest risk

A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.

(C.)Salary risk

The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

E. The main actuarial assumptions used were as follows:

	31-Dec-22	31-Dec-21

Discount rate	1.30%	0.70%
Expected rate of salaryincrease	1.50%	1.50%
The weighted average duration of the
	9 years	9 years
defined benefit obligation

(A.) Assumptions on future mortality experience are set based on the 6th Taiwan Standard Ordinary Experience Mortality Table (TSO).
(B.) The sensitivity analysis:

If significant actuarial assumptions change reasonably and all other assumptions are held constant, the present value of the defined benefit obligation may increase(decrease) as below:

elow:
ITEM		31-Dec-22	31-Dec-21
Discount rate	( $ 3,727 ) ( $ 4,188 ) ( 1,506 ) ( 1,693 ) 3,854 4,339 1,526 1,717 3,837 4,293 ( 3,729 ) ( 4,165 ) ( 26 ) ( 48 ) 26 48
0.25% increase
0.1% increase
0.25% decrease
0.1% decrease
Future salaryincrease rate
0.25% increase
0.25% decrease
Employee turnover rate
110% of the expected
employee turnover rate
90% of the expected
employee turnover rate

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated .

180 -
F. The contribution that the Group expects to make to its defined benefit pension plans in next year is NT$1,136 thousand.

Other Employees’ benefits were as follows:

r Employees’benefits were as follows:
ITEM Employees benefits payable Compensated absences payable Other employees benefits Total	31-Dec-22 $ 9,647 5,217 15,029 $ 29,893	31-Dec-21
		$ `－` 4,841 14,898
		$ 19,739

(16.) Capital Stock

The movements in the number of Sinphar’s ordinary shares outstanding are as follows:

January 1 December 31 January 1 December 31	For the Year Ended December31,2022	For the Year Ended December31,2022
	Issued and paid shares (in thousands) Issued capital 167,722 $ 1,677,221 167,722 $ 1,677,221 For the Year Ended December 31,2021	Issued capital
		$ 1,677,221
		$ 1,677,221
	Issued and paid shares (in thousands) 167,722 167,722	Issued capital
		$ 1,677,221
		$ 1,677,221

As of Dec 31, 2022 the Sinphar’s authorized capital amount was NT$2,500,000 thousand, consisting of 250,000 thousand shares of ordinary stocks.

(17.) Capital Surplus

ITEM Additional paid in capital Additional paid-in capital arising from bond conversion Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in ownership interest in Subsidiaries Others Total	31-Dec-22 $ 422,450 190,611 310,439 5,832 640 $ 929,972	31-Dec-21
		$ 455,994 190,611 310,439 5,832 640
		$ 963,516

Under Sinphar’s Act, the capital surplus generated from excess of the issuance price over the par value of capital stock and donations may be used to offset a deficit; in addition, when Sinphar has no deficit, such capital surplus may be distributed as stock dividends or cash dividends. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed a certain percentage of Sinphar’s paid in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

181 -

(18.) Accumulated Deficit and Dividend Policy

A. When allocating the net profits in each fiscal year, Sinphar shall be first utilized for paying taxes, offsetting losses of previous years, and then setting aside the 1) legal capital reserve at 10% of the profits left over, until the accumulated legal capital reverse equals Sinphar’s paid-in capital; 2) special capital reverse in accordance with relevant laws or regulations or as requested by the authorities in charge; and 3) balance left over shall be allocated according to the resolution of the board of directors and the shareholders’ meeting.
B. To consider about the economic circumstances, development phase, and future business expansion, dividends will be allocated in consideration of future capital expenditure and cash forecast. However, cash dividends are limited to over 20% of total dividends distributed.
C. The appropriation for legal capital reserve shall be made until the reserve equals Sinphar’s paid-in capital. The reserve may be used to offset deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if Sinphar incurs no loss.
D. Special Reserve ：

31-Dec-22 $ 37,951 53,124 $ 91,075	31-Dec-21
	$ 37,951 53,124
	$ 91,075

(A.) In accordance with the regulations, Sinphar shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
(B.) When IFRSs were first adopted, according to the special reserve regulation of Financial Supervisory Commission R.O.C, no. 1010012865 on April 6, 101, If Sinphar subsequently uses, disposes or reclassifies the relevant assets, the proportion originally set aside as the special reserve will be reversed into distributable retained earnings.
E. The resolutions of 2021 and 2020 deficit compensation have been approved by Sinphar’s shareholders in its meeting held on June 21, 2022 and August 3, 2021, respectively. The deficit would be covered with legal capital reserve and distribute cash dividend of NT$0.2 per share, based on the amount NT$33,545 thousand of capital surplus upon issuance.
F. The appropriations of earnings for 2022 had been approved in the meeting of the Board of Directors on March 17, 2023 and the appropriations and dividends per share were as follows:

	Appropriation of Earnings	Appropriation of Earnings		Dividends Per Share(NT$)

Legal capital reserve	$	23,372	$	`－`
Special capital reserve		30,292		`－`
Cash dividends		167,722		1
Total	$	221,386

The appropriations of earnings for 2022 are to be presented for approval in the shareholders’ meeting which is to be held on June 20, 2023.

182 -

G. Information on the resolution of the Board of Directors' and shareholders' meetings regarding the appropriation of earnings is available from the Market Observation Post System on the website of the TWSE.

(19.) Others Equity Items

Others Equity Items
		Exchange differences on		Unrealized Gain (Loss) on Financial Assets at Fair Value
		translation of foreign financial		Through Other Comprehensive
ITEM		statements			Income		Total
Balance as at Jan 1, 2022	(	$	91,854 ) (	$		37,325 ) ( $	129,179 )
Exchange differences on translation of foreign
financial statements			13,919			`－`	13,919
Income tax effects	(		2,784 )			`－`(	2,784 )
Unrealized gain on financial assets at FVTOCI			`－` (			68 ) (	68 )
Share of other comprehensive income of
associates accounted for using the equity
method			18(			3,274 ) (	3,256)
Balance as at Dec 31, 2022	(	$	80,701 ) (	$		40,667 ) ($	121,368)
		Exchange differences on		Unrealized Gain(Loss) on Financial Assets at
		translation of foreign financial		Fair Value Through Other Comprehensive
ITEM			statements		Income		Total
Balance as at Jan 1, 2021	(	$	86,308 ) (	$		32,683 ) ( $	118,991 )
Exchange differences on translation of foreign
financial statements	(		6,873 )			`－`(	6,873 )
Income tax effects			1,374			`－`	1,374
Share of other comprehensive income of
associates accounted for using the equity
method	(		47 ) (			4,642 ) (	4,689)
Balance as at Dec, 2021	(	$	91,854 ) (	$		37,325 ) ($	129,179)
Non-controlling interests
			For the Years Ended		December	31
ITEMS			2022		2021
Balance at January 1		$	354,944	$	399,393
Share attributable to non-controlling
interests:
Net Income (loss)		(	60,470 )	(	166,824)
Exchange differences arising from the
translation of the translating foreign
operations			2,937	(		1,477)
Unrealized gain(loss) on financial
assets at fair value through other
comprehensive income		(	1,998 )	(		2,844)
difference between consideration and
carrying amount of subsidiaries
acquired or disposed			`－`		22,112
Changes in ownership interest in
Subsidiaries			`－`		110,761
Decrease in non-controlling interests		(	8,795 )	(		6,177)
Balance at December 31		$	286,618	$	354,944

(20.) Non-controlling interests

183 -

(21.) Net Revenue

Net Revenue
			For the Year Ended		December 31
ITEM			2022		2021
Revenue from contracts with customers
Sales revenue		$	3,192,174	$	2,780,737
Less: Sales returns and discounts	(		335,523) (		347,221 )
Total		$	2,856,651	$	2,433,516

A. Breakdowns of contract revenue
(A.) Please refer to Note 14 for geographical and departmental information details.
(B.) Revenue was recognized at a specific point of time period when all the obligations were fulfilled.
B. Contract Balance

The contract liabilities in relation to contract revenue were as follows:

ITEM Contract liabilities-current	31-Dec-22 $ 96,559	31-Dec-21 $ 93,637	1-Jan-21
			$ 97,798

(A.) Changes in contract liabilities mainly result from the time difference between the performance obligation satisfied and the customer’s payment.
(B.) Revenue from opening contract liabilities - sales of goods recognized as revenue in the current period were as follows:

were as follows:
Revenue			2022		2021
Amounts from opening contract liabilities - sales
of good		$	85,216	$	85,248
Other Incomes
			For the Year Ended		December 31
ITEM			2022		2021
Government grants		$	12,252	$	7,130
Rental income			1,731		1,636
Others			34,724		20,616
Total		$	48,707	$	29,382
Other Gains and Losses
			For the Year Ended		December 31
ITEM			2022		2021
Net currency exchange gains (losses)		$	21,311 (	$	6,956 )
Losses on disposal of assets	(		811)(		1,498 )
Gains on initial recognition of biological assets and
agricultural product			1,293		`－`
Others	(		752) (		1,567 )
Total		$	21,041 (	$	10,021 )

(22.) Other Incomes
(23.) Other Gains and Losses
184 -

(24.) Employee Benefits Expense, Depreciation and Amortization

For the Year Ended December 31, 2022

	For the	Year Ended December31,2022	,2022
ITEM Employee benefits expense Salaries and wages Labor and health insurance Pension Other employee benefits Depreciation Amortization Total ITEM Employee benefits expense Salaries and wages Labor and health insurance Pension Other wages Depreciation Amortization Total	Cost of revenue $ 274,189 25,476 15,174 16,542 152,313 3,474 $ 487,168 For the	Operatingexpenses Total $ 322,615 $ 596,804 24,808 50,284 14,458 29,632 23,121 39,663 48,536 200,849 62,391 65,865 $ 495,929 $ 983,097 Year Ended December31,2021	Total
			$ 596,804 50,284 29,632 39,663 200,849 65,865
			$ 983,097
	Cost of revenue $ 244,751 24,150 13,934 15,511 147,181 4,768 $ 450,295	Operatingexpenses $ 293,294 25,245 14,318 22,600 49,801 67,620 $ 472,878	Total
			$ 538,045 49,395 28,252 38,111 196,982 72,388
			$ 923,173

A. Sinphar shall allocate 2~8% and not higher than 5% of annual profits during the period to employees’ compensation and directors’ and supervisors’ remuneration, respectively. If there is a change in the proposed amount after the annual consolidated financial statement are authorized for issue, the difference is recorded as a change in accounting estimate.
B. The employees’ compensation and directors’ and supervisors’ remuneration for 2022 and 2021 were approved in the meetings of the Board of Directors on March 17, 2023 and March 15, 2022, respectively. The amounts recognized in the financial reports were as follows:

2022 Employees’ compensation Directors’ and supervisors’ remuneration $ 9,647 $ 5,426 9,647 5,426 $ `－`$ `－`	2021	2021
Employees’ compensation $ 9,647 9,647 $ `－`	Employees’ compensation $ `－` `－` $ `－`	Directors’ and supervisors’ remuneration
		$ `－` `－`
		$ `－`

The above-mentioned compensation was distributed in cash. There was no compensation to employees and remuneration to directors and supervisors allocated in 2021 due to net loss.

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C. The information about employees’ compensation and directors’ and supervisors’ remuneration of Sinphar as resolved by the meeting of Board of Directors is available from the Market Observation Post System on the website of the TWSE.

(25.) Finance Costs

Finance Costs
ITEM Interest expense - bank loans Interest expense – long term payables Total	For the Year Ended December 31
	2022 $ 27,803 10 $ 27,813	2021
		$ 24,742 57
		$ 24,799

(26.) Income Tax

A. The components of tax expense:

				For the Year Ended December31	For the Year Ended December31
		ITEM		2022	2021
Current tax
Current tax expense recognized in the current
	year		$	57,707	$	41,613
Adjustments for prior periods				3,399	(	27)
Total				61,106		41,586
Deferred tax
The origination		and reversal of temporary
	differences			19,766	(	21,152)
Income tax expense			$	80,872	$	20,434
Inc	ome tax recognized in other comprehensive income:
				For the Year Ended December 31
		ITEM		2022	2021
	Currency translation differences		$	2,784	($	1,374)

B. Income tax recognized in other comprehensive income:
C. Reconciliation between income tax expense and accounting loss as follows:

			For the Year Ended	For the Year Ended	For the Year Ended	December 31
ITEM			2022			2021
Profit (loss) before income tax		$	245,046	(	$	184,525 )
Tax calculated based on profit (loss) before tax and
statutory tax rate		$	37,861	(	$	91,116 )
Effects from items disallowed by tax regulation			26,075			64,879
The Income from Income Basic Tax Act			3,637			`－`
Investment tax credit	(		33,260)	(		16,663)
No deferred income tax assets have been
recognized			27,783			87,666
Net change in deferred tax expense (income)			19,766	(		21,152)
Income tax adjustments for prior years			3,399	(		27)
Foreign tax credit	(		4,389)	(		3,153)
Income tax expense		$	80,872		$	20,434

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The corporate income tax rate for entities subject to the R.O,C, Income Tax Act is 20%, and the tax rate for unappropriated earnings is 5%. The tax rate for subsidiaries in China is 25%. For entities located in other jurisdictions, taxes are calculated using the applicable tax rate for each individual jurisdiction. Under the Act for the Development of Biotech and Pharmaceutical Industry, Sinphar could recognize an investment tax credit within a limit of 20% of the investment price if the investee is applicable to the act.

D. Deferred income tax assets and liabilities

Deferred tax assets or liabilities arising from temporary differences, operating loss carryforward, and investment tax credits:

investment tax credits:
Deferred income tax asset Temporary difference Employee benefits Sales returns and allowances Unrealized loss on inventories Exchange difference on foreign operations Others Investment tax credit Deferred income tax liabilities Temporary difference Land value increment tax Gain on foreign investments accounted for using the equity method Others Deferred income tax asset Temporary difference Employee benefits Sales returns and allowances Unrealized loss on inventories		For the Year Ended December 31,		2022	Dec-31 $ 3,006 11,264 16,867 20,173 798 `－` $ 52,108 $ 32,939 1,692 ,3521 $ 38,152 Dec-31 $ 2,980 12,780 16,429
	Jan-1 Profit and loss Other comprehensive income $ 2,980 $ 26 $ `－` 12,780 ( 1,516 ) `－` 16,429 438 `－` 22,957 `－` ( 2,784 ) 1,392 ( 594 ) `－` 18,337 ( 18,337 ) `－` $ 74,875 ( $ 19,983 ) ( $ 2,784 ) $ 32,939 $ `－`$ `－` `－` 1,692 `－` 5,345 ( 1,909 ) `－` $ 38,284 $ 217 $ `－` For the Year Ended December 31,			Effect of exchange rate changes $ `－` `－` `－` `－` `－` `－` $ `－` $ `－` `－` 85 $ 85 2021
	Jan-1 $ 2,936 11,144 15,462	Profit and loss $ 44 1,636 967	Other comprehensive income $ `－` `－` `－`	Effect of exchange rate changes $ `－` `－` `－`

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For the Year Ended December 31, 2021

Exchange difference on foreign operations Others Investment tax credit Deferred income tax liabilities Temporary difference Land value increment tax Others	Jan-1 21,583 737 `－` $ 51,862 $ 32,939 4,895 $ 37,834	Profit and loss `－` 655 18,337 $ 21,639 $ `－` 487 $ 487	Other comprehensive income Effect of exchange rate changes 1,374 `－` `－` `－` `－` `－` $ 1,374 $ `－` $ `－` $ `－` `－` ( 37 ) $ `－` ( $ 37 )	Dec-31
				22,957 1,392 18,337
				$ 74,875
				$ 32,939 5,345
				$ 38,284

The above-mentioned deferred income tax liabilities were classified as other non-current liabilities.

E. Unrecognized deferred tax assets:

ITEM Items not recognized as deferred tax assets: Loss on investments accounted for using the equity method Loss on financial assets evaluation Loss carryforward Investment tax credit Others Total	31-Dec-22 $ `－` 969 527,595 `－` 9,785 $ 538,349	31-Dec-21 $ 1,917 969 500,379 4,331 9,218 $ 516,814

F. Information of unused loss carried forward:

As of December 31, 2022, operating loss carryforward of subsidiary as follow:

ExpiryYear 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Total	Remaining Creditable Amount $ 102,070 225,547 172,275 159,319 256,871 288,492 393,517 388,622 466,157 185,106 $ 2,637,976	Tax effect $ 20,414 45,109 34,455 31,864 51,374 57,698 78,704 77,724 93,232 37,021 $ 527,595

G. The tax authorities have examined income tax return of Sinphar through 2020.

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(27.) Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)
					For the	Year		Ended December		31,2022
							Income tax
ITEM					Before tax			expense			After tax
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit obligation				$	9,080		$	`－`		$	9,080
Unrealized loss on equity instruments at fair value through
other comprehensive income			(		68 )			`－`	(		68 )
Share of other comprehensive income of associates and
joint ventures accounted for using the equity method
Unrealized loss on equity instruments at fair value
through other comprehensive income			(		5,272 )			`－`	(		5,272 )
Subtotal					3,740			`－`			3,740
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign
operations					16,844	(		2,784 )			14,060
Share of other comprehensive income of associates		and
joint ventures accounted for using the equity method
Exchange differences arising on translation of foreign
operations transferred to profit or loss					30			`－`			30
Subtotal					16,874	(		2,784 )			14,090
Other comprehensive income				$	20,614	(	$	2,784 )		$	17,830
					For the	Year		Ended December		31,2021
							Income tax
ITEM					Before tax			benefit			After tax
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit obligation				$	4,007		$	`－`		$	4,007
Share of other comprehensive income of associates and
joint ventures accounted for using the equity method
Unrealized loss on equity instruments at fair	value
through other comprehensive income			(		7,486 )			`－`	(		7,486 )
Subtotal			(		3,479 )			`－`	(		3,479 )
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign
operations			(		8,350 )			1,374	(		6,976 )
Share of other comprehensive income of associates		and
joint ventures accounted for using the equity method
Exchange differences arising on translation of foreign
operations transferred to profit or loss			(		47 )			`－`	(		47 )
Subtotal			(		8,397 )			1,374	(		7,023 )
Other comprehensive income			(	$	11,876 )		$	1,374	(	$	10,502 )

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(28.) Earnings (Loss) per Share

ITEM
Basic earnings (loss) per share:
Net income (loss) attributable to shareholders of the parent
Weighted average number of shares outstanding for the period
(in thousands)
Basic earnings (loss) per share, after tax (Unit: NT$ Per Share)
Diluted earnings (loss) per share:
Net income (loss) available to shareholders of the parent
Weighted average number of shares outstanding for the period
(in thousands)
Effect of the dilutive potential ordinary shares
Employees’ compensation (share in thousands)
Weighted average number of shares outstanding for diluted
earnings per share (share in thousand)
Diluted earnings per share, after tax (in dollars)

For the Year Ended December 31
2022
2021
$ 224,644
($ 38,135)
167,722
167,722
$ 1.34
($ 0.23)
$ 224,644
($ 38,135)
167,722
167,722
291
(Note)
168,013
(Note)
$ 1.34
$ (Note)

Note: The year ended 2021 is the loss, and the potential ordinary shares have an anti-dilution effect, so the diluted loss per share will not be calculated.

(29.) Transactions with non-controlling interests

The Group engaged in the seasoned capital offering, acquisition and disposal of the equity interest of its subsidiaries in 2021 and 2020. The transactions did not result in the Group losing control of ownership interest of the subsidiary; therefore, it is treated as an equity transaction and the Group would adjust its capital reserve based on changes in its shareholding ratio as follows:

	For the Year Ended December 31,2021
Investee SynCore SynCore Total

7. TRANSACTIONS WITH RELATED PARTIES

(1.) Name of the parent company and the ultimate controlling party

Sinphar is the ultimate controlling party of the Group.

(2.) Names of related parties and relationship categories

Names of related parties Related party categories CANADA BIOTECH Other related parties XING-DA CAPITAL CORP. Other related parties Shu Fei Yu Other related parties Board of Directors, General Manager and Vice General Manager (Note) Key management personnel

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Note: According to the Order of the Financial Supervisory Commission, issue no. 10703452331, Sinphar has established an audit committee to replace the supervisor since August 3, 2021.

(3.) Significant transactions with related parties

All transactions, account balances, incomes and expenses between Sinphar and its subsidiaries (which are related parties of Sinphar) were eliminated upon consolidation. Hence, there were not disclosed items in the note. The transactions with related parties were as follows:

A. Trademarks and royalties

Under an agreement with CANADA BIOTECH, CANADA BIOTECH, the Group owns the right to use its trademark under the condition which the Group pays 0.2%~0.8% of annual gross profit from merchandise sale as royalty each quarter, with the annual sum of payment not less than 36 thousand in Canadian currency. The Group paid the royalties amounted to NT$890 thousand and NT$872 thousand in 2022 and 2021 respectively. The payments were recognized as marketing expense.

B. Others

The Group has successively acquired nearby agricultural land for the plant planning. However, under the current regulations, the ownership of agricultural lands could not be registered under Sinphar. Therefore, the Group has appointed the other related party, Shu Fei Yu, to be the owner the land. Please refer to the property, plant and equipment session in Note 6(9) for more information.

C. Endorsements and guarantees

The Group has signed a drug sales contract with a medical institution. According to the terms of the contract, Xing-da Investment Co., Ltd., another related party, would be the guarantor of the Group.

(4.) Key management compensation

The remuneration to the Board of Directors and main management personnel were as follows:

		For the Year Ended	For the Year Ended	December 31
		2022		2021
Salaries and other short-term employee benefits	$	40,545	$	36,7088

8. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The Group’s assets pledged as collateral are as follows:

oup’s assets pledged as collateral are as follows:
ITEM Deposits in banks(classified within other current assets) Property, plant and equipment, net Right-of-use assets Intangible assets Total	31-Dec-22 $ 503 2,014,721 15,765 6,559 $ 2,037,548	31-Dec-21
		$ 2,228 2,060,490 16,056 8,199
		$ 2,086,973

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of December 31, 2022 were as follows:

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(1.) The National Health Research Institutes (NHRI) and the Group entered into an exclusive license contract to transfer a new anticancer drug developing technology to SynCore in August 2008. According to this contract, after the authorized drug approved for commercialization, the Group will pay a certain percentage of net revenue for sales royalty fee, except for the fixed amounted license fee.
(2.) MacuCLEAR (an American company) and the Group entered into the technology license contract to obtain the exclusive license of prescription to manufacture and market the new drug for dry age-related macular degeneration in Asia and Australia in November 2011. According to this contract, the Group will pay a certain percentage of sales profit for sales royalty fee.
(3.) Medigene (a Germany company) and the Group entered into the agreement for the license of phase Ⅲ clinical trial and collaboration development of the new anticancer drug “EndoTAG-1” (SB05). Based on the business developing strategy, the Group had revised the partial terms and conditions of the agreement with Medigene. The final revised agreement state that the Group obtained the complete rights of the EndoTAG technology platform (including developing the original item (SB05) and its derivative diseases, new item for diseases, new technology platform and new derivatives). The license fee was on a countryby-country basis no more than EUR 4,000 thousands and on the basis of certain percentage of net sales after the new drug (SB05) approved for commercialization.
(4.) As of December 31, 2022, the Group issued guarantee note to the Ministry of Economic Affairs for A+ Enterprise Innovation R&D Quenching Program amounted NT$ 40,000 thousand.
(5.) Capital expenditures committed but not yet incurred are as follows

tal expenditures committed but not	yet incurred are as follows
ITEMS Property, plant and equipment	31-Dec-2022 $ 61,933	31-Dec-2021
		$ 62,945

SIGNIFICANT LOSSES FROM DISASTERS: None.
SIGNIFICANT EVENTS AFTER REPORTING PERIOD: None.

12. OTHER INFORMATION

(1) CAPITAL MANAGEMENT

The Group requires significant amount of capital to maintain its research and development expenditure. Accordingly, the Group manages its capital to ensure that it has sufficient and necessary financial resources and plans to fund its working capital needs, capital asset purchase, research and development expenditure, debt service requirement and dividend payments associated with its existing operations over the next 12 months.

(2) FINANCIAL INSTRUMENTS

A. Financial Risk of financial instrument.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s risk management objectives are to manage the market risk (including foreign currency risk, interest risk and price risk), credit risk and liquidity risk related to its operating activities. The Group identifies measures and manages the aforementioned risks and mitigates the disadvantage impact on financial performance. The material treasury activities are reviewed by Audit Committees and/or Board of Directors in accordance with procedures required by relevant regulations or internal

192 -

controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

NATURE AND EXTENT OF SIGNIFICANT FINANCIAL RISKS

(A)Market risk
a. Foreign currency risk
- (a.) The Group is exposed to the foreign currency risk due to the transaction of sales, purchase and cash denominated in foreign currency other than the Group’s functional currency. These non-functional currencies are USD, RMB, CAD, JPY and EUR.
- (b.) Foreign currency exposure and sensitivity analysis

		31-Dec-22	31-Dec-22	31-Dec-22	31-Dec-22
Foreign Currencies (In Thousands) $ 7,505 54,570 65 65,151 133 134 $ 461 $ 3,396 10,624 548 7,600 58	Exchange Rate 30.71 4.41 32.72 0.23 3.94 22.67 32.72 30.71 4.41 32.72 0.23 22.67	Carrying Amount (In Thousands) $ 230,489 240,544 2,134 15,141 525 3,032 $ 15,087 $ 104,288 46,832 17,938 1,766 1,323	Sensitivityanalysis
			Extent of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Impact on Profit or loss $ 2,305 2,405 21 151 5 30 $ `－` $ 1,043 468 179 18 13	Impact on Equity
					$ `－` `－` `－` `－` `－` `－` $ 151 $ `－` `－` `－` `－` `－`

193 -

31-Dec-21

Financial assets Monetaryitems USD:NT$ RMB:NT$ EUR:NT$ HKD:NT$ CAD:NT$ Non-monetaryitems EUR:NT$ Financial liabilities Monetaryitems USD:NT$ RMB:NT$ EUR:NT$ CAD:NT$	Foreign Currencies (In Thousands) $ 11,863 41,069 460 1,133 81 $ 650 $ 7,942 8,028 603 62	Exchange Rate 27.68 4.34 31.32 3.55 21.62 31.32 27.68 4.34 31.32 21.62	Carrying Amount (In Thousands) $ 328,363 178,402 14,425 4,020 1,747 $ 20,359 $ 219,825 34,875 18,874 1,336	Sensitivityanalysis	Sensitivityanalysis	Sensitivityanalysis
				Extent of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Impact on Profit or loss $ 3,284 1,784 144 40 17 $ `－` $ 2,198 349 189 13	Impact on Equity
						$ `－` `－` `－` `－` `－` $ 204 $ `－` `－` `－` `－`

If New Taiwan dollar strengthened against the relevant currency and all other variables were held constant, there would be an equal and opposite impact on profit or loss and other equity as of December 31, 2022, and December 31, 2021.

(c.) Since there were varieties of foreign currencies within the Group, the Group disclosed the summarized foreign exchange gain (loss) information of monetary items. The realized and unrealized foreign exchange loss were NT$ 21,311 thousand and NT$ (6,956) thousand for the year ended December 31, 2022 and 2021, respectively.

The Group believes the unrealized exchange gain (loss) of fluctuation risk on foreign currency monetary item is insignificant.

b. Price risk

The Group is exposed to price risk primarily related to its investment in instruments classified as financial assets at FVTPL and financial assets at FVTOCI.

The Group primarily invested in the foreign publicly traded and unlisted stocks and the domestic beneficiary certificates. The instruments prices are affected by the uncertainties of the investment targets’ future value.

Assuming a hypothetical increase/decrease of 1% in prices of the equity instruments at the end of the reporting period, the other comprehensive income for the years ended December

194 -

31, 2022 and 2021 would have increased/decreased by NT$ 247 thousand and NT$ 204 thousand, respectively, as they were classified as financial assets at FVTOCI. Assuming a hypothetical increase/decrease of 1% in prices of the domestic beneficiary certificates, the net loss for the years ended December 31, 2022 and 2021 would have increased/decreased by NT$ 67 thousand, respectively, as they were classified as financial assets at FVTPL.

c. Interest rate risk

The carrying amounts of the Group’s financial assets and financial liabilities exposed to interest rate risk were as follows:

interest rate risk were as follows:
			Carrying	Amount
Item			31-Dec-22		31-Dec-21
Fair value interest rate risk
Financial assets		$	405,391	$	425,005
Financial liabilities	(		317)	(	2,213)
Net		$	405,074	$	422,792
Cash flow interest rate risk
Financial assets		$	826,370	$	808,363
Financial liabilities	(		1,912,959)	(	2,132,024)
Net		$	1,086,589	($	1,323,661)

(a.) Sensitivity analysis: Fair value interest rate risk

The Group did not designate any fixed interest rate financial instruments as fair value through profit or loss and derivatives instruments (interest rate swaps) to hedge its exposures to changes in fair values. As such, changes in interest rate would not affect the net income and the other comprehensive income at the end of the reporting period.

(b.) Sensitivity analysis: Cash flow interest rate risk

The Group’s financial instruments at floating interest rate were assets (liabilities) at floating interest rate. Therefore, changes in interest rate would affect the future cash flows. Assuming a hypothetical increase/decrease 1% in interest rates, the net income for the years ended December 31, 2022 and 2021 would increase/decrease by NT$ 10,866 thousand and NT$ 13,237 thousand, respectively.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Group. The Group is exposed to credit risk from operating activities, primarily from account receivables, and from investing activities, primarily from bank deposits, fixed-income investments and other financial instruments. The Group managed the credit risk separately for business related and financial related risk.

a. Business related credit risk:

To maintain the quality of account receivable, the Group has established related credit risk management procedure. The risk assessment of individual customer includes evaluating

195 -

financial position, internal evaluation, historical trading records and economic circumstance which could affect the payment ability of the customer. The Group may choose to strengthen overall risk management including collection in advance or credit insurance to mitigate the credit risk of certain customers.

b. Financial credit risk:

The financial department of the Group regularly monitors and reviews the credit risk of bank deposit and other financial instruments. The Group mitigates its exposure by selecting counterparties (banks, financial institutions, company organizations and government authorities) with well credit and investment-grade credit ratings. The credit risk is insignificant.

(a.) Concentration of credit risk

As of December 31, 2022, and December 31, 2021, accounts receivable from the top 10 customers represent 24.87%, and 31.01% of total accounts receivables of the Group, respectively. The Group believes the concentration risk is insignificant for the remaining accounts receivable.

(b.) Expected credit impairment losses measurement
◎Accounts receivable: Simplified approach, please refer to Note 6(4.) and (5).
◎Judgment on whether credit risk increasing significantly: None

(C) Liquidity risk

a. Liquidity risk management

The Group’s objective of managing liquidity risk is to maintain sufficient cash and cash equivalents required for operations, high liquidity securities, and bank financing lines for operations, and to ensure that the Group has sufficient financial flexibility.

b. Maturity analysis of financial liabilities

			31-Dec-22
Less than 6 Months $ 447,000 558 323,182 396,295 25,170 $ 1,192,205	6`－`12 Months $ `－` `－` `－` 25,146 25,170 $ 50,316	1`－`2 Years $ `－` `－` `－` 4,983 990,341 $ 995,324	2`－`5 Years $ `－` `－` `－` `－` 417,592 $ 417,592	Over 5 Years $ `－` `－` `－` `－` 7,686 $ 7,686	Contractual Cash flows $ 447,000 558 323,182 426,424 1,465,959 $ 2,663,123	Carrying Amount
						$ 447,000 558 323,182 426,424 1,465,959
						$ 2,663,123

196 -

31-Dec-21

Non-derivative financial liabilities Short-term loans Note payable Accounts Payable Other payable Long-term borrowing, including current portion Long-term payable, including the current portion Total	Less than 6 Months $ 235,000 163 201,261 481,037 29,540 1,905 $ 948,906	6`－`12 Months $ 352,000 `－` `－` 38,976 29,530 318 $ 420,824	1`－`2 Years $ `－` `－` `－` `－` 1,300,219 `－` $ 1,300,219	2`－`5 Years $ `－` `－` `－` `－` 147,542 `－` $ 147,542	Over 5 Years $ `－` `－` `－` `－` 38,193 `－` $ 38,193	Contractual Cash flows $ 587,000 163 201,261 520,013 1,545,024 2,223 $ 2,855,684	Carrying Amount
							$ 587,000 163 201,261 520,013 1,545,024 2,213
							$ 2,855,674

The Group doesn’t expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

B. Categories of financial instruments

The following is the carrying amounts of the financial assets and financial liabilities of the Group at December 31, 2022 and December 31, 2021.

cember 31, 2022 and December 31, 2021.
Financial assets Financial assets measured at amortized cost Cash and cash equivalents Financial assets measured at amortized cost-current Net, notes and accounts receivable Refundable deposits Financial assets at FVTPL – current Financial assets at FVTPL – non-current Financial assets at FVTOCI －non- current Financial liabilities Financial liabilities at amortized cost Short-term loans Net, notes and accounts payable Other payable Long-term loans (Including the current portion) Long-term payable (Including the current portion)	31-Dec-22 $ 1,237,556 `－` 685,189 19,400 6,660 `－` 24,695 447,000 323,740 426,424 1,465,959 `－`	31-Dec-21
		$ 1,194,785 43,440 592,972 26,818 6,660 `－` 20,359 587,000 201,424 520,013 1,545,024 2,213

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(3.) Fair value information
A. For the fair value of financial instruments that are not measured at fair value, please refer to the Note 12 (3)B.

Fair value hierarchy definition

Level 1

Fair value measurements of the Level 1 are those derived from quoted prices in active markets for identical financial instruments. An active market is a market in which transactions for identical instrument take place with sufficient frequency and volume to provide public pricing information on an ongoing basis. The foreign publicly traded stocks and the domestic beneficiary certificates invested by the Group were classified as this hierarchy.

Level 2

Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that observable for the instrument, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3

Fair value measurements are those derived from valuation techniques that include inputs for instrument that are not based on observable market data. The Group invested in equity investments without active market included within level 3.

B. Financial instruments that are not measured at fair value

The Group considers the carrying amounts of financial instruments that are not measured at fair value, such as cash and cash equivalents, notes and accounts receivables, other financial assets, refundable deposits, notes and accounts payable, approximate their fair values.

C. Fair value hierarchy information

The Group’s financial instruments measured at fair value were under a recurring basis.

The following table presents the Group’s financial instruments measured at fair value on a recurring basis:

Items Asset: Fair value on a recurring basis Financial assets measured at FVTPL Beneficiary certificates Foreign unlisted publicly traded preference share Financial assets at FVTOCI Domestic unlisted ordinary shares Foreign publicly traded stocks Foreign unlisted publicly traded preference share Total		31-Dec-22	31-Dec-22	Total $ 6,660 `－` 9,608 15,087 `－` $ 31,355
	Level 1 $ 6,660 `－` `－` 15,087 `－` $ 21,747	Level 2 $ `－` `－` `－` `－` `－` $ `－`	Level3 $ `－` `－` 9,608 `－` `－` $ 9,608

198 -

				31-Dec-21	31-Dec-21
Items		Level 1		Level 2	Level3		Total
Asset:
Fairvalue on a recurringbasis
Financial assets measured at FVTPL
Beneficiary certificates	$	6,660 $		`－`	$	`－`$	6,660
Foreign unlisted publicly traded preference share			`－`	`－`		`－`	`－`
Financial assets at FVTOCI
Foreign publicly traded stocks		20,359		`－`		`－`	20,359
Foreign unlisted publicly
traded preference share			`－`	`－`		`－`	`－`
Total	$	27,019 $		`－`	$	`－`$	27,019

D. Valuation techniques and assumptions used in fair value measurement
(A.) If there is an active market for the financial instruments, the fair value of the financial instruments is measured by using the quoted market prices. The quoted market prices announced by the main market place and the prices of government bonds classified as popular securities announced by Taipei Exchange (TPEx) are deemed as fair value foundation of publicly traded equity instruments and debt instruments with an active market.

If there are timely and frequent quoted prices from the exchange market, the broker, the dealer, industry association, price service organization, or the administrative, and the prices represent actual, frequent, and fair trades, the financial instruments are deemed as with an active market. Otherwise, the market is deemed as not active. In general, huge price gap, price gap apparently expanding, and small trading volume were indicators of a not active market.

The financial instruments held by the Group with active market quoted prices as their fair value are listed below by characteristics:

a. Publicly traded stock: Closing price
b. Beneficiary certificates: Net value
(B.) Except for the aforementioned financial instruments with active market, the fair value of other financial instruments is measured by valuation technique or quotation of counterparties. The fair value from valuation technique could refer to the fair value of other financial instruments with similar substantial conditions and characteristics, discounted cash flow method and other valuation technique including model with observable market information on balance sheet date (e.g. yield curve of TPEx, quoted interest rate of Reuters commercial Note).

The fair values of non-listed equity investments were Level 3 fair value assets, and determined using the market approach by reference the peer companies valuation, third party quotation, net value and operation status. The significant unobservable input used was discount for lack of marketability. A movement in discount for the lack of marketability would not result in significant changes in the fair values.

(C.) The Group considered the credit risk evaluation adjustment for financial instruments and nonfinancial instruments to reflect the credit risk of the counterparty and the credit quality of the Group.
199 -
(D.) Valuation techniques used in Level 3 fair value Measurement:

The evaluation procedure of the financial instruments belong to Level 3 is verified by the financial department of the Group through verifying the independent source inputs to make sure the evaluation results closing to the market status. To make sure the reasonability of the evaluation results, the financial department verify the independence and reliability of source data, test and renew the input data, model and other necessary inputs.

(E.) There were no transfers between different fair value hierarchy for the years ended December 31, 2022 and 2021, respectively.

13. SEPARATELY DISCLOSED ITEMS

(1.) Information about significant transactions:
A. Financing provided to others: None;
B. Endorsements/guarantees provided: Table 1 attached;
C. Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Please see Table 2 attached;
D. Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None;
E. Acquisition of individual real estate properties at costs of at least NT $300 million or 20% of the paid-in capital: None;
F. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None;
G. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
I. Trading in derivative instruments: None;
J. The business relationship between the parent and the subsidiaries and significant transactions between them: Please see Table 3 attached;
(2.) Related Information of investees: Please see Table 4 attached;
(3.) Information on investments in Mainland China:
A. The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 5 attached.
B. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: See Table 3 attached.
(4.) Information of major shareholder (list of all shareholders with ownership 5% or greater showing the names and the number of shares and percentage of ownership held by each shareholder): Please see Table 6 attached.
200 -

14. SEGMENT INFORMATION

(1.) For the purpose of management, the chief operating decision-maker, the operation is separated based on business unit and have three reportable segments: Pharmaceuticals, Healthy food, and others. In addition, the Group does not put the asset and liability items into consideration when making an operation decision. Thus, there is no need to disclose the related asset and liability information of the reportable segments.
(2.) Segment revenue and result

Segment revenue and result
			Net revenue from	external customers
			2022			2021
Pharmaceutical		$	1,896,475		$	1,575,217
Healthy food			860,087			763,549
Others			100,089			94,750
Total		$	2,856,651		$	2,433,516
			Segment	operating
			2022			2021
Pharmaceutical		$	464,781		$	384,253
Healthy food			195,750			125,210
Others			22,497			23,781
Total		$	683,028		$	533,244
Reconciliations of the segments’ income
			2022			2021
Income from reportable segments		$	683,028		$	533,244
Income (loss) from other segments	(		485,693 )	(		716,014 )
Non-operating incomes and expenses			47,711	(		1,755)
Income (loss) before tax from
continuing operation		$	245,046	(	$	184,525 )
Geographical information
			For the Year Ended		December 31,
Areas			2022			2021
Sales from external customers:
Taiwan		$	2,344,951		$	1,998,232
Mainland China			208,056			196,764
America			114,723			67,923
Vietnam			39,868			58,096
Others			149,053			112,501
Total		$	2,856,651		$	2,433,516

(3.) Reconciliations of the segments’ income
(4.) Geographical information
(5.) Major Customer Information:

For the year ended December 31, 2022 and 2021, the Group does not have customers representing over 10% of net revenue. Therefore, no major customer information was disclosed.

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Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

TABLE 1

Endorsements/Guarantees provided

For the Year Ended December 31, 2022

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

		Guaranteed Party	Guaranteed Party	Limits on
				Endorsement/				Amount of	Ratio of	Maximum			Guarantee
No. (Note 1)	Endorsement / Guarantee Provider	Name	Nature of relationship (Note 2)	Guarantee Amount Provided to Each Guaranteed Party (Note 3)	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Endorsement/ Guarantee Collateralized by Properties	Accumulated Endorsement/ Guarantee to Net Equity per Latest Financial Statements	Endorsement/ Guarantee Amount Allowable (Note 4)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Provided to Subsidiaries in Mainland China
0	Sinphar Pharmaceutical Co.,Ltd.	ZuniMed Biotech Co., Ltd.	1	$ 1,172,092	$ 30,000	$ 30,000	$ 5,000	$ `－`	1.02%	$ 1,465,115	Y	`－`	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	SynCore Biotechnology Co.,Ltd.	1	$ 1,172,092	$ 350,000	$ 350,000	$ 30,000	$ `－`	11.94%	$ 1,465,115	Y	`－`	`－`
1	ZuniMed Biotech Co., Ltd.	Sinphar Pharmaceutical Co.,Ltd	2	$ 38,322	$ 25,000	$ 25,000	$ 25,000 (Note 5)	$ `－`	26.09%	$ 47,903	`－`	Y	`－`

Note 1 ： (1) The issuer fills in “0”. (2) The subsidiaries are numbered in order starting from “1”.

Note 2 ： (1) The endorser/guarantor parent company owns directly and indirectly more the 50% voting shares of the endorsed/guaranteed subs idiary.

Note 4 ： Maximum endorsement/guarantee amount allowable is 50% of the net worth of the Endorsement/Guarantee Provider. Note 5 ： It is a supply guarantee for the medical institution.

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Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 2

Marketable Securities Held (Excluding Subsidiaries, Associate and Joint Venture)

As of December 31, 2022

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

Held Company Name	Marketable Securities Type and Name	Relationship with Sinphar	Financial Statement Account	December 31,2022	December 31,2022	December 31,2022	December 31,2022	Note
				Shares/Units	Carrying Value	Percentage of Ownership	Fair Value
Sinphar Pharmaceutical Co., Ltd.	PHYTOCEUTICA INC.(preferred share)	Investee	Financial assets at fair value throughprofit or loss(Non-Current)	90,362.00	$ `－`	`－`	$ `－`	`－`
Sinphar Pharmaceutical Co., Ltd.	Datun Entertainment Development Co.,Ltd.	`－`	Financial assets at fair value through other comprehensive income(Non-Current)	4.00	9,608	0.34%	9,608	`－`
SynCore Biotechnology Co., Ltd.	Fuh Hwa Money Market	`－`	Financial assets at fair value throughprofit or loss(Current)	252,743.00	3,617	`－`	3,697	`－`
SynCore Biotechnology Co., Ltd.	Fuh Hwa You Li Money Market	`－`	Financial assets at fair value throughprofit or loss(Current)	152,110.90	2,031	`－`	2,078	`－`
SynCore Biotechnology Co., Ltd.	JPMorgan`（`Taiwan`）`Glbl Fd of Bd Fds Inc	`－`	Financial assets at fair value throughprofit or loss(Current)	90,062.20	1,012	`－`	988	`－`
SynCore Biotechnology Co., Ltd.	MacuCLEAR, INC. (Preferred Share)	`－`	Financial assets at fair value through other comprehensive income(Non-Current)	95,160.00	`－`	0.95%	`－`	`－`
SynCore Biotechnology Co., Ltd.	Medigene (Common Share)	`－`	Financial assets at fair value through other comprehensive income(Non-Current)	224,934.00	15,087	0.92%	15,087	`－`

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Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 3

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars)

No. (Note1)	CompanyName	Counter-party	Nature of Relationships (Note 2)	Transaction Details	Transaction Details	Transaction Details	Transaction Details
				Financial Statements Item	Amount	Transaction Terms	Percentage of consolidated revenue or assets%
0	Sinphar Pharmaceutical Co.,Ltd.	Sinphar Tian-Li Pharmaceutical Co.,Ltd.(Hangzhou)	1,2	Purchase	$ 5,058	Note 4	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	Sinphar Tian-Li Pharmaceutical Co.,Ltd.(Hangzhou)	1,2	Accounts Payable	315	Note 4	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	ZuniMed Biotech Co.,Ltd.	1,2	Purchases	63,358	Note 4	2%
0	Sinphar Pharmaceutical Co.,Ltd.	ZuniMed Biotech Co.,Ltd.	1,2	Accounts Payable	9,178	Note 4	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	SynCore BiotechnologyCo.,Ltd.	1,2	Sales Revenue	2,267	Note 4	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	SynCore BiotechnologyCo.,Ltd.	1,2	Rental Income	13,356	Note 5	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	SynCore BiotechnologyCo.,Ltd.	1,2	Other Income	10,147	`－`	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	CANCAP PHARMACEUTICAL LTD.	1,2	Professional Service Fee	8,113	`－`	`－`
1	Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	Hetian Tianli shasheng Pharmaceutical Development Co.,Ltd.	3	Purchases	18,745	Note 4	1%
1	Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	Hetian Tianli shasheng Pharmaceutical Development Co.,Ltd.	3	Accounts Payable	19,797	Note 6	`－`

Note 1 ： Sinphar and its subsidiaries are coded as follows:

1. Sinphar is coded “0”.

The subsidiaries are coded consecutively beginning from ”1” in the order presented in the table above.

Note 2 ： The relationship with the trader has the following three types:

Parent company to a subsidiary.
Subsidiary to the parent company .

3. Subsidiary to subsidiary.

Note 3: For the calculation of the ratio of the transaction amount to consolidated revenue or assets, if it is an asset-liability item, it is calculated by the balance at the end of the period in the consolidated assets; if it is a profit and loss item, it is calculated by the cumulative amount in the period as a share of the consolidated revenue.

Note 4 : There is no significant difference of receive (payment) terms and price based on the actual transaction terms from general customers,the receive(payment) term is 30 to 365 days 。

Note 5: The rent is determined by the general rental market price in the nearby areas and the mutual agreements from both parties. The rental income is received monthly according to the contract term.

Note 6: The selling price is determined by mutual agreement and general market price. Prepayment shall be made in advance according to the pre-ordered quantity during the credit period. A new selling price for the exceeded quantity will be negotiated if the actual quantity exceeds the scheduled quantity.

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Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 4

Name, Location, and Related Information of Investees Over Which Sinphar Exercise Significant Influence (Excluding Information On Investment In Mainland China) as of December 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

			Mi	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Nt I
Investor Company	Investee Company	Location	an Businesses	December	December		Percentage	Carrying	e ncome (Losses) of the	Share of Profits /	Notes
			and Products	31, 2022	31, 2021	Shares	of Ownership	Value	Investee	Losses of Investee
Sinphar Pharmaceutical Co., Ltd.	CANCAP PHARMACEUTICAL LTD.(Ordinary shares)	Canada	Production and sale of healthy food	$ 44,605	$ 44,605	2,140,000	88.43%	$ `－`	$ 1,222	$ 1,222	Subsidiary
Sinphar Pharmaceutical Co., Ltd.	CANCAP PHARMACEUTICAL LTD.(Preference shares)	Canada	Production and sale of healthy food	126,247	126,247	51,500	100.00%	1,219	1,222	`－`	Subsidiary
Sinphar Pharmaceutical Co.,Ltd.	SUNETIC BIOTECH INC.	Mauritius	Investment business	745,748	745,748	18,854,534	83.47%	915,635	71,464	61,217	Subsidiary
Sinphar Pharmaceutical Co.,Ltd.	UNIVERSAL NEXT TECHNOLOGIES INC.	British Virgin Islands	Investment business	17,467	17,467	503,845	100.00%	39	9	9	Subsidiary
Sinphar Pharmaceutical Co., Ltd.	ZuniMed Biotech Co., Ltd.	Taiwan	Production and sale of medical appliances	109,990	109,990	10,300,000	100.00%	91,660	2,516	2,917	Subsidiary
Sinphar Pharmaceutical Co.,Ltd.	SynCore Biotechnology Co., Ltd.	Taiwan	Biotechnology service	1,745,698	1,745,698	71,456,000	62.09%	154,419	(188,666)	(117,252)	Subsidiary
SynCore Biotechnology Co., Ltd.	SynCore Biotechnology Europe GmbH	Germany	New drugs development and biotechnology service	834	834	25,000	100.00%	692	12	12	Subsidiary

Note：The shares of profits/losses of investee were calculated based on the financial statements audited by the CPAs. The effect of realized (unrealized) gains and losses have already been considered.

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Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 5

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital (RMB in Thousands)	Method of Investment	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31,2022	Net Income (Losses) of Investee Company	Percentage of Ownership	Shares of Profits/Losses (note 1)	Carrying Amount as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31,2022
							Outflow	Inflow
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	Production and sales of raw materials, pharmaceuticals		RMB 193,005	Indirect investment in mainland China by SUNETIC BIOTECH INC., an 83.47% owned subsidiary of Sinphar		$ 645,635 (USD 19,786 thousand)	`－`	`－`	$ 645,635 (USD 19,786 thousand)	$ 77,554	83.47%	$ 64,734	$ 919,592	$ 107,493
Hetian Tianli shasheng Pharmaceutical Development Co., Ltd.	Scientific research and production and sales of shasheng Pharmaceutical		RMB 10,000	Indirect investment in mainland China by Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou), a sub-subsidiary company of which Sinphar holds 83.47% of the total shares		`－`	`－`	`－`	`－`	(14,370)	75.96%	(9,090)	87,630	`－`
Hangzhou Vitrum Healthy Food Co., Ltd.	Sale of healthy food		RMB 30,000	Indirect investment in mainland China by Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) a sub-subsidiary company of which Sinphar holds 83.47% of the total shares.		`－`	`－`	`－`	`－`	(453)	83.47%	(378)	1,811	`－`

		Accumulated Investment in Mainland China as of December 31, 2022 (US$ in Thousands)			Investment Amounts Authorized by Investment Commission, MOEA (US$ in Thousands)		Upper Limit on Investment (Note 3)
		652,200 (USD 19,986 (Note 2))			777,614 (USD 25,321)		1,758,138

Note 1 ： The shares profits/losses of investee were calculated based on the financial statements audited by the R.O.C. CPAs of the parent company.

Note 2 ： The amount included the indirect investment of UNIVERSAL NEXT TECHOLOGY INC to Qinghai Mingxing Bio-Engineering Co., amounting to USD$ 200 thousand, which has already been cancelled by the Investment Board. Note 3 ： According to the regulations of the Investment Commission of the Ministry of Economic Affairs, the upper limit of the cumulative amount of its investment in the mainland is 60% of the net value.

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Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

TABLE 6

Information of major shareholders

December 31, 2022

Shareholders	Shares	Shares
	Total shares owned (In thousands)	Ownership Percentage
XING-DA CAPITAL CORP.	15,470	9.22%

Note: The main shareholder information in this table is calculated by Taiwan Depository & Clearing Corporation, using total number of ordinary shares and preferred shares held by the shareholders who have completed Sinphar’s dematerialized securities registration and delivery (including treasury shares) is more than 5% on the last business day at the end of each quarter. As for the difference between capital stock recorded in Sinphar's financial report and the number of shares which Sinphar actually have completed the dematerialized securities registration and delivery, may result from computation basis.

207 -

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.

208 -

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:

Understand and evaluate the design and implementation of the internal control in relation to inventory.
Perform inventory counts, to identify if there are any inventories which are obsolete or damaged.
Obtain Inventory aging reports to analyses the changes in inventory age, and check the records of inventory changes to verify the correctness of inventory.
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.
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:

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

209 -

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:

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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.
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.
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.
210 -

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

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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.

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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.

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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.

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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)

For the years ended December 31, 2022 and 2021 Sinphar Pharmaceutical Co., Ltd. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)	For the years ended December 31, 2022 and 2021 Sinphar Pharmaceutical Co., Ltd. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS (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
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.

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Sinphar Pharmaceutical Co., Ltd.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2022 and 2021

(Amounts in Thousands of New Taiwan Dollars , Unless Specified Otherwise)

1. GENERAL INFORMATION

Sinphar Pharmaceutical Co., Ltd. (the Company or Sinphar) was incorporated in the Republic of China (“R.O.C.”) on July 2, 1977. Sinphar mainly engages in the production, processing and trading of various Western medicines, Chinese medicines, medicinal cosmetics and detergents.

The parent company only financial statements are presented in the Company’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The accompanying parent company only financial statements were approved by the Company’s board of directors and issued on March 17, 2023.

APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).
New standard, interpretation and amendments to the IFRSs endorsed by the FSC for application starting from 2022:

2022:
New Standards,Interpretations and Amendments Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts—Cost of Fulfilling aContract” Amendments to IFRS 3 “Reference to the Conceptual Framework” Annual Improvements to IFRS Standards 2018–2020	Effective Date Announced by IASB(Note 1)
	January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4) January 1, 2022 (Note 5)

Note 1: Unless stated otherwise, the New IFRSs above are effective for annual periods beginning on or after their respective effective dates.

Note 2: An entity shall apply these amendments retrospectively, but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in thefinancial statements in which the entity first applies the amendments.
Note 3: An entity shall apply these amendments to contracts for which it has not yet fulfilled all its obligations on January 1, 2022.
Note 4: These amendments apply to business combinations whose acquisition date occur during the annual reporting periods beginning on or after January 1, 2022.
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Note 5: An entity shall apply the Amendment to IFRS 9 to financial liabilities that are modified or exchanged during the annual reporting periods beginning on or after January 1, 2022. An entity shall apply the Amendment to IAS 41 to fair value measurements for annual reporting periods beginning on or after January 1, 2022. An entity shall apply the Amendment to IFRS 1 for annual reporting periods beginning on or after January 1, 2022.

The Company evaluates there is no significant impact on its financial position and financial performance as a result of the initial adoption of the standards or interpretations.

(2) Effect of amendments to new issuance or amendments to IFRSs endorsed by FSC but not yet adopted by the Company:

New standards, interpretations and amendments to the IFRSs endorsed by the FSC for application starting from 2023:

2023:
New Standards,Interpretations and Amendments Amendments to IAS 1 “Disclosures 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”	Effective Date Announced byIASB
	January 1, 2023 (Note 1) January 1, 2023 (Note 2) January 1, 2023 (Note 3)

Note1: The amendments are applied for annual periods beginning on or after January 1, 2023.

Note2: These amendments apply to changes in accounting estimates and changes in accounting policies that occur during annual reporting periods beginning on or after January 1, 2023.
Note3: Except for deferred taxes for temporary differences associated with lease and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.
A. Amendments to IAS 1 “Disclosures of Accounting Policies”

B. Amendments to IAS 8 “Definition of Accounting Estimates”

C. Amendments to IAS 12 “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”

The amendments narrow the exemption extent in paragraphs 15 and 24 of IAS 12 for an company from recognizing a deferred tax asset or liability in particular circumstances. In particular, the exemption does not apply to a transaction that gives rise to equal taxable and deductible difference at the time of the transaction. At the initial application of the amendments, an company shall, at the beginning of the earliest comparative period presented, recognise deferred taxes for all deductible and taxable temporary differences associated with (i) lease and (ii) decommissioning liabilities and recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.

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The Company evaluates there is no significant impact on its financial position and financial performance as a result of the initial adoption of the standards or interpretations.

(3) New IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed and issued into effect by the FSC.

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs endorsed by the FSC are as follows:

the FSC are as follows:

New Standards,Interpretations and Amendments Effective Date Announced
byIASB

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture”
Amendments to IFRS 16 “Lease liability in a Sale and Leaseback”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17

Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9－
Comparative Information”
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-Current”
Amendments to IAS 1 “Non-current Liabilities with Covenants” To be determined by IASB
January 1, 2024
January 1, 2023
January 1, 2023
January 1, 2023

January 1, 2024
January 1, 2024

As of the date, the parent company only financial statements were authorized for issue, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The main accounting policies used in the preparation of the parent company only financial statements are explained below. Unless otherwise stated, these policies apply consistently throughout all reporting periods.

(1.) Statement of Compliance

The accompanying parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs endorsed by the FSC.

(2.) Basis of Preparation of the Parent Company Only Financial Statement
A. Except for the following items, the accompanying parent company only financial statements have been prepared on the historical cost basis:
- (A.) The financial assets and liabilities measured at fair value through profit and loss (including derivative financial instruments).
- (B.) The financial assets measured at fair value through other comprehensive income.
- (C.) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of the parent company only financial statements in compliance with IFRSs endorsed by FSC requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in process of applying the Company’s accounting policies. The areas involving a high degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial
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statements are disclosed in Note 5.

C. The subsidiaries, associates and jointly controlled entities are incorporated in the parent company only financial statements under the equity method.
(3.) Foreign Currencies
A. Foreign currency transaction

Transactions in currencies other than the Company’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated. Except for financial instruments at FVTOCI, financial instruments that are designated as foreign operation net hedge or qualified as cash flow hedge, the retranslation foreign exchange differences are recognized in other comprehensive income. In other cases, the exchange differences are recognized in profit and loss.

B. Translation of foreign operation

For the purpose of preparing parent company only financial statements, the functional currencies of the Company and the foreign entities (including subsidiaries, associates, joint ventures and branches in other countries that use currency different from the currency of the Company) are translated into the presentation currency - the New Taiwan dollar as follows: assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; profits and losses items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

(4.) Classification of Current and Noncurrent Assets and Liabilities
A. Assets that meet one of the following criteria are classified as current assets:
- (A.) Assets expected to be realized or intended to be sold or used within normal operating cycle;
- (B.) Assets held primarily for the purpose of trading;
- (C.) Assets expected to be realized within 12 months after the reporting period; and
- (D.) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Assets that are not classified as current are classified as non-current.

B. Liabilities that meet one of the following criteria are classified as current liabilities:
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(A.) Liabilities expected to be paid off within normal operating cycle;
(B.) Liabilities held primarily for the purpose of trading;
(C.) Liabilities due to be settled within 12 months after the reporting period (It is still a current liability even if a long-term refinancing or rearrangement of payment agreement is completed after the balance sheet date and before the financial report is approved,); and
(D.) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Liabilities that are not classified as current are classified as non-current.

(5.) Cash and Cash Equivalent

(6.) Financial Instruments

Financial assets and financial liabilities are recognized in balance sheets when the Company becomes a party to the contractual provisions of the instruments.

A. Financial assets

(A.) Measurement category

The Company adopts trade-date accounting to recognize financial assets.

Financial assets are classified as financial assets at FVTPL, financial assets at amortized cost, and equity investments at FVTOCI.

a. Financial assets at FVTPL

b. Equity investment at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

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Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

c. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

(a.) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
(b.) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(a.) Purchased or originated credit-impaired financial assets, for those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(b.) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets, for those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.
(B.) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses (“ECL”) on financial assets at amortized cost (including accounts receivable).

The loss allowance for accounts receivable is measured at an amount equal to lifetime ECL. For other financial assets, when the credit risk on the financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to 12-month ECL. If there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to lifetime ECL.

The Company recognizes an impairment loss for aforementioned financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

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(C.) Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

a. The contractual rights to receive the cash flows from the financial asset expire.
b. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
c. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

B. Financial liabilities

(A.) Subsequent measurement

Except for the following, financial liabilities measured at amortized cost are measured using the effective interest rate method after initial recognition.

a. Financial liabilities at FVTPL are financial liabilities held for trading or financial liabilities designated upon initial recognition as at FVTPL. Repurchase currently and the derivative financial instruments unless financial guarantee contract and designated and effective as a hedging instrument, are classified financial liabilities held for trading. The Company designates the financial liabilities upon initial recognition as at FVTPL when the financial liabilities accord to one of the followings:
(a.) Mixed (combined) contract; or
(b.) Eliminates or significantly reduces measurement or recognition; or
(c.) A tool to manage and evaluate its performance on a fair value basis in accordance with a written risk management policy.
b. Financial liabilities at FVTPL are stated at fair value upon initial recognition, related transaction costs and any gain or loss arising on remeasurement is recognized in profit or loss.
c. A financial liabilities that designated as financial liabilities measured at FVTPL, which amount of change in fair value resulting from a change in credit risk, is recognized as other comprehensive income, and that will not be reclassified subsequently to profit or loss. The amount of the remaining fair value change in the liability is reported in the profit and loss. However, if the aforementioned accounting treatment triggers or exacerbates the improper accounting ratio, the full profits or losses of the liability are reported in the profit or loss.
(B.) Derecognition of financial liabilities

C. Modification of Financial Instruments

When the contractual cash flows of a financial instrument are renegotiated or modified and the renegotiation

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or modification does not result in the derecognition of that financial instrument, the Company recalculates the gross carrying amount of the financial asset or the amortized cost of the financial liabilities using the original effective interest rate and recognises a modification gain or loss in profit or loss. Any costs or fees incurred adjust the carrying amount of the modified financial instrument and are amortised over the remaining term of the modified financial instrument. If the renegotiation or modification results in that the derecognition of that financial instrument is required, then the financial instrument is derecognized accordingly.

If the basis for determining the contractual cash flows of a financial asset or financial liability changes resulting from interest rate benchmark reform and the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis, the Company applies the practical expedient to account for that change as a change in effective interest rate. If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Company first applies the practical expedient aforementioned to the changes required by interest rate benchmark reform, and then applies the applicable requirements to any additional changes to which that practical expedient does not apply.

(7.) Inventories

(8.) Investments Accounted for Using Equity Method

Investments in subsidiaries are accounted for using the equity method. A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Company also recognized its share in change in the equity of subsidiaries.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amount of the subsidiary and the fair value of the consideration paid or received is recognized directly in equity.

When the Company’s share of losses of a subsidiary equal or exceed its interest in that subsidiary (which includes any carrying amount of the investment in subsidiary accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

When the Company loses control of a subsidiary, and retained investment of the former subsidiary is measured at fair value at that date. A gain of loss is recognized in profit or loss and calculated as the difference between 1) the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and 2) the previous carrying amount of the investments in such subsidiary. In addition, the Company shall account for all amount previously recognized in other comprehensive income in relation to the subsidiary on the same basis as would be required if the subsidiary had directly disposed of the related assets and liabilities.

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When the Company transacts with its subsidiaries, profits and losses resulting from the transactions with the subsidiaries are recognized in the Company’s parent company only financial statements only to the extent of interest in the subsidiaries that are not owned by the Company.

(9.) Property, Plant and Equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. For property, plant and equipment under construction, sample produced from testing whether the asset is functioning properly before its intended use are measured at lower of the costs or net realizable value. Proceeds from selling such an item and the cost of the item are recognized in profit or loss.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be reliably measured. The carrying amount of the replaced component is derecognized. All other repairs and maintenance expense are recognized in profit or loss as incurred.
C. Except for land, which is not depreciated, other items of property, plant and equipment are measured at cost, the depreciable amount shall be allocated by the straight-line method over its useful life. Depreciation methods, useful lives, and residual values are reviewed at the end of each reporting period. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in accounting estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change.

The estimated useful lives of property, plant and equipment are as follows:

Buildings: 5~55 Years

Machinery: 3~10 Years

Transportation: 5~8 Years

Office Equipment: 5~15 Years

Other Equipment: 2~10 Years

D. If an item of property, plant and equipment or any significant component is disposed or there is no future economic benefit flow to the Company, the carrying amount is derecognized in profit and loss. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized in profit and loss.

(10.) Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes) and include land held for a currently undetermined future use.

Owned investment properties are initially measured at cost, including transaction costs, and subsequently measured at cost less accumulated depreciation and accumulated impairment loss. All investment properties are depreciated using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

(11.) Intangible Assets
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A. Intangible assets acquired separately (with finite useful lives)
Intangible assets acquired from government grants are measured at fair value. Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis as follow.
(A.)Computer Software: 1~10 Years
(B.)Technology: 10 Years
(C.)License: The duration of patent right and the duration of the contract whichever is shorter

The estimated useful life, residual value, and amortization period and method are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.

B. Internally-generated intangible assets - research and development expenditure
(A.) Expenditure on research activities is recognized as an expense in the period in which it is incurred except for the goodwill or intangible assets from business combination.
(B.) An internally-generated intangible asset arising from the development phase of an internal project is recognized if, and only if, all of the following conditions have been demonstrated:
- (a.) The technical feasibility of completing the intangible asset so that it will be available for use or sale;
- (b.) The intention to complete the intangible asset and use or sell it;
- (c.) The ability to use or sell the intangible asset;
- (d.) When the intangible asset could generate probable future economic benefits;
- (e.) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
- (f.) The ability to measure reliably the expenditure attributable to the intangible asset during its development.
(C.) Capitalized intangible assets in development phase are stated at cost, less accumulated amortization and accumulated impairment loss. Intangible assets with indefinite useful lives that are not amortizable.
(D.) The assessment of intangible assets with indefinite life is reviewed annually to determine whether the useful lives of intangible asset with indefinite life continues to be with indefinite life. If not, the change in useful life from infinite to finite is recorded as change in accounting estimate.

C. Disposal of the assets

Any gain or loss arising from the disposal of the assets is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognized in profit or loss.

(12.) Impairment of Non-Financial Assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets, excluding inventories and deferred tax assets, to determine whether there is any indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

225 -

The Company assesses at each reporting date whether is an indication that an asset other than goodwill may be impaired. If circumstances indicate that previously recognized impairment losses may no longer exist or may have decreased, the Company reassesses the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimate of an asset which in turn increase the recoverable amount since the last impairment loss was recognized. The reversal is limited to that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortization had no impairment loss been recognized for the asset in prior years.

For the purpose of impairment testing, goodwill is allocated to each of the Company’s cash-generating units (or group of cash-generating units) that are expected to benefit from the synergies of the combination. If the carrying amount of a cash-generating unit exceeds its recoverable amount, an impairment loss is to be recognized. The impairment loss is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit, then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses related to goodwill cannot be reversed in future periods.

(13.) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation from past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date. The discount rate shall be a pre-tax rate that reflect current market assessment of the time value and the risk specific to the liability. Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as interest expense. Future operating loss is not recognized as provisions.

(14.) Employee Benefits

A. Short-term employee benefits

B. Pensions

(A.)Defined contribution plans

(B.) Defined benefit plans
a. Net obligation under a defined benefit plan is defined as the present value of an amount of pension
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benefits that employees will receive on retirement for their services with the Company in current or prior period(s). The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is estimated annually by independent actuaries using the projected unit credit method.

b. Remeasurements of defined benefit plans are recognized in other comprehensive income as incurred and are recorded as retained earnings.
c. Past-service costs are recognized immediately in profit or loss.
C. Employee’s compensation and directors’ remuneration

D. Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognize any related restructuring costs. The benefits expected to be due more than 12 months after balance sheet date should be discounted to the present value.

(15.) Taxation
A. Income tax expenses include both current taxes and deferred taxes. Except for expenses related to the items recognized in other comprehensive income or directly in equity, all current and deferred taxes shall be recognized in profit or loss.
B. The current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of each reporting period in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. According to Income Tax Act in the R.O.C., income tax on unappropriated earnings is expensed in the year the shareholders’ meeting approved the appropriation of earnings which is the year subsequent to the year the earnings are generated.
C. Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. A deferred tax liability is not recognized on taxable temporary differences arising from the initial recognition of goodwill. If a temporary difference arises from the initial recognition (other than a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, the resulting deferred tax asset or liability is not recognized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint arrangements, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.
D. Deferred tax assets arising from deductible temporary differences, unused loss carry forward and unused tax
227 -

credits are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period.

E. Current income tax assets and liabilities are offset and the net amount reported at the end of the reporting period when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset at the end of the reporting period when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same tax authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
F. Tax credit resulting from acquisitions of equipment or technology, research and development expenditures, employee training, and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.
(16.) Revenue

The Company identifies the contract with the customers, and recognizes revenue when performance obligations are satisfied.

A. Revenue from sale of goods

B. Royalties

Royalties are the rights of using intellectual property in authorized duration. The received royalties are recognized in royalty revenue on a time basis over the period of the authorization.

C. Technical service

The Company provides research and development technology test services. Revenue from services is recognized as revenue during the period when services are provided to customers. If the services rendered exceed the payment, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized.

The Company’s estimates of revenue, costs and completion degree are revised with the test situation. Any income and cost increase or decrease caused by the estimated changes will be reflected in profit or loss during the period when the revision situation is known to the management.

(17.) Borrowing costs

Except for the aforementioned, all other borrowing costs are recognized as profit or loss in the period in which

228 -

they are incurred.

(18.) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Company will comply with any conditions attached to the grants and the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate.

Government grants that are deemed as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future costs are recognized in profit or loss in the period in which they are receivable.

(19.) Earnings per Share

The Company discloses the basic and diluted earnings per share attributable to ordinary equity holders of the Compnay. The calculation of basic earnings per share is based on the profit or loss attributable to the ordinary shareholders of the Compnay divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit or loss attributable to ordinary shareholders of the Compnay divided by the weighted-average number of ordinary shares outstanding after adjustment for the effect of all dilutive potential ordinary shares.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, the management is required to make judgments, estimations, and assumptions about the uncertain situation. The estimates and associated assumptions are based on historical experience and other factors considered relevant. Actual results may differ from these estimates.

The Company considers the economic implications of the Covid-19 pandemic, changes in climates and related governmental policies and regulations, the conflicts between Ukraine and Russia as well as related international sanctions, inflation and volatility in interest rate when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

In the preparation of the parent company only financial statements, the critical accounting judgments the Company has made and the major sources of estimation and assumption uncertainty are described as follows:

A. Critical judgements in applying accounting policies

Business model assessment for financial assets

The Company determines the business model at a level that reflects how companys of financial assets are managed together to achieve a particular business objective. This assessment involves judgment and consideration of all relevant evidence, such as how the performance of the assets is evaluated, the risks that affect the performance of the assets, and how the managers of the assets are compensated. The Company constantly assess the adequacy of its business model and monitors financial assets measured at amortized cost and debt investments measured at fair value through other comprehensive income. When these assets are derecognized prior to their maturity, the Company reviews the reasons for their disposal and whether the reasons are consistent with the objective of the business for which the assets were held. If the objective of the business for an asset is changed, the classification of the asset is prospectively changed from the reclassification date.

B. Critical accounting estimates and assumptions
229 -

(A.)Revenue Recognition

Sales revenue, excluding related estimated sales returns, discounts and other similar allowance, is recognized when the control of goods or services is transferred to the customer and the Company satisfies it performance obligation. The Company estimates sales returns and allowance based on historical experience and other known factors. The Company assesses the reasonableness of the estimates periodically.

(B.)Estimated impairment of financial assets

The provision for impairment of accounts receivables, debt investments, and financial guarantee contracts is based on assumptions on default risk and expected loss rates. The Company makes these assumptions and selects inputs for impairment calculation based on the Company’s historical experience and existing market conditions, as well as forward looking information. If the future cash inflows are less than expected, a material impairment loss may arise. Please refer to Note 6(5.)for the assumption and input data.

(C.)Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. The management considers current market and historical experience on sperific future product demand for evaluation basis, and charge of these factors may significantly affect the results.

(D.)The useful life of property, plant and equipment

Property, plant and equipment are amortized on a straight-line basis, and the Company periodically evaluates the useful life and residual value of property, plant and equipment. If there is a significant change in the relevant estimates, it will be adjusted in the current period of the change and in subsequent years.

(E.)Realisability of deferred tax assets

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1.) Cash and Cash Equivalents

Cash and Cash Equivalents
ITEM Cash on hand Check deposits Demand deposits Cash equivalent	31-Dec-22 $ 1,713 1,209 613,469	31-Dec-21
		$ 1,592 909 524,256

230 -

Time deposits (Investments with original maturities less than 1 year) Total	86,664 $ 703,055	4,373
		$ 531,130

A.The Company trades with a variety of financial institutions all with high credit quality to disperse credit risk, and the management expects that the probability of counterparty default is remote.
B.The cash and cash equivalents were not pledged.
(2.) Notes Receivable, Net

Notes Receivable, Net
ITEM			31-Dec-22		31-Dec-21
Notes receivable		$	179,178	$	160,213
Less: Allowance for impairment loss	(		353 ) (		1,063 )
		$	178,825	$	159,150

A. As of December 31, 2022 and 2021, the notes receivables were not pledged.
B. Please refer to table below for the information about the disclosures on allowance for impairment loss for accounts receivable.
(3.) Accounts Receivable, Net

Accounts Receivable, Net
ITEM			31-Dec-22		31-Dec-21
Accounts receivable
Gross carrying amount measured at amortized cost		$	462,300	$	368,436
Less: Allowance for impairment loss	(		5,714) (		3,135)
		$	456,586	$	365,301

A. The Company’s average credit terms of accounts receivable were 30 to 120 days, which was determined with factors of customers’ industrial environment, business scales and profitability.
B. The accounts receivable were not pledged.
C. The Company applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for all notes receivable and accounts receivable. The lifetime expected credit losses on accounts receivables are estimated by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions. According to the past experience of credit loss, there is no significant difference between different customer categories, thus the provision matrix doesn’t further distinguish customer categories, and is set up the expected credit loss ratio by the past due days.

The following table details the loss allowance of note receivables and accounts receivables based on the Company’s provision matrix.

December 31,2022 Not past due 0 to 60 days 61 to 120 days 121 to 180 days Over 181 days	Expected Credit Loss Ratio 0%~1% 5% 30% 50% 100%	Gross Carrying Amount $ 623,321 9,792 3,806 952 3,607	Loss Allowance (Lifetime ECL) $ 353 489 1,142 476 3,607	Amortized Cost
				$ 622,968 9,303 2,664 476 `－`

231 -

$ 641,478

6,067 $

635,411

Total

December 31,2021 Not past due 0 to 60 days 61 to 120 days 121 to 180 days Over 181 days Total	Expected Credit Loss Ratio 0%~1% 5% 30% 50% 100%	Gross Carrying Amount $ 520,135 4,490 847 294 2,883 $ 528,649	Loss Allowance (Lifetime ECL) $ 689 225 254 147 2,883 $ 4,198	Amortized Cost
				$ 519,446 4,265 593 147 －
				$ 524,451

D. The movements of the loss allowances of notes receivable and accounts receivable, including those from related parties, were as follows:

Opening Balance Add: Impairment loss Closing Balance	31-Dec-22 $ 4,198 1,869 $ 6,067	31-Dec-21 $ 3,038 1,160 $ 4,198

E. These amounts were recognized without considering other credit enhancements held by the Company. The Company writes off an accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. However, the Company continues to engage in enforcement activity to recover the receivables due. Any recovered amounts are recognized in profit or loss.
F. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.
(4.) Inventories

ITEM Merchandise Finished goods Work in process Raw materials Materials Total	31-Dec-22 $ 826 232,422 83,569 254,293 43,946 $ 615,056	31-Dec-21 $ 889 292,197 35,562 197,765 33,310 $ 559,723

A. Cost of revenue related to inventories recognized in profit or loss as follows:

For the Year Ended December 31

232 -

ITEM			2022		2021
Cost of goods sold		$	1,559,756	$	1,367,617
Loss on inventory value decline			2,188		4,679
Loss on inventory scrapped			16,838		20,872
Others	(		1,571 ) (		1,438 )
Total		$	1,577,211	$	1,391,730

B. From September to October, 2020, the Company failed to meet the standards and regulations of the Food and Drugs Administration in the stability study testing. The Company therefore was prohibited from manufacturing, selling the related products, and was requested to retrieve the distributed product from the market of the related 6 products. As a result, the Company enlarged the scope of inspections of all products and voluntarily recalled 17 related products and carried out different refinement plans to ensure the mistakes would be resolved effectively.

The Company made adjustments to the related asset items, liability items and income in the consolidated financial statements for the year ended 2022 and 2021 in regard to the incident as follows.

(A.) Inventory

For the year ended 2021, the Company increased the cost of recycled products NT$1,144 thousand. Recycling products mainly from export customers, scrapped the inventory and recognized cost of goods sold simultaneously. There were scrapped and recalled goods cost amounted to NT$6,786 thousand.

The Company continued to implement the improvement plan and reported to the relevant authority. After having the stability test data that can support the prescribed validity period and ensuring the product quality is safe, the production and shipment of products was resumed in 2022. For the year ended 2022 and 2021.The Company reversed NT$472 thousand and NT$8,433 thousand for loss on inventory market price decline, respectively.

As of December 31, 2021, the different batches of recycled products NT$472 thousand were unavailable for sale. Due to the uncertainty of products available for sale, the Company recognized as unrealized loss on inventories.

(B.) Refunds Liability

(C.) Other losses

The related expenses aroused from the recall of the product during 2021 was NT$786 thousand.

C. No inventories were pledged or held as collateral.
(5.) Financial Assets at Fair Value through profit and loss / other comprehensive income – non-current

ITEM 31-Dec-22 31-Dec-21

Financial assets mandatorily measured at fair value through profit or loss

233 -

ITEM			31-Dec-22		31-Dec-21
Overseas unlisted preferred shares
PHYTOCEUTICA INC. CANCAP		$		4,844 $	4,844
PHARMACEUTICAL, LTD.				1,219	`－`
				6,063	4,844
Less: Accumulated impairments	(			4,844 ) (	4,844 )
Total		$		1,219 $	－
ITEM			31-Dec-22		31-Dec-21
Financial assets mandatorily measured at fair
value throughother comprehensive income
Domestic unlisted ordinary shares		$		9,676 $	`－`
Less: Valuation adjustments	(			68 ) (	`－`)
Total		$		9,608 $	`－`

A. The Company invested in the preferred stocks of PHYTOCEUTICA INC., it is not entitled to other rights of ordinary shares, except for that dividends and distribution of residual assets preferred over ordinary shares.
B. These investments in equity instruments were held for long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI.
C. As of December 31, 2022 and 2021, the financial assets at fair value through profit or loss were not pledged or held as collateral.
D. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.
(6.) Investments Accounted for Using Equity Method

			31-Dec-22				31-Dec-21
		Original	Percentage			Original	Percentage
		Investment	Of	Carrying		Investment	Of		Carrying
Name of Investee		Amount	Ownership	Amount		Amount	Ownership		Amount
CANCAP
PHARMACEUTICAL
LTD. (ordinary shares)	$	44,605	88.43% ( $	125,028 ) $		44,605	88.43%	( $	126,252 )
SUNETIC BIOTECH
INC.		745,748	83.47%	915,635		745,748	83.47%		884,909
UJNIVERSAL NEXT
TECHNOLOGIES INC.		17,467	100.00%		39	17,467	100.00%		27
ZuniMed Biotech Co.,
Ltd.		109,990	100.00%	91,660		109,990	100.00%		88,743
SynCore Biotechnology
Co., Ltd.		1,745,698	62.09%	154,419		1,745,698	62.09%		274,927
Total	$	2,663,508		1,036,725$		2,663,508			1,122,354
Add: Transfer into debit
item of financial asset at
FV through PL				125,028					126,247
Transfer into investment
accounted for using
equity method					`－`				5
			$	1,161,753				$	1,248,606

A. The investment accounted for using equity method for CANCAP PHARMACEUTICAL LTD. has been consistently dealing with operating deficit. This caused the Company to carry a credit balance on the carrying amount of its related long-term investment. The Company also owns the preference shares of the investee,
234 -

hence the credit balance amounted to NT$125,028 thousand and NT$126,247 thousand were respectively debited as Financial Assets at Fair Value through Profit and Loss.

B. The Company received cash dividends from subsidiary SUNETIC BIOTECH. INC. amounted to NT$44,405 thousand and NT$31,191 thousand for the years ended December 31, 2022 and 2021, respectively..
C. The Company engaged in seasoned equity offering, acquisition and disposal of the ownership interest of subsidiaries in both 2022 and 2021. The adjustments to capital surplus in accordance to their percentage of ownership interest were described as follows: (For the year ended December 31, 2022:None.)

For the year ended December 31, 2021

Name of Investee SynCore Biotechnology Co., Ltd. SynCore Biotechnology Co., Ltd. Total	ITEM Investment Amount Capital Surplus Seasoned equity offering $ 332,920 ( $ 95,181 ) Disposal ( 172,838) 150,726 $ 160,082 $ 55,545

D. The stocks of SynCore Biotechnology Co, Ltd are listed for publicly traded. As of December 31, 2022 and 2021, the Company held its shares with market values amounted to NT$1,380,084 thousand and NT$1,304,100 thousand, respectively and there were 17,122 thousand shares and 30,382 thousand shares, excluded in the computation of the market value due to the regulation about privately placed equity shares with 3 years resell limit.
E. The amount of profit and loss and other comprehensive income accounted for using equity method in 2022 and 2021 are calculated based on the financial statements audited by a CPA of the same period.
F. Please refer to Note 13 for the information of investments accounted for using equity method.
(7.) Property, Plant and Equipment

										Unfinished
										Construction
										and
										Equipments
								Other		Pending
			Land		Buildings	Machinery		Equipment		Acceptance		Total
Cost
1-Jan-22		$	487,277	$	1,909,362 $	1,185,808	$	203,381	$	66,323	$	3,852,151
Additions			`－`		10,296	9,989		18,517		37,271		76,073
Disposals	(		`－`)	(	`－`) (	3,516 ) (		382)	(	`－`)	(	3,898`）`
Reclassification			`－`		19,457	23,070		5,090	(	30,972)		16,645
31-Dec-22		$	487,277	$	1,939,115 $	1,215,351	$	226,606	$	72,622	$	3,940,971
Accumulated
depreciation and
Impairment
1-Jan-22		$	`－`	$	764,350 $	868,119	$	154,043	$	`－`	$	1,786,512
Depreciation			`－`		58,999	66,448		12,143		`－`		137,590
Disposals	(		`－`)	(	`－`)(	3,047)(		362)	(	`－`)	(	3,409)
31-Dec-22		$	`－`	$	823,349 $	931,520	$	165,824	$	`－`	$	1,920,693
Cost
1-Jan-21		$	487,061	$	1,890,168 $	1,129,043	$	201,677	$	13,940	$	3,721,889
Additions			216		12,189	23,807		6,674		37,912		80,798
Disposals	(		`－`)	(	`－`) (	1,368 ) (		5,113)	(	`－`)	(	6,481`）`

235 -

											Unfinished
											Construction
											and
											Equipments
									Other		Pending
			Land		Buildings		Machinery		Equipment		Acceptance			Total
Reclassification			`－`		7,005		34,326		143		14,471			55,945
31-Dec-21		$	487,277	$	1,909,362	$	1,185,808	$	203,381	$	66,323		$	3,852,151
Accumulated
Depreciation and
Impairment
1-Jan-21		$	`－`	$	705,891	$	804,615	$	148,694	$	`－`		$	1,659,470
Depreciation			`－`		58,459		64,872		10,192		`－`			133,523
Disposals	(		`－`)	(	`－`) (		1,368) (		5,113)	(	`－`)	(		6,481)
31-Dec-21		$	`－`	$	764,350	$	868,119	$	154,013	$	`－`		$	1,786,512
CarryingAmount
31-Dec-22		$	487,277	$	1,115,766	$	283,831	$	60,782	$	72,622		$	2,020,278
31-Dec-21		$	487,277	$	1,145,012	$	317,689	$	49,338	$	66,323		$	2,065,639

A. The property, plant and equipment were pledged or held as collateral, please refer to Note 8 for details.

B. As of December 31, 2022 and 2021, the Company acquired agricultural lands from non-related parties for the purpose of plant planning which could not be registered ownership of the Company. The acquisition cost was NT$23,184 thousand, and the land was registered in the name of Shu Fei Yu. To protect the interest of the Company, the mortgage right of the land was registed belong to the Company.

(8.) Investment Properties

Investment Properties
Cost 1-Jan-22 Additions 31-Dec-22 Accumulated depreciation and impairments 1-Jan-22 Depreciation expense 31-Dec-22 Cost 1-Jan-21 Additions 31-Dec-21 Accumulated depreciation and impairments 1-Jan-21 Depreciation expense 31-Dec-21 CarryingAmount	Land $ 182,880 － $ 182,880 $ －－ $ － $ 182,880 － $ 182,880 $ －－ $ －	Buildings $ 71,884 － $ 71,884 $ 15,256 1,547 $ 16,803 $ 71,884 － $ 71,884 $ 13,709 1,547 $ 15,256	Total
			$ 254,764 －
			$ 254,764
			$ 15,256 1,547
			$ 16,803
			$ 254,764 －
			$ 254,764
			$ 13,709 1,547
			$ 15,256

236 -

31-Dec-22 31-Dec-21	Land $ 182,880 $ 182,880	Buildings $ 55,081 $ 56,628	Total
			$ 237,961
			$ 239,508

A. Rental income from investment properties and direct operating expenses arising from investment property are shown below:

shown below:
Rental income from investment properties Direct operating expenses arising from the investment properties that generated rental income during the period	31-Dec-22 $ 7,404 $ 2,167	31-Dec-21
		$ 7,404
		$ 2,167

B. Investment properties are depreciated on a straight-line basis based on 15~50 years useful lives.
C. The investment properties that are not valued by an external independent valuer are valued by the Company’s management using the rental of adjacent area as reference. This was the cash flow approach and belonged to the level 3 fair value measurement. The fair values as at December 31, 2022 and 2021 were amounted to NT$338,395 thousands and NT$284,643 thousands, respectively.
D. Information on investment properties pledged to others as collaterals is provided in Note 8.
(9.) Intangible Assets

ntangible Assets
						Technology
			Software			Licenses			Total
Cost
1-Jan-22		$	94,481		$	－		$	94,481
Additions			10,236			－			10,236
Disposals	(		13,862 )	(		－)	(		13,862 )
31-Dec-22		$	90,855		$	－		$	90,855
Accumulated amortization and
impairment
1-Jan-22		$	59,453		$	－		$	59,453
Amortization			16,798			－			16,798
Disposals	(		13,862 )	(		－)	(		13,862 )
31-Dec-22		$	62,389		$	－		$	62,389
Cost
1-Jan-21		$	81,796		$	1,394		$	83,190
Additions			14,936			－			14,936
Disposals	(		2,375 )	(		1,394 )	(		3,769 )
Reclassification			124			－			124
31-Dec-21		$	94,481		$	－		$	94,481
Accumulated amortization and
impairment
1-Jan-21		$	40,634		$	1,394		$	42,028
Amortization			21,194			－			21,194
Disposals	(		2,375 )	(		1,394 )	(		3,769 )
31-Dec-21		$	59,453		$	－		$	59,453
CarryingAmount

237 -

31-Dec-22 31-Dec-21	Software $ 28,466 $ 35,028	Technology Licenses $ － $ －	Total
			$ 28,466
			$ 35,028

A. The software was pledged as collateral for long-term loans, please refer to Note 8.

(10.) Short-term loans

Short-term loans
Category Unsecured loans Category Unsecured loans	31-Dec-22
	Amount InterestRate $ 360,000 1.44%~2.12% 31-Dec-21	InterestRate
	Amount $ 440,000	InterestRate
		0.77%~1.41%

(11.) Long-term loans and current portion of long-term liabilities

ITEM			31-Dec-22	31-Dec-21
Secured loans		$	1,192,935 $	879,822
Unsecured loans			260,000	650,000
Subtotal			1,452,935	1,529,822
Less: current portion	(		48,116 ) (	56,844 )
Total		$	1,404,819 $	1,472,978
Interest Rate			1.525%~2.283%	0.800%~1.603%

Please refer to Note 8 for collaterals pledged for long-term borrowings.

(12.) Long-term payable and current portion of long-term liabilities

The Company has signed a project contract with an equipment manufacture company for an improvement on energy saving of the air conditioner and hot water system. The amounts payable will be paid in installments in accordance to the contract term as described as follows: ( As of December 31, 2022:None.)

December 31, 2021

		December 31, 2021
Current Less than 1 year	Long-termpayable $ 2,223	Future expense $ 10	PV of long-term payable
			$ 2,213

(13.) Retirement Benefit Plans

Defined contribution plans

A. The employee pension plan under the Labor Pension Act of the R.O.C. (the Act) is a defined contribution plan. Pursuant to the plan, the Company make monthly contributions of 6% of each individual employee’s salary or wage to employees’ pension accounts.

B. NT$19,435 thousand and NT$17,518 thousand were contributed by the Company for the years ended December 31, 2022 and 2021, respectively.

Defined benefit plan

The Company and its domestic subsidiaries have defined benefit pension plans in accordance with the Labor Standards Law of the R.O.C. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an

238 -

amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited in Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. The Company would assess as the balance in the aforementioned labor pension reserve account by the end of each year. If the account balance is not enough to pay the pension to the labors expected to be qualified for retirement in the next year, the Company will make contribution for the deficit by next March. The pension fund is managed by the government’s designated authorities and the Company has no right to influence their investment strategies.

A. Amounts recognized in the parent company only balance sheets are as follows:

ITEM		31-Dec-22				31-Dec-21
Present value of defined
benefit obligations	$	165,248			$	171,779
Fairvalue ofplan assets	(	129,270	)	(		120,890	)
Net defined benefit liability	$	35,978			$ 50,889
		35,978				50,889

B. Movements of net defined benefit liabilities were as follows:

B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:	B. Movements of net defined benefit liabilities were as follows:

	For the Year Ended December31,2022
			Present value of	Fair value of plan Net defined benefit
			defined benefit				Fair value of plan				Net defined benefit
ITEM			obligations				asset				liability
		$	171,779		(	$	120,890	)		$	50,889
BALANCE at JANUARY 1
Service cost:
Current service cost			1,075				`－`				1,075
			1,182		(		832	)			350
Interest expense(revenue)
			2,257		(		832	)			1,425
Recognized inprofit or loss
Remeasurement on the net

defined benefit liability:
Return on plan assets			`－`		(		9,475	)	(		9,475	)
Actuarial (gains) losses
Actuarial loss arising from	8 `－` 8 ( 9,474 ) `－` ( 9,474 ) 9,861 `－` 9,861
changes in demographic
assumptions
Actuarial (gain) loss
arising from changes in
financial assumptions
Actuarial loss arising from
experience adjustments											9,861
Components of defined benefit	395 ( 9,475 ) ( 9,080 )

costs recognized in other
comprehensive income			395					)	(		9,080	)
Pension fund contribution			`－`	( 7,256 ) ( 7,256								) )
Paid Pension	( 9,183 ) 9,183 (										`－`
Balance at December 31		$ 165,248 ( $ 129,270 )								$ 35,978


	For the Year Ended December31,2021
			Present value of	Fair value of plan Net defined
			defined benefit				Fair value of plan			Net defined
ITEM			obligations				asset			benefit liability
BALANCE at JANUARY 1	$	$	182,749		(	$	117,934	)	$	64,815
Service cost:

239 -

For the Year Ended December 31, 2021

	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021	For the Year Ended December31,2021
			Present value of	Fair value of plan Net defined
			defined benefit				Fair value of plan				Net defined
ITEM			obligations				asset				benefit liability
Current service cost			1,469				`－`				1,469
Interest expense(revenue)			542		(		350	)			192
Recognized inprofit or loss			2,011		(		350	)			1,661
Remeasurement on the net	`－` ( 1,855 ) ( 1,855 ) 294 `－` 294 ( 6,939 ) `－` ( 6,939 ) 4,493 `－` 4,493
defined benefit liability:
Return onplan assets
Actuarial(gains)losses
Actuarial loss arising from
changes in demographic
assumptions
Actuarial (gain) loss
arising from changes in
financial assumptions
Actuarial loss arising from
											4,493
experience adjustments
Components of defined benefit	( 2,152 ) ( 1,855 ) ( 4,007 )

costs recognized in other
comprehensive income			2,152		(			)	(		4,007	)
Pension fund contribution	(		`－`		(		11,431	)	(		11,431	)
Paid Pension			10,829	)			10,680		(		149	)
Balance at December 31		$	171,779		(	$	120,890	)		$	50,889

C. The defined benefit plan as of the year ended 2022 and 2021 were summarized by functions as follows:

Operation Costs Selling Expense Administrative Expense Research and Development Expense	31-Dec-22 $ 648 408 293 76 $ 1,425	31-Dec-21
		$ 766 454 354 87
		$ 1,661

D. Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

(A.)Investment risk

(B.)Interest risk

(C.)Salary risk

The present value of the defined benefit obligation is calculated by reference to the future salaries of

240 -

plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

E. The main actuarial assumptions used were as follows:

	31-Dec-22	31-Dec-21

Discount rate	1.30%	0.70%
Expected rate of salary increase	1.50%	1.50%
The weighted average duration of the
	9 years	9 years
defined benefit obligation

(A.) Assumptions on future mortality experience are set based on the 6th Taiwan Standard Ordinary Experience Mortality Table (TSO).
(B.) The sensitivity analysis:

If significant actuarial assumptions change reasonably and all other assumptions are held constant, the present value of the defined benefit obligation may increase(decrease) as below:

		31-Dec-22	31-Dec-21
ITEM
Discount rate	( $ 3,727 ) ( $ 4,188 ) ( 1,506 ) ( 1,693 ) 3,854 4,339 1,526 1,717 3,837 4,293 ( 3,729 ) ( 4,165 ) ( 26 ) ( 48 ) 26 48
0.25% increase
0.1% increase
0.25% decrease
0.1% decrease
Future salaryincrease rate
0.25% increase
0.25% decrease
Employee turnover rate
110% of the expected
employee turnover rate
90% of the expected
employee turnover rate

F. The contribution that the Company expects to make to its defined benefit pension plans in next year is NT$1,136 thousand.

Other Employees’ benefits were as follows:

ITEM Employees benefits payable Compensated absences payable Other employees benefits Total	31-Dec-22 $ 9,647 4,846 15,029 $ 29,522	31-Dec-21
		$ `－` 4,841 14,898
		$ 19,739

(14.) Capital Stock

The movements in the number of the Company's ordinary shares outstanding are as follows:

For the Year Ended December 31, 2022

241 -

January 1 December 31 January 1 December 31	Issued and paid shares (in thousands) Issued capital 167,722 $ 1,677,221 167,722 $ 1,677,221 For the Year Ended December 31, 2021	Issued capital
		$ 1,677,221
		$ 1,677,221
	Issued and paid shares (in thousands) 167,722 167,722	Issued capital
		$ 1,677,221
		$ 1,677,221

As of Dec 31, 2022 the Company’s authorized capital amount was NT$2,500,000 thousand, consisting of 250,000 thousand shares of ordinary stocks.

(15.) Capital Surplus

Capital Surplus
ITEM Additional paid in capital Additional paid-in capital arising from bond conversion Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in ownership interest in Subsidiaries Others Total	31-Dec-22 $ 422,450 190,611 310,439 5,832 640 $ 929,972	31-Dec-21
		$ 455,994 190,611 310,439 5,832 640
		$ 963,516

Under the Company Act, the capital surplus generated from excess of the issuance price over the par value of capital stock and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as stock dividends or cash dividends. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed a certain percentage of the Compnay’s paid in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(16.) Accumulated Deficit and Dividend Policy
A. When allocating the net profits in each fiscal year, Sinphar shall be first utilized for paying taxes, offsetting losses of previous years, and then setting aside the 1) legal capital reserve at 10% of the profits left over, until the accumulated legal capital reverse equals Sinphar’s paid-in capital; 2) special capital reverse in accordance with relevant laws or regulations or as requested by the authorities in charge; and 3) balance left over shall be allocated according to the resolution of the board of directors and the shareholders’ meeting.
B. To consider about the economic circumstances, development phase, and future business expansion, dividends will be allocated in consideration of future capital expenditure and cash forecast. However, cash dividends are limited to over 20% of total dividends distributed.
C. The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.
D. Special Reserve ：

ITEMS 31-Dec-22 31-Dec-21

Amount when first applied to IFRSs

37,951 $

37,951

242 -

Amount aroused from other equity interest Total	53,124 $ 91,075	53,124
		$ 91,075

(A.) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
(B.) When IFRSs were first adopted, according to the special reserve regulation of Financial Supervisory Commission R.O.C, no. 1010012865 on April 6, 101, If the company subsequently uses, disposes or reclassifies the relevant assets, the proportion originally set aside as the special reserve will be reversed into distributable retained earnings.
E. The resolutions of 2021 and 2020 deficit compensation have been approved by the company’s shareholders in its meeting held on June 21, 2022 and August 3, 2021, respectively. The deficit would be covered with legal capital reserve and distribute cash dividend of NT$0.2 per share, based on the amount NT$33,545 thousand of capital surplus upon issuance.
F. The appropriations of earnings for 2022 had been approved in the meeting of the Board of Directors on March 17, 2023 and the appropriations and dividends per share were as follows:

		Appropriation of Earnings		Dividends Per Share(NT$)

Legal capital reserve	$	23,372	$	`－`
Special capital reserve		30,292		`－`
Cash dividends		167,722		1
Total	$	221,386

The appropriations of earnings for 2022 are to be presented for approval in the shareholders’ meeting which is to be held on June 20, 2023.

G. Information on the resolution of the Board of Directors' and shareholders' meetings regarding the appropriation of earnings is available from the Market Observation Post System on the website of the TWSE.
(17.) Others Equity Items

Others Equity Items
					Unrealized Gain
			Exchange		(Loss) on Financial
ITEM		differences on translation of foreign financial statements			Assets at Fair Value Through Other Comprehensive Income		Total
Balance as at Jan 1, 2022	(	$	91,854 ) (		$	37,325 ) ( $	129,179	)
Exchange differences on translation of foreign
financial statements			13,919			`－`	13,919
Unrealized gain on financial assets at FVTOCI			`－`	(		68 ) (	68	)
Income tax effects	(		2,784 )			`－`(	2,784	)
Share of other comprehensive income of
associates accounted for using the equity
method			18	(		3,274 ) (	3,256	)
Balance as at Dec 31, 2022	(	$	80,701 ) (		$	40,667 ) ($	121,368	)
Balance as at Jan 1, 2021	(	$	86,308 ) (		$	32,683 ) ( $	118,991	)
Exchange differences on translation of foreign
financial statements	(		6,873 )			`－`(	6,873	)
Income tax effects			1,374			`－`	1,374
Share of other comprehensive income of			47	) (		4,642 ) (	4,689	)

243 -

Unrealized Gain Exchange (Loss) on Financial differences on Assets at Fair Value translation of Through Other foreign financial Comprehensive ITEM statements Income Total associates accounted for using the equity method ( Balance as at Dec, 2021 ( $ 91,854 ) ( $ 37,325 ) ( $ 129,179 )

(18.) Net Revenue

Net Revenue
			FortheYear Ended		December31
ITEM			2022		2021
Revenue from contracts with customers
Net revenue from the sale of goods		$	2,846,628	$	2,504,119
Less: Sales returns	(		15,124 ) (		17,094	)
Less: Sales discounts	(		320,298) (		329,767	)
Total		$	2,511,206	$	2,157,258

A. Breakdowns of contract revenue
(A.) Please refer to Note 14 for geographical and departmental information details.
(B.) Revenue was recognized at a specific point of time period when all the obligations were fulfilled.
B. Contract Balance

The contract liabilities in relation to contract revenue were as follows:

ITEM Contract liabilities-current	31-Dec-22 $ 93,235	31-Dec-21 $ 92,307	1-Jan-21
			$ 96,138

(A.) Changes in contract liabilities mainly result from the time difference between the performance obligation satisfied and the customer’s payment.
(B.) Revenue from opening contract liabilities - sales of goods recognized as revenue in the current period were as follows:

as follows:
Revenue Amounts from opening contract liabilities - sales of good Other Income ITEM Government grants Rental income Others Total	2022 2021 $ 84,649$ 84,394 For the Year Ended December31	2021
		$ 84,394
	2022 $ 828 15,543 23,855 $ 40,266	2021
		$ `－` 15,564 34,203
		$ 49,767

(19.) Other Income
(20.) Other Gains and Losses

For the Year Ended December 31 ITEM 2022 2021 Net currency exchange gains (losses) $ 15,314 ( $ 1,874 ) Gains (losses) on disposal of assets ( 402 ) 258

244 -

Others	(		3,205	) (		3,668	)
Total		$	11,707	(	$	5,284	)

(21.) Employee Benefits Expense, Depreciation and Amortization

For the	Year Ended December 31, 2022	Year Ended December 31, 2022
Cost of revenue $ 242,959 24,608 11,088 `－` 15,420 110,227 3,473 $ 407,775 For the	Operating expenses Total $ 253,658 $ 496,617 20,627 45,235 9,772 20,860 8,194 8,194 17,046 32,466 27,362 137,589 37,734 41,207 $ 374,393 $ 782,168 Year Ended December 31, 2021	Total
		$ 496,617 45,235 20,860 8,194 32,466 137,589 41,207
		$ 782,168
Cost of revenue $ 215,605 23,344 10,111 `－` 14,489 106,339 4,736 $ 374,624	Operating expenses $ 211,241 19,948 9,068 2,262 16,332 27,184 32,168 $ 318,203	Total
		$ 426,846 43,292 19,179 2,262 30,821 133,523 36,904
		$ 692,827

A. As of December 31, 2022, and 2021, the number of employees of the Company were 775 and 769, respectively, the directors who have not served as employees were both 6.
B. The average employee benefits expense are NT$ 774 thousand and NT$ 682 thousand in 2022 and 2021, respectively.
C. The average salaries and wages are NT$ 646 thousand and NT$ 559 thousand in 2022 and 2021, respectively.
D. The adjustment rate of average salaries and wages is 16%.
E. The supervisor's remuneration are NT$370 thousand in 2021. (The auditing committee was formed at August 2021).
F. Salary Policy

Directors’ remuneration

a. The Company's Articles of Incorporation stipulate that the remuneration for all directors is determined by the board of directors, regardless of operating profit or loss, which would be paid at the usual level of the industry.
245 -
b. The Company's Articles of Incorporation stipulate the company shall allocate not higher than 5% of annual profits during the period to directors’ and supervisors’ remuneration.

Executive compensation

The remuneration for the management of the Company is based on the nature of the department, personnel positioning, work performance and business development progress, and is reviewed by the remuneration committee and resolved by the board of directors.

Employees’ compensation

The remuneration of the Company’s employees includes the salary, various allowances, position subsidy additions, overtime wages and various bonuses, as well as the employee remuneration paid by the Company according to the annual profitability. The Company's Articles of Incorporation stipulate the company shall allocate 2%~8% of income before income tax during the period to employees’ compensation.

G. The employees’ compensation and directors’ and supervisors’ remuneration for 2022 and 2021 were approved in the meetings of the Board of Directors on March 17, 2023 and March 15, 2022, respectively. The amounts recognized in the financial reports were as follows:

2022 Employees’ compensation Directors’ and supervisors’ remuneration $ 9,647 $ 5,426 9,647 5,426 $ `－` $ `－`	2021	2021
Employees’ compensation $ 9,647 9,647 $ `－`	Employees’ compensation $ `－` `－` $ `－`	Directors’ and supervisors’ remuneration
		$ `－` `－`
		$ `－`

The above-mentioned compensation was distributed in cash. There was no compensation to employees and remuneration to directors and supervisors allocated in 2021 due to net loss.

H. The information about employees’ compensation and directors’ and supervisors’ remuneration of the company as resolved by the meeting of Board of Directors is available from the Market Observation Post System on the website of the TWSE.
(22.) Finance Costs

.) Finance Costs
ITEM Interest expense - bank loans Interest expense – long term payables Total	For the Year Ended December 31
	2022 $ 24,997 10 $ 25,007	2021
		$ 22,325 57
		$ 22,382

(23.) Income Tax

A. The components of tax expense:

For the Year Ended December 31

2022

2021

ITEM

246 -

Current tax

Current tax expense recognized in the current year Adjustments for prior periods Total Deferred tax Deferred income tax related to origination and reversal of temporary differences Income tax expense	$ 39,894 $ 35,124 179 2,095 $ 40,073 $ 37,219 21,675 ( 21,638) $ 61,748 $ 15,581

B. Income tax recognized in other comprehensive income (loss):

ITEM Currency translation differences	For the Year Ended December31 2022 2021 $ 2,784 ($ 1,374)

C. Reconciliation between income tax expense and accounting loss as follows:

For the Year Ended December 31

ITEM
Profit (loss) before income tax		$	286,392	(	$	22,554 )
Tax calculated based on profit (loss) before tax
and statutory tax rate		$	57,278	(	$	4,511 )
Effects from items disallowed by tax regulation			16,628			59,451
The Income from Income Basic Tax Act			3,637			`－`
Investment tax credit	(		33,260)	(		16,663)
Net change in deferred tax expense (income)			21,675	(		21,638)
Income tax adjustments for prior years			179			2,095
Foreign tax credit	(		4,389)	(		3,153)
Income tax expense		$	61,748		$	15,581

Under the Act for the Development of Biotech and Pharmaceutical Industry, the Company could recognize an investment tax credit within a limit of 20% of the investment price if the investee is applicable to the act.

D. Deferred income tax assets and liabilities

Deferred tax assets or liabilities arising from temporary differences, operating loss carryforward, and investment tax credits:

	For the Year Ended December 31,2022	For the Year Ended December 31,2022
Jan-1 $ 2,980	- 247 - Profit and loss $ 26	Other comprehensive income $ `－`	Dec-31
			$ 3,006

Deferred income tax asset Temporary difference Employee benefits

3,006

For the Year Ended December 31, 2022

	For the Year Ended December 31,2022	For the Year Ended December 31,2022	For the Year Ended December 31,2022
Sales returns and allowances Unrealized loss on inventories Exchange difference on foreign operations Others Investment tax credit Deferred income tax liabilities Temporary difference Land value increment tax Gain on foreign investments accounted for using the equity method Deferred income tax asset Temporary difference Employee benefits Sales returns and allowances Unrealized loss on inventories Exchange difference on foreign operations Others Investment tax credit Deferred income tax liabilities Temporary difference Land value increment tax	Jan-1 Profit and loss Other comprehensive income 12,780 ( 1,516 ) `－` 16,429 438 `－` 22,957 `－` ( 2,784 ) 1,392 ( 594 ) `－` 18,337 ( 18,337 ) `－` $ 74,875 ( $ 19,983 ) ( $ 2,784 ) $ 32,939 $ `－`$ `－` `－` 1,692 `－` $ 32,939 $ 1,692 $ `－` For the Year Ended December 31,2021			Dec-31 11,264 16,867 20,173 798 `－` $ 52,108 $ 32,939 1,692 $ 34,631 Dec-31 $ 2,980 12,780 16,429 22,957 1,392 18,337 $ 74,875 $ 32,939
	Jan-1 $ 2,936 11,144 15,462 21,583 737 `－` $ 51,862 $ 32,939	Profit and loss $ 44 1,636 967 `－` 655 18,337 $ 21,639 $ `－`	Other comprehensive income $ `－` `－` `－` 1,374 `－` `－` $ 1,374 $ `－`

The above-mentioned deferred income tax liabilities were classified as other non-current liabilities.

E. Unrecognized deferred tax assets:

Unrecognized deferred tax assets:
ITEMS Items not recognized as deferred tax assets: Loss on investments accounted for using the equity method Loss on financial assets evaluation Investment tax credit	31-Dec-22 $ `－` 969 `－` $ 969	31-Dec-21
		$ 1,917 969 4,331
		$ 7,217

F. The tax authorities have examined income tax return of the Company through 2020.

(24.) Other Comprehensive Income (Loss)

For the Year Ended December 31, 2022

248 -

							Income tax	Income tax
ITEM				Before tax				expense			After tax
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit obligation				$	9,080		$	`－`		$	9,080
Unrealized loss on equity instruments at fair value
through other comprehensive income			(		68 )			`－`	(		68 )
Share of other comprehensive income of associates
accounted for using the equity method
Unrealized loss on equity instruments at fair
value through other comprehensive income			(		3,274 )			`－`	(		3,274 )
Subtotal					5,738			`－`			5,738
Items that may be reclassified subsequently to profit		or
loss:
Exchange differences arising on translation of foreign
operations					13,919	(		2,784 )			11,135
Share of other comprehensive income of associates
accounted for using the equity method
Exchange differences arising on translation		of
foreign operations transferred to profit	or loss				18			`－`			18
Subtotal					13,937	(		2,784 )			11,153
Other comprehensive income				$	19,675	(	$	2,784 )		$	16,891
					For the Year Ended December 31,2021
							Income tax
ITEM				Before tax				benefit			After tax
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit obligation				$	4,007		$	`－`		$	4,007
Share of other comprehensive income of associates
and joint ventures accounted for using the equity
method
Unrealized loss on equity instruments at	fair value
through other comprehensive income			(		4,642 )			`－`	(		4,642 )
Subtotal			(		635 )			`－`	(		635 )
Items that may be reclassified subsequently to profit		or
loss:
Exchange differences arising on translation of foreign
operations			(		6,873 )			1,374	(		5,499 )
Share of other comprehensive income of	associates
and joint ventures accounted for using the equity
method
Exchange differences arising on translation		of
foreign operations transferred to profit or loss			(		47 )			`－`	(		47 )
Subtotal			(		6,920 )			1,374	(		5,546 )
Other comprehensive income			(	$	7,555 )		$	1,374	(	$	6,181 )

(25.) Earnings (Loss) per Share

For the Year Ended December 31

249 -

ITEM
Basic earnings (loss) per share:
Net income (loss) attributable to shareholders of the parent
Weighted average number of shares outstanding for the period
(in thousands)
Basic earnings (loss) per share, after tax (Unit: NT$ Per Share)
Diluted earnings per share:
Net income (loss) available to shareholders of the parent
Weighted average number of shares outstanding for the period
(in thousands)
Effect of the dilutive potential ordinary shares
Employees’ compensation (share in thousands)
Weighted average number of shares outstanding for diluted
earnings per share (share in thousand)
Diluted earnings per share, after tax (in dollars)

2022
2021
$ 224,644
($ 38,135)
167,722
167,722
$ 1.34
($ 0.23)
$ 224,644
($ 38,135)
167,722
167,722
291
(Note)
168,013
(Note)
$ 1.34
$ (Note)

Note: The year ended 2021 is the loss, and the potential ordinary shares have an anti-dilution effect, so the diluted loss per share will not be calculated.

If the Company offered to settle the compensation or bonuses paid to employees in shares or cash at the Company’s option, the Company assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares are included in the weighted average number of shares outstanding used in the calculation of diluted earnings per share if the effect is dilutive. Such dilutive effect of the potential shares is included in the calculation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

7. TRANSACTIONS WITH RELATED PARTIES

A. Name of the parent company and the ultimate controlling party

The Company is the ultimate controlling party.

B. Names of related parties and relationship categories

Names of related parties and relationship categories
Names of relatedparties SynCore Biotechnology Co., Ltd. ZuniMed Biotech Co., Ltd. CANCAP PHARMACEUTICAL LTD. Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) Board of Directors, General Manager and Vice General Manager (Note) CANADA BIOTECH Shu Fei Yu	Relatedpartycategories
	Subsidiaries Subsidiaries Subsidiaries Subsidiaries Key management personnel Other related parties Other related parties

Note: According to the Order of the Financial Supervisory Commission, issue no. 10703452331, The Company has established an audit committee to replace the supervisor since August 3, 2021.

C. Significant transaction with related parties
(A.) Revenue

For the Year Ended December 31

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Related party category/Name Subsidiary/SynCore	2022 $ 2,267	2021
		$ 2,677

The prices of sales with related parties were not significantly different from those of sold to third parties, and the payment term is 30-90 days.

(B.) Purchases of goods

Purchases of goods
Relatedpartycategory/Name Subsidiaries ZuniMed Sinphar Tian-Li	FortheYear EndedDecember31
	2022 $ 63,358 5,058 $ 68,416	2021
		$ 41,636 10,149
		$ 51,785

The prices of purchase and commission processing with related parties were not significantly different from those of purchased from third parties, and the payment term is 30-90 days.

(C.) Lease arrangement-operating lease

The subsidiary, SynCore, leased buildings from the Company mainly for the use of office and laboratory with lease terms from August 1, 2017 to February 28, 2024. The rental price was determined in accordance with mutual agreement and the payment would be collected monthly. As of the year ended December 31, 2022 and 2021, the rental receivables were NT$11,263 thousand and NT$5,311 thousand, respectively. The rental incomes were both NT$13,356 thousand in 2022 and 2021.

(D.) Trademarks and royalties

Under an agreement with CANADA BIOTECH, CANADA BIOTECH, the Company owns the right to use its trademark under the condition which the Company pays 0.2%~0.8% of annual gross profit from merchandise sale as royalty each quarter, with the annual sum of payment not less than 36 thousand in Canadian currency. The Company paid the royalties amounted to NT$890 thousand and NT$872 thousand in 2022 and 2021 respectively. The payments were recognized as marketing expense.

(E.) Others

(a.) The Company collected the common general administration fee, research and development cost and other income from its related party in 2022 and 2021. The amounts were described as follows:

Relatedpartycategory/Name Subsidiaries SynCore Others	2022 $ 10,147 49 $ 10,196	2021
		$ 18,165 15
		$ 18,180

The Company entered a sales agency agreement with its Subsidiary, SynCore. The Company would charge a service fee based on the quantity of sales. The service income in 2022 and 2021 were NT$5,064 thousand and NT$2,398 thousand respectively; As of December 31, 2022 and 2021, the advance service incomes were amounted to NT$534 thousand and NT$1,481 thousand respectively; Service fee charged on SynCore for assisting the development of new drugs in 2021 was NT$3,599 thousand. Deferred credit items as of December 31, 2022 and 2021 were NT$1,304 thousand and NT$2,909 thousand, respectively. They were recognized as other non-current liabilities.

(b.) The Company entrusted its subsidiary, SynCore, with the development of new drugs. The research and
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development cost in 2021 was NT$87 thousand.

(c.) For the years ended December 31, 2022 and 2021, the Company paid its subsidiary, CANCAP, service fee amounting to NT$8,113 thousand and NT$1,426 thousand, respectively.
(d.) The Company paid its subsidiaries various related operating expenses in 2022 and 2021. The amounts were described as follows:

were described as follows:
Related party category/Name Subsidiaries SynCore	FortheYear EndedDecember31
	2022 $ 601	2021
		$ 704

(e.) As of December 31, 2022, the Company paid its subsidiary, SynCore, a compensation for loss on raw material amounting to NT$413 thousand.
(f.) The Company has successively acquired nearby agricultural land for the plant planning. However, under the current regulations, the ownership of agricultural lands could not be registered under the compnay. Therefore, the Company has appointed the other related party, Shu Fei Yu, to be the owner the land. Please refer to the property, plant and equipment session in Note 6(7.) for more information.
(F.) Receivables from / payables to related parties

Item Accounts receivable Other receivables Accounts payable Other payables	Related party category/Name Subsidiary/SynCore Subsidiary/SynCore Subsidiary/ZuniMed Subsidiary/Sinphar Tian-Li Total Subsidiary/SynCore	31-Dec-22 $ 7 $ 328 $ 9,178 315 $ 9,493 $ 434	31-Dec-21
			$ `－`
			$ 492
			$ 5,742 374
			$ 6,116
			$ `－`

The above-mentioned other receivable was recognized as other current asset.

No endorsement or guarantee was obtained for outstanding receivables from and payables to related parties and no loss allowances were recognized for receivables from related parties for 2022 and 2021.

(G.) Endorsements/guarantees obtain

Endorsements/guarantees obtain
Relatedpartycategory/Name Subsidiary/ZuniMed Relatedpartycategory/Name Subsidiary/ZuniMed	31-Dec-22
	Endorsement/Guarantee received Used Balance $ 25,000$ 25,000 31-Dec-21		Unused Balance
			$ `－`

	Endorsement/Guarantee received $ 25,000	Used Balance $ 25,000	Unused Balance
			$ `－`

The above is a supply guarantee of the medical institution.

(H.) Endorsements/Guarantees provide

Endorsements/Guarantees provide
Related Party Categories	31-Dec-22
	Endorsement/Guarantee provided	Used Balance	Unused Balance

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$ 350,000 $ 30,000 30,000 5,000 $ 380,000 $ 35,000 31-Dec-21	$ 350,000 $ 30,000 30,000 5,000 $ 380,000 $ 35,000 31-Dec-21	$ 320,000 25,000
		$ 345,000

Endorsement/Guarantee provided $ 350,000 30,000 $ 380,000	Used Balance $ 100,000 5,000 $ 105,000	Unused Balance
		$ 250,000 25,000
		$ 275,000

D. Compensation of key management personnel

The remuneration to the Board of Directors and main management personnel were as follows:

ITEM Salaries and other short-term employee benefits	For the Year Ended December31 2022 2021 $ 26,373 $ 20,059
	2022 $ 26,373

Please refer to the shareholder meeting’s annual report for the information about the above-mentioned remuneration to board of directors and the main management personnel.

8. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The Company’s assets pledged as collateral for long-term loans are as follows:

ITEM Property, plant and equipment Investment properties Intangible assets Total	31-Dec-22 $ 1,161,084 237,961 6,559 $ 1,405,604	31-Dec-21 $ 1,193,389 239,508 8,199 $ 1,441,096

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

As of December 31, 2021, Capital expenditures committed but not yet incurred are as follows:

ITEM Property, plant and equipment	31-Dec-2022 $ 58,363	31-Dec-2021 $ 62,945

10. SIGNIFICANT LOSSES FROM DISASTERS: None.

SIGNIFICANT EVENTS AFTER REPORTING PERIOD: None.

12. OTHER INFORMATION

(1.) CAPITAL MANAGEMENT

The Company requires significant amount of capital to maintain its research and development expenditure. Accordingly, the Company manages its capital to ensure that it has sufficient and necessary financial resources and plans to fund its working capital needs, capital asset purchase, research and development expenditure, debt service requirement and dividend payments associated with its existing operations over the next 12 months.

(2.) FINANCIAL INSTRUMENTS

A. Financial Risk of financial instrument.

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FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's risk management objectives are to manage the market risk (including foreign currency risk, interest risk and price risk), credit risk and liquidity risk related to its operating activities. The Company identifies, measures and manages the aforementioned risks and mitigates the disadvantage impact on financial performance. The material treasury activities are reviewed by Audit Committees and/or Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

NATURE AND EXTENT OF SIGNIFICANT FINANCIAL RISKS

(A)Market risk

a. Foreign currency risk
(a.) The Company is exposed to the foreign currency risk due to the transaction of sales, purchase and cash denominated in foreign currency other than the Company’s functional currency. These non-functional currencies are USD, RMB, JPY and HKD.
(b.) Foreign currency exposure and sensitivity analysis

		31-Dec-22	31-Dec-22	31-Dec-22	31-Dec-22
Foreign Currencies (In Thousands) $ 4,225 1,074 118 64,992 $ 603	Exchange Rate 30.7100 4.4080 3.9380 0.2324 30.7100	Carrying Amount (In Thousands) $ 129,751 4,736 465 15,104 $ 18,522	Sensitivityanalysis
			Extent of variation 1% 1% 1% 1% 1%	Impact on Profit or loss $ 1,298 47 5 151 $ 185	Impact on Equity
					$ －－－－ $ －

		31-Dec-21	31-Dec-21	31-Dec-21	31-Dec-21
Foreign Currencies (In Thousands) $ 4,429 1,046 1,118 $ 76	Exchange Rate 27.6800 4.3440 3.5490 27.6800	Carrying Amount (In Thousands) $ 122,598 4,543 3,966 $ 2.101	Sensitivityanalysis
			Extent of variation 1% 1% 1% 1%	Impact on Profit or loss $ 1,226 45 40 $ 21	Impact on Equity
					$ －－－ $ －

(c.) Since there were varieties of foreign currencies within the Company, the Company disclosed the
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summarized foreign exchange gains (losses) information of monetary items. The realized and unrealized foreign exchange gains (losses) were NT$ 15,314 thousand and NT$ (1,874) thousand for the year ended December 31, 2022 and 2021, respectively.

(d.) The unrealized exchange gains (losses) of fluctuation risk on foreign currency monetary item is significant. The unrealized foreign exchange gains (losses) were NT$ 240 thousand and NT$ (21) thousand for the year ended December 31, 2022 and 2021, respectively.

b. Price risk

The Company is exposed to price risk primarily related to its investment in instruments classified as financial assets at FVTPL and financial assets at FVTOCI.

The Company primarily invested in the unlisted stocks. The instruments prices are affected by the uncertainties of the investment targets’ future value.

Assuming a hypothetical increase/decrease of 1% in prices of the equity instruments at the end of the reporting period, the other comprehensive income for the years ended December 31, 2022 and 2021 would have increased/decreased by NT$ 12 thousand and NT$ 0 thousand, respectively, as they were classified as financial assets at FVTOCI.

c. Interest rate risk

The carrying amounts of the Company’s financial assets and financial liabilities exposed to interest rate risk were as follows:

rate risk were as follows:
		CarryingAmount
Item		31-Dec-22	31-Dec-21
Fair value interest rate risk
Financial assets	$	86,664 $	4,373
Financial liabilities	(	317) (	2,213)
Net	$	86,347 $	2,160
Cash flow interest rate risk
Financial assets	$	613,469 $	524,256
Financial liabilities	(	1,812,935) (	1,969,822)
Net	($	1,199,466) ($	1,445,566)

(a.) Sensitivity analysis: Fair value interest rate risk

The Company did not designate any fixed interest rate financial instruments as fair value through profit or loss and derivatives instruments (interest rate swaps) to hedge its exposures to changes in fair values. As such, changes in interest rate would not affect the net income and the other comprehensive income at the end of the reporting period.

(b.) Sensitivity analysis: Cash flow interest rate risk

The Company’s financial instruments at floating interest rate were assets (liabilities) at floating interest rate. Therefore, changes in interest rate would affect the future cash flows. Assuming a hypothetical increase/decrease 1% in interest rates, the net income for the years ended December 31, 2022 and 2021 would increase/decrease by NT$ 11,995 thousand and NT$ 14,456 thousand, respectively.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in

255 -

financial losses to the Company. The Company is exposed to credit risk from operating activities, primarily from account receivables, and from investing activities, primarily from bank deposits, fixed-income investments and other financial instruments. The Company managed the credit risk separately for business related and financial related risk.

a. Business related credit risk:

To maintain the quality of account receivable, the Company has established related credit risk management procedure. The risk assessment of individual customer includes evaluating financial position, internal evaluation, historical trading records and economic circumstance which could affect the payment ability of the customer. The Company may choose to strengthen overall risk management including collection in advance or guarantee provided by customers to mitigate the credit risk of certain customers.

b. Financial credit risk:

The financial department of the Company regularly monitors and reviews the credit risk of bank deposit and other financial instruments. The Company mitigates its exposure by selecting counterparties (banks, financial institutions, Company organizations and government authorities) with well credit and investment-grade credit ratings. The credit risk is insignificant.

(a.) Concentration of credit risk

As of December 31, 2022, and December 31, 2021, accounts receivable from the top 10 customers represent 24.51%, and 23.20% of total accounts receivables of the Company, respectively. The Company believes the concentration risk is insignificant for the remaining accounts receivable.

(b.) Expected credit impairment losses measurement
- Accounts receivable : Simplified approach, please refer to Note 6(3.).
- Judgment on whether credit risk increasing significantly:None.
(C) Liquidity risk
a. Liquidity risk management

The Company’s objective of managing liquidity risk is to maintain sufficient cash and cash equivalents required for operations, high liquidity securities, and bank financing lines for operations, and to ensure that the Company has sufficient financial flexibility.

b. Maturity analysis of financial liabilities

			31-Dec-22
Less than 6 Months $ 360,000 313,721 258,835 24,058 $ 956,614	6`－`12 Months $ `－` `－` 23,032 24,058 $ 47,090	1`－`2 Years $ `－` `－` `－` 988,115 $ 988,115	2`－`5 Years $ `－` `－` `－` 410,093 $ 410,093	Over 5 Years $ `－` `－` `－` 6,611 $ 6,611	Contractual Cash flows $ 360,000 313,721 281,867 1,452,935 $ 2,408,523	Carrying Amount
						$ 360,000 313,721 281,867 1,452,935
						$ 2,408,523

Non-derivative financial liabilities Short-term loans Accounts payable Other payables				31-Dec-21
	Less than 6 Months $ 150,000 193,522 211,466	6`－`12 Months $ 290,000 `－` 27,413	1`－`2 Years $ `－` `－` `－`	2`－`5 Years $ `－` `－` `－`	Over 5 Years $ `－` `－` `－`	Contractual Cash flows $ 440,000 193,522 238,879	Carrying Amount
							$ 440,000 193,522 238,879

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			31-Dec-21
						Carrying Amount
						1,529,822 2,213

The Company doesn’t expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

B. Categories of financial instruments

The following is the carrying amounts of the financial assets and financial liabilities of the Company at December 31, 2022 and December 31, 2021.

December 31, 2022 and December 31, 2021.
Financial assets Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable (including related parties) Refundable deposits Financial assets at FVTPL – non-current Financial assets at FVTOCI－non-current Financial liabilities Financial liabilities measured at amortized cost Short-term loans Net, accounts payable (including related parties) Other payable (including related parties) Long-term loans (including the current portion) Long-term payable (including the current portion)	31-Dec-22 $ 703,055 635,411 17,830 1,219 9,608 360,000 313,721 281,867 1,452,935 `－`	31-Dec-21
		$ 531,130 524,451 25,292 `－` `－` 440,000 193,522 238,879 1,529,822 2,213

(3.) Fair value information

A. Details of the fair values of the Company’s financial assets and financial liabilities not measured at fair value and investment property measured at cost are provided in Note 12. (3)B and Note 6.(8), respectively.

Level 1

Level 2

Level 3

Fair value measurements are those derived from valuation techniques that include inputs for instrument that are not based on observable market data. The Company invested in equity investments without active market

257 -

included within level 3.

B. Financial instruments that are not measured at fair value

The Company considers the carrying amounts of financial instruments that are not measured at fair value, such as cash and cash equivalents, notes and accounts receivables, refundable deposits, accounts payable, approximate their fair values.

C. Fair value hierarchy information

The Company’s financial instruments measured at fair value were under a recurring basis.

The following table presents the Company’s financial instruments measured at fair value on a recurring basis:

	31-Dec-22	31-Dec-22
Level 1 $ `－` $ `－`	Level 2 Level3 $ `－` $ 1,219 $ `－` $ 9,608 31-Dec-21		Total
			$ 1,219
			$ 9,608

Level 1 $ `－`	Level 2 $ `－`	Level3 $ `－`	Total
			$ `－`

D. Valuation techniques and assumptions used in fair value measurement
(A.) If there is an active market for the financial instruments, the fair value of the financial instruments is measured by using the quoted market prices. The quoted market prices announced by the main market place and the prices of government bonds classified as popular securities announced by Taipei Exchange (TPEx) are deemed as fair value foundation of publicly traded equity instruments and debt instruments with an active market.

(B.) Except for the aforementioned financial instruments with active market, the fair value of other financial instruments is measured by valuation technique or quotation of counterparties. The fair value from valuation technique could refer to the fair value of other financial instruments with similar substantial conditions and characteristics, discounted cash flow method and other valuation technique including model with observable market information on balance sheet date (e.g. yield curve of TPEx, quoted
258 -

interest rate of Reuters commercial Note).

(C.) The Company considered the credit risk evaluation adjustment for financial instruments and non-financial instruments to reflect the credit risk of the counterparty and the credit quality of the Company.
(D.) Valuation techniques used in Level 3 fair value Measurement:

The evaluation procedure of the financial instruments belong to Level 3 is verified by the financial department of the Company through verifying the independent source inputs to make sure the evaluation results closing to the market status. To make sure the reasonability of the evaluation results, the financial department verify the independence and reliability of source data, test and renew the input data, model and other necessary inputs.

(E.) There were no transfers between different fair value hierarchy for the years ended December 31, 2022 and 2021, respectively.

13. SEPARATELY DISCLOSED ITEMS

(1.) Information about significant transactions:
A. Financing provided to others: None;
B. Endorsements/guarantees provided: Table 1 attached
C. Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Please see Table 2 attached;
D. Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None;
E. Acquisition of individual real estate properties at costs of at least NT $300 million or 20% of the paid-in capital: None;
F. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None;
G. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
I. Trading in derivative instruments: None;
(2.) Related Information of investees: Please see Table 3 attached;
(3.) Information on investments in Mainland China: Please see Table 4 attached and Table 3 attached;
A. The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 4 attached.
259 -
B. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: See Table 7 & 3 attached.
(4.) Information of major shareholder (list of all shareholders with ownership 5% or greater showing the names and the number of shares and percentage of ownership held by each shareholder): Please see Table 5 attached.

14. SEGMENT INFORMATION

Please refer to the consolidated financial statements of Sinphar Pharmaceutical Co., Ltd. and subsidiaries for operating segment information.

260 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

TABLE 1

Endorsements/Guarantees provided

For the Year Ended December 31, 2022

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

		Guaranteed Party	Guaranteed Party	Limits on
				Endorsement/				Amount of	Ratio of	Maximum			Guarantee
No. (Note 1)	Endorsement / Guarantee Provider	Name	Nature of relationship (Note 2)	Guarantee Amount Provided to Each Guaranteed Party (Note 3)	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Endorsement/ Guarantee Collateralized by Properties	Accumulated Endorsement/ Guarantee to Net Equity per Latest Financial Statements	Endorsement/ Guarantee Amount Allowable (Note 4)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Provided to Subsidiaries in Mainland China
0	Sinphar Pharmaceutical Co.,Ltd.	ZuniMed Biotech Co., Ltd.	1	$ 1,172,092	$ 30,000	$ 30,000	$ 5,000	$ `－`	1.02%	$ 1,465,115	Y	`－`	`－`
0	Sinphar Pharmaceutical Co.,Ltd.	SynCore Biotechnology Co.,Ltd.	1	$ 1,172,092	$ 350,000	$ 350,000	$ 30,000	$ `－`	11.94%	$ 1,465,115	Y	`－`	`－`
1	ZuniMed Biotech Co., Ltd.	Sinphar Pharmaceutical Co.,Ltd	2	$ 38,322	$ 25,000	$ 25,000	$ 25,000 (Note 5)	$ `－`	26.09%	$ 47,903	`－`	Y	`－`

Note 1 ： (1) The issuer fills in “0”. (2) The subsidiaries are numbered in order starting from “1”.

Note 2 ： (1) The endorser/guarantor parent company owns directly and indirectly more the 50% voting shares of the endorsed/guaranteed subsidia ry.

(2) The endorsed/guaranteed company owns directly and indirectly more the 50% voting shares of the endorser/guarantor parent company. Note 3 ： Maximum endorsement/guarantee amount allowable is 40% of the net worth of the Endorsement/Guarantee Provider. Note 4 ： Maximum endorsement/guarantee amount allowable is 50% of the net worth of the Endorsement/Guarantee Provider. Note 5 ： It is a supply guarantee for the medical institution.

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TABLE 2

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 2

Marketable Securities Held (Excluding Subsidiaries, Associate and Joint Venture)

As of December 31, 2022

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

Held Company Name	Marketable Securities Type and Name	Relationship with Sinphar	Financial Statement Account	December 31,2022	December 31,2022	December 31,2022	December 31,2022	Note
				Shares/Units	Carrying Value	Percentage of Ownership	Fair Value
Sinphar Pharmaceutical Co., Ltd.	PHYTOCEUTICA INC.(preferred share)	Investee	Financial assets at fair value throughprofit or loss(Non-Current)	90,362.00	$ `－`	`－`	$ `－`	`－`
Sinphar Pharmaceutical Co., Ltd.	Datun Entertainment Development Co.,Ltd.	`－`	Financial assets at fair value through other comprehensive income(Non-Current)	4.00	9,608	0.33%	9,608	`－`
SynCore Biotechnology Co., Ltd.	Fuh Hwa Money Market	`－`	Financial assets at fair value throughprofit or loss(Current)	252,743.00	3,617	`－`	3,697	`－`
SynCore Biotechnology Co., Ltd.	Fuh Hwa You Li Money Market	`－`	Financial assets at fair value throughprofit or loss(Current)	152,110.90	2,031	`－`	2,078	`－`
SynCore Biotechnology Co., Ltd.	JPMorgan`（`Taiwan`）`Glbl Fd of Bd Fds Inc	`－`	Financial assets at fair value throughprofit or loss(Current)	90,062.20	1,012	`－`	988	`－`
SynCore Biotechnology Co., Ltd.	MacuCLEAR, INC. (Preferred Share)	`－`	Financial assets at fair value through other comprehensive income(Non-Current)	95,160.00	`－`	0.95%	`－`	`－`
SynCore Biotechnology Co., Ltd.	Medigene (Common Share)	`－`	Financial assets at fair value through other comprehensive income(Non-Current)	224,934.00	15,087	0.92%	15,087	`－`

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TABLE 3

Name, Location, and Related Information of Investees Over Which Sinphar Exercise Significant Influence (Excluding Information On Investment In Mainland China) as of December 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

			Mi	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Nt I
Investor Company	Investee Company	Location	an Businesses	December	December		Percentage	Carrying	e ncome (Losses) of the	Share of Profits /	Notes
			and Products	31, 2022	31, 2021	Shares	of Ownership	Value	Investee	Losses of Investee
Sinphar Pharmaceutical Co., Ltd.	CANCAP PHARMACEUTICAL LTD.(Ordinary shares)	Canada	Production and sale of healthy food	$ 44,605	$ 44,605	2,140,000	88.43%	$ `－`	$ 1,222	$ 1,222	Subsidiary
Sinphar Pharmaceutical Co., Ltd.	CANCAP PHARMACEUTICAL LTD.(Preference shares)	Canada	Production and sale of healthy food	126,247	126,247	51,500	100.00%	1,219	1,222	`－`	Subsidiary
Sinphar Pharmaceutical Co.,Ltd.	SUNETIC BIOTECH INC.	Mauritius	Investment business	745,748	745,748	18,854,534	83.47%	915,635	71,464	61,217	Subsidiary
Sinphar Pharmaceutical Co.,Ltd.	UNIVERSAL NEXT TECHNOLOGIES INC.	British Virgin Islands	Investment business	17,467	17,467	503,845	100.00%	39	9	9	Subsidiary
Sinphar Pharmaceutical Co., Ltd.	ZuniMed Biotech Co., Ltd.	Taiwan	Production and sale of medical appliances	109,990	109,990	10,300,000	100.00%	91,660	2,516	2,917	Subsidiary
Sinphar Pharmaceutical Co.,Ltd.	SynCore Biotechnology Co., Ltd.	Taiwan	Biotechnology service	1,745,698	1,745,698	71,456,000	62.09%	154,419	(188,666)	(117,252)	Subsidiary
SynCore Biotechnology Co., Ltd.	SynCore Biotechnology Europe GmbH	Germany	New drugs development and biotechnology service	834	834	25,000	100.00%	692	12	12	Subsidiary

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TABLE 4

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital (RMB in Thousands)	Method of Investment	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31,2022	Net Income (Losses) of Investee Company	Percentage of Ownership	Shares of Profits/Losses (note 1)	Carrying Amount as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31,2022
							Outflow	Inflow
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	Production and sales of raw materials, pharmaceuticals		RMB 193,005	Indirect investment in mainland China by SUNETIC BIOTECH INC., an 83.47% owned subsidiary of Sinphar		$ 645,635 (USD 19,786 thousand)	`－`	`－`	$ 645,635 (USD 19,786 thousand)	$ 77,554	83.47%	$ 64,734	$ 919,592	$ 107,493
Hetian Tianli shasheng Pharmaceutical Development Co., Ltd.	Scientific research and production and sales of shasheng Pharmaceutical		RMB 10,000	Indirect investment in mainland China by Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou), a sub-subsidiary company of which Sinphar holds 83.47% of the total shares		`－`	`－`	`－`	`－`	(14,370)	75.96%	(9,090)	87,630	`－`
Hangzhou Vitrum Healthy Food Co., Ltd.	Sale of healthy food		RMB 30,000	Indirect investment in mainland China by Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) a sub-subsidiary company of which Sinphar holds 83.47% of the total shares.		`－`	`－`	`－`	`－`	(453)	83.47%	(378)	1,811	`－`

		Accumulated Investment in Mainland China as of December 31, 2022 (US$ in Thousands)			Investment Amounts Authorized by Investment Commission, MOEA (US$ in Thousands)		Upper Limit on Investment (Note 3)
		652,200 (USD 19,986 (Note 2))			777,614 (USD 25,321)		1,758,138

Note 1 ： The shares profits/losses of investee were calculated based on the financial statements audited by the R.O.C. CPAs of the parent company.

264 -

Sinphar Pharmaceutical Co., Ltd.

TABLE 5

Information of major shareholders

December 31, 2022

Shareholders	Shares	Shares
	Total shares owned (In thousands)	Ownership Percentage
XING-DA CAPITAL CORP.	15,470	9.22%

265 -

Ⅶ. Review of Financial Status, Performance, and Risk Related Issues

7.1 Analysis of Financial Status

Significant change of assets, liabilities, and shareholder equality and its illustration within two years

Unit: NT$ thousand

two years			Unit: NT$ thousand	Unit: NT$ thousand
Year Item	December 31, 2022	December 31, 2021	Difference
			Amount	%
Current Assets	2,778,451	2,703,349	75,102	2.78%
Property, Plant and Equipment	3,119,747	3,203,902	(84,155)	-2.63%
Intangible Assets	86,983	117,296	(30,313)	-25.84%
Other Assets	200,010	196,384	3,626	1.85%
Total Assets	6,185,191	6,220,931	(35,740)	-0.57%
Current Liabilities	1,445,911	1,534,499	(88,588)	-5.77%
Non-current Liabilities	1,522,432	1,609,249	(86,817)	-5.39%
Total Liabilities	2,968,343	3,143,748	(175,405)	-5.58%
Capital Stock	1,677,221	1,677,221	–	–
Capital Surplus	929,972	963,516	(33,544)	-3.48%
Retained Earnings	444,405	210,681	233,724	110.94%
Other Equity Interest	(121,368)	(129,179)	7,811	6.05%
Non-controlling Interest	286,618	354,944	(68,326)	-19.25%
Total Equity	3,216,848	3,077,183	139,665	4.54%
Analysis of changes in financial ratios: 1. The decrease in intangible assets: caused by amortization expenses. 2. The increase in retained earnings was mainly due to the growth of revenue in this period.

266 -

Individual Financial Status:

Significant change of assets, liabilities, and shareholder equity and its illustration within two years

Unit: NT$ thousand

			Unit: NT$ thousand	Unit: NT$ thousand
Year Item	December 31, 2022	December 31, 2021	Difference
			Amount	%
Current Assets	1,994,225	1,644,160	350,065	21.29%
Property, Plant, and Equipment	2,020,278	2,065,639	(45,361)	-2.20%
Intangible Assets	28,466	35,028	(6,562)	-18.73%
Other Assets	1,557,252	1,642,520	(85,268)	-5.19%
Total Assets	5,600,221	5,387,347	212,874	3.95%
Current Liabilities	1,179,327	1,090,824	88,503	8.11%
Non-current Liabilities	1,490,664	1,574,284	(83,620)	-5.31%
Total Liabilities	2,669,991	2,665,108	4,883	0.18%
Capital Stock	1,677,221	1,677,221	–	–
Capital Surplus	929,972	963,516	(33,544)	-3.48%
Retained Earnings	444,405	210,681	233,724	110.94%
Other Equity Interest	(121,368)	(129,179)	7,811	6.05%
Non-controlling Interest	–	–	–	–
Total Equity	2,930,230	2,722,239	207,991	7.64%
Analysis of changes in financial ratio: 1. The increase in current assets compared with the same period was mainly due to the increase in cash and cash equivalents in this period. 2. The increase in retained earnings was mainly due to the growth of revenue in this period.

267 -

7.2 Financial Performance

7.2.1 Comparison and Analysis of Operation Result

Unit: NT$ thousand

Year Item	2022	2021	Increase (Decrease) Amount	%
Total Operating Revenue	3,192,174	2,780,737	411,437	14.80%
Decrease: Sales Return and Allowance	335,523	347,221	(11,698)	-3.37%
Net Operating Profit	2,856,651	2,433,516	423,135	17.39%
Operating Cost	1,765,351	1,544,809	220,542	14.28%
Gross Profit	1,091,300	888,707	202,593	22.80%
Operating Expenses	893,965	1,071,477	(177,512)	-16.57%
Operating Income (Loss)	197,335	(182,770)	380,105	207.97%
Non-operating Income and Expenses	47,711	(1,755)	49,466	2,818.58%
Net Income (Loss) Before Tax from ContinuingOperations	245,046	(184,525)	429,571	232.80%
Income Tax Expenses	80,872	20,434	60,438	295.77%
Net Income After Tax form ContinuingOperations	164,174	(204,959)	369,133	180.10%
Other Comprehensive Income (Income After Tax)	17,830	(10,502)	28,332	269.78%
Total Comprehensive Income	182,004	(215,461)	397,465	184.47%
Analysis of changes in financial ratios: 1. The increase in non-operating income and expenses compared with the same period was mainly due to the increase in exchange gains and other revenue in the current. 2. The increase in income tax expenses compared with the same period was mainly due to tax recognized added in the net profit in this period and the deferred tax asset was decreased in deferred tax asset. 3. Other comprehensive income (income after tax) is more than the corresponding period due to exchange differences in translation of foreign financial statements. caused the income to increase in this period.

7.2.2 Expected Sales Volume in the Coming Year and Its Basis

Not applicable.

7.2.3 Effect of Company’s Future Financial Operation and the Response Action

None

268 -

Individual Financial Performance

A. Comparison and Analysis of Operation Result

Individual Financial Performance A. Comparison and Analysis of Operation Result	Individual Financial Performance A. Comparison and Analysis of Operation Result	Individual Financial Performance A. Comparison and Analysis of Operation Result	Individual Financial Performance A. Comparison and Analysis of Operation Result	Individual Financial Performance A. Comparison and Analysis of Operation Result
Unit: NT$ thousand
Year Item	2022	2021	Increase (Decrease) Amount	%
Total Operating Revenue	2,846,628	2,504,119	342,509	13.68%
Decrease: Sales Return and Allowance	335,422	346,861	(11,439)	-3.30%
Net Operating Profit	2,511,206	2,157,258	353,948	16.41%
Operating Cost	1,577,211	1,391,730	185,481	13.33%
Gross Profit	933,995	765,528	168,467	22.01%
Unrealized Gross Profit from Sales	371	1,106	(735)	-66.46%
Realized Gross Profit from Sales	1,106	610	496	81.31%
Operating Expenses	625,121	537,951	87,170	16.20%
Operating Profit	309,609	227,081	82,528	36.34%
Non-operating Income and Expenses	(23,217)	(249,635)	226,418	90.70%
Net Income Before Tax from ContinuingOperations	286,392	(22,554)	308,946	1,369.81%
Income Tax Expenses	61,748	15,581	46,167	296.30%
Net Income After Tax from ContinuingOperations	224,644	(38,135)	262,779	689.08%
Other Comprehensive Income (Net Income After Tax)	16,891	(6,181)	23,072	373.27%
Total Comprehensive Income (Loss)	241,535	(44,316)	285,851	645.03%
Analysis of changes in financial ratios: 1. The decrease in non-operating income and expenses compared with the same was mainly due to the decrease in the loss of investment accounted for using equity method in the current. 2. The increase in income tax expenses compared with the same period was mainly due to tax recognized added in the net profit in this period and the deferred tax is decreased in deferred tax asset. 3. Other comprehensive income (income after tax) is more than the corresponding period due to exchange differences in translation of foreign financial statements caused the income to increase in this period.

B. Expected Sales Volume in the Coming Year and Its Basis

Not applicable

C. Effect of the Company’s Future Financial Operation and the Response

None

269 -

7.3 Cash Flow

Cash Flow Analysis

A. Cash Flow Analysis for the Current Year

Unit: NT$ thousand

						Unit: NT$ thousand	Unit: NT$ thousand
Cash balance -beginning of period	Net cash flow from operating activities	Net cash flow from investment activities	Net cash flow from financing activities	Exchange rate effect on cash and cash equivalents	Cash balance (shortage) -end of period	Countermeasures for liquidityshortage
						Investment plans	Financing plans
1,194,785	425,298	(124,238)	(263,325)	5,036	1,237,556	─	─

Analysis: None

B. Countermeasures and Analysis of Liquidity Shortage

None

C. Cash Flow Analysis for the Coming Year

Unit: NT$ thousand

Cash balance -beginning of period	Net cash flow from operating activities	Net cash flow from investment activities	Cash balance (shortage) -end of period	Countermeasures for liquidityshortage	Countermeasures for liquidityshortage
				Investment plans	Financing plans
1,237,556	467,828	(248,476)	1,456,908	─	─

(A) Countermeasures and Analysis of Liquidity Shortage

None

7.4 Major Capital Expenditure Items

Unit: NT$ thousand

			Unit: NT$ thousand	Unit: NT$ thousand
Project	Planned Date of Completion	Total Capital Needed	Expected Capital Expenditure
			2023	2024
Refurbishment of Plant and Equipment	2024 Q4	250,000	125,000	125,000
Health Exhibition Hall	2024 Q2	100,000	50,000	50,000
Total		350,000	175,000	175,000
Expected Benefit		Increase production capacity, increase number of visitors, and business expansion.

270 -

7.5 Cause of the Profit/Loss for Investment in Recent Year and Investment Plans for the Coming Year

7.5.1 Investment Policy in the Most Recent Years

Unit: NT$ thousand

				Unit:	NT$ thousand
Remark/Item	Amount	Policy	Reasons for Gains or Loss	Action Plan	Investment Plan in the Future
CANCAP PHARMACEUTICAL LTD.	1,222	Assist with collecting information on scientific research	Global raw material sourcing and pricing negotiation	Expand the scope of raw material and negotiation of global material	Actively expand business
ZuniMed Biotech Co., Ltd.	2,917	Strengthen medical devices technology and acquire assets	Improve productivity	Adjust business model with focus on plastic medical containers	Actively expand business
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	64,734	Establish production of Chinese herbal medicine extracts and global market	Chinese herbal medicine development is in progress on schedule	Expand the production of Chinese herbal medicine extracts, strengthen the R&D capabilities of new products, and expand market	Develop natural products market
Hetian Tianli shasheng Pharmaceutical Development Co., Ltd.	(9,090)	Cooperate with planting base of Chinese herbal medicine development	Mainly for planting demonstration base and focus on planting	Continue to manage planting base to ensure the quality of Chinese herbal medicine	Expand the application scope based on the demand for planting
Hangzhou Vitrum Healthy Food Co., Ltd.	(378)	Responsible for selling health food in China	At the stage of being developed	At the stage of planning and developing	Difficult to register healthy food company, so this company is retained.
SynCore Biotechnology Co., Ltd.	(117,252)	Research and development of drugs	At drug development stage	Focus on new drug development, and search for global collaboration partners	Capital increase per operational demand

271 -

Remark/Item	Amount	Policy	Reasons for Gains or Loss	Action Plan	Investment Plan in the Future
SynCore Biotechnology Europe GmbH	12	R&D of new drug and biotechnology services	At the stage of new drug development	Focus on regional new drug development and search for regional partners	None

7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

Majority of the Company’s products are drugs and functional food. Other than the accounts receivable and payable that was transacted in foreign currency and has been exchanged by the foreign exchange rate and used floating exchange rate, the Company does not hold any financial instrument that is influenced by interest rate and market price. The exchange rate risk is not significant because the Company uses natural hedges to control foreign currency and offset by accounts receivable and payable. When financing, the Company will strive for the prime lending rate to reduce costs. In addition, inflation does not have a significant effect on the Company.

7.6.2 Policies, Main Causes of Gain or Loss, and Future Response Measure with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

The Company has not engaged in the investment activities like high-risk, high-leveraged investments, derivatives, or lending funds to other parties in recent years. Apart from this, there is no other matter.

The Company provides endorsements and guarantees due to the operating demand of subsidiaries. The endorsement and guarantee amount for ZuniMed Biotech Co., Ltd. in this period is NT$30,000,000 and the endorsement and guarantee amount for SynCore Biotechnology Co., Ltd. in this period is NT$350,000,000. The amount respectively accounts for 1.02% and 11.94% of the net worth in the financial statement as of December 31, 2022. In addition, for operating demand, the subsidiary, ZuniMed Biotech Co., Ltd. provides endorsement and guarantee to the parent company, Sinphar Pharmaceutical Co., Ltd. The endorsement and guarantee amount is NT$25,000,000 which accounts for 26.09% of the net worth in the financial statement as of December 31, 2022.

272 -

7.6.3 Future Research & Development Projects and Estimated R&D Expenses

A. The small molecule anticancer drug, SB01, transferred from the National Institutes of Health has completed phase Ⅱ clinical trial for head and neck cancer. Based on the clinical trial findings, the study team concluded that drug efficacy and dose-finding studies need to be conducted before proceeding with future clinical trials. The small molecule new drug, SB02, has completed several preclinical studies on dosage form reformulations. However, the results did not meet the expected outcome. Therefore, there was no significant progress for the SB02 drug development process.
B. The SB04 dry age-related macular degeneration (dry AMD) phase Ⅱ/Ⅲ clinical trial was approved by TFDA. However, patient recruitment did not meet the expected enrollment timeline. In the SB04 phase Ⅱ/Ⅲ clinical trial, the study team observed that SB04 has adverse effects due to its drug mechanism, which led to some negative psychological effects on patients. Some of the patients dropped out of the third clinical trial. The study team concluded that SB04 eye drop will need further research regarding the dosage adjustment and development.
C. SB05 TNBC (Triple Negative Breast Cancer): The clinical study team will need to evaluate the future development plan and discuss the feasibility for this phase Ⅲ TNBC clinical trial.
D. SB05PC (Pancreatic Cancer): Designing phase Ⅲ human clinical trial.
E. Establishing a joint development model with European and American pharmaceutical companies for research and development.
F. Establishing an international licensing business development platform and a network of cooperation partners in Asian countries.

The above expenses of new drug research and development will be paid according to the progress of each R&D projects.

In addition, the estimated R&D expenses of other BE/BA generic drugs, health food, health supplements, and product improvement projects amount to nearly NT$10 billion.

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales

After the amendment to Regulations for Registration of Medical Products on September 14, 2021, the extension of a drug permit only needs to follow a simplified procedure as stated in Article 73. The Company will apply for license extension according to the expiration of each drug permit license.

273 -

7.6.5 Effects of and Response to Changes in Technology (Including Information Security Risk) and the Industry Relating to Corporate Finance and Sales

(A) Changes in Industry

From 2022, National Health Insurance Administration reduced the drug price of drugs for three-hypers, such as cardiovascular, nervous system, and systemic anti-infective agents. Our company is not be significantly impacted by this change, as the Company has actively expanded sales of health food and health supplements to reduce the impact of domestic NHI drug price reduction.

(B) Changes in Technology (Including Information and Security Risk)

The Company continues to implement ISO 27001:2013 and includes server room management into the scope of accreditation; we hold a drill annually to ensure it complied with the estimated recovery time of system and reduced the risks of system interruption due to natural disaster and human error.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures

Since listing on the stock exchange, the Company is devoted to quality improvement and highly efficient R&D production technology which has had a positive effect

7.6.7 Expected benefit from, Risk Relating to and Response to Merger and Acquisition Plans

None

7.6.8 Expected Benefits from, Risk Relating to and Response to Factory Expansion Plans

The Company is in the biotechnology pharmaceutical industry which focuses on product validity and safety. Through official accreditation by health institutes of various countries, the Company ensures the validity of the products. The Company adjusts production lines to showcase product advantage and maximize operational profits.

7.6.9 Risks Relating to and Response to Purchase or Sales Concentration

More than 60% of the total operation sales revenue is diversified

7.6.10 Impact, Risks, and Response to Mass Share Transfer of or Change of Directors, Supervisors, or Shareholders Holding More Than 10% of the Company’s Share

There are no Directors or major shareholders holding more than 10% of the Company’s share or the matters of mass share transfer.

274 -

7.6.11 Effect of, Risks Relating to and Response to the Changes in Management Rights

None

7.6.12 Litigation or Non-litigation Matters

None

7.6.13 Other Major Risks

None

7.7 Other Important Matters

None

275 -

Ⅷ. Special Notes

8.1 Summary of Affiliated Company

8.1.1 Consolidated Operational Reports of Affiliated Companies

A. Affiliated Companies Organizational Chart

March 31, 2023

==> picture [750 x 246] intentionally omitted <==

----- Start of picture text -----

Sinphar Pharmaceutical Co., Ltd.
88.43% 62.09% 100% 100.00% 83.47%
CANCAP SynCore UNIVERSAL NEXT ZuniMed Biotech Co., SUNETIC BIOTECH INC.
Biotechnology
PHARMACEUTICAL
Co., Ltd. TECHNOLOGIES Ltd.
100% LTD.
100%
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)
SynCore
Biotechnology
Europe GmbH
91.00% 100%
Hetian Tianli shasheng Hangzhou
Pharmaceutical Vitrum Healthy
Development Co., Ltd. Food Co., Ltd.
----- End of picture text -----

B. Company concluded as the existence of the controlling and subordinate relation according to Article 369-3 of Company Act: None

C. According to Article 369-2 of the Company Act, company has a direct control over the management of the personnel, financial or business operation of another company: None

276 -

8.1.2 Information about Affiliated Companies

				March 31, 2023
Company	Date of Incorporation	Address	Paid-in Capital (in thousands)	Business Activities
CANCAP PHARMACEUTICAL LTD.	July 16, 1997	240-13071 Vanier Place Richmond, B.C. V6V 2J1 Canada	CAD7,070	Manufacturing and sales of functional food and drugs
UNIVERSAL NEXT TECHNOLOGIES INC.	April 26, 2001	P.O.BOX 3321, Road Town, Tortola, British Virgin Islands	US$504	Invest in other regions
SUNETIC BIOTECH INC.	December 31, 2001	3rdFloor, St. James Court, St. Denis Street, Port Louis, Republic of Mauritius	US$22,589	Invest in other regions
ZuniMed Biotech Co., Ltd.	December 3, 2003	No. 84, Zhongshan Rd., Zhongshan Village, Dongshan Township, Yilan County 269, Taiwan (R.O.C.)	NT$103,000	Biotechnological services and wholesale of medical devices
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	January 29, 2002	No. 599, Hungfeng Road, Yuhang Economic Development Zone, Hangzhou City, Zhejiang, China	RMB193,005	Manufacturing and sales of active pharmaceutical ingredients
Hetian Tianli shasheng Pharmaceutical Development Co., Ltd.	July 11, 2002	No. 1 Industrial Park, Yutian County, Xinjiang Province	RMB10,000	Research, sales, processing, planting of psammophytic drug and plants
Hangzhou Vitrum Healthy Food Co., Ltd.	October 20, 2004	No. 597 Hungfeng Road, Yuhang Economic Development Zone, Hangzhou City, Zhejiang, China	RMB30,000	Wholesale and retail sale of health supplements
SynCore Biotechnology Co., Ltd.	August 6, 2008	No. 84, Zhongshan Rd., Zongshan Village, Dongshan Township, Yilan County, Taiwan (R.O.C.)	NT$1,150,770	Biotechnological services, intellectual property, medicine inspection
SynCore Biotechnology Europe GmbH	June 22, 2015	Karl-Scharnagl-Ring 5, 80539 München German	EUR25	New drug R&D and biotechnological services

277 -

8.1.3 Shareholders in Common of the Company and Its Affiliates with Deemed

Control and Subordination

None

8.1.4 Directors, Supervisors, and General Manager of Affiliated Company

Unit: shares; %

			Unit: shares; %	Unit: shares; %
Company	Title	Name or Representative	Shareholding
			Shares	Share Percentage
CanCap Pharmaceutical Ltd.	Chairman	Sinphar Pharmaceutical Co., Ltd. Representative: Yi Ta Lee	2,140,000	88.43
CanCap Pharmaceutical Ltd.	Director	Sinphar Pharmaceutical Co., Ltd. Representative: LoySengYeo	2,140,000	88.43
CanCap Pharmaceutical Ltd.	Director	Yi Ta Lee	50,000	2.07
CanCap Pharmaceutical Ltd.	Director and General Manager	Ju Nee Yeo	50,000	2.07
UNIVERSAL NEXT TECHNOLOGIES INC.	Chairman	Sinphar Pharmaceutical Co., Ltd. Representative: Chih Wen Lee	503,845	100.00
SUNETIC BIOTECH INC.	Chairman	Sinphar Pharmaceutical Co., Ltd. Representative: Chih Wen Lee	18,854,534	83.47
SUNETIC BIOTECH INC.	Director	Yi Ta Lee	70,000	0.31
ZuniMed Biotech Co., Ltd.	Chairman	Sinphar Pharmaceutical Co., Ltd. Representative: Chih Wen Lee	10,300,000	100.00
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	Executive Director	ZuniMed Biotech Co., Ltd. Representative: Neng Yin Yu	–	100.00
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	General Manager	ZuniMed Biotech Co., Ltd. Representative: Chao Jih Wang	–	100.00
SynCore Biotechnology Co.,Ltd.	Chairman	Sinphar Pharmaceutical Co., Ltd. Representative: Chih Wen Lee	71,456,000	62.09

278 -

Company	Title	Name or Representative	Shareholding	Shareholding
			Shares	Share Percentage
SynCore Biotechnology Co.,Ltd.	Director	Sinphar Pharmaceutical Co., Ltd. Representative: WhyJu Chu	71,456,000	62.09
SynCore Biotechnology Europe GmbH	Representative	SynCore Biotechnology Co., Ltd. Resentative: Yi Ta Lee	25,000	100.00
Hetian Tianli shasheng Pharmaceutical Development Co.,Ltd.	Director and General Manager	Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) Representative: Neng Yin Yu	–	91.00
Hangzhou Vitrum Healthy Food Co., Ltd.	Director and General Manager	Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) Representative: Neng Yin Yu	–	100.00

8.1.5 Operational Highlights of the Affiliated Company

8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company	8.1.5 Operational Highlights of the Affiliated Company
December 31, 2022 Unit: NT$ thousand
Company	Capital	Total Assets	Total Liabilities	Net Worth	Net Revenue	Operating Profit	Current Profit/Loss (After Tax)	EPS/NTD (After Tax)
Cancap Pharmaceutical Ltd.	176,688	3,552	2,009	1,543	8,113	1,075	1,222	–
UNIVERSAL NEXT TECHNOLOGIES INC.	17,467	40	–	40	–	(78)	9	–
ZuniMed Biotech Co., Ltd.	103,000	143,061	47,255	95,806	71,758	2,971	2,516	0.24
SynCore Biotechnology Co., Ltd.	1,150,770	436,648	187,636	249,012	15,857	(191,473)	(188,665)	(1.64)
SynCore Biotechnology Europe GmbH	834	692	–	692	–	–	12	–
SUNETIC BIOTECH INC.	765,933	1,103,896	–	1,103,896	–	(146)	71,464	3.16
Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)	982,787	1,197,413	95,709	1,101,704	328,464	65,142	77,554	–
Hangzhou Vitrum Healthy Food Co., Ltd.	152,761	2,899	729	2,170	–	(464)	(453)	–

279 -

Company	Capital	Total Assets	Total Liabilities	Net Worth	Net Revenue	Operating Profit	Current Profit/Loss (After Tax)	EPS/NTD (After Tax)
Hetian Tianli shasheng Pharmaceutical Development Co., Ltd.	50,920	123,492	8,483	115,009	18,777	(16,438)	(14,370)	–

8.2 Private Securities in the Most Recent Year and before the Printing Date

None

8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year and before the Printing Date

None

8.4 Other Supplementary Information

None

Ⅸ. The Matters Impacting Shareholder Equity or Securities Price in Accordance with Subparagraph 2, Paragraph 3, Article 36 in the Securities and Exchange Act in the Most Recent Year and Before the Printing Date

None

280 -

Sinphar Pharmaceutical Co., Ltd.

Chairman: Chih Wen Lee

AI assistant

SINPHAR — Annual Report 2022

51911_rns_2023-07-13_52b1f723-5133-453c-9edb-e4bc7bb7f770.pdf

Ⅰ. Spokesperson and Deputy Spokesperson

Spokesperson

Deputy Spokesperson

Ⅱ. Headquarters, Branch Offices and Factory

Headquarters and Factory

Taipei Branch Office

Ⅲ. Stock Transfer Agency

Ⅳ. Contact Information of the Certified Public Accountants for the Latest Financial Report

Ⅴ. Overseas Securities Exchange and the Inquiry Methods for Listed Negotiable Securities

Ⅵ. Company Website

Table of Contents

Ⅰ. Letter to Shareholders

Dear Shareholders,

1.1 2022 Business Report

1.1.1 2022 Operational Performance

1.1.2 Budget Implementation

1.1.3 Financial and Profitability Analysis

1.1.4 Research and Development

A. Research and Development Expenses in Recent Two Years

B. Main Research and Development Activities in 2022

C. Research and Development Progress

1.2 Business Plan for 2023

1.2.1 Management Guideline and Marketing Strategies

Operation and Marketing Strategies in 2023

A. New Drugs Research and Development

B. Natural Botanical Materials

C. Drugs

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

E. Diversified Marketing and Foreign Business

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

1.2.2 Sales Volume Forecast and Supporting Basis

1.3 The Impact on Company’s Future Development Strategies Due to Competition, Regulatory Restrictions and Market Changes

Ⅱ. Company Profile

2.1 Date of Incorporation : July 2, 1977

2.2 Company History

Ⅲ. Corporate Governance Report

3.1 Organizational System

3.1.1 Organizational Chart

3.1.2 Major Corporate Functions

3.2 Directors, Supervisors and Management Team Information

3.2.1 Directors

A. Major Shareholders of the Institutional Shareholders

(A) Major Shareholders of the Company’s Major Institutional Shareholders

B. Information of Directors

(A) Professional Qualifications of Directors and Independence Analysis of Independent Directors

(B) Diversity and Independence of Board of Directors

b. Independence of Board of Directors

3.2.2 Management Team

3.3 Remuneration Paid to Directors, Supervisors, and Management Team in the Most Recent Year

3.3.1 Remuneration for Directors and Independent Directors

3.3.2 Remuneration for Supervisors

3.3.3 Remuneration for General Managers and Vice General Managers

3.3.4 Managerial Officers with the Top Five Highest Remuneration Amounts

Name of the Corporate Managers Distributing Employee Compensation

and the Status of Distribution

(B) Directors and Supervisors

(C) General Managers and Vice General Managers

3.4 Implementation of Corporate Governance

3.4.1 Operation of Board of Directors

B. Opinions Provided by Independent Directors to the Resolutions of the Board Meeting and Company Resolutions Regarding Opinions of Independent Directors

C. Implementation Status of Board Evaluation

(A)

(B) Evaluation Result

3.4.2 Operation of Audit Committee

A. Audit Committee Members

B. Main duties of the Audit Committee

C. Information on Operation of Audit Committee

3.4.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the Reasons

3.4.4 The Status of Establishing the Remuneration Committee

A. The Information on Remuneration Committee Members

3.4.5 Implementation Status of Sustainable Development and Deviations from the “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies”

3.4.6 Fulfillment of Ethical Corporate Management and Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”

3.4.7 Corporate Governance Guidelines and Regulations

3.4.8 Other Important Information Regarding Corporate Governance

3.4.9 Internal Control System Execution Status

Implementation Status:

Implementation Status:

SINPHAR Annual Report 2022