{"url_path":"/sec/mens/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1954488/0001213900-26-057073-index.html","accession_number":"0001213900-26-057073","cik":"0001954488","ticker":"MENS","issuer_name":"Jyong Biotech Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1954488/0001213900-26-057073-index.html","primary_entity_key":"0001954488","primary_entity_name":"Jyong Biotech Ltd."},"word_count":45543,"has_tables":true,"body_markdown":"**Item 3. KEY INFORMATION**\n\n** **\n\n**A. [Reserved]**\n\n \n\n**B. Capitalization and Indebtedness**\n\n \n\nNot applicable.\n\n \n\n**C. Reasons for the Offer and Use of Proceeds**\n\n \n\nNot applicable.\n\n \n\n**D. Risk Factors**\n\n \n\n**RISK FACTORS SUMMARY**\n\n \n\nYou should carefully consider the risks and uncertainties\nsummarized below, the risks described under “Item 3. Key Information — D. Risk Factors” beginning on page 1. The risks\ndescribed in “Risk Factors” in this annual report may cause us to not realize the full benefits of our strengths or may cause\nus to be unable to successfully execute all or part of our growth strategy. Some of the more significant risks include the following:\n\n \n\n●Our business is highly dependent on the success of our core\ndrug candidate, Botreso®. If we are unable to obtain marketing approval for or successfully commercialize Botreso®, or if we\nexperience significant delays in doing so, our business would expect to be materially and adversely affected. (page 3)\n\n \n\n●We may allocate our limited resources to pursue a particular\ndrug candidate, indication, or technology and fail to capitalize on existing or future drug candidates, indications or technologies that\nmay later prove to be more profitable, or for which there is a greater likelihood of success. (page 4)\n\n \n\n●The U.S. FDA has rarely approved botanical drug products.\nIf we are unable to obtain the U.S. FDA’s approval for marketing our drug candidates, or if we experience significant delays in\ndoing so, our business could be materially and adversely affected. (page 5)\n\n \n\n●Clinical development involves a lengthy and expensive process\nwith an uncertain outcome, and results of earlier studies may not be predictive of future study results. (page 5)\n\n \n\n●All of our key drug candidates are in preclinical or clinical\ndevelopment. If we are unable to complete clinical development and obtain regulatory approval to ultimately commercialize our key drug\ncandidates, or if we experience significant delays in doing so, our business, financial condition, results of operations and prospects\nwill be materially harmed. (page 6)\n\n \n\n●If we encounter delays or difficulties enrolling and retaining\npatients in our clinical trials, our clinical development progress and our receipt of necessary regulatory approvals could be delayed\nor otherwise adversely affected. (page 7)\n\n \n\n●The U.S. FDA has concluded that one of our four Phase III\ntrials failed to demonstrate a statistically significant difference between Botreso® with API-1 and placebo in the primary efficacy\nendpoint in the Botreso®-US-a study. If our future clinical trials of our key drug candidates fail to demonstrate safety and efficacy\nto the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience\ndelays in completing, or ultimately be unable to complete, the development, regulatory approval, and commercialization of our drug candidates.\n(page 8)\n\n \n\n●Our drug candidates may cause serious adverse, undesirable\nor unacceptable side effects or may have other properties that could delay or prevent their regulatory approval, limit the commercial\nprofile of an approved label, and/or result in significant negative consequences following regulatory approval, if any. (page 10)\n\n \n\n1\n\n \n\n \n\n●The manufacture of our drug products is a complex process\nwhich requires significant expertise and capital investment, and if we encounter problems in establishing our manufacturing capabilities\nfor clinical or commercial scale or in the manufacture of our future products, our business could suffer. (page 11)\n\n \n\n●Changes in our drug candidates’ manufacturing or formulation\nmay result in additional costs or delay. (page 12)\n\n \n\n●We have not yet obtained marketing approval for a drug candidate\nand we may be unable to obtain, or may be delayed in obtaining, marketing approval for our drug candidates. (page 12)\n\n \n\n●Obtaining and maintaining regulatory approval of our drug\ncandidates in one jurisdiction does not mean that we will be successful in obtaining or maintaining regulatory approval of our drug candidates\nin other jurisdictions. (page 12)\n\n \n\n●If we are unable to identify a supplier capable of producing\nAPI-2 that is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso® and PCP, or to conduct\nother additional clinical trials as may be required by the U.S. FDA, which would significantly delay our product development and increase\nour costs. (page 15)\n\n \n\n●Even if any of our drug candidates receives marketing approval,\nwe or others may later discover that the product is less effective than previously believed or causes rare undesirable side effects that\nwere not previously identified, which could compromise our ability, or that of any future collaborators, to market the product. (page\n15)\n\n \n\n●Our drug candidates may fail to achieve the degree of market\nacceptance by physicians, patients, patient advocacy groups, third-party payors and others in the medical community necessary for commercial\nsuccess. (page 16)\n\n \n\n●We face substantial competition, rapid technological change\nand the possibility that our competitors may discover, develop or commercialize drugs before we do or more successfully than we do, or\ndevelop therapies that are similar, more advanced or more effective than ours, each of which may adversely affect our financial condition\nand our ability to successfully market or commercialize our drug candidate. (page 16)\n\n \n\n●Even if we are able to commercialize any approved drug candidates,\nreimbursement may be limited or unavailable in certain market segments for our drug candidates, and we may be subject to unfavorable\npricing regulations, which could harm our business. (page 17)\n\n \n\n●The data and information that we gather in our research and\ndevelopment process could be inaccurate or incomplete, which may have negative influence on our business, reputation, financial condition\nand results of operations. (page 18)\n\n \n\n●The incidence and prevalence for target patient populations\nof our drug candidates are based on estimates and third-party sources. The market opportunities for our drug candidates, if approved,\nmay be smaller than we anticipate. (page 19)\n\n \n\n●We have been involved in legal proceedings in the ordinary\ncourse of our business, and are currently involved in active legal proceedings. Any adverse outcome of these legal proceedings could\nhave a material adverse effect on our business, results of operations and financial condition. (page 21)\n\n \n\n●We face economic and political risks associated with doing\nbusiness in Taiwan, particularly due to the geopolitical tension between Taiwan and PRC that could negatively affect our business and\nhence the value of your investment. (page 24)\n\n \n\n●We are required to comply with extensive regulations and\nhold a number of permits and licenses to carry on our business in Taiwan. Our ability to obtain and maintain these regulatory approvals\nis uncertain, and future government regulation may place additional burdens on our efforts to commercialize our drug candidates. (page\n26)\n\n \n\n●Our future success depends on our ability to attract, retain\nand motivate senior management and qualified scientific employees. (page 27)\n\n \n\n2\n\n \n\n \n\n●If we do not achieve our projected development and commercialization\ngoals in the timeframes we announced and expected, the commercialization of any of our drug candidates may be delayed and our business\nwill be negatively influenced. (page 27)\n\n \n\n●Certain of our facilities are mortgaged. If the mortgagees\nenforce the mortgage, our business could be materially and adversely affected. (page 28)\n\n \n\n●As we rely on third parties to conduct our clinical trials\nand provide other important services related to research and development, regulatory submissions, and commercialization, if we fail to\nmaintain our relationships with these third parties or if they do not successfully carry out their contractual duties, comply with applicable\nlaws, or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business\ncould be substantially harmed. (page 42)\n\n \n\n●If we are unable to obtain and maintain patent and other\nintellectual property protection for our drug candidates, or if the scope of such intellectual property rights obtained is not sufficiently\nbroad, third parties could develop and commercialize products and technologies similar or identical to ours and compete directly against\nus, and our ability to successfully commercialize any product or technology may be adversely affected. (page 45)\n\n \n\n●Obtaining and maintaining our patent protection depends on\ncompliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and\nour patent protection could be reduced or eliminated for non-compliance with these requirements. (page 47)\n\n \n\n●If the TFDA, the U.S. FDA or comparable foreign regulatory\nauthorities approve generic versions of any of our products that receive marketing approval, or such authorities do not grant our products\nappropriate periods of data exclusivity before approving generic versions of our products, the sales of our products could be materially\nand adversely affected. (page 47)\n\n \n\n**RISKS RELATED TO THE DISCOVERY, DEVELOPMENT,\nAND COMMERCIALIZATION OF OUR DRUG CANDIDATES**\n\n** **\n\n**Our business is highly dependent on the success of our core drug candidate,\nBotreso®. If we are unable to obtain marketing approval for or successfully commercialize Botreso®, or if\nwe experience significant delays in doing so, our business would expect to be materially and adversely affected.**\n\n \n\nWe currently have no drug products that are approved for commercial\nsale. Compared with other companies that have multiple drug candidates in active development, our business and future success depends,\nin large parts, on our ability to obtain regulatory approval for, and then successfully commercialize our core drug candidate, Botreso®.\nIf we cannot obtain approval for Botreso®, which is the initial indication that we are currently exploring, we will have\nspent substantial time and financial resources without receiving a return on investment.\n\n \n\nThe success of Botreso® will depend on several factors,\nincluding the following:\n\n \n\n●the successful completion of Phase I PK study and Phase III\nclinical trial to support marketing approval by the U.S. FDA and successfully addressing the deficiencies the U.S. FDA identified in\nour previous submissions;\n\n \n\n●timely receipt of marketing approvals from applicable regulatory\nauthorities;\n\n \n\n●the performance of our future collaborators, if any;\n\n \n\n●the extent of any required post-marketing approval commitments\nto applicable regulatory authorities;\n\n \n\n●establishment of supply arrangements with third-party raw\nmaterials suppliers;\n\n \n\n●obtaining and maintaining patent, trade secret protection\nand regulatory exclusivity, both in Taiwan, the U.S. and internationally;\n\n \n\n●protection of our rights in our intellectual property portfolio;\n\n \n\n3\n\n \n\n \n\n●successful launch of commercial sales following any marketing\napproval;\n\n \n\n●a continued acceptable safety profile following any marketing\napproval, and meeting all applicable post-market commitments, obligations, and requirements;\n\n \n\n●commercial acceptance of our products, if approved, by patients,\nthe medical community and third-party payors; and\n\n \n\n●our ability to compete with other therapies.\n\n \n\nIf we do not achieve one or more of these factors, many of which are\nbeyond our control, in a timely manner or at all, we could experience significant delays or an inability to obtain regulatory approvals\nor commercialize Botreso®. Even if regulatory approvals are obtained, we may not be able to successfully commercialize\nBotreso® due to various factors beyond our control. Accordingly, we may not be able to generate sufficient revenue through\nthe sale of Botreso® to sustain our operations.\n\n** **\n\n**We may allocate our limited resources to pursue a particular drug\ncandidate, indication, or technology and fail to capitalize on existing or future drug candidates, indications or technologies that may\nlater prove to be more profitable, or for which there is a greater likelihood of success.**\n\n \n\nBecause we have limited financial and managerial resources, we intend\nto focus on developing drug candidates for specific indications that we identify as most likely to succeed, in terms of both their potential\nfor marketing approval and commercialization. As a result, we may forgo or delay pursuit of opportunities with other drug candidates\nor for other indications or technologies that later may prove to have greater commercial potential or a greater likelihood of success.\nOur resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.\nOur spending on current and future research and development programs and drug candidates for specific indications may not yield any commercially\nviable drug candidates. In addition, if we do not accurately evaluate the commercial potential or target market for a particular drug\ncandidate or technology, we may relinquish valuable rights to that drug candidate or technology through collaboration, licensing or other\nroyalty arrangements when it would have been more advantageous for us to retain sole development and commercialization rights to such\ndrug candidate or technology. For example, we are developing our core drug candidate, Botreso®, to initially treat BPH/LUTS. We\nare also considering a number of additional indications for Botreso®, including the potential to prevent prostate cancer.\nWe cannot guarantee that the treatment of BPH/LUTS will be the most profitable indication for Botreso® as opposed to other\ncontemplated indications. This could result in us failing to capitalize on the true market potential of our core drug candidate in a timely\nmanner or at all.\n\n \n\nAlthough a substantial amount of our efforts will\nfocus on the continued clinical testing, potential approval, manufacturing and commercialization of our existing drug candidates, the\nsuccess of our business depends, in part, upon our ability to identify, license, discover, develop, and commercialize additional drug\ncandidates or new technologies. Research efforts to identify new drug candidates and technologies require substantial technical, financial,\nand human resources. Although we do not currently engage in such activities, we may in the future seek to expand our drug pipeline through\nin-licensing arrangements. We may end up focusing our efforts and resources on potential drug candidates and technologies that ultimately\nprove to be unsuccessful. Our research and any future licensing efforts may fail to identify, discover or in-license new drug candidates\nand technologies suitable for clinical development and commercialization for a number of reasons, including, but not limited to, the following:\n\n \n\n●our research or business development methodology or search\ncriteria and process may be unsuccessful in identifying potential drug candidates and technologies, or potential drug candidates and\ntechnologies that are within our resources to license or acquire and develop;\n\n \n\n●our potential drug candidates and technologies may be shown\nto have adverse effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;\nand\n\n \n\n●it may take greater human, financial and/or research resources\nto identify additional therapeutic opportunities for our drug candidates or to develop more suitable potential drug candidates and technologies\nthan what we possess, thereby limiting our ability to diversify and expand our drug portfolio.\n\n \n\n4\n\n \n\n \n\nAccordingly, there can be no assurance that we will\nsuccessfully identify and develop new drug candidates or technologies, or additional therapeutic opportunities for our drug candidates,\nwhether through internal research or future licensing efforts, which could materially and adversely affect our future growth and prospects.\n\n** **\n\n**The U.S. FDA has rarely approved botanical drug products. If we\nare unable to obtain the U.S. FDA’s approval for marketing our drug candidates, or if we experience significant delays in doing\nso, our business could be materially and adversely affected.**\n\n \n\nAs of the date of this annual report, only four botanical drug products\nhave received the U.S. FDA’s approval for marketing as prescription drugs: (i) Veregen which contains the drug substance sinecatechins,\nwhich is a partially purified fraction of the water extract of green tea leaves from *Camellia sinensis (L.) O Kuntze* and is indicated\nfor the treatment of genital and perianal warts, (ii) Mytesi which is a proanthocyanidin oligomer indicated to relieve symptoms of diarrhea\nin HIV/AIDS patients taking antiretroviral therapy and is derived from the red latex of *Croton lechleri Müll. Arg*., (iii)\nNexoBrid which is a topically administered, biological orphan drug for the enzymatic removal of eschar in patients with deep partial-\nand full-thickness thermal burns, and (iv) Filsuvez which is a prescription medicine used on the skin to treat wounds that may happen\nwith dystrophic and junctional epidermolysis bullosa (EB) in adults and children 6 months of age and older.\n\n \n\nThe quality control of botanical drug products\nis very complex due to the variability of botanical raw material and the need to ensure that the therapeutic effect for botanical drug\nproduct batches is consistent. It is challenging to ensure batch-to-batch consistency, which must be demonstrated to obtain U.S. FDA approval.\nMinor changes in API source or the manufacturing process can result in meaningful difference in clinical effects and may mean that earlier\ndeveloped pharmacological, nonclinical and clinical data no longer apply to the changed product.\n\n \n\nWe cannot predict the time required to secure all\nappropriate regulatory approvals or the extent of testing and documentation that may be required by governmental authorities, in particular,\nto obtain the approval for a botanical drug product from the U.S. FDA. Any delays in obtaining, or failure to obtain, regulatory approvals\nwould significantly delay the development of markets and products and would have a material adverse effect on our business, results of\noperations and financial condition.\n\n** **\n\n**Clinical development involves a lengthy and expensive process with\nan uncertain outcome, and results of earlier studies may not be predictive of future study results.**\n\n \n\nThere is a risk of failure for every drug candidate.\nClinical testing is expensive, difficult to design and implement and can take many years to complete, so its outcome is inherently\nuncertain. It is difficult to predict when or if any of our drug candidates will prove effective and safe in humans or will receive regulatory\napproval, and failure can occur at any time during the preclinical and clinical development process. Before obtaining regulatory approval\nfrom regulatory authorities for the commercialization of any drug candidate, our drug candidates must complete preclinical studies and\nthen be subjected to extensive clinical trials to demonstrate the safety and efficacy of our drug candidates in humans.\n\n \n\nThe results of preclinical studies and clinical\ntrials of our drug candidates may not be predictive of the results of later-stage clinical trials. Drug candidates during later stages\nof clinical trials may fail to show the desired results in safety and efficacy despite having progressed through preclinical studies and\ninitial to advanced clinical trials and despite the level of scientific rigor in the study, design and adequacy of execution. In some\ninstances, there can be significant variability in safety and/or efficacy results among different studies of the same drug candidate due\nto numerous factors, including, but not limited to, differences in individual patient conditions, including genetic differences, and other\ncompounding factors, such as other medications or pre-existing medical conditions. Moreover, preclinical and clinical data are often susceptible\nto varying interpretations and analyses, and many companies that have believed their drug candidates performed satisfactorily in preclinical\nstudies and clinical trials have nonetheless failed to obtain regulatory approval of their drug candidates.\n\n \n\nIn the case of any studies we conduct, results may\ndiffer from earlier studies due to the larger number of clinical trial sites, foreign subjects and different languages involved in such\nstudies. Clinical practices vary globally, and there is a lack of harmonization among the guidance provided by various regulatory bodies\nof different regions and countries with respect to the data that is required to receive marketing approval, which makes designing global\nstudies increasingly complex. Differing regulatory approval requirements in different countries could make it more difficult for us to\nconduct unified global studies, which can lead to increased development costs and marketing delays or non-viability of our clinical trials.\nIn addition, regulatory authorities may determine that clinical trial results obtained in foreign subjects do not adequately represent\nthe results that would be obtained in local patients and are thus not supportive of relevant approvals.\n\n \n\n5\n\n \n\n \n\nIn particular, if we experience delays in the start or completion of,\nor termination of, any clinical trial of our key drug candidates, Botreso®, PCP and IC, the commercial prospects of them\nmay be harmed, and our ability to generate product revenues from our key drug candidates will be delayed. In addition, any delays in completing\nour clinical trials will increase our costs, slow down the development and approval process for our key drug candidates, and jeopardize\nour ability to commence product sales and generate revenues. Any of these occurrences may significantly harm our business, financial condition\nand prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may\nalso ultimately lead to the denial of regulatory approval of our key drug candidates.\n\n \n\nInvestigation and development of botanical drug\nproducts is very complex due to the variability of botanical raw material and the need to ensure that the therapeutic effect for botanical\ndrug product batches is consistent. Minor changes in API source or the manufacturing process can result in meaningful difference in clinical\neffects and may mean that earlier developed pharmacological, nonclinical and clinical data no longer apply to the changed product.\n\n** **\n\n**All of our key drug candidates are in preclinical or clinical development.\nIf we are unable to complete clinical development and obtain regulatory approval to ultimately commercialize our key drug candidates,\nor if we experience significant delays in doing so, our business, financial condition, results of operations and prospects will be materially\nharmed.**\n\n \n\nAll of our key drug candidates are still in development.\nOur ability to generate revenue from our key drug candidates is dependent on receipt of regulatory approval and successful commercialization\nof such products. We cannot guarantee that we will be able to obtain regulatory approvals for our existing drug candidates in a timely\nmanner, or at all, and we may be unable to obtain successful commercialization of our key drug candidates even if we receive regulatory\napproval. Each of our key drug candidates will require additional preclinical and/or clinical development, regulatory approvals in multiple\njurisdictions, development of commercial manufacturing supply and capacity, substantial investment and significant marketing efforts before\nwe generate any revenue from product sales.\n\n \n\nThe success of our key drug candidates will depend\non several factors, including, but not limited to, the following:\n\n \n\n●hiring and maintaining sufficient experts and employees to\noversee all development and regulatory activities and meeting of safety requirements;\n\n \n\n●for our botanical drug product candidates, the ability to\nobtain and maintain an adequate supply of the botanical raw material from which the drug products are derived and manufactured;\n\n \n\n●successful completion of preclinical studies and clinical\ntrials, including the successful enrollment in such clinical trials;\n\n \n\n●receipt of regulatory approvals from applicable regulatory\nauthorities for planned and future clinical trials, drug registration, manufacturing and commercialization;\n\n \n\n●successful completion of all studies required to obtain regulatory\napproval in the United States, Taiwan, China, Europe and any other jurisdictions where we intend to market our key drug candidates;\n\n \n\n●our ability to establish manufacturing capabilities and capacities,\nwhether internally or through third-party cooperators, to the specifications of our key drug candidates for clinical supply;\n\n \n\n●obtaining and maintaining patent, trade secret and other\nintellectual property protection and/or regulatory exclusivity for our key drug candidates;\n\n \n\n●launching commercial sales of our key drug candidates, if\nand when approved, whether alone or in collaboration with others;\n\n \n\n6\n\n \n\n \n\n●acceptance of the drug candidates, if and when approved,\nby patients, the medical community and third-party payors;\n\n \n\n●obtaining and maintaining healthcare coverage and adequate\nreimbursement;\n\n \n\n●effectively competing with other therapies and alternative\ndrugs;\n\n \n\n●successfully enforcing and defending intellectual property\nrights and claims; and\n\n \n\n●maintaining a continued acceptable safety profile of the\ndrug candidates following regulatory approval, and meeting all applicable post-market commitments, obligations, and requirements.\n\n \n\nAny significant delays in, or an inability to, obtain\nregulatory approval and ultimately achieve commercial success for our existing and future drug candidates in one or more jurisdictions\nwould materially harm our business and we may not be able to generate enough revenues and cash flows to continue our operations could\nfurther materially harm our business. As a result, our financial condition, results of operations and prospects will be materially and\nadversely harmed.\n\n** **\n\n**If we encounter delays or difficulties enrolling and retaining patients\nin our clinical trials, our clinical development progress and our receipt of necessary regulatory approvals could be delayed or otherwise\nadversely affected.**\n\n \n\nThe timely completion of clinical trials in accordance\nwith their protocols depends, among other things, on our ability to enroll a sufficient number of patients that will remain in the study\nuntil its conclusion. We may not be able to initiate or continue clinical trials for our drug candidates if we are unable to locate and\nenroll a sufficient number of eligible patients to participate in these studies as required by the TFDA, the U.S. FDA, and any other applicable\nsimilar regulatory authorities, or if there are delays in the enrollment of eligible patients as a result of the competitive clinical\nenrollment environment. Even once enrolled, we may be unable to retain a sufficient number of patients to complete any of our trials.\nThe inability to enroll a sufficient number of patients who meet the applicable criteria for our clinical trials would result in significant\ndelays and could require us to abandon one or more clinical trials altogether. If patients are unwilling to enroll in our clinical trials\nbecause of restrictions on travel or healthcare institution policies, negative publicity from adverse events related to the pharmaceutical\nindustry or for other reasons, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of our drug\ncandidates may be delayed. As of the date of this annual report, we have not encountered any delays or difficulties enrolling and retaining\npatients in our clinical trials, however, we cannot predict or guarantee that we will be successful at enrolling subjects in future clinical\ntrials. Even if we are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment could result\nin increased development costs, delays in advancing our drug candidates, delays in testing the effectiveness of our drug candidates or\ntermination of clinical trials altogether.\n\n \n\nPatient enrollment for our clinical trials may be\naffected by other factors, including, but not limited to, the following:\n\n \n\n●severity of the disease under investigation;\n\n \n\n●total size and nature of the relevant patient population;\n\n \n\n●design and eligibility criteria for the clinical trial in\nquestion;\n\n \n\n●perceived risks and benefits of the drug candidate under\nstudy;\n\n \n\n●our resources to facilitate timely enrollment in clinical\ntrials;\n\n \n\n●patient referral practices of physicians;\n\n \n\n●availability of competing therapies also undergoing clinical\ntrials;\n\n \n\n●our investigators’ or clinical trial sites’ efforts\nto screen and recruit eligible patients;\n\n \n\n●our ability to maintain patients’ consents;\n\n \n\n●ability to monitor patients adequately during and after treatment;\n\n \n\n7\n\n \n\n \n\n●proximity and availability of clinical trial sites for prospective\npatients; and\n\n \n\n●the occurrence of any pandemic, epidemic or any other public\nhealth crises, including from the COVID-19 pandemic, the monkeypox outbreak, natural catastrophe or other disasters that may cause a\ndelay in enrollment of patients in clinical trials.\n\n \n\nAdditionally, our ability to successfully initiate,\nenroll and complete clinical trials in any foreign country is subject to numerous risks unique to conducting business in foreign countries,\nincluding:\n\n \n\n●difficulty in establishing or managing relationships with\nour cooperators, including but not limited to research institutions, hospitals and physicians;\n\n \n\n●different standards for the conduct of clinical trials;\n\n \n\n●absence in some countries of established groups with sufficient\nregulatory expertise for review of clinical trial protocols;\n\n \n\n●inability to locate qualified local consultants, physicians\nand cooperators; and\n\n \n\n●the potential burden of complying with a variety of foreign\nlaws, medical standards and regulatory requirements.\n\n \n\nIn addition, our clinical trials may compete with\nother clinical trials for drug candidates that are in the same therapeutic areas as our drug candidates, and this competition will reduce\nthe number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to\nenroll in a trial being conducted by one of our competitors. Because the number of qualified clinical investigators and clinical trial\nsites is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use,\nwhich will reduce the number of patients who are available for our clinical trials at such clinical trial sites. For example, although\nwe have not encountered any delays or difficulties in enrolling or retaining patients for our clinical trials in the past, we may in the\nfuture experience such delays or difficulties due to government orders and site policies on account of health epidemics, and some patients\nmay be unwilling or unable to travel to study sites, enroll in our studies or comply with clinical trial protocols if quarantines impede\npatient movement or interrupt healthcare services. If we have difficulty enrolling a sufficient number of patients or finding additional\nclinical trial sites to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials,\nany of which could have an adverse effect on our business, financial condition, results of operations and prospects. In addition, it is\npossible that health pandemics may have an impact on the workforce of the third parties on which we rely, which could adversely impact\nour ability to conduct preclinical studies, enroll and retain patients in our clinical trials and conduct the clinical trials of our drug\ncandidates on expected timeframes or to complete such studies, and our ability to ultimately obtain regulatory approval. As a result,\nthe value of our Company could decline and our ability to obtain additional financing may be impaired.\n\n** **\n\n**The U.S. FDA has concluded that one of our four Phase III trials failed\nto demonstrate a statistically significant difference between Botreso® with API-1 and placebo in the primary efficacy endpoint\nin the Botreso®-US-a study. If our future clinical trials of our key drug candidates fail to demonstrate safety and efficacy\nto the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience\ndelays in completing, or ultimately be unable to complete, the development, regulatory approval, and commercialization of our drug candidates.**\n\n \n\nBefore obtaining regulatory approval for the sale\nof our drug candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our drug candidates in humans.\nWe may experience numerous unexpected events during, or as a result of clinical trials that could delay or prevent our ability to receive\nregulatory approval or commercialize our drug candidates, including, but not limited to, the following:\n\n \n\n●regulators, institutional review boards, or IRBs, or ethics\ncommittees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective study\nsite;\n\n \n\n●delay in reaching, or failure to reach, agreements on acceptable\nterms with prospective CROs and study sites, the terms of which can be subject to extensive negotiation and may vary significantly among\ndifferent CROs and study sites;\n\n \n\n8\n\n \n\n \n\n●manufacturing issues, including problems with manufacturing,\nsupply quality, compliance with current good manufacturing practices, or obtaining sufficient quantities of a drug candidate from third\nparties for use in a clinical trial;\n\n \n\n●clinical trials of our drug candidates may produce negative\nor inconclusive results, and we may decide to conduct additional clinical trials or abandon the development of such drug candidates,\nor regulators may require us to do so;\n\n \n\n●the number of patients required for clinical trials of our\ndrug candidates may be larger than we anticipate, enrollment may be insufficient or slower than we anticipate, or patients may drop out\nor fail to return for post-treatment follow-up at a higher rate than we anticipate;\n\n \n\n●our third-party contractors used in our clinical trials,\nincluding any clinical investigators, may fail to comply with regulatory requirements or meet their contractual obligations to us in\na timely manner, or at all, or may deviate from clinical trial protocol or dropout of clinical trials, which may require that we add\nnew clinical trial sites or clinical investigators;\n\n \n\n●we might have to suspend or terminate clinical trials of\nour drug candidates for various reasons, including a finding of a lack of clinical response, serious adverse, undesirable or unacceptable\nside effects or other unexpected characteristics or a finding that participants are being exposed to unacceptable health risks;\n\n \n\n●we may elect to, or regulators, IRBs or ethics committees\nmay require that we or our investigators, suspend or terminate clinical research or not rely on the results of clinical research for\nvarious reasons, including non-compliance with regulatory requirements;\n\n \n\n●the cost of clinical trials of our drug candidates may be\ngreater than we anticipate; and\n\n \n\n●the supply or quality of our drug candidates or other materials\nnecessary to conduct clinical trials of our drug candidates may be insufficient or inadequate.\n\n \n\nIf we are required to conduct additional clinical\ntrials or other testing of our drug candidates beyond those that we currently plan, if we are unable to successfully complete clinical\ntrials of our drug candidates or other testing, if the results of these studies or tests are not positive or are only modestly positive,\nor if they raise safety concerns, we may (i) be delayed in obtaining regulatory approval for our drug candidates; (ii) obtain\napproval for indications or patient populations that are not as broad as intended or desired; (iii) not obtain regulatory approval\nat all; (iv) have the drug removed from the market after obtaining regulatory approval; (v) be subject to additional post-marketing\ntesting requirements; (vi) be subject to restrictions on how the drug is distributed or used; or (vii) be unable to obtain reimbursement\nfor use of the drug. Many of the factors that cause a delay in the commencement or completion of clinical trials may also ultimately lead\nto the denial of regulatory approval of our drug candidates. Further, the TFDA, the U.S. FDA or other regulatory authorities may disagree\nwith our clinical trial design or our interpretation of data from clinical trials, or may change the requirements for approval even after\nit has reviewed and commented on the design for our clinical trials.\n\n \n\nWe used one supplier for API-1, which formed the\nbasis for the NDA that has since been withdrawn by the Company. The supplier of API-1 sold a parcel of its land and is currently in the\nprocess of relocating and reconstructing its manufacturing facility. Consequently, API-1 is presently unavailable to us, and the supplier\nof API-1 withdrew its consent for us to reference their DMF on file with the U.S. FDA.\n\n \n\nThe U.S. FDA has determined that one of our four Phase III trials failed\nto demonstrate a statistically significant difference between Botreso® with API-1 and placebo in the primary efficacy endpoint\nin the MCS-2-US-a study. Given the current unavailability of API-1, we requested a Type D meeting on December 12, 2023, to propose\nconducting a new Phase III trial and Phase I PK study using API-2. The U.S. FDA provided written responses on February 23, 2024,\nwith their comments on the Phase III trial and Phase I PK study design and requested that we provide the Statistical Analysis Plan for\nthe Phase III study. We are currently finalizing the Phase III protocol and the Phase I PK study protocol from the synopsis to comply\nwith the U.S. FDA requirements. If the CMC comparability between API-1 and API-2 is approved, we will request a Type B meeting (WRO) with\nthe U.S. FDA to discuss our revised Phase III protocol, Statistical Analysis Plan, and PK study protocol.\n\n \n\n9\n\n \n\n \n\nWe intend to conduct the two studies in the US\nfollowing the completion of our second round of financing, with the completion targeted within one to two years. The study budget\ncannot be determined at present and will need to be estimated after further comments from the U.S. FDA. The aforementioned completion\ntimeline and study budget are additional to the originally allocated resources, necessitated by the lack of access to API-1 supplies.\n\n \n\n**Our drug candidates may cause serious adverse, undesirable or unacceptable\nside effects or may have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved\nlabel, and/or result in significant negative consequences following regulatory approval, if any.**\n\n \n\nAs is the case with pharmaceuticals generally, it\nis likely that there may be serious adverse, undesirable or unacceptable side effects caused by our drug candidates that could cause us\nor regulatory authorities to interrupt, delay or halt clinical trials and may result in a more restrictive label, a delay or denial of\nregulatory approval by the TFDA, the U.S. FDA or other comparable regulatory authorities, or a significant change in our clinical trial\nprotocols or even our development plan. Results of our future preclinical studies and clinical trials could reveal a high and unacceptable\nseverity or prevalence of adverse events. In such an event, our studies could be suspended or terminated and the TFDA, the U.S. FDA or\nother comparable regulatory authorities could order us to cease further development of, or deny approval of, our drug candidates for any\nor all targeted indications. Adverse events related to our drug candidates may affect patient recruitment or the ability of enrolled subjects\nto complete the study and could result in potential liability claims. Serious or life-threatening adverse events associated with any of\nour drug candidates or of a botanical constituent could be so rare in occurrence as to not be statistically likely to arise during clinical\ntrials and may only arise after regulatory approval and marketing. Any of these occurrences may significantly influence our reputation,\nbusiness, financial condition and prospects.\n\n \n\nAll identified serious adverse events have been determined to be “not\nrelated” to Botreso®, with the exception of a pancreatitis event observed in the MCS-2-US-c trial. In\nthis instance, the pancreatitis lasted only three days, and the causality was assessed as “possibly related” but not “definitely\nrelated,” as the event was most likely attributable to Metformin, a medication used to treat diabetes mellitus.\n\n \n\nAdditionally, the identification of serious adverse,\nundesirable or unacceptable side effects caused by any of our future approved drug candidates may lead to potentially significant negative\nconsequences, which include, but are not limited to, the following:\n\n \n\n●suspension of our marketing of the drug candidate;\n\n \n\n●withdrawal or revocation by regulatory authorities of their\napprovals of or the licenses for the drug candidate;\n\n \n\n●the requirement by regulatory authorities to conduct additional\nclinical trials, add additional warnings to, or otherwise change the label of the drug candidate, such as recommending or requiring additional\npre-screening testing prior to prescribing or administering the drug candidate or requiring a “black box” warning or contraindication,\nor to create a medication guide outlining the risks of such side effects for distribution to patients;\n\n \n\n10\n\n \n\n \n\n●restriction on the distribution of the drug candidate or\nimposition of burdensome implementation requirements on us through the establishment of a Risk Evaluation and Mitigation Strategy, or\nREMS, or similar strategy as may be required by the U.S. FDA or a comparable regulatory authority;\n\n \n\n●the requirement by regulatory authorities to conduct specific\npost-marketing studies of the drug candidate;\n\n \n\n●the requirement to change the way the drug candidate is distributed\nor administered;\n\n \n\n●becoming subjected to regulatory investigations, government\nenforcement actions or litigation proceedings, and being held liable for harm caused to subjects or patients;\n\n \n\n●the product becoming less competitive;\n\n \n\n●removal of drug candidates from the marketplace; and\n\n \n\n●harm to our reputation.\n\n \n\nAny of these events could prevent us from achieving\nor maintaining market acceptance of any particular drug candidate that is approved and could significantly harm our business, results\nof operations and prospects.\n\n \n\nFurther, the use of our drug candidates in\nconjunction with other therapies, may result in unique adverse events that could be exacerbated compared with adverse events from\nthe use of our drug candidates alone. Results of our studies could reveal a high and unacceptable severity or prevalence of adverse\nevents. These types of adverse events could be caused by our drug candidates and could cause us or regulatory authorities to\ninterrupt, delay or halt clinical trials and may result in a more restrictive indication or the delay or denial of regulatory\napproval by the TFDA, the U.S. FDA or other comparable regulatory authority.\n\n** **\n\n**The manufacture of our drug products is a complex process which\nrequires significant expertise and capital investment, and if we encounter problems in establishing our manufacturing capabilities for\nclinical or commercial scale or in the manufacture of our future products, our business could suffer.**\n\n \n\nAs of the date of this annual report, only four botanical drug products\nhave received the U.S. FDA’s approval for marketing as prescription drugs. The quality control of botanical drug products is very\ncomplex due to the variability of botanical raw material and the need to demonstrate that the therapeutic effect for the tested botanical\ndrug product batches is the targeted constituent (or constituents in the aggregate). It is challenging to ensure batch-to-batch consistency,\nwhich must be demonstrated to obtain U.S. FDA approval. Minor changes in geographical location of the API source or the manufacturing\nprocess can result in meaningful differences in clinical effects and may mean that earlier developed pharmacological, nonclinical and\nclinical data no longer apply to the changed product. If we are unable to obtain the U.S. FDA’s approval for marketing our drug\ncandidates, or if we experience significant delays in doing so, our business could be materially and adversely affected.\n\n \n\nThe manufacture of our drug products is a complex\nprocess, in part due to strict regulatory requirements and the inherent variability and sensitivities of the botanical nature of our drug\nproducts’ raw materials. If we are unable to identify an appropriate geographical location for growing our botanical raw materials\nto ensure consistency in the concentration of target constituents or if we are unable to identify an appropriate production site or suitable\ncollaborators to develop our manufacturing infrastructure, or if we fail to do so in a timely manner, any of these may lead to significant\ndelays in the clinical supply of our drug candidates as well as the commercial manufacturing of our drug candidates once regulatory and\nmarketing approvals have been obtained. In turn, this could delay our clinical trials, negatively impact our ability to ultimately obtain\nregulatory approval and materially harm any future commercialization plans.\n\n \n\n11\n\n \n\n \n\nIn addition, problems may arise during the manufacturing\nprocess for a variety of reasons, including, but not limited to, required consistency of botanical raw materials, equipment malfunction,\nfailure to follow specific protocols and procedures, problems with (including shortage of) raw materials, global supply chain issues,\ndelays related to the construction of new facilities or expansion of any future growing or manufacturing facilities, including changes\nin growing or manufacturing production sites and limits to manufacturing capacity due to regulatory requirements, changes in the types\nof products produced, increases in the prices of raw materials, physical limitations that could inhibit continuous supply, man-made or\nnatural disasters and environmental factors. For example, although we have not experienced material supply disruptions due to the COVID-19\npandemic, we cannot guarantee that we will not experience supply disruptions in the future due to the COVID-19 pandemic or any other pandemics,\nepidemics or other public health crises, natural catastrophes or other disasters.” If problems arise during the production of a\nbatch of future products, that batch of future products may have to be discarded and we may experience product shortages or incur added\nexpenses. This, as well as problems that may arise during the manufacturing process, could, among other things, lead to significant additional\ncosts and/or delays, lost revenue, damage to customer relationships, time and expense spent investigating the cause and, depending on\nthe cause, similar losses with respect to other batches or products. If problems are not discovered before such product is released to\nthe market, recall and product liability costs may also be incurred.\n\n** **\n\n**Changes in our drug candidates’ manufacturing or formulation\nmay result in additional costs or delay.**\n\n \n\nAs our drug candidates are developed through preclinical\nstudies to late-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program,\nsuch as raw materials testing and release, manufacturing methods and formulation, are altered in an effort to optimize processes, which\nmay not pass regulatory inspections. If we engage in the scale-up of manufacturing, we may encounter unexpected issues relating to the\nmanufacturing process or the quality, purity and stability of the product, and we may be required to refine or alter our manufacturing\nprocesses to address these issues. Such changes may not achieve these intended objectives. Any of these changes could cause our product\ncandidates to perform differently and affect the results of preclinical studies and clinical trials. Such changes may also require additional\ntesting, notification or approval by relevant regulatory authorities, including additional pharmacokinetics or pharmacodynamics trials.\nThis could delay completion of preclinical studies and clinical trials; require us to conduct bridging clinical trials or studies, or\nto repeat one or more clinical trials; increase study or clinical trial costs; or delay approval of our product candidates and jeopardize\nour ability to commence product sales and generate revenue.\n\n** **\n\n**We have not yet obtained marketing approval for a drug candidate\nand we may be unable to obtain, or may be delayed in obtaining, marketing approval for our drug candidates.**\n\n \n\nWe have not yet obtained marketing approval for a drug candidate.\nIt is possible that the TFDA, the U.S. FDA or other comparable regulatory authority may refuse to accept for review any NDAs that\nwe submit for our drug candidates. It is also possible that the U.S. FDA may conclude, after review of our data, that our application\nfor Botreso® is insufficient or the data fails to achieve clinical endpoints to statistical significance when compared\nwith placebo, and thus may delay the U.S. FDA’s issuance of marketing approval of Botreso®. If the TFDA, the U.S.\nFDA or other comparable regulatory authority does not accept or approve our NDAs for any of our drug candidates, it may require that we\nconduct additional clinical trials, preclinical studies or manufacturing validation studies and submit that data before it will reconsider\nour applications. Depending on the extent of these or any other required trials or studies, approval of any NDA or application that we\nsubmit may be delayed by several years or may require us to expend more resources than we have available. It is also possible that\nadditional trials or studies, if performed and completed, may not be considered sufficient by the TFDA, the U.S. FDA or other comparable\nregulatory authority to approve our NDAs. Any delay in obtaining, or an inability to obtain, marketing approvals would prevent us from\ncommercializing our drug candidates, generating revenues and achieving and sustaining profitability.\n\n** **\n\n**Obtaining and maintaining regulatory approval of our drug candidates\nin one jurisdiction does not mean that we will be successful in obtaining or maintaining regulatory approval of our drug candidates in\nother jurisdictions.**\n\n \n\nObtaining and maintaining regulatory approval of\nour drug candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other\njurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory\napproval process in others. For example, even if the U.S. FDA grants marketing approval of a drug candidate, comparable regulatory authorities\nin foreign jurisdictions must also approve the manufacturing, marketing and promotion of the drug candidate in those countries. Approval\nprocedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those\nin Taiwan or the U.S., including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may\nnot be accepted by regulatory authorities in other jurisdictions.\n\n \n\n12\n\n \n\n \n\nWe may also submit marketing applications in other\ncountries. Regulatory authorities have requirements for approval of drug candidates with which we must comply prior to marketing in those\njurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant\ndelays, difficulties, and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to\ncomply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will\nbe reduced and our ability to realize the full market potential of our drug candidates will be harmed.\n\n** **\n\n**Potential Non-Acceptance by the U.S. FDA of API-1 and API-2\nComparability could materially and adversely affect our business, financial condition, and results of operations.**\n\n \n\nActive pharmaceutical ingredient-1(API-1), the raw material we used\nin the previous clinical trials for Botreso®, is currently unavailable due to the supplier’s relocation and withdrawal\nof their consent to reference their Drug Master File on file with the U.S. FDA. We have completed the CMC documentation on the\nactive pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1 and API-2 and submitted it to the U.S.\nFDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. As of the date of this annual report, the Company has not yet\nsuccessfully demonstrated the comparability of API-1 and API-2.\n\n \n\nWe are currently in the process of providing the\nU.S. Food and Drug Administration (FDA) with the necessary information to demonstrate the comparability of API-1 and API-2 and are\nawaiting a response. However, there is a risk that the FDA may determine that API-1 and API-2 are not sufficiently comparable and we would\nhave to perform more clinical trials.\n\n \n\nThe FDA’s concerns primarily relate to potential\ndifferences in the sources and methods of producing API-1 and API-2, including, but not limited to, changes in agricultural sites, agricultural\nand collection practices, processing methods, and manufacturing techniques. Each of these factors could impact the quality, safety, and\nefficacy of the active pharmaceutical ingredients, leading to a requirement for additional data or even new clinical trials to establish\ncomparability.\n\n \n\nIf the FDA does not agree that API-1 and API-2 are sufficiently comparable,\nwe could face significant consequences, including, but not limited to, regulatory delays and increased costs. We will be required to repeat\nthe Botreso® and PCP clinical trials using API-2, or to conduct other additional clinical trials as may be required by\nthe U.S. FDA. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2\nthat is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso® and PCP, which\ncould significantly delay our product development efforts and result in increased costs” on page 13.\n\n \n\nThe approval process for our drug candidates could\nbe delayed significantly, as we may be required to conduct additional studies or provide further data to address the FDA’s concerns.\nThe need for additional studies or data submissions could result in substantial, unanticipated costs, which could adversely affect our\nfinancial condition and operational results.\n\n** **\n\n**Our ability to obtain FDA approval for our new drug application\n(NDA) may be delayed or denied due to concerns raised by the FDA regarding our clinical trial data and comparability of our active pharmaceutical\ningredients.**\n\n \n\nThe U.S. FDA has reviewed our proposed Phase III\nprotocol and Phase I pharmacokinetic (PK) synopsis, as reflected in their written response dated February 23, 2024. The U.S. FDA\nraised several concerns in this response that could impact our ability to obtain approval for our new drug application (NDA):\n\n \n\n(i)The U.S. FDA questioned whether one new Phase III study with\nAPI-2 would be sufficient, as they believe results from two positive Phase III efficacy studies provide more convincing evidence of effectiveness\nthan results from a single trial. Additionally, a single Phase III efficacy study could make it challenging to collect the amount of\nsafety information required for a new molecular entity.\n\n \n\n(ii)The U.S. FDA noted its concern that Study MCS-2-US-a did\nnot demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint. They also expressed\nconcerns regarding the treatment effect of questionable significance in Study MCS-2-TWN-a.\n\n \n\n13\n\n \n\n \n\n(iii)The U.S. FDA was concerned that our study plan had not specified\neither the quantity or quality of the confirmatory evidence, and did not state a specific clinical circumstance, ethical or practical\nconsideration, or unmet medical need that would preclude the conduct of a second adequate and well-controlled efficacy study.\n\n \n\n(iv)Additionally, regarding the comparability of API-1 and API-2,\nthe U.S. FDA commented that it will need more information on how we would demonstrate comparability between API-1 and API-2. They noted\nthat their determination of whether our original Phase III studies with API-1 would be useful depends on the quality of support for a\nconvincing link between products containing these APIs.\n\n \n\nIn response to these concerns and upon U.S. FDA’s\nrecommendation, we are developing a comparability plan to provide the U.S. FDA with convincing link and data between products containing\nAPI-1 and API-2. As of the date of this annual report, the Company is still in the process of providing the information required by the\nU.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.\n\n \n\nAfter our submission of our comparability plan and, if U.S. FDA agrees\nour data demonstrates comparability between API-1 and API-2, we will be able to rely on trials that were previously conducted using API-1,\nand we then will initiate the Botreso® Phase III study and the PK study using API-2 simultaneously. As mentioned earlier,\nfor Botreso® (API-1), we have conducted four Phase III clinical trials in the U.S. and Taiwan, including two pivotal\ntrials (one in each location) and two open-label extension studies (also one in each location) using API-1. The U.S. FDA raised concerns\nabout one pivotal Phase III trial in the U.S., which failed to demonstrate a difference between treatment groups for the primary efficacy\nendpoint in the intent-to-treat population. Additionally, the FDA expressed concerns regarding the reproducibility of some reported efficacy\nresults for Study MCS-2-TWN-a. However, the U.S. FDA had no further comments on the two open-label extension studies in the U.S. and Taiwan\nusing API-1. Therefore, if the FDA agrees that our data demonstrates comparability between API-1 and API-2, we will also need to conduct\nanother pivotal Phase III study using API-2, and we will work with the FDA to address the reproducibility issue.\n\n \n\nTo address the U.S. FDA’s concern that\nStudy MCS-2-US-a did not demonstrate a statistically significant difference between the drug and placebo in the primary efficacy endpoint,\nwe plan to conduct an additional Phase III study, MCS-2-US-b, using API-2.\n\n \n\nRegarding the U.S. FDA’s concerns about\nthe reproducibility of the reported efficacy results for Study MCS-2-TWN-a, we propose to re-analyze the statistical results of the MCS-2-TWN-a\nstudy data using Clinical Data Interchange Standards Consortium (CDISC) data sets that match the FDA’s requested data format. Then,\nwe will submit the reanalysis for further discussions with U.S. FDA about its concerns.\n\n \n\nOn May 14, 2024, we asked U.S. FDA to provide a written response\nto our questions about obtaining U.S. FDA’s review and comments on a newly proposed Phase III clinical trial protocol for Botreso®\nwith API-2 and a pharmacokinetic (PK) study. On May 23, 2024, we received a denial notice from the U.S. FDA, stating that it\nwas premature to provide such a written response at this stage of drug development, however, the U.S. FDA would continue its review of\nthe study design of PK study and Phase III clinical trial using API-2. The U.S. FDA decided that until the company provides complete Chemistry,\nManufacturing, and Controls (CMC) information on API-2 and a plan to establish comparability between API-1 and API-2, the U.S. FDA\nis not in a position to reach any agreement on protocols designed to establish the safety and efficacy of Botreso®. We\nhave completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between API-1\nand API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. If the U.S. FDA does\nnot agree that API-1 and API-2 are comparable, we will continue to research additional API sources based on our own patent, to pursue\nadditional outsourcing API vendors, and to follow U.S. FDA’s guidance for demonstrating comparability between API-1 and API-2 to\nthe U.S. FDA’s satisfaction. In the event that we are unable to establish comparability between API-1 and API-2, we will be required\nto repeat the Botreso® and PCP clinical trials using API-2, or to conduct other additional clinical trials as may be required\nby the U.S. FDA. For further details, see the risk factor titled “If we are unable to identify a supplier capable of producing API-2\nthat is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso® and PCP, which\ncould significantly delay our product development efforts and result in increased costs” on page 13.\n\n \n\nThere can be no assurance that the U.S. FDA\nwill agree with our comparability plan or that our additional studies will satisfactorily address the U.S. FDA’s concerns.\nAny failure to adequately address these concerns could significantly delay or prevent the approval of our NDA, which would materially\nand adversely affect our business, financial condition, and results of operations.\n\n** **\n\n14\n\n \n\n** **\n\n**If we are unable to identify a supplier capable of producing API-2\nthat is sufficiently comparable to API-1, we will be required to repeat our clinical trials for Botreso® and PCP, or to\nconduct other additional clinical trials as may be required by the U.S. FDA, which would significantly delay our product development\nand increase our costs.**\n\n \n\nOur clinical trials for Botreso® and PCP have thus far\nutilized API-1, an active pharmaceutical ingredient (API) produced by a supplier that is no longer available. We have transitioned to\nusing API-2, a new API produced by an alternative supplier, and are in the process of establishing comparability between API-1 and API-2.\nThe U.S. FDA requires that we demonstrate that API-2 is sufficiently comparable to API-1 to rely on the results of our previous clinical\ntrials using API-1.\n\n \n\nIf we are unable to successfully demonstrate this comparability, or\nif we are unable to identify another supplier capable of producing an API that meets the required standards, we may be required to repeat\nthe clinical trials that we conducted using API-1 for both Botreso® and PCP. This would encompass phases I, II, and III\nstudies for Botreso® using. API-2, and phases I and II studies for PCP using API-2, or to conduct other additional clinical\ntrials as may be required by the U.S. FDA.\n\n \n\nThis could result in significant delays in our product\ndevelopment timelines, increased costs, and could adversely affect our business, financial condition, and results of operations. Furthermore,\nwe cannot guarantee that any future clinical trials using API-2 or any alternative API would yield results similar to those previously\nobtained using API-1, which could further hinder our ability to obtain regulatory approval and bring our products to market.\n\n** **\n\n**Even if any of our drug candidates receives marketing approval,\nwe or others may later discover that the product is less effective than previously believed or causes rare undesirable side effects that\nwere not previously identified, which could compromise our ability, or that of any future collaborators, to market the product.**\n\n \n\nClinical trials of our drug candidates are conducted\nin carefully defined sets of patients who have agreed to enter into clinical trials. Consequently, it is possible that our clinical trials,\nor those of any future collaborator, may indicate an apparent positive effect of a drug candidate that is greater than the actual positive\neffect, if any, or alternatively fail to identify undesirable side effects. If, following approval of a drug candidate, we, or others,\ndiscover that the product is less effective than previously believed or causes rare undesirable side effects that were not previously\nidentified, any of the following adverse events could occur and may have material negative influence on our business and operations:\n\n \n\n●regulatory authorities may withdraw their approval of our\ndrug products;\n\n \n\n●we, or any future collaborators, may be required to recall\nthe product, change the way the product is administered or conduct additional clinical trials;\n\n \n\n●additional restrictions may be imposed on the marketing of,\nor the manufacturing processes for, the particular product;\n\n \n\n●we may be subject to fines, injunctions or the imposition\nof civil or criminal penalties;\n\n \n\n●regulatory authorities may require the addition of labeling\nstatements, such as recommending or requiring additional pre-screening testing prior to prescribing or administering the drug candidate\nor requiring a “black box” warning or a contraindication;\n\n \n\n●we, or any future collaborators, may be required to create\na Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients;\n\n \n\n●we, or any future collaborators, could be sued and held liable\nfor harm caused to patients;\n\n \n\n●the product may become less competitive; and\n\n \n\n●damages to our reputation.\n\n** **\n\n15\n\n \n\n** **\n\n**Our drug candidates may fail to achieve the degree of market acceptance\nby physicians, patients, patient advocacy groups, third-party payors and others in the medical community necessary for commercial success.**\n\n \n\nEven if our drug candidates receive regulatory approval,\nthey may nonetheless fail to gain sufficient market acceptance by physicians, patients, patient advocacy groups and others in the medical\ncommunity. Efforts to educate physicians, patients, patient advocacy groups and third-party payors on the benefits of our drug candidates\nmay require significant resources and may not be successful, and physicians and patients may prefer other drugs or drug candidates to\nours. If our drug candidates do not achieve an adequate level of acceptance, we may not generate significant revenue from sales of our\ndrugs or drug candidates and may not become profitable.\n\n \n\nThe degree of market acceptance of our drug candidates,\nif and only when they are approved for commercial sale, will depend on a number of factors, including, but not limited to, the following:\n\n \n\n●the clinical indications for which our drug candidates are\napproved;\n\n \n\n●the degree to which physicians, hospitals, patient advocacy\ngroups and patients consider our drug candidates as safe and effective treatments;\n\n \n\n●whether our drug candidates have achieved the perceived advantages\nof our drug candidates over alternative treatments;\n\n \n\n●the prevalence and severity of any adverse effects;\n\n \n\n●product labeling or package insert requirements of the TFDA,\nthe U.S. FDA or other comparable regulatory authorities;\n\n \n\n●limitations or warnings or contraindications contained in\nthe labeling approved by the TFDA, the U.S. FDA or other comparable regulatory authorities;\n\n \n\n●timing of market introduction of our drug candidates as well\nas competitive drugs;\n\n \n\n●cost of treatment in relation to alternative treatments;\n\n \n\n●availability of adequate coverage and reimbursement from\nthird-party payors and government authorities in the United States, Taiwan and/or any other jurisdictions;\n\n \n\n●willingness of patients to pay any out-of-pocket expenses\nin the absence of coverage and reimbursement by third-party payors and government authorities;\n\n \n\n●relative convenience and ease of administration, including\nas compared with alternative treatments and competitive therapies; and\n\n \n\n●the effectiveness of our sales and marketing efforts.\n\n** **\n\n**We face substantial competition, rapid technological change and\nthe possibility that our competitors may discover, develop or commercialize drugs before we do or more successfully than we do, or develop\ntherapies that are similar, more advanced or more effective than ours, each of which may adversely affect our financial condition and\nour ability to successfully market or commercialize our drug candidate.**\n\n \n\nThe development and commercialization of new drugs\nare highly competitive and the pharmaceutical industry is subject to rapid and significant technological change. We face competition with\nrespect to our drug candidates and will face competition with respect to any drug candidates that we may seek to develop or commercialize\nin the future, from companies of all sizes around the world, including major and specialty pharmaceutical companies and generic drug companies.\nPotential competitors further include academic institutions, government agencies and other public and private research organizations that\nconduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.\n\n \n\n16\n\n \n\n \n\nOur competitors may have significantly greater financial,\ntechnical, human and other resources, such as larger research and development staff and experienced marketing and manufacturing departments,\nand more experience in the development and regulatory approval process than we have. Mergers and acquisitions in the biotechnology and\npharmaceutical industries may result in even more resources being concentrated on our competitors. As a result, these companies may obtain\nregulatory approval from the TFDA, the U.S. FDA or other comparable regulatory authorities more rapidly than we are able to and may be\nmore effective in selling and marketing their products as well. This may lead to potential increased competition from drugs that have\nalready obtained approval in other jurisdictions. Smaller or early-stage companies may also prove to be significant competitors, particularly\nthrough collaborative arrangements with large, established companies. Our competitors also may also compete with us in recruiting and\nretaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials,\nas well as in acquiring technologies complementary to, or necessary for, our drug development programs.\n\n \n\nOur competitors may succeed in developing, acquiring,\nor licensing on an exclusive basis, products that are more effective, safer or less costly than any drug candidate that we may develop,\nor may achieve earlier patent protection, regulatory approval, product commercialization, and market penetration than we do. Additionally,\ntechnologies developed by our competitors may render our potential drug candidates uneconomical or obsolete, and we may not be successful\nin marketing our drug candidates against competitors. The availability of our competitors’ products could limit the demand, and\nthe price we are able to charge, for any drug candidates that we may develop and commercialize.\n\n** **\n\n**While certain of our employees have experience in launching and\nmarketing drug candidates, we may not be able to effectively build and manage a sales network or benefit from the sales network of third-party\ncollaborators.**\n\n \n\nWe are actively establishing a team for sales, marketing\nand distribution, which requires significant capital expenditures, management resources and time. We will have to compete with other biotechnology\ncompanies to recruit, hire, train and retain marketing and sales personnel. If we are unable to establish internal sales, marketing and\ncommercial distribution capabilities for any or all of the drugs we develop or in particular regions or markets, we may pursue third-party\ncollaborative arrangements regarding the sales and marketing of our drug products into such regions or markets. However, there can be\nno assurance that we will be able to establish or maintain such collaborative arrangements, or, if we are able to do so, that they will\nhave effective sales forces. Any revenue we receive will depend on the efforts of such third parties, which may not be successful. We\nmay have little or no control over the marketing and sales efforts of such third parties, and our revenue from product sales may be lower\nthan if we had commercialized our drug candidates ourselves. We will also face competition in our search for third parties to assist us\nwith the sales and marketing efforts of our drug candidates, which may result in collaborative arrangements with less-than-optimal terms.\n\n \n\nThere can be no assurance that we will be able to\ndevelop in-house sales and commercial distribution capabilities or establish or maintain relationships with third-party collaborators\nto successfully commercialize any product, and as a result, we may not be able to generate product sales revenue.\n\n** **\n\n**Even if we are able to commercialize any approved drug candidates,\nreimbursement may be limited or unavailable in certain market segments for our drug candidates, and we may be subject to unfavorable pricing\nregulations, which could harm our business.**\n\n \n\nThe regulations that govern regulatory approvals,\npricing and reimbursement for new therapeutic products vary widely from country to country. Some countries require approval of the sale\nprice of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or licensing approval is\ngranted. In some non-U.S. markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after\ninitial approval is granted. As a result, we might obtain regulatory approval for a drug product in a particular country, but then be\nsubject to price regulations that delay our commercial launch of the drug and negatively impact the revenues we are able to generate from\nthe sale of the drug in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug\ncandidates, even if our drug candidates obtain regulatory approval.\n\n \n\n17\n\n \n\n \n\nOur ability to commercialize any drugs successfully\nalso will depend in part on the extent to which reimbursement for these drugs and related treatments will be available from government\nhealth administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such\nas private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement\nlevels. A primary trend in the global healthcare industry is cost containment. Government authorities and these third-party payors have\nattempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party\npayors are requiring that companies provide them with predetermined discounts from list prices and are challenging the prices charged\nfor medical products. We cannot be sure that reimbursement will be available for any drug that we commercialize and, if reimbursement\nis available, what the level of reimbursement will be. Reimbursement may impact the demand for, or the price of, any drug for which we\nobtain regulatory approval. Obtaining reimbursement for certain of our drugs may be particularly difficult because of the higher prices\noften associated with drugs administered under the supervision of a physician. If reimbursement is not available or is available only\nto limited levels, we may not be able to successfully commercialize any drug candidate that we successfully develop.\n\n \n\nThere may be significant delays in obtaining reimbursement\nfor approved drug candidates, and coverage may be more limited than the purposes for which the drug candidates are approved by the TFDA,\nthe U.S. FDA or other comparable regulatory authorities. Moreover, eligibility for reimbursement does not imply that any drug will be\npaid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim\npayments for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Payment rates may\nvary according to the use of the drug and the clinical setting in which it is used, may be based on payments allowed for lower cost drugs\nthat are already reimbursed, and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by\nmandatory discounts or rebates required by government healthcare programs or private payors and by any future weakening of laws that presently\nrestrict imports of drugs from countries where they may be sold at lower prices than in the United States or Taiwan. Our inability\nto promptly obtain coverage and profitable payment rates from both government-funded and private payors for any future approved drug candidates\ncould have a material adverse effect on our business, our operating results, and our overall financial condition.\n\n** **\n\n**Preliminary interim or “top-line” data that we announce\nor publish from time to time may change as more data become available and are subject to audit and verification procedures that could\nresult in material changes in the final data.**\n\n \n\nFrom time to time, we may publish preliminary interim\nor “top-line” data from clinical trials. Positive preliminary data from such interim analyses may not be predictive of such\ntrial’s subsequent or overall results. Preliminary data are subject to the risk that one or more of the outcomes may materially\nchange as more data become available. Additionally, preliminary data are subject to the risk that one or more of the clinical outcomes\nmay materially change as patient enrollment continues and more patient data become available. Therefore, positive preliminary results\nin any ongoing clinical trial may not be predictive of such results in the completed trial. We also make assumptions, estimations, calculations\nand conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully evaluate all data. As a\nresult, preliminary data that we report may differ from future results from the same clinical trials, or different conclusions or considerations\nmay qualify such results, once additional data have been received and fully evaluated. Preliminary data also remain subject to audit and\nverification procedures that may result in the final data being materially different from the preliminary data we previously published.\nAs a result, preliminary data should be viewed with caution until the final data are available. Material adverse changes in the final\ndata compared to preliminary data could significantly harm our business prospects.\n\n** **\n\n**The data and information that we gather in our research and development\nprocess could be inaccurate or incomplete, which may have negative influence on our business, reputation, financial condition and results\nof operations.**\n\n \n\nWe collect, aggregate, process, and analyze data\nand information from our preclinical studies and clinical trials. We also engage in substantial information gathering following the identification\nof a promising drug candidate. Because data in the healthcare industry is fragmented in origin, inconsistent in format, often incomplete\nand rapidly evolving, the overall quality of data collected or accessed in the healthcare industry is often subject to challenge, the\ndegree or amount of data which is knowingly or unknowingly absent or omitted can be material, and we often discover data issues and errors\nwhen monitoring and auditing the quality of our data. If we make mistakes in the capture, input, or analysis of these data, our ability\nto advance the development of our drug candidates may be materially harmed and our business, prospects and reputation may suffer.\n\n \n\n18\n\n \n\n \n\nWe also engage in the procurement of regulatory\napprovals necessary for the development and commercialization of our drug candidates, for which we manage and submit data to governmental\nentities. These processes and submissions are governed by complex data processing and validation policies and regulations. Notwithstanding\nsuch policies and regulations, interim, top-line or preliminary data from our clinical trials that we announce or publish from time to\ntime may change as more patient data become available and are subject to audit and verification procedures that could result in material\nchanges in the final data, in which case we may be exposed to liability to a customer, court or government agency that concludes that\nour storage, handling, submission, delivery or display of health information or other data was wrongful or erroneous. Although we maintain\ninsurance coverage for clinical trials this coverage may prove to be inadequate or could cease to be available to us on acceptable terms,\nif at all. Even unsuccessful claims could result in substantial costs and diversion of management time, attention, and resources. A claim\nbrought against us that is uninsured or under-insured could harm our business, financial condition and results of operations.\n\n \n\nIn addition, we rely on CROs and other third parties\nto monitor and manage data for some of our ongoing preclinical studies and clinical trials and control only certain aspects of their activities.\nIf any of our CROs or other third parties do not perform to our standards in terms of data accuracy or completeness, data from those preclinical\nstudies and clinical trials may be compromised as a result, and our reliance on these parties does not relieve us of our regulatory responsibilities.\nFor a detailed discussion, see “— Risks Related to Our Dependence on Third Parties — As we rely on third parties\nto conduct our clinical trials and provide other important services related to research and development, regulatory submissions, and commercialization,\nif we fail to maintain our relationships with these third parties or if they do not successfully carry out their contractual duties, comply\nwith applicable laws, or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates\nand our business could be substantially harmed.”\n\n** **\n\n**The incidence and prevalence for target patient populations of our\ndrug candidates are based on estimates and third-party sources. The market opportunities for our drug candidates, if approved, may be\nsmaller than we anticipate.**\n\n \n\nWe expect to initially seek approval of Botreso® for\nthe treatment of BPH/LUTS. Our projections of the number of patients with BPH/LUTS and the portion of those patients that would benefit\nfrom treatment with Botreso® are based on our beliefs and estimates, including the report by Frost & Sullivan,\ndata published by third parties, including scientific literature, patient foundations and publicly available databases, and on internally\ngenerated data and assumptions. While we believe our market size information is generally reliable, such information is inherently imprecise,\nand relies on our and third parties’ projections, assumptions and estimates within our target market, which are necessarily subject\nto a high degree of uncertainty and risk due to a variety of factors. For more details, please refer to “Risks Related to the Discovery,\nDevelopment, and Commercialization of Our Drug Candidates — Even if we are able to commercialize any approved drug candidates, reimbursement\nmay be limited or unavailable in certain market segments for our drug candidates, and we may be subject to unfavorable pricing regulations,\nwhich could harm our business.” If such third-party or internally generated data prove to be inaccurate or we make errors in our\nprojections, assumptions or estimates based on that data, our addressable target market opportunity and/or our future growth rate may\nbe less than we currently estimate. Further, new sources may reveal a change in the estimated number of patients, and the number of patients\nmay turn out to be lower than expected. Additionally, the potentially addressable patient population for our current programs or future\ndrug candidates may be limited. Accordingly, the information regarding the size of our addressable market opportunity included in this\nannual report should not be taken as indicative of our future growth.\n\n \n\nThe ultimate market opportunity for our drug candidates\nwill depend on, among other things, the final labeling for such drug candidates as agreed with the TFDA, the U.S. FDA and any other applicable\ncomparable foreign regulatory authorities, acceptance by the medical community and patient access, potential competition and drug pricing\nand reimbursement. Even if we obtain significant market share for any drug candidate, if the potential target populations deviate from\nour estimation, our business, financial condition, results of operations and prospects may be harmed.\n\n** **\n\n**Potential product liability claims or lawsuits could divert our\nresources, incur substantial liabilities and limit the commercialization of any drug products that we may develop.**\n\n \n\nWe face an inherent risk of product liability claims\nas a result of the clinical testing of our drug candidates despite obtaining appropriate informed consents from our clinical trial participants.\nWe will face an even greater risk if we or any future collaborators commercially sell any product that we or they may develop. For example,\nwe may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing,\nmarketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure\nto warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under\nstate consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial\nliabilities or be required to limit the commercialization of our drug candidates.\n\n \n\n19\n\n \n\n \n\nRegardless of the merits or eventual outcome, liability\nclaims may result in significant negative consequences to our business and prospects, including, but not limited to:\n\n \n\n●significant negative media attention and reputational damage;\n\n \n\n●withdrawal of clinical trial participants or clinical trial\nsites or investigators and inability to continue clinical trials;\n\n \n\n●significant costs to defend the related litigation;\n\n \n\n●substantial monetary awards to trial participants or patients;\n\n \n\n●the inability to commercialize any drug candidates that we\nmay develop;\n\n \n\n●initiation of investigations by regulators;\n\n \n\n●loss of revenue;\n\n \n\n●diversion of management’s time and our resources; and\n\n \n\n●a decline in the price of our ordinary shares.\n\n \n\nWe currently maintain liability insurance covering\nour clinical trials. Although we maintain such insurance, any claim that may be brought against us could result in a judgment or settlement\nin an amount that is not covered, in whole or in part, by our insurance or which is in excess of the limits of our insurance coverage.\nOur insurance policies also contain various exclusions, and we may be subject to particular liability claims for which we have no coverage.\nWe will have to pay any amount awarded by a court or negotiated in a settlement that exceeds our coverage limitations or that is not covered\nby our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. In addition, if we cannot successfully\ndefend ourselves against such claims, we may incur substantial liabilities and be required to suspend or delay our ongoing clinical trials.\n\n** **\n\n**Illegal and/or parallel imports and counterfeit pharmaceutical products\nmay reduce demand for our future approved drug candidates and could have a negative impact on our reputation and business.**\n\n \n\nThe illegal importation of competing products from\ncountries where government price controls or other market dynamics result in lower prices may adversely affect the demand for our future\napproved drug candidates, if any, and, in turn, may adversely affect our sales and profitability in countries and regions where we plan\nto commercialize our products. Unapproved foreign imports of prescription drugs are illegal in most of the territories all over the world.\nHowever, illegal imports may continue to occur or even increase as the ability of patients and other customers to obtain these lower priced\nimports continues to grow. Furthermore, cross-border imports from lower-priced markets (which are known as parallel imports) into higher-priced\nmarkets could harm sales of our future drug products and exert commercial pressure on pricing within one or more markets. In addition,\ngovernment authorities may expand consumers’ ability to import lower priced versions of our future approved products or competing\nproducts from outside Taiwan, the U.S., China or other countries where we operate or expect to operate. Any future legislation or regulations\nthat increase consumer access to lower priced medicines from outside Taiwan, the United States, China or other countries where we\nmay operate could have a material adverse effect on our business.\n\n \n\nCertain products distributed or sold in the pharmaceutical\nmarket may be manufactured without proper licenses or approvals, or be fraudulently mislabeled with respect to their content or manufacturers.\nThese products are generally referred to as counterfeit pharmaceutical products. The counterfeit pharmaceutical product control and enforcement\nsystem, particularly in developing markets may be inadequate to discourage or eliminate the manufacturing and sale of counterfeit pharmaceutical\nproducts imitating our products. Since counterfeit pharmaceutical products in many cases have very similar appearances compared with the\nauthentic pharmaceutical products but are generally sold at lower prices, counterfeits of our products could quickly erode the demand\nfor our future approved drug candidates.\n\n \n\n20\n\n \n\n \n\nIn addition, counterfeit pharmaceutical products\nare not expected to meet our rigorous manufacturing and testing standards. A patient who receives a counterfeit pharmaceutical product\nmay be at risk for a number of dangerous health consequences. Our reputation and business could suffer harm as a result of counterfeit\npharmaceutical products sold under our brand name. In addition, thefts of inventory at warehouses, plants or while in-transit, which are\nnot properly stored and which are sold through unauthorized channels, could adversely impact patient safety, our reputation and our business.\n\n** **\n\n**RISKS RELATED TO OUR BUSINESS AND INDUSTRY**\n\n** **\n\n**We have been involved in legal proceedings in the ordinary course\nof our business, and are currently involved in active legal proceedings. Any adverse outcome of these legal proceedings could have a material\nadverse effect on our business, results of operations and financial condition.**\n\n \n\nAs of the date of this annual report, we are a party to a legal dispute\nagainst one of our shareholders, the Taizhou City Optimization and Upgrade Investment Partnership (Limited Partnership), or the Plaintiff,\nconcerning a claim of redemption. The dispute arose out of a share purchase agreement entered into in May 2019 among (i) the\nPlaintiff, (ii) Medi-life Co., Limited and Sira View Corp. (collectively, the “Transferring Shareholders”), (iii) Jyong\nBiotech Ltd., or “Jyong,” (iv) Health Ever Bio-Tech Co., Ltd., our Taiwan subsidiary, and (iv) our CEO, Ms. Fu Feng\nKuo, under which the Plaintiff purchased 1,794,258 shares of Jyong from the Transferring Shareholders at an aggregate price of RMB112,500,000.\nThe Plaintiff filed a complaint to the Taizhou Intermediate People’s Court and primarily claimed for a redemption of all shares\nof Jyong held by it, as well as confirmation of the Plaintiff’s right to liquidate all equity interests in our PRC subsidiary, Innovative\nBiotech Co., Ltd., which was pledged to the Plaintiff by our Hong Kong subsidiary, Top ShunXing Bio-Tech Co., Limited on July 22,\n2019. This dispute went on trial on March 16, 2023 and November 29, 2023, respectively. On March 25, 2024, the Taizhou\nCourt entered into a judgement partially in favor of the Plaintiff, ordering, among other things, the Transferring Shareholders to pay\nthe Redemption price of RMB112,500,000 and corresponding interests, and Jyong, HEB, and Ms. Fu Feng Kuo to be jointly liable for such\nobligation. The Taizhou Court also ruled that the Plaintiff is entitled to liquidate all equity interest in Innovative Biotech pledged\nto it in order to realize the payment of the aforementioned obligations. We filed an appeal against this judgement on April 29, 2024\nto the High People’s Court of Zhejiang Province (the “High Court”). The High Court held a hearing for this case on August 9,\n2024, and later issued a judgement against us to sustain the ruling of the Taizhou Court. As of December 31, 2024, our total potential\nliability under this judgement is USD 19,378,364. The judgment is final and not appealable, and the settlement agreement becomes legally\nbinding upon execution by the parties. Under applicable Chinese law, Taizhou is entitled to initiate enforcement proceedings to recover\nthe approximately RMB 134.5 million (USD 19.4 million) in cash, with Jyong, HEB, and Ms. Fu Feng Kuo jointly liable for such\nobligations. As of the date of this annual report, the Plaintiff has initiated enforcement procedure before competent courts respectively\nin Taiwan, Hong Kong and Cayman Islands, however, the concerned parties are actively engaged in negotiation to reach a settlement and\nthus postpone or suspend the enforcement procedure. Under PRC’s civil procedure, after a judgement from civil litigation enters\ninto effect, the parties may, at any time before and during the enforcement procedure, and until such enforcement procedure is completed,\nchoose to enter into a settlement agreement and file to the competent court to perform such agreement in lieu of enforcing the judgement.\nIn the opinion of our legal counsel for this lawsuit, should we eventually fail to reach a settlement with the Plaintiff, this case is\nlikely to result in an outcome unfavorable to us. We estimated the fair value of guarantee liabilities at the fair value of the shares\nat the inception of this guarantee and recorded guarantee liabilities of US$19.4 million and accrued liabilities – guarantee\nobligation of US$21.6 million as of December 31, 2024 and 2025, respectively. For more details about the legal dispute, please see\n“Item 4. Information on the Company — B. Business Overview — Legal Proceedings — Taizhou Investment\nDispute.” There are no insurance policies to cover related payment liabilities. The dispute may incur substantial costs of settlement\nor litigation and may result in an outcome adverse to our interests, which may in turn result in the loss of our PRC subsidiary and materially\nand adversely affect our business, financial conditions and results of operations.\n\n \n\nIn addition to the right of requesting redemption\nof the shares purchased, certain provisions of the share purchase agreement also stipulate that the Plaintiff shall enjoy various preferential\nrights and management authorities as a shareholder of Jyong. Specifically, section 7 of the share purchase agreement states that the Plaintiff\nshall be entitled to, among other things: (i) the right of anti-dilution should Jyong engage in financing activities at a lower price\nper share; (ii) the right of first refusal when Jyong issues new shares or any existing shareholder transfers shares to a third party\nbefore “Qualified Issuance and Listing” (defined as Jyong’s potential public filing of shares and listing on the main\nboard of The Stock Exchange of Hong Kong Limited, or the HKEx, which never occurred); and (iii) the right to take prior to other shareholders\nin case of liquidation events. Section 8 stipulates that should Jyong fails to get listed on the HKEx by June 30, 2020, then the\nexecution of certain matters shall obtain a written consent from the Plaintiff, including but not limited to: (i) approving any plans\nfor initial public offering or merger/acquisition of Jyong; (ii) amending Jyong’s registered capital or issuing any securities that\nmay increase Jyong’s registered capital or dilute Plaintiff’s shareholding; (iii) selling, transferring or licensing any important\nintellectual property rights of the group companies; and (iv) determining plan for issuing dividends or offsetting losses for Jyong.\n\n \n\n21\n\n \n\n \n\nOn November 23, 2022, the Bureau of Natural Resources and Planning\nin Taizhou (“Taizhou Resources Bureau”) issued a formal notice of reminder of default, requiring Innovative Biotech Co., Ltd.\nto pay liquidated damages of RMB13,080,170, with the amount of damages accruing from November 24, 2022 to the date of actual construction\nto be calculated separately, due to its failure to commence and complete construction on a parcel of land which it acquired the use right\nin December 2019. This claim arose out of a land use right agreement entered into on November 29, 2019 between Innovative Biotech\nCo., Ltd. and Taizhou Resources Bureau, under which the land use right for a parcel of state-owned land, with an aggregated area of 26,680\nsquare meters, was transferred to Innovative Biotech Co., Ltd. (the “Land Use Right Agreement”) for the construction of a\npharmaceutical factory project (the “Factory Project”). According to the Land Use Right Agreement, the construction of the\nFactory Project shall commence on May 28, 2020 and complete on November 28, 2022. However, Innovative Biotech Co., Ltd. failed\nto commence and complete the construction on agreed schedule. As of the date of this annual report, we have not paid the liquidated damages\nof RMB13,080,170 yet and we are currently in litigation with Taizhou Resources Bureau and awaiting the judgment. Under the Land Use Right\nAgreement, in addition to the liquidated damages, Innovative Biotech Co., Ltd. is obliged to pay land idling fee if the land is left idle\nfor more than one year but less than two years, and Taizhou Resources Bureau has the right to take back the land use right if the\nland is left idle for more than two years. On September 26, 2024, the Taizhou Resources Bureau issued a notice regarding taking\nback the land use right without compensation, giving Innovative Biotech Co., Ltd. the right to file for an administrative hearing within\nfive business days of receipt of notice. While the Company initially applied for the administrative hearing, it subsequently decided to\nrelinquish the land use rights to the Taizhou Resources Bureau in accordance with the notice. As a result, the Company will no longer\nproceed with the hearing process. On February 8, 2025, the Bureau issued a formal Decision Letter confirming the reclamation of IB’s\nland use rights without compensation. IB timely filed an application for administrative reconsideration with the Taizhou Municipal People’s\nGovernment. On June 26, 2025, the Municipal Government issued its decision upholding the Bureau’s reclamation order. Dissatisfied\nwith the outcome, IB initiated an administrative lawsuit with the Taizhou Intermediate People’s Court of Zhejiang Province on July\n23, 2025. On January 19, 2026, the Court rendered a judgment dismissing IB’s claims and ordering IB to bear the litigation costs\nof RMB 50. Although IB filed an appeal against this judgment on February 2, 2026, management, based on the advice of our local legal counsel,\nassesses that there is a high probability that the unfavorable judgment will be upheld on appeal. As of the date of this annual report,\nthe appellate process remains ongoing. The claims and proceedings discussed above, and other potential claims or proceedings relating\nto this issue, could result in substantial costs and materially and adversely affect our business, financial conditions and results of\noperations. For details about the legal dispute, please also see “Item 4. Information on the Company — B. Business Overview\n— Legal Proceedings — Taizhou Administrative Penalty” and “Item 4. Information on the Company — B. Business\nOverview — License and Collaboration Agreements — Taizhou Collaboration Framework Agreement.”\n\n \n\nMoreover, we are exposed to risks related to potential legal disputes\narising from agreements and contracts entered into from time to time in our ordinary course of business. For instance, on December 21,\n2018, we entered into a collaboration framework agreement, or the 2018 Taizhou Agreement, with Taizhou High-tech Industrial Park Management\nCommittee, or the “Taizhou High-tech Committee,” and Taizhou Infrastructure Investment Group Co., Ltd., pursuant to which\nTaizhou High-tech Committee agreed to grant up to 40 mu (approximate 26,666.66 sq.m.) industrial land to us for the Factory Project with\na favorable price of RMB400,000 per mu and 1,500 mu industry land to us subject to further negotiation. On September 12, 2019, based\non the 2018 Taizhou Agreement, we entered into an investment cooperation agreement with the Taizhou Circular Economic Industrial Concentration\nDistrict Administrative Committee (the “Taizhou Industry District Committee”), the successor of the Taizhou High-tech Committee,\nor the “2019 Taizhou Agreement,” which further specified details relating to the Factory Project with no material deviation\nfrom the 2018 Taizhou Agreement. According to the 2018 Taizhou Agreement and 2019 Taizhou Agreement, we are obligated to complete the\nconstruction of the Factory Project by 2022, which shall be ready for production by 2023. As of the date of this annual report, the construction\nof the Factory Project has been suspended. In addition, RMB30 million of Innovative Biotech Co., Ltd.’s registered capital\nshall be actually paid within one year of its registration. As of the date of this annual report, only RMB16,562,000 of Innovative Biotech\nCo., Ltd.’s registered capital has been paid. Furthermore, our PRC subsidiary shall pay a cash deposit of RMB 10,000 per mu after\nsigning the “standard parcel” development and construction agreement, or the Construction Agreement, with the Taizhou Industry\nDistrict Committee. As of the date of this annual report, both the deposit and the final balance for the land have already been paid in\nfull regarding the “Standard Land” deposit. There are liquidated penalties for failing to commence construction on schedule.\nHowever, we have not received any relevant payment demand notices as of the date of this annual report. According to the 2018 Taizhou\nAgreement, failure to commence and conclude the construction of the Factory Project on schedule as agreed may entitle the Taizhou Municipality\nwith the rights to replace the granted parcel, adjust or withdraw the preferential policies available under such agreement (including\nbut not limited to the government subsidy of RMB12.0 million innovative Biotech Co., Ltd. has already received), and take back the\nparcel with the original purchase price of RMB400,000 per mu. See also “Item 4. Information on the Company — B. Business Overview\n—  License and Collaboration Agreements — Taizhou Collaboration Framework Agreement.”\n\n \n\n22\n\n \n\n \n\nOn November 29, 2019, our PRC subsidiary, Innovative\nBiotech Co. (“IB”) entered into the Construction Agreement with the Taizhou Industry District Committee. The Construction\nAgreement provided specifics regarding the Factory Project IB was required to meet, including but not limited to the period of construction,\nplot ratio, amount of investment and tax income per mu. The Construction Agreement stipulates that before the Factory Project meets the\nrequirements of amount of investment and plot ratio under the Construction Agreement, IB and its shareholder shall not transfer the acquired\nparcel, directly or via transfer or pledge of equity, to a third party. Should IB breaches this agreement and causes the purpose of the\nConstruction Agreement unable to be realized, the Taizhou Industry District Committee shall have the right to terminate the Construction\nAgreement and claim corresponding damages. The Taizhou Industry District Committee did not explicitly consent to the pledging of IB’s\nshares to the Taizhou City Optimization and Upgrade Investment Partnership (Limited Partnership). However, as of the date of this annual\nreport, the Taizhou Industry District Committee has yet to raise any claims against IB based on the event discussed above. As of December 31,\n2024 and 2025, IB classified the liquidated damages and accrued interests of US$2.9 million and US$3.0 million as other current\nliabilities, respectively.\n\n \n\nOn November 29, 2022, the Taizhou Bay New District\nAdministrative Committee (the “Plaintiff”), successor of the Taizhou Industry District Committee, filed a civil complaint\nto the Taizhou Intermediate People’s Court (“the Taizhou Court”) against our PRC subsidiary, IB, claiming that IB has\nmaterially breached the 2019 Taizhou Agreement by failing to initiate and conclude the construction of the Factory Project in accordance\nwith the schedule stipulated by the 2019 Taizhou Agreement and the Land Use Right Agreement. The Plaintiff requested the Taizhou Court\nto terminate the 2019 Taizhou Agreement, and to order IB to return the government subsidy of RMB 12.0 million IB previously received\nunder the 2019 Taizhou Agreement, and to pay corresponding interests calculated at the Loan Prime Rate published by the National Inter-bank\nFunding Center. On December 1, 2022, the Court issued an order of preliminary asset preservation, freezing the RMB 10.7 million\ndeposit in IB’s bank account. This dispute went on trial on February 13, 2023, and two hearings were held on May 6, 2023\nand August 17, 2023 respectively. On September 8, 2023, the Court entered into a judgement in favor of the Plaintiff, terminating\nthe 2019 Taizhou Agreement and ordering IB to return the government subsidy of RMB12.0 million and corresponding interest and expenses\nto the Plaintiff. On September 14, 2023, we filed an appeal with the High People’s Court of Zhejiang Province (the “High\nCourt”) regarding each of the Court’s rulings described above. The High Court held a hearing for this case on October 24,\n2023. On December 12, 2023, the High Court issued a judgment against IB to affirm the Taizhou Court’s ruling in its entirety.\nOn January 5, 2024, the Taizhou Court issued an order of enforcement, stipulating, among other things, freezing and assignment of\nIB’s deposit in its bank account or withholding of IB’s income up to RMB 12.0 million and corresponding interests, and\nthe seizure, attachment and freezing of IB’s property valued at RMB 12.0 million and corresponding interests, and restrictions\non making certain high expenses by IB and related personnel. As of the date of this annual report, the 40 mu (approximate 26,666.66 sq.m.)\nindustrial land we acquired for the Factory Project have been seized by the Taizhou Court, and IB’s RMB 11.1 million deposit\nin its bank account has been transferred to the Plaintiff. On December 27, 2023, we filed a petition for retrial to the Supreme People’s\nCourt of the People’s Republic of China (the “Supreme Court”). The Supreme Court issued a decision to reject our petition\nfor retrial on August 21, 2024. As of December 31, 2024, and 2025, IB accrued US$0.4 million and US$0.4 million of\nother current liabilities for the loss contingencies for this dispute, respectively. For more details about the legal dispute, please\nsee “Item 4. Information on the Company — B. Business Overview— Legal Proceedings — Taizhou Government Subsidy\nDispute.” There are no insurance policies to cover related payment liabilities. This dispute has resulted in an outcome adverse\nto our interests, which may in turn result in financial loss and adversely affect our business, financial conditions and results of operations.\n\n \n\nWe initially planned to use approximately 10% of the net proceeds of\nJyong Biotech Ltd.’s initial public offering (the “IPO”) for (i) a possible settlement of the litigation with Taizhou\nBay New District Administrative Committee, including the return of government subsidy, litigation expenses and interest expenses, and\n(ii) commitments with Taizhou Resources Bureau, including liquidated damages and land idling fee. However, due to the significant increase\nin our total potential liabilities, including the judgment in the Taizhou Investment Dispute of approximately USD 21.6 million, our current\nliabilities now substantially exceed the originally anticipated amount. As a result, a significantly greater portion of the net proceeds\nfrom the IPO, or potentially all of such proceeds, may be required to satisfy our outstanding liabilities and legal obligations rather\nthan being deployed for research and development or other business purposes.  We may, in the future, be subject to allegations, claims\nand legal actions arising in the ordinary course of our business, which may include claims by shareholders and claims by third parties,\nincluding customers, suppliers, product consumers, business partners, or regulators. If any of these proceedings is determined adversely\nagainst us, or results in judgments, fines or settlements involving a payment of a material sum of money, it could materially and adversely\naffect our business, financial condition, and results of operations. In addition, negative publicity could adversely affect the reputation\nand brand of the operating entities. Even the successful defense of these proceedings may cause the operating entities to incur substantial\nlegal costs and may divert management’s attention and resources.\n\n** **\n\n23\n\n \n\n** **\n\n**We face economic and political risks associated with doing business\nin Taiwan, particularly due to the geopolitical tension between Taiwan and PRC that could negatively affect our business and hence the\nvalue of your investment.**\n\n \n\nOur performance is affected by global economic conditions\nas well as geopolitical issues and other conditions with global reach. Macroeconomic weakness and uncertainty make it more difficult for\nus to manage our operations and accurately forecast financial result. As a result of the invasion of Ukraine by Russia, the United States,\nthe European Union, the United Kingdom and other jurisdictions have imposed sanctions on certain Russian and Ukrainian persons and entities,\nincluding certain Russian banks, energy companies and defense companies, and have imposed restrictions on exports of various items to\nRussian and certain regions of Ukraine (including the self-proclaimed Donetsk People’s Republic and Luhansk People’s Republic\nand Crimea). Moreover, on February 22, 2022, the Office of Foreign Assets Control of the United States issued sanctions aimed\nat limiting Russia’s ability to raise funds through sovereign debt. Such ongoing events between Ukraine and Russia could also increase\nChina/Taiwan political tensions and U.S./China trade and other relations. These geopolitical issues have resulted in increasing global\ntensions and create uncertainty for global commerce. Any or all of these factors could negatively affect demand for our products and our\nbusiness, financial condition and result of operations. In addition, new requirements or restrictions could come into effect which might\nincrease the scrutiny on our business or result in one or more of our business activities being deemed to have violated sanctions. Our\nbusiness and reputation could be adversely affected if the authorities of the United Nations, the United States, the European Union,\nTaiwan or other jurisdictions were to determine that any of our activities constitutes a violation of the sanctions they impose or provides\na basis for a sanction’s designation of us.\n\n \n\nFurther, our headquarters, R&D center and material\nlaboratory are located in Taiwan. Accordingly, our business, financial condition and results of operations and the market price of our\nordinary shares may be affected by changes in governmental policies, taxation, growth rate, inflation rate or interest rates and by social\ninstability and diplomatic and social developments in or affecting Taiwan. In particular, the unique political status of Taiwan and its\ninternal political movement cause sustained tension between PRC and Taiwan. Past developments related to the interactions between PRC\nand Taiwan, especially in relation to trade activities such as bans on exports of goods from time to time, have on occasions depressed\nthe transactions and business operations of certain Taiwanese companies and overall economic environment. We cannot predict whether there\nwill be an escalation of the tensions between PRC and Taiwan which would lead to new bans or tariffs on exports or even conflict. Any\nconflict which threatens the military, political or economic stability in Taiwan could have a material adverse effect on our current or\nfuture business and financial condition and results of operations.\n\n** **\n\n**We have engaged in transactions with related parties, and such transactions\npresent possible conflicts of interest that could have an adverse effect on our business and results of operations.**\n\n \n\nWe have entered into a number of transactions\nwith related parties, including our significant stockholders, directors and executive officers, and their relatives. For example, we have\nentered into several transactions with our Co-Founder and Chief Executive Officer, Fu-Feng Kuo, including leases with landlord entities\nin which Ms. Kuo has or had a significant ownership interest. Also, From February 2021 to November 2021, the Company entered into several\nloan agreements with Nobel Consumer Corporation, which is managed by a related party of the Company. In addition, on June 24, 2025, we\nentered into a loan agreement with Linkage Gladden Enterprise Ltd., one of our shareholders. See “Item 7. Major Shareholders and\nRelated Party Transactions — B. Related Party Transactions” on page 144. We may in the future enter into additional transactions\nwith entities in which members of our board of directors and other related parties hold ownership interests.\n\n \n\nTransactions such as loans and leases in which related\nparties hold ownership interests present potential conflicts of interest. The interests of the landlord entity and lender, along with\ntheir shareholders, may not align with the interests of our stockholders regarding the negotiation and certain other matters related to\nour lease or loan terms with that landlord entity or lender. We may have achieved more favorable terms if such transactions had not been\nentered into with related parties, and these transactions, individually or in the aggregate, may have an adverse effect on our business\nand results of operations, or may result in government enforcement actions or other litigation.\n\n** **\n\n24\n\n \n\n** **\n\n**We will need to obtain substantial additional financing for our\noutstanding liabilities due to legal proceedings and commitment, and bank loans, and if we fail to obtain additional financing, we may\nnot be able to continue as a going concern.**\n\n \n\nThe accompanying consolidated financial statements in this annual report\nhave been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis,\nwhich contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the consolidated\nfinancial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might\nbe necessary should we be unable to continue as a going concern. We concluded that there is substantial doubt about our ability to continue\nas a going concern for a period of one year from the date that the unaudited interim consolidated financial statements included in this\nregistration statement were issued. In addition, our independent registered public accounting firm has issued a report that included an\nexplanatory paragraph referring to our significant net losses, working capital deficit and need to raise additional funds, which also\nraised substantial doubt about our ability to continue as a going concern as it noted.\n\n \n\nAs of the date of this annual report, we have\nnot generated revenue and we had a net working capital deficit of approximately US$11.9 million and US$11.2 million as of December 31,\n2024 and 2025, respectively. This deficit included accrued expenses of approximately US$1.2 million and US$1.0 million, accounts\npayable of approximately US$3,000 and US$2,000, short-term and long-term loan from banks of approximately US$7.3 million and US$8.3 million\nwhich will be due within the next twelve months, other current liabilities of approximately US$3.3million and US$3.4 million due\nto litigation with Taizhou Bay New District Administrative Committee and commitments with Taizhou Resources Bureau, and accrued interest\nowed under the loan agreement with related parties of approximately US$0.1 million and US$0.3 million, as of December 31,\n2024 and 2025, respectively. As of the date of this annual report, the Company’s total potential liability under the judgment in\nthe Taizhou Investment Dispute is approximately USD 21.6 million. The judgment is final and non-appealable. Under applicable Chinese law,\nTaizhou is entitled to initiate enforcement proceedings to recover approximately RMB 149.1 million (USD 21.6 million) in\ncash, with Jyong, HEB, and Ms. Fu Feng Kuo jointly and severally liable for such obligations. As of the date of this annual report, the\nPlaintiff has initiated enforcement procedure before competent courts respectively in Taiwan, Hong Kong and Cayman Islands, however, the\nconcerned parties are actively engaged in negotiation to reach a settlement and thus postpone or suspend the enforcement procedure. The\nCompany is engaged in ongoing discussions with the counterparty to reach a settlement; however, there can be no assurance that a settlement\nwill be reached. In the event that a settlement is not concluded, Jyong, HEB, and Ms. Fu Feng Kuo may be required to jointly pay the full\namount of approximately RMB 149.1 million (USD 21.6 million) in cash. Due to the significant increase in our total potential\nliabilities, a significantly greater portion of the net proceeds from our IPO, or potentially all of such proceeds, may be required to\nsatisfy our outstanding liabilities and legal obligations.  We will seek future funding based on the requirements of our business\noperations until we obtain regulatory approvals to market and commercialize our drug candidates and generate sufficient revenue from them.\nWe have the ability to exercise discretion and flexibility to deploy our capital resources used in research and development activities\naccording to the amount and timing of our financing activities.\n\n \n\nGiven that our significant current liabilities as described above exceed\nUS$20 million, there is a substantial risk that all or substantially all of the net proceeds from our IPO may be required to satisfy these\nliabilities. In such event, we would have limited funds available from the IPO proceeds to fund our research and development activities,\nclinical trials, or other business operations, and we would need to seek additional financing to continue our operations. There can be\nno assurance that such additional financing will be available on acceptable terms, or at all. If we are unable to obtain sufficient funding,\nwe may be forced to delay, reduce, or eliminate our research and development programs, which could have a material adverse effect on our\nbusiness, financial condition, and results of operations.\n\n \n\nWe cannot guarantee that we are able to obtain future\nfinancing in sufficient amounts or on terms acceptable to us, if at all. If we are unable to raise additional capital when required or\non acceptable terms, we may be required to:\n\n \n\n●significantly delay, scale back or discontinue the development\nor commercialization of our product candidates;\n\n \n\n●seek corporate partners for our product candidates when we\nwould otherwise develop our product candidates on our own, or at an earlier stage than otherwise would be desirable or on terms that\nare less favorable than might otherwise be available;\n\n \n\n●relinquish or license on unfavorable terms, our rights to\ntechnologies or product candidates that we otherwise would seek to develop or commercialize ourselves; or\n\n \n\n●significantly curtail or cease operations.\n\n \n\nIf we are unable to raise additional capital in\nsufficient amounts or on terms acceptable to us, we will be prevented from pursuing development and commercialization efforts, which will\nhave a material and adverse effect on our business, operating results and prospects which could result in a loss of your investment.\n\n** **\n\n25\n\n \n\n** **\n\n**We are required to comply with extensive regulations and hold a\nnumber of permits and licenses to carry on our business in Taiwan. Our ability to obtain and maintain these regulatory approvals is uncertain,\nand future government regulation may place additional burdens on our efforts to commercialize our drug candidates.**\n\n \n\nWe are a Taiwan-based biotechnology company which\nis subject to extensive government regulation and supervision in Taiwan. The regulatory framework addresses all aspects of operating in\nthe pharmaceutical industry, including product development activities, clinical trials, registration, production, distribution, packaging,\nlabelling, storage and shipment, advertising, licensing and post-approval pharmacovigilance certification requirements and procedures,\nperiodic renewal and reassessment processes, data security and data privacy protection requirements and compliance and environmental protection.\nViolation of applicable laws and regulations may materially and adversely affect our business. In particular, if we and our cooperators\nare unable to obtain or renew permits or licenses required for our operations, they will not be able to manufacture or distribute our\ndrug candidates and we will not be able to engage in the commercialization and distribution of our drug candidates and our business may\nbe adversely affected.\n\n \n\nThe regulatory framework governing the pharmaceutical\nindustry in Taiwan is subject to change and amendment from time to time. Any such change or amendment could materially and adversely impact\nour business, financial condition and prospects. The Taiwan government has introduced pharmaceutical laws and regulations in recent years,\nespecially imposing further obligations on the pharmaceutical manufacturers with respect to the management of drug safety surveillance.\nIn addition, in order to align Taiwan laws and regulations with the global practice, the Taiwan government also requires the pharmaceutical\nmanufacturers to comply with several global practice rules. In addition, the Taiwan government has also introduced reforms to the health\ncare system in recent years and may continue to do so, with an overall objective to expand basic medical insurance coverage and improve\nthe quality and reliability of healthcare services. The specific regulatory changes under the various reform initiatives remain uncertain.\nThe implementing measures to be issued may not be sufficiently effective to achieve the stated goals, and as a result, we may not be able\nto benefit from such reform to the extent we expect, if at all. Moreover, the various reform initiatives could give rise to regulatory\ndevelopments, such as more burdensome administrative procedures, which may have an adverse effect on our business, financial condition\nand prospects.\n\n \n\nFor further information regarding government regulation\nin Taiwan and other jurisdictions, see “Item 4. Information on the Company — B. Business Overview — Regulations”\nfor more details.\n\n** **\n\n**Even if we receive regulatory approval for any of our drug candidates,\nwe will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense, and if\nwe fail to comply with ongoing regulatory requirements or experience any unanticipated problems with any of our drug candidates, we may\nbe subject to penalties.**\n\n \n\nIf the TFDA, the U.S. FDA or a comparable regulatory\nauthority approves any of our drug candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting,\nstorage, advertising, promotion and record keeping for any such drug will be subject to extensive and ongoing regulatory requirements.\nThese requirements may include submissions of safety and other post-marketing information and reports, facility registration and drug\nlisting requirements, and continued compliance with current good laboratory practices, or cGLPs and current good clinical practice, or\nGCPs. Any regulatory approvals that we receive for our drug candidates may also be subject to limitations on the approved indicated uses\nfor which the drug may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing.\n\n \n\nOnce a drug is approved by the TFDA, the U.S. FDA\nor a comparable regulatory authority for marketing, it is possible that there could be a subsequent discovery of previously unknown problems\nwith the drug, including problems with manufacturing processes, or failure to comply with regulatory requirements. If any of the foregoing\noccurs with respect to our drug products, it may result in, among other things:\n\n \n\n●restrictions on the marketing or manufacturing of the drug,\nwithdrawal of the drug from the market or voluntary or mandatory drug recalls;\n\n \n\n●manufacturing delays and supply disruptions where regulatory\ninspections identify observations of noncompliance requiring mediation;\n\n \n\n●revisions to the labeling, including limitation on approved\nuses or the addition of additional warnings, contraindications or other safety information, such as boxed warnings;\n\n \n\n●imposition of a risk mitigation plan, or RMP, which may include\ndistribution or use restrictions;\n\n \n\n26\n\n \n\n \n\n●requirements to conduct additional post-market clinical trials\nto assess the safety of the product;\n\n \n\n●fines, warning letters or holds on clinical trials;\n\n \n\n●refusal by the TFDA, the U.S. FDA or comparable regulatory\nauthorities to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of drug\nlicense approvals;\n\n \n\n●product seizure or detention, or refusal to permit the import\nor export of products;\n\n \n\n●injunctions or the imposition of civil, administrative or\ncriminal penalties; and\n\n \n\n●revocation of approval of such drug.\n\n \n\nAny government investigation of alleged violations\nof law could require us to expend significant time and resources and could generate negative publicity. Moreover, regulatory policies\nmay change or additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates.\nIf we are not able to maintain regulatory compliance, regulatory approval that has been obtained may be lost and we may not achieve or\nsustain profitability, which may harm our business, financial condition and prospects significantly.\n\n** **\n\n**Our future success depends on our ability to attract, retain and\nmotivate senior management and qualified scientific employees.**\n\n \n\nWe are highly dependent on the expertise of the\nmembers of our research and development team, as well as the principal members of our management. We have entered into employment agreements\nwith our executive officers, but each of them may terminate their employment with us at any time with or without prior written notice.\nIn addition, we currently do not have “key-man” insurance for any of our executive officers or other key personnel.\n\n \n\nRecruiting, retaining and motivating qualified management,\nscientific, clinical, manufacturing and sales and marketing personnel will also be critical to our success. The loss of the services of\nour executive officers or other key employees could impede the achievement of our research, development and commercialization objectives\nand seriously harm our ability to successfully implement our business strategy. Further, replacing executive officers and key employees\nmay be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth\nof skills and experience required to successfully develop, gain regulatory approval of and commercialize drugs. Competition to hire from\nthis limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the\ncompetition among numerous biotechnology companies for similar personnel. We also experience competition for the hiring of scientific\nand clinical personnel from universities and research institutions. In addition, our management are required to devote significant time\nto compliance initiatives as we are a public company, which may require us to recruit more management personnel.\n\n \n\nCompetition for skilled personnel is intense, particularly\nin the pharmaceutical industry. We face competition for personnel from other companies, universities, public and private research institutions\nand other organizations. This competition may limit our ability to hire and retain highly qualified personnel on acceptable terms, or\nat all. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous biotechnology\ncompanies for similar personnel. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist\nus in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed or may have\ncommitments under consulting or advisory contracts with other entities that may limit their availability to us.\n\n** **\n\n**If we do not achieve our projected development and commercialization\ngoals in the timeframes we announced and expected, the commercialization of any of our drug candidates may be delayed and our business\nwill be negatively influenced.**\n\n \n\nFor planning purposes, we generally estimate the\ntiming of the accomplishment of various scientific, clinical, regulatory and other product development objectives. These milestones may\ninclude our expectations regarding the commencement or completion of scientific studies and clinical trials, the regulatory submissions\nor commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as\nthe completion of an ongoing clinical trial, the initiation of other clinical trials, receipt of regulatory approval or the commercial\nlaunch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a\nvariety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including:\n\n \n\n●our available capital resources or capital constraints we\nexperience;\n\n \n\n●the rate of progress, costs and results of our clinical trials\nand research and development activities, including the extent of scheduling conflicts with participating clinicians and collaborators;\n\n \n\n27\n\n \n\n \n\n●our ability to identify and enroll patients who meet clinical\ntrial eligibility criteria;\n\n \n\n●our receipt of approvals by the TFDA, the U.S. FDA and comparable\nregulatory authorities in other jurisdictions, and the timing thereof;\n\n \n\n●other actions, decisions or rules issued by regulators;\n\n \n\n●our ability to access sufficient, reliable and affordable\nsupplies of materials used in the manufacture of our drug candidates;\n\n \n\n●our ability to manufacture and supply clinical trial materials\nto our clinical sites on a timely basis;\n\n \n\n●the efforts of our collaborators with respect to the commercialization\nof our products; and\n\n \n\n●the securing of, costs related to, and timing issues associated\nwith, commercial product manufacturing as well as sales and marketing activities.\n\n \n\n●If we fail to achieve announced milestones in the timeframes\nwe expected, the commercialization of any of our drug candidates may be delayed, and our business, results of operations, financial condition\nand prospects may be adversely affected.\n\n** **\n\n**Certain of our facilities are mortgaged. If the mortgagees enforce\nthe mortgage, our business could be materially and adversely affected.**\n\n \n\nSome of our properties are mortgaged to commercial banks. We currently\nmortgage our titles of one construction and two land parcels in Yilan County to Taiwan Cooperative Bank Suao Branch (“Taiwan Cooperative\nBank”) to secure our long terms borrowings with a total amount of NTD88.2 million. The construction and two land parcels\nin Yilan County are currently used as our research and development center.\n\n \n\nTaiwan Cooperative Bank may, at any time, reduce\nthe loan amount or shorten the term of the loan to the Company, or deem it to be fully due, if any of the following circumstances apply\nto any of the debts owed by our Company to Taiwan Cooperative Bank, without prior notice or reminder from Taiwan Cooperative Bank: (1)\nwhen any debt is not paid off as agreed or when the principal is to be paid ; (2) when filing for settlement in accordance with the Bankruptcy\nLaw, filing for declaration of bankruptcy, filing for company reorganization, being notified by the clearing house to refuse transactions,\ncessation of business, liquidation of debts; (3) when the original obligation to provide guarantee is not provided according to the agreement;\n(4) when an heir is declared to have abandoned the inheritance after the person’s death; (5) when the main property is confiscated\ndue to criminal offenses; and (6) in addition to the above items, it is necessary for your bank to preserve its creditor’s rights\nand the matters specifically stipulated in the contract.\n\n \n\nIn case the mortgagees enforce the mortgage, we\nmay not be able to continue using our properties. Our business may be interrupted, and additional relocation costs may be incurred if\nwe are required to relocate operations. Even if the mortgage is not enforced, such third-party security rights may also limit our use\nof the collateral assets and adversely affect our operational efficiency. It could result in diversion of management attention and cause\nus to incur extra costs associated with addressing relevant issues. However, as of the date of this annual report, we are not aware of\nany action, claim or investigation being conducted or threatened by mortgagees to enforce the mortgage.\n\n** **\n\n**We are subject to risks relating to our leased properties.**\n\n \n\nWe lease certain real properties in Taiwan and China\nfrom third parties primarily as office space and operation facilities. We may become involved in disputes with the property owners or\nthird parties who otherwise have rights to or interests in our leased properties. We can provide no assurance that we will be able to\nfind suitable replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not be subject to material liability\nresulting from third parties’ challenges on our use of such properties. As a result, our business, financial condition and results\nof operations may be materially and adversely affected.\n\n \n\n28\n\n \n\n \n\nFurthermore, we have not registered any of our\nleasehold interests with the relevant Chinese governmental authorities as required by PRC law, which may expose us to potential fines\nif we fail to remediate after receiving any notice from the relevant Chinese governmental authorities. Failure to complete the lease registration\nwill not affect the legal effectiveness of the lease agreements according to PRC law, but the real estate administrative authorities may\nrequire the parties to the lease agreements to complete lease registration within a prescribed period of time, and failure to do so may\nsubject the parties to fines from RMB1,000 ($US137) to RMB10,000 ($US1,370) for each of such lease agreements. In addition, there may\nbe tax consequences, including stamp duty and other applicable taxes, in connection with such lease agreements.\n\n \n\nAs of the date of this annual report, we are current\non our mortgage payments, no defaults have occurred, and we had not been subject to any actions, claims or investigations threatened against\nus or our lessors with respect to the defects in our leasehold interests which may have a material adverse impact on our business, financial\ncondition and results of operation. However, if any of our leases is terminated as a result of challenges by third parties or governmental\nauthorities for lack of title certificates or proof of authorization to lease, we do not expect to be subject to any fines or penalties,\nbut we may be forced to relocate the affected offices, stores or warehouses and incur additional expenses relating to such relocation.\nWe cannot guarantee that suitable alternative locations are readily available on commercially reasonable terms, or at all, and if we fail\nto relocate our operations in a timely manner, our operations may be interrupted.\n\n** **\n\n**Our employees, consultants, collaborators and contract research\norganizations may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements,\nwhich could cause significant liability for us and harm our reputation.**\n\n \n\nWe are exposed to the risk that our employees, consultants,\ncollaborators and contract research organizations may engage in fraud or other misconduct, including intentional failures to comply with\nthe TFDA and the U.S. FDA regulations or similar regulations of comparable regulatory authorities, to provide accurate information to\nthe TFDA, the U.S. FDA or comparable regulatory authorities, to comply with manufacturing standards we have established, to comply with\nhealthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable regulatory authorities,\nto report financial information or data accurately or to disclose unauthorized activities to us. Such misconduct could also involve the\nimproper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to\nour reputation. It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity\nmay not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other\nactions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations. If any such actions are instituted\nagainst us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on\nour business, financial condition and results of operations, including the imposition of significant fines or other sanctions.\n\n** **\n\n**We have limited insurance coverage, and any claims beyond our insurance\ncoverage may result in our incurring substantial costs and a diversion of resources.**\n\n \n\nWe maintain insurance policies that are required\nunder applicable laws and regulations as well as insurance based on our assessment of our operational needs and industry practice. We\nalso maintain liability insurance covering our clinical trials as well as certain other types of insurance. Our insurance coverage may\nbe insufficient to cover any claim for product liability, damage to our fixed assets or employee injuries. Any liability or damage to,\nor caused by, our facilities or our personnel beyond our insurance coverage may result in our incurring substantial costs and a diversion\nof resources.\n\n \n\nOperating as a public company has made it more expensive\nfor us to obtain director and officer liability insurance, since we may be required to accept reduced policy limits and coverage or incur\nsubstantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain\nqualified people to serve on our board of directors, our board committees or as our executive officers. We do not know, however, if we\nwill be able to maintain existing insurance with adequate levels of coverage. Any significant uninsured liability may result in a substantial\namount of payments, which would adversely affect our cash position and results of operations.\n\n** **\n\n29\n\n \n\n** **\n\n**Our future success depends on our ability to promote our brand and\nprotect our reputation. If we are unable to effectively promote our brand, our business may be materially and adversely affected.**\n\n \n\nWe believe that enhancing and maintaining awareness of our “HEB”\nbrand is critical to achieving widespread acceptance of our drug candidates, especially Botreso®, and attracting new customers.\nSuccessful promotion of our brand depends largely on the quality of the products we offer and the effectiveness of our branding and marketing\nefforts. We expect that our branding and marketing efforts will require us to incur significant expenses and devote substantial resources.\nWe cannot guarantee that our sales and marketing efforts will be successful. Brand promotion activities may not lead to increased revenue\nin the near term, and, even if they do, any revenue increases may not offset the expenses we incur to promote our brand. Our failure to\nestablish and promote our brand and any damage to our reputation will hinder our growth. In addition, our reputation may be undermined\nas a result of the negative publicity about our company or our industry in general. If our drug candidates do not perform to customers’\nexpectations, it may result in lower confidence in our products in general, which may in turn impair our operating results and our reputation.\n\n** **\n\n**The tax laws of the jurisdictions in which we operate may adversely\naffect our business and our tax results.**\n\n \n\nThe tax laws applicable to our business activities\nare subject to change and uncertain interpretation. Our tax position could be adversely impacted by changes in tax rates, laws, practices,\ntreaties or regulations or changes in the interpretation thereof by the authorities in jurisdictions in which we do business.\n\n \n\nMoreover, we conduct operations through our subsidiaries\nin various tax jurisdictions pursuant to transfer pricing arrangements between us and our subsidiaries. While we believe that we operate\nin compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on\napplicable tax authorities. If tax authorities in any jurisdiction in which we operate were to successfully challenge our transfer prices\nas not reflecting arms’ length transactions, they could require us to adjust our transfer prices and thereby reallocate our income\nto reflect these revised transfer prices, which could result in a higher tax liability to us. Furthermore, a tax authority could assert\nthat we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, and such an assertion, if\nsuccessful, could increase our expected tax liability in one or more jurisdictions. Such circumstances could adversely affect our financial\ncondition, results of operations and cash flows.\n\n** **\n\n**If we, our CROs, consultants or any other collaborators fail to\ncomply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could\nhave a material adverse effect on the success of our business.**\n\n \n\nWe and third parties, such as our CROs and consultants\nor any other collaborators, are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory\nprocedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations may involve the use\nof hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products.\nWe generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination\nor injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held\nliable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with\ncivil or criminal fines and penalties.\n\n \n\nIn addition, we may be required to incur substantial\ncosts to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations\nmay impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial\nfines, penalties or other sanctions.\n\n** **\n\n**Although the audit report included in this annual report is issued\nby an independent registered public accounting firm that is subject to inspections by the Public Company Accounting Oversight Board, or\nthe PCAOB, and has been inspected by the PCAOB on a regular basis, there is no guarantee that future audit reports will be prepared by\nauditors or their international affiliates in jurisdictions where the PCAOB is able to fully inspect their work, and as such, future investors\nmay be deprived of such inspections, which could result in limitations or restrictions to our access of the U.S. capital markets.**\n\n \n\nOn April 21, 2020, SEC Chairman Jay Clayton\nand PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks\nassociated with investing in companies based in or having substantial operations in emerging markets including China. The joint statement\nemphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks\nof fraud in emerging markets.\n\n \n\n30\n\n \n\n \n\nOn May 18, 2020, Nasdaq filed three proposals\nwith the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market,”\n(ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and\n(iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s\nauditors.\n\n \n\nOn May 20, 2020, the U.S. Senate passed\nthe HFCAA requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit\nspecified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s\nauditors for three consecutive years, the issuer’s securities are prohibited from trading on a national exchange. On December 2,\n2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law. On March 28,\n2021, the SEC issued interim measures implementing the HFCAA which became effective on May 5, 2021. On December 2, 2021, the\nSEC adopted final amendments implementing congressionally mandated submission and disclosure requirements of the HFCAA, which sent into\neffect on January 10, 2022. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable\nAct. The bill, which was enacted, shortened the three-consecutive-year compliance period under the HFCAA to two consecutive years.\nAs a result, the time period before our ordinary shares may be prohibited from trading or delisted will be reduced. On September 22,\n2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated\nunder the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign\njurisdiction because of a position taken by one or more authorities in that jurisdiction.\n\n \n\nInspections of an independent registered public\naccounting firm conducted by the PCAOB outside China have at times identified deficiencies in those auditors’ audit procedures and\nquality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The recent joint\nstatement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act, or HFCAA,\nall call for additional and more stringent criteria to be applied to emerging market companies, including companies based in China, upon\nassessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. On August 26,\n2022, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the PRC Ministry of Finance, which\nwas the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in\nmainland China and Hong Kong completely, consistent with U.S. Law. On December 15, 2022, the PCAOB determined that it was\nable to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong\nKong and vacated its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate\nthe PCAOB’s access in the future, the PCAOB may consider the need to issue a new determination. On December 29, 2022, the Accelerating\nHFCAA was signed into law, which amended the HFCAA by requiring the SEC to prohibit an issuer’s securities from trading on any U.S.\nstock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.\n\n \n\nOur auditor, WWC, P.C., headquartered in San Mateo, California, is\nindependent registered public accounting firms with the PCAOB, are required under the laws of the United States to undergo regular\ninspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Therefore, it\nis not subject to the determinations announced by the PCAOB on December 16, 2021 as it is not on the list published by the PCAOB. Although\nwe have a subsidiary within the PRC, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of\nthe Chinese government authorities, our auditor, WWC, P.C., headquartered in San Mateo, California, has been inspected by the PCAOB on\na regular basis. However, due to the recent developments in connection with the implementation of the HFCAA, we still cannot assure you\nwhether the SEC, Nasdaq or other regulatory authorities would apply additional and more stringent criteria to us after considering the\neffectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency\nof resources, geographic reach or experience as it relates to the audit of our consolidated financial statements. The requirement in the\nAccelerating HFCAA that the PCAOB be permitted to inspect the issuer’s public accounting firm within two years, may result\nin our delisting in the future if the PCAOB is unable to inspect our accounting firm at such future time.\n\n** **\n\n31\n\n \n\n** **\n\n**Our internal computer systems, or those used by our consultants\nor any other third-party cooperators may fail or suffer breakdowns, cyberattacks or information security breaches that could compromise\nthe confidentiality, integrity and availability of such systems and data, result in material disruptions of our development programs and\nbusiness operations, risk disclosure of confidential, financial or proprietary information, and affect our reputation.**\n\n \n\nDespite the implementation of security measures,\nour internal computer systems or those used by our consultants or any other third-party cooperators, may be vulnerable to damage from\ncomputer viruses and unauthorized access. As the cyber-threat landscape evolves, attacks are growing in frequency, sophistication, and\nintensity, and are becoming increasingly difficult to detect. These risks are increased given the recent work from home arrangements because\nof the monkeypox outbreak and the threat of Russian cyberattacks in response to the war in Ukraine. Such attacks could include the use\nof key loggers or other harmful and virulent malware, including ransomware or other denials of service, and can be deployed through malicious\nwebsites, the use of social engineering, and/or other means. If a breakdown, cyberattack, or other information security breach were to\noccur and cause interruptions in our operations, it could result in a misappropriation of confidential information, including our intellectual\nproperty or financial information, and a material disruption of our development programs and our business operations. For example, the\nloss of clinical trial data from completed, ongoing, or future clinical trials could result in delays in our regulatory approval efforts\nand significantly increase our costs to recover or reproduce the data. Likewise, we rely on our third-party research institution collaborators\nfor research and development of our drug candidates and other third parties for the manufacture of our drug candidates and to conduct\nclinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. To the\nextent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure\nof confidential, financial, or proprietary information, including data related to our personnel, we could incur liability or risk disclosure\nof confidential, financial, or proprietary information, and the further development and commercialization of our drug candidates could\nbe delayed. There can be no assurance that we and our business counterparties will be successful in efforts to detect, prevent, or fully\nrecover systems or data from all breakdowns, service interruptions, attacks, or breaches of systems that could adversely affect our business\nand operations and/or result in the loss of critical or sensitive data, which could result in financial, legal, business, or reputational\nharm to us.\n\n** **\n\n**Failure to comply with existing or future laws and regulations related\nto privacy or data security could lead to government enforcement actions, which could include civil or criminal fines or penalties, private\nlitigation, other liabilities, and/or adverse publicity. Compliance or the failure to comply with such laws could increase the costs of\nour products, could limit their use or adoption, and could otherwise negatively affect our operating results and business.**\n\n \n\nThe regulatory framework for the collection, use,\nsafeguarding, sharing, transfer and other processing of personal information worldwide is rapidly evolving and is likely to remain uncertain\nfor the foreseeable future. Regulatory authorities in virtually every jurisdiction in which we operate have implemented and are considering\na number of legislative and regulatory proposals concerning personal data protection. Additionally, the interpretation and application\nof data protection laws in jurisdictions applicable to us are often uncertain and in flux. We therefore face uncertainty as to the exact\ninterpretation of any such requirements, and we may be unsuccessful in implementing all measures required by data protection authorities\nor courts in interpretation of new laws.\n\n \n\nSince we are conducting clinical trials in the U.S.,\nwe are subject to laws and regulations that address privacy, personal information protection and data security at both the federal and\nstate levels, including federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health\nInformation Technology and Clinical Health Act, and its implementing regulations, which imposes certain requirements relating to the privacy,\nsecurity and transmission of individually identifiable health information. Numerous laws and regulations, including security breach notification\nlaws, health information privacy laws, and consumer protection laws, govern the collection, use, disclosure and protection of health-related\nand other personal information. Given the variability and evolving state of these laws, we face uncertainty as to the exact interpretation\nof the new requirements, and we may be unsuccessful in implementing all measures required by regulators or courts in their interpretation.\n\n \n\n32\n\n \n\n \n\nWe are also subject to laws and regulations that\naddress personal information protection and data security in Taiwan, primarily including the Personal Data Protection Act (“PDPA”),\nunder which we are generally required to give notice to and obtain consent from an individual before collecting, processing, or using\nany of the said individual’s personal information, subject to certain exceptions, and are restricted from providing personal information\nbeyond the authorized scope to third parties without an individual’s prior consent. Personal data pertaining to a natural person’s\nmedical records, healthcare, genetics, sex life, physical examination and criminal records are classified as sensitive personal data,\nwhich shall be subject to certain stricter obligations. Any violation may lead to a fine ranging from NTD20,000 to NTD500,000, in some\ncases up to NTD1,000,000 depending on the violating scenario and be liable for any damages caused. Moreover, in the event that the violation\nis with the intention of obtaining unlawful gains, or with the intention of impairing other person’s interests, thereby causing\ndamage to others, such violation may lead to the imprisonment for no more than five years.\n\n \n\nRegulatory authorities in Europe have implemented\nand are considering a number of legislative and regulatory proposals concerning data protection. For example, the General Data Protection\nRegulation (EU) 2016/ 679, or the GDPR, which became effective in May 2018, imposes a broad range of strict requirements on companies\nsubject to the GDPR, such as us, including, but not limited to, requirements relating to having legal bases for processing personal information\nrelating to identifiable individuals and transferring such information outside the European Economic Area (including to the U.S.), providing\ndetails to those individuals regarding the processing of their personal information, keeping personal information secure, having data\nprocessing agreements with third parties who process personal information, responding to individuals’ requests to exercise their\nrights in respect of their personal information, reporting security breaches involving personal data to the competent national data protection\nauthority and affected individuals and recordkeeping. The GDPR substantially increases the penalties to which we could be subject in the\nevent of any non-compliance, including fines of up to €10.0 million or up to 2% of our total worldwide annual turnover for certain\ncomparatively minor offenses, or up to €20.0 million or up to 4% of our total worldwide annual turnover for more serious offenses.\nGiven the new law, we face uncertainty as to the exact interpretation of the new requirements, and we may be unsuccessful in implementing\nall measures required by data protection authorities or courts in interpretation of the new law. National laws of member states of the\nEuropean Union are in the process of being adapted to the requirements under the GDPR. Because the GDPR specifically gives member\nstates flexibility with respect to certain matters, national laws may partially deviate from the GDPR and impose different obligations\nfrom country to country, leading to additional complexity and uncertainty.\n\n \n\nWe expect that we will continue to face uncertainty\nas to whether our efforts to comply with evolving obligations under global data protection, privacy and security laws will be sufficient.\nAny failure or perceived failure by us to comply with applicable laws and regulations could result in reputational damage or proceedings\nor actions against us by governmental entities, individuals or others. These proceedings or actions could subject us to significant civil\nor criminal penalties, damages, injunctive relief and negative publicity, result in the delayed or halted transfer or confiscation of\ncertain personal information, require us to change our business practices, increase our costs and otherwise materially harm our business,\nprospects, financial condition and results of operations. In addition, our current and future relationships with customers, vendors,\npharmaceutical collaborators and other third parties could be negatively affected by any proceedings or actions against us, or current\nor future data protection obligations imposed on them under applicable law. In addition, to the extent that any disruption or security\nbreach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary\ninformation, we could incur significant legal and financial exposure and reputational damage that could potentially have an adverse effect\non the development of our drug candidates and our business.\n\n** **\n\n**Our Taiwan subsidiaries are subject to restrictions on paying dividend\nor making other payments to us, which may restrict our ability to satisfy its liquidity requirements.**\n\n \n\nAs an exempted company with limited liability incorporated\nunder the laws of the Cayman Islands structured as a holding company, we may need dividends and other distributions on equity from our\nTaiwan subsidiaries to satisfy our liquidity requirements. Current Taiwan regulations permit our Taiwan subsidiaries to pay dividends\nto their respective shareholders only out of their accumulated profits, if any, which shall first make up previous losses and set aside\nat least 10% of its accumulated profits each year. These reserves are not distributable as cash dividends. Furthermore, if our Taiwan\nsubsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends\nor make other payments to us. Any limitation on the ability of our Taiwan subsidiaries to distribute dividends or to make payments to\nus may restrict our ability to satisfy our liquidity requirements. In addition, the dividend payments by our Taiwan subsidiaries to us\nshall be subject to the withholding tax of 21% since January 1, 2018.\n\n** **\n\n33\n\n \n\n** **\n\n**Taiwan laws and regulations of loans to and direct investment in\nTaiwan entities by offshore holding companies may delay or prevent us from using the proceeds of our IPO to make loans or additional contributions\nto our Taiwan subsidiaries, which could materially and adversely affect our ability to fund and expand our business.**\n\n \n\nWe are an offshore holding company conducting our\noperations substantially in Taiwan through our Taiwan subsidiaries. We may make loans to our Taiwan subsidiaries, or we may make additional\ncapital contributions to our Taiwan subsidiaries, or we may establish new Taiwan subsidiaries and make capital contributions to these\nnew Taiwan subsidiaries, or we may acquire offshore entities with business operations in Taiwan in an offshore transaction.\n\n \n\nMost of these ways are subject to Taiwan regulations\nand approvals or registration. For example, investment, including lending long-term loans, in Taiwan entities require Foreign Investment\nApproved from the Investment Commission, Ministry of Economic Affairs. Furthermore, foreign entities are prohibited from investing in\nsome industries which are relating to national security and environmental protection, as specified in the negative list provided by Taiwan\nauthority.\n\n** **\n\n**Our Taiwan subsidiaries are subject to foreign exchange control\nimposed by Taiwan authorities, which may affect the paying dividends, repatriating the interest or making other payments to us.**\n\n \n\nCurrently Taiwan regulates only those foreign exchange\ntransactions that involve the conversion of the NTD into foreign currencies. Pursuant to the relevant provisions of Taiwan Foreign Exchange\nControl Act, foreign exchange transactions by a company shall be submitted and such remittance shall be subject to the approval of the\nCentral Bank of Taiwan where the annual accumulated settlement amount of foreign exchange purchased or sold has exceeded USD50 million.\nNevertheless, Taiwan government may impose further foreign exchange restrictions in certain emergency situations, where Taiwan government\nexperiences extreme difficulty in stabilizing the balance of payments or where there are substantial disturbances in the financial and\ncapital markets in Taiwan. If the dividend payments or other payments by our Taiwan subsidiaries and branches to us involves the currency\nconversion from NTD to US Dollar, such conversion would be subject to the foregoing foreign exchange control imposed by Taiwan authority.\n\n** **\n\n**We are subject to changing laws and regulations regarding regulatory\nmatters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.**\n\n \n\nWe are subject to rules and regulations by various\ngoverning bodies, including, for example, as a public company, the SEC, which is charged with the protection of investors and the oversight\nof companies whose securities are publicly traded as well as Nasdaq, and the various regulatory authorities in the Cayman Islands and\nTaiwan, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations\nhave resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management\ntime and attention from revenue-generating activities to compliance activities. Further, there could be unanticipated changes in existing\nregulatory requirements. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability\nto commercialize and generate revenues from our drug candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn,\nthe value of our Company and our operating results will be adversely affected.\n\n \n\nMoreover, because these laws, regulations and standards\nare subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution\nmay result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure\nand governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty\nand our business may be harmed.\n\n** **\n\n**We may be exposed to liabilities under the U.S. Foreign Corrupt\nPractices Act, or the FCPA, and similar anti-corruption and anti-bribery laws of Taiwan and other countries in which we operate, as well\nas U.S. and certain foreign export controls, trade sanctions and import laws and regulations. Compliance with these legal requirements\ncould limit our ability to compete in foreign markets and any determination that we have violated these laws could have a material adverse\neffect on our business or our reputation.**\n\n \n\nOur operations are subject to the FCPA and similar\nanti-bribery or anti-corruption laws, regulations or rules of Taiwan and other countries in which we operate. The FCPA and these other\nlaws generally prohibit us, our officers, and our employees and intermediaries from, directly or indirectly, offering, authorizing or\nmaking improper payments to non-U.S. government officials for the purpose of obtaining or retaining business or other advantage.\nWe may engage third parties for preclinical studies or clinical trials outside of the United States, to sell our products abroad\nonce we enter a commercialization phase, and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals.\nWe have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities\nand other organizations. As our business expands, the applicability of the FCPA and other anti-bribery laws to our operations will increase.\nIf our procedures and controls to monitor anti-bribery compliance fail to protect us from reckless or criminal acts committed by our employees\nor agents or if we, or our employees, agents, contractors or other collaborators, fail to comply with applicable anti-bribery laws, our\nreputation could be harmed and we could incur criminal or civil penalties, other sanctions and/or significant expenses, which could have\na material adverse effect on our business, including our financial condition, results of operations, cash flows and prospects.\n\n \n\n34\n\n \n\n \n\nIn addition, our products may be subject to U.S. and\nforeign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of our products,\nor our failure to obtain any required import or export authorization for our products, when applicable, could harm our international or\ndomestic sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding the export of our products\nmay create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to\nsome countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain products\nand services to countries, governments and persons targeted by U.S. sanctions. If we fail to comply with export and import regulations\nand such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. Moreover, any new\nexport or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries,\npersons or products targeted by such regulations, could result in decreased use of our products by, or in our decreased ability to export\nour products to, existing or potential customers with international operations. Any decreased use of our products or limitation on our\nability to export or sell our products would likely adversely affect our business.\n\n** **\n\n**Our operations are subject to the effects of a rising rate of inflation.**\n\n \n\nTaiwan has recently experienced historically high\nlevels of inflation. The inflation rate of Taiwan inched up to 2.7% in December of 2022 from 2.4% in the previous month. The inflation\nrate in June 2022 was 3.6%, highest inflation rate since August of 2008. As of December 2024 and 2025, the inflation rate in Taiwan stood\nat 2.10%. and 1.31%, respectively. If the inflation rate increases, for example due to increases in the costs of labor and supplies, it\nwill affect our expenses, such as employee compensation and research and development charges. Research and development expenses account\nfor a significant portion of our operating expenses. Such increased charges may not be readily recoverable during the period of time that\nwe are bringing the drug candidates to market. Additionally, Taiwan is experiencing an acute workforce shortage, which in turn, has created\na very competitive wage environment that may increase our operating costs. To the extent inflation results in rising interest rates and\nhas other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.\n\n** **\n\n**Our business may be exposed to foreign exchange risks.**\n\n \n\nWe conduct clinical trials in multiple jurisdictions\nand thus we have expenses denominated in local currencies in multiple jurisdictions in connection with, among other things, our sponsored\nclinical trials, purchase of drug product for our clinical trials, process development and the prosecution and maintenance of our intellectual\nproperty portfolio. As a result, we are exposed to foreign currency exchange risk, as our results of operations and cash flows are subject\nto fluctuations in foreign currency exchange rates. In accordance with our business decisions, our exposure to this type of risk could\nchange depending on:\n\n \n\n●the currencies chosen when agreements are signed, such as\nlicensing agreements, or co-marketing or co-development agreements;\n\n \n\n●the location of clinical trials on drug candidates; and\n\n \n\n●our policy for insurance coverage.\n\n \n\n35\n\n \n\n \n\nShould any of these risks materialize, this could\nhave a material adverse effect on our business, prospects, financial condition and results of operations.\n\n \n\nIn addition, our business is conducted in Taiwan, and our books and\nrecords are maintained in NTD. The consolidated financial statements that we file with the SEC and provide to our shareholders are\npresented in U.S. dollars. Changes in the exchange rates between NTD and U.S. dollars affect the value of our assets and the\nresults of our operations, when presented in U.S. dollars. The value of NTD against the U.S. dollar and other currencies may\nfluctuate and is affected by, among other things, changes in the Taiwan’s political and economic conditions and perceived changes\nin the economy of Taiwan and the United States. Any significant revaluation of NTD may materially and adversely affect our cash flows,\nrevenue, and financial condition. Further, our ordinary shares offered by this annual report are offered in U.S. dollars, we will\nneed to convert the net proceeds we receive into NTD or other currencies in order to use the funds for our business. Changes in the conversion\nrate among the U.S. dollar, NTD and other currencies will affect the amount of proceeds we will have available for our business.\n\n \n\nAs of the date of this annual report, we have not\nentered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter\ninto more hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able\nto adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by local exchange control regulations\nthat restrict our ability to convert NTD into foreign currencies. See “— Our Taiwan subsidiaries are subject to restrictions\non paying dividend or making other payments to us, which may restrict our ability to satisfy its liquidity requirements.” As a result,\nfluctuations in exchange rates may have a material adverse effect on your investment.\n\n** **\n\n**We have recorded net cash outflow from operating activities since\nour inception and we expect to need to obtain additional financing to fund our operations. If we are unable to obtain such financing,\nwe may be unable to complete the development and commercialization of our drug candidates.**\n\n \n\nSince our inception, our operations have consumed\nsubstantial amounts of cash. The expenses used in our research and development activities were approximately US$0.9 million and US$0.8 million\nfor the years ended December 31, 2024 and 2025, respectively.\n\n \n\nWe expect our expenses to increase in connection\nwith our ongoing activities, particularly as we initiate new clinical trials of, initiate new research and preclinical development efforts\nfor and seek marketing approval for, our drug candidates. In addition, if we obtain marketing approval for any of our drug candidates,\nwe may incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent\nthat such sales, marketing, manufacturing and distribution are not the responsibility of a future collaborator. Furthermore, following\nthe completion of our IPO, we have incurred significant additional costs associated with operating as a public company. Accordingly, we\nexpect to need to obtain substantial additional funding in connection with our continuing operations. Our financing to fund our operations\nmay be adversely affected, delayed or fail to raise because of capital market environment, valuation of our company or the progress of\nour competitors. If we are unable to raise capital when needed or on attractive terms, we may be forced to delay, reduce or eliminate\nour research and development programs or any future commercialization efforts.\n\n \n\nGiven that our significant current liabilities exceed US$20 million,\nthere is a substantial risk that all or substantially all of the net proceeds from our IPO may be required to satisfy these liabilities.\nIn such event, we would have limited funds available from the IPO proceeds to fund our research and development activities, clinical trials,\nor other business operations, and we would need to seek additional financing to continue our operations. We do not have any committed\nexternal source of funds. Accordingly, we may have to obtain further funding through public or private equity offerings, debt financings,\ncollaborations and licensing arrangements or other sources. The incurrence of indebtedness or the issuance of certain equity securities\ncould result in increased fixed payment obligations and could also result in our undertaking certain additional restrictive covenants,\nsuch as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license\nintellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. However,\nadequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital\nthrough the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation\nor other preferences that adversely affect your rights as a holder of our ordinary shares.\n\n \n\nOur failure to raise capital as and when needed\nwould have a negative impact on our financial condition and our ability to pursue our business strategy.\n\n \n\n36\n\n \n\n \n\nOur existing cash on hand will not be sufficient\nto enable us to meet our short-term obligations or long-term plans, including commercialization of clinical pipeline products, if approved,\nor initiation or completion of future clinical trials. Our future funding requirements, both short-term and long-term, will depend on\nmany factors, including:\n\n \n\n●the number of future drug candidates that we pursue and their\ndevelopment requirements;\n\n \n\n●the scope, progress, timing, results and costs of discovering,\nresearching and developing drug candidates, and conducting preclinical studies and clinical trials;\n\n \n\n●the scope, prioritization and number of our research and\ndevelopment programs;\n\n \n\n●the costs, timing and outcome of regulatory review of our\ndrug candidates;\n\n \n\n●the cost of manufacturing our drug candidates and any products\nwe commercialize, including costs associated with expanding our supply chain;\n\n \n\n●the cost and timing of future commercialization activities,\nincluding product manufacturing, marketing, sales and distribution, for any of our drug candidates for which we receive regulatory approval;\n\n \n\n●the cash received, if any, from commercial sales of any drug\ncandidates for which we receive regulatory approval;\n\n \n\n●our ability to establish and maintain strategic collaborations,\nlicensing or other arrangements and the financial terms of such collaborations and arrangements;\n\n \n\n●the extent to which we acquire or in-license other drug candidates\nand technologies;\n\n \n\n●our headcount growth and associated costs;\n\n \n\n●the costs, timing and outcome of preparing, filing and prosecuting\npatent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;\n\n \n\n●resources required to develop and implement policies and\nprocesses to promote ongoing compliance with applicable healthcare laws and regulations;\n\n \n\n●costs required to ensure that our and any of our partners’\nbusiness arrangements with third parties comply with applicable healthcare laws and regulations; and\n\n \n\n●the costs of operating as a public company.\n\n** **\n\n**We have no history of commercializing pharmaceutical products, which\nmay make it difficult to evaluate the prospects for our future viability.**\n\n \n\nWe have no history of commercializing pharmaceutical\nproducts. Our operations, to date, have been limited to financing and staffing our company, developing our biotechnology and conducting\npreclinical research and clinical trials for our drug candidates. We have not yet demonstrated an ability to successfully obtain marketing\napprovals for or commercialize our drug candidates or manufacture our drug candidates on a scale sufficient to supply the commercial markets.\nWe currently have no drug candidates approved for commercial sale and have not generated any revenue from such sales. Consequently, any\npredictions about our future success or viability may not be as accurate as they could be if we had a longer operating history and/or\napproved products on the market.\n\n \n\nDue to the fact that we have yet to commercialize\na drug product, particularly in light of the rapidly evolving drug research and development industry in which we operate and the changing\nregulatory and market environments we encounter, may make it difficult to evaluate our prospects for future performance. As a result,\nany assessment of our future performance or viability is subject to significant uncertainty. We will encounter risks and difficulties\nfrequently experienced by early-stage companies in rapidly evolving fields as we seek to transition to a company capable of supporting\ncommercial activities.\n\n \n\nAs we continue to build our business, we expect\nour financial condition and operating results may fluctuate significantly from quarter to quarter and year to year due to a variety of\nfactors, many of which are beyond our control. Accordingly, you should not rely upon the results of any particular quarterly or annual\nperiod as indications of future operating performance.\n\n** **\n\n37\n\n \n\n** **\n\n**We have incurred net losses since our inception and anticipate that\nwe will continue to incur net losses for the foreseeable future and may not generate revenue that is significant or large enough to achieve\nprofitability.**\n\n \n\nWe have incurred significant annual net operating\nlosses in every year since our inception. We may continue to incur net operating losses for at least the next several years. Our\nnet losses were approximately US$3.0 million and US$4.7 million for the years ended December 31, 2024 and 2025, respectively.\nAs of December 31, 2024 and 2025, we had an accumulated deficit of approximately US$33.0 million and US$37.8 million, respectively.\nIn addition, we incurred negative cash flows in operating activities for the approximate amount of US$3.6 million and US$3.0 million\nfor the years ended December 31, 2024 and 2025, respectively. We have not generated any revenues from product sales and may never\nhave a drug candidate approved for commercialization. We have financed our operations to date primarily through bank loans. We have devoted\nsubstantially all of our financial resources and efforts to research and development, including preclinical studies and our clinical trials.\nOur net losses may fluctuate significantly from quarter to quarter and year to year. Net losses and negative cash flows have had, and\nwill continue to have, an adverse effect on our stockholders’ equity and working capital.\n\n \n\nWe anticipate that our expenses will increase substantially\nif and as we:\n\n \n\n●continue to develop and conduct clinical trials with respect\nto our key drug candidates, PCP and IC;\n\n \n\n●initiate and continue research, preclinical and clinical\ndevelopment efforts for any future drug candidates;\n\n \n\n●seek regulatory approvals for our drug candidates;\n\n \n\n●commercialize our drug candidates once we have obtained marketing\napproval;\n\n \n\n●establish sales, marketing, distribution and other commercial\ninfrastructure in the future to commercialize various products for which we may obtain marketing approval, if any;\n\n \n\n●hire additional clinical, operational, financial and administrative,\nquality control and scientific personnel;\n\n \n\n●add operational, financial and management information systems\nand personnel, including personnel to support our product development and help us comply with our obligations as a public company;\n\n \n\n●require the manufacture of larger quantities of drug candidates\nfor clinical development and, potentially, commercialization;\n\n \n\n●seek to identify additional drug candidates and technologies;\n\n \n\n●obtain, maintain, expand and protect our intellectual property\nportfolio;\n\n \n\n●enforce and defend any intellectual property-related claims;\n\n \n\n●acquire or in-license other drug candidates, intellectual\nproperty and technologies;\n\n \n\n●enter into out-licensing and co-development collaborations\nconsistent with our global strategy;\n\n \n\n●add equipment and physical infrastructure to support our\nresearch and development\n\n \n\n●incur setbacks or delays to the initiation or completion\nof preclinical studies, drug development and/or clinical trials due to any pandemic; and\n\n \n\n●incur any disruption or delays to the supply of our drug\ncandidates due to any pandemic.\n\n** **\n\n38\n\n \n\n \n\n**We will likely need to increase the size and capabilities of our\norganization, and we may experience difficulties in managing our growth.**\n\n \n\nIn order to execute our business plans, we expect\nthat we will need to significantly increase the number of our employees and consultants and the scope of our operations, particularly\nin the areas of research and development, regulatory affairs and business development. Our future financial performance and our ability\nto commercialize our drug candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.\nTo manage our anticipated future growth, we will need to continue to implement and improve our managerial, operational and financial systems,\nexpand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources, we may\nnot be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of\nour operations may lead to significant costs and may divert our management and business development resources. Any inability to manage\ngrowth could delay the execution of our business plans or disrupt our operations and have a material adverse effect on our business.\n\n \n\nIn addition, we currently rely, and for the foreseeable\nfuture may continue to rely, in substantial part on certain academic organizations, advisors and consultants to provide certain services.\nThere can be no assurance that the services of these academic organizations, advisors and consultants will continue to be available to\nus on a timely basis when needed or that we can find qualified replacements. Furthermore, if we are unable to effectively manage our outsourced\nactivities or if the quality or accuracy of the services provided by academic organizations, advisors or consultants is compromised for\nany reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of our drug\ncandidates or otherwise advance our business. There can be no assurance that we will be able to maintain our existing relationships with\nthese academic organizations, advisors and consultants or find other competent academic organizations, advisors and consultants on economically\nreasonable terms, if at all.\n\n** **\n\n**If we fail to implement and maintain an effective system of internal\ncontrols, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor\nconfidence and the market price of our shares may be materially and adversely affected.**\n\n \n\nWe are subject to the reporting requirements of\nthe Exchange Act of 1934, or Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the Nasdaq.\nOur independent registered public accounting firm has not conducted an audit of our internal control over financial reporting, as we are\nnot required to provide a report of management’s assessment on our internal control over financial reporting due to a transition\nperiod established by the rules of the SEC for newly public companies.\n\n \n\nIn connection with the audits of our consolidated\nfinancial statements as of December 31, 2024 and 2025, we and our independent registered public accounting firm identified material weaknesses\nin our internal control over financial reporting as well as other control deficiencies for the above mentioned periods. The material weakness\nidentified is a lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting\nrequirements to formalize key controls over financial reporting and to prepare consolidated financial statements and related disclosures.\n\n \n\nWe intend to implement measures designed to improve\nour internal control over financial reporting to address the underlying causes of the material weakness, including (i) hiring more qualified\nstaff to fill up the key roles in the operations; (ii) setting up a financial and system control framework with formal documentation of\npolices and controls in place; and (iii) strengthening corporate governance.\n\n \n\nIn response to the material weaknesses identified prior to our IPO, we will implement a number of measures to address the material weakness\nidentified, including but not limited to (i) working closely with external highly qualified accountants with relevant U.S. GAAP and SEC\nreporting experience and qualifications to strengthen the financial reporting function, establish a financial and system control framework,\nand arrange regular training programs on U.S. GAAP accounting for our accounting and financial reporting personnel; (ii) strengthening\nand improving the overall internal control function by employing an external consulting firm to assist us in assessing the compliance\nrequirements of the Sarbanes Oxley Act; (iii) strengthen corporate governance; and (iv) making an internal control report to the Audit\nCommittee every quarter to report the progress and improvement in internal control, which is well monitored by the Audit Committee.\n\n \n\nHowever, we cannot assure you that all these measures\nwill be sufficient to address all the potential internal control issues for the financial reporting, and we cannot assure you that we\nwill not identify additional material weaknesses or significant deficiencies in the future. In addition, if we are unable to meet the\nrequirements of Section 404 of the Sarbanes-Oxley Act, our ordinary shares may not be able to remain listed on the Nasdaq Global\nMarket.\n\n \n\n39\n\n \n\n \n\nSection 404 of the Sarbanes-Oxley Act of 2002\nrequires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F\nbeginning with our annual report beginning with our second annual report on Form 20-F. In addition, once we cease to be an “emerging\ngrowth company” as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and\nreport on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over\nfinancial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is\neffective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is\nqualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed,\nor if it interprets the relevant requirements differently from us. In addition, as we are a public company, our reporting obligations\nmay place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be\nunable to timely complete our evaluation testing and any required remediation.\n\n \n\nDuring the course of documenting and testing our\ninternal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we\nmay identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the\nadequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time,\nwe may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. If we fail to achieve\nand maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to\nmeet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could\nin turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our shares.\nAdditionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate\nassets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal\nsanctions. We may also be required to restate our financial statements from prior periods.\n\n** **\n\n**We currently have no operations in China although we have established\na subsidiary in each of Hong Kong and China. However, due to the extraterritorial reach (the so-called “long arm provisions”)\nunder the current PRC laws and regulations, the Chinese government may exert substantial oversight and influence over the manner in which\nwe must conduct our business and may intervene in or influence our operations at any time, which could result in a material change in\nour operations and significantly and adversely impact the value of our ordinary shares. We endeavor to operate our business in compliance\nwith applicable laws and regulations in all material respects.**\n\n \n\nWe currently have no operations in China although\nwe have established a subsidiary in each of Hong Kong and China. However, we may in the future expand our operations into China.\nThe Chinese government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations\nas the government deems appropriate to further regulatory, political and societal goals. The Chinese government has recently published\nnew policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the\npossibility that it will in the future release regulations or policies regarding our industry that could require us to seek permission\nfrom Chinese authorities to continue to operate our business which adversely affect our business, financial condition and results of operations.\nFurthermore, recent statements made by the Chinese government have indicated an intent to increase the government’s oversight and\ncontrol over offerings of companies with significant operations in China that are to be conducted in foreign markets, as well as foreign\ninvestment in China-based issuers. On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities\nOffering and Listing by Domestic Companies, or the Trial Measures, which became effective on March 31, 2023. We reasonably believed\nthat the Trial Measures do not apply to us, and as of the date of this annual report, we have not received any inquiry, notice, warning\nor sanctions regarding our planned overseas listing from the CSRC and any other PRC governmental authorities. Although as of the date\nof this annual report, we do not expect to be materially affected by the foregoing statements or the Trial Measures, any such action,\nonce taken by the Chinese government, could significantly limit or completely hinder our ability to offer or continue to offer ordinary\nshares to our investors, and could cause the value of our ordinary shares to significantly decline or become worthless.\n\n** **\n\n40\n\n \n\n** **\n\n**Changes in the political and economic policies of the Chinese government\nor in relations between China and the United States may materially and adversely affect our business, financial condition, results\nof operations and the market price of our ordinary shares.**\n\n \n\nIf we, in the future, expand our operations into\nChina, our financial condition and results of operations may be affected by economic, political and legal developments in China. The PRC\neconomy differs from the economies of most developed countries in many respects, including the extent of government involvement, level\nof development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures\nemphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment\nof improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government.\nIn addition, the PRC government continues to play a significant role in regulating industrial development by imposing industrial policies,\nand change of enforcement practice of such rules and policies can occur quickly with little advance notice. The PRC government also exercises\nsignificant control over China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations,\nsetting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries\nor companies.\n\n \n\nWhile the PRC economy has experienced significant\ngrowth in the past four decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government\nhas implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit\nthe overall PRC economy, but may also have a negative effect on us. If we expand our operations into China, our business, financial condition\nand results of operations could be materially and adversely affected by government control over capital investments or changes in tax\nregulations that are applicable to us.\n\n \n\nIf the business environment in China deteriorates\nfrom the perspective of domestic or international investment, or if relations between China and the United States or other governments\ndeteriorate, the Chinese government may intervene with our operations and our business in China in the future, and then the market price\nof our ordinary shares, may also be adversely affected.\n\n** **\n\n**PRC regulation and oversight of loans to and direct investment in\nPRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds\nof our IPO to make loans or additional capital contributions to our PRC subsidiaries in China, which could materially and adversely affect\nour liquidity and our ability to fund and expand our business.**\n\n \n\nWe are an offshore holding company conducting our\noperations in Taiwan through our Taiwan subsidiaries. We currently have one subsidiary in China, namely Innovative Biotech Co., Ltd.,\nwhich has no operations and generates no revenue as of the date of this annual report. In the event that we elect to expand our operations\ninto China in the future, we may make loans to our PRC subsidiary, or we may make additional capital contributions to our PRC subsidiary,\nor we may establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, or we may acquire offshore entities\nwith business operations in China in an offshore transaction.\n\n \n\nMost of these ways are subject to PRC regulations\nand approvals or registration. For example, loans by us to our wholly owned PRC subsidiary to finance its activities cannot exceed statutory\nlimits and must be registered with the local counterpart of SAFE. If we decide to finance our wholly owned PRC subsidiary by means\nof capital contributions, these capital contributions are subject to registration with the State Administration for Market Regulation\nor its local branch, reporting of foreign investment information with the PRC Ministry of Commerce, or registration with other governmental\nauthorities in China.\n\n \n\n41\n\n \n\n \n\nSAFE promulgated the Notice of the State Administration\nof Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE\nCircular 19, effective June 2015, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement\nof the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, the Notice from the State\nAdministration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses, and\nthe Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange\nBusinesses. According to SAFE Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered\ncapital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans, the\nrepayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although SAFE Circular\n19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity\ninvestments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested\ncompany may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such\ncapital to be used for equity investments in China in actual practice. SAFE promulgated the Notice of the State Administration of Foreign\nExchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16,\neffective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against\nusing RMB capital converted from foreign currency denominated registered capital of a foreign-invested company to issue RMB entrusted\nloans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE\nCircular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer\nany foreign currency we hold, including the net proceeds from our IPO, to our PRC subsidiary, which may adversely affect our liquidity\nand our ability to fund and expand our business in China. On October 23, 2019, the SAFE promulgated the Notice for Further Advancing\nthe Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested\ncompanies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment\nis genuine, does not violate applicable laws, and complies with the negative list on foreign investment. However, since the SAFE Circular\n28 is newly promulgated, it is unclear how SAFE and competent banks will carry this out in practice.\n\n \n\nIn light of the various requirements imposed by\nPRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be\nable to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, or at all, with\nrespect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary. As a result, uncertainties\nexist as to our ability to provide prompt financial support to our PRC subsidiary when needed. If we fail to complete such registrations\nor obtain such approvals, our ability to use the proceeds we expect to receive from our IPO and to capitalize or otherwise fund our PRC\noperations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our\nbusiness.\n\n** **\n\n**RISKS RELATED TO OUR DEPENDENCE ON THIRD PARTIES**\n\n** **\n\n**As we rely on third parties to conduct our clinical trials and provide\nother important services related to research and development, regulatory submissions, and commercialization, if we fail to maintain our\nrelationships with these third parties or if they do not successfully carry out their contractual duties, comply with applicable laws,\nor meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business\ncould be substantially harmed.**\n\n \n\nWe have relied on and plan to continue to rely on\nthird-party CROs to monitor and manage data for some of our ongoing clinical trials. We rely on these parties for the execution of our\npreclinical studies and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring\nthat each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our\nreliance on the CROs does not relieve us of our regulatory responsibilities.\n\n \n\nOur CROs have the right to terminate their agreements\nwith us in the event of an unrectified material breach. If any of our relationships with our third-party CROs is terminated, we may not\nbe able to (i) enter into arrangements with alternative CROs or do so on commercially reasonable terms or (ii) meet our desired\nclinical development timelines. In addition, there is a natural transition period when a new CRO commences work, and the new CRO may not\nprovide the same type or level of services as the original provider and data from our clinical trials may be compromised as a result.\nThere is also a need for relevant technology to be transferred to the new CRO, which may take time and further delay our development timelines.\n\n \n\nExcept for remedies available to us under our agreements\nwith our CROs, we cannot control whether or not our CROs devote sufficient time and resources to our ongoing clinical, nonclinical and\npreclinical studies. If our CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if\nthe quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols, the\nimpacts of any pandemic on their operations, regulatory requirements or for other reasons, our clinical trials may be extended, delayed\nor terminated and we may not be able to obtain regulatory approval for or successfully commercialize our drug candidates. As a result,\nour results of operations and the commercial prospects for our drug candidates would be harmed and our costs could increase. In turn,\nour ability to generate revenues could be delayed or compromised.\n\n \n\n42\n\n \n\n \n\nWe cannot guarantee that third parties perform duties\ncomplying with our standards or produce results in a timely manner. They may fail to perform at all. In addition, the use of third-party\nservice providers requires us to disclose our proprietary information to these third parties, which could increase the risk that such\ninformation will be misappropriated. We currently have a limited number of employees, which limits the internal resources we have available\nto identify and monitor our third-party service providers. To the extent we are unable to identify and successfully manage the performance\nof third-party service providers in the future, our business may be adversely affected. Though we carefully manage our relationships with\nour CROs, there can be no assurance that we will not encounter similar challenges or delays in the future, and such challenges or delays\ncould have a material adverse impact on our business, financial condition and prospects.\n\n** **\n\n**As we rely on third parties to conduct our preclinical studies and\nclinical trials, our business could be harmed if those third parties fail to comply with the applicable regulatory requirements.**\n\n \n\nWe and our CROs are required to comply with cGCPs,\ncGLPs, and other regulatory regulations and guidelines enforced by the TFDA, the U.S. FDA, the International Conference on Harmonization,\nor ICH, and comparable foreign regulatory authorities for all of our drug candidates in clinical development. Regulatory authorities enforce\nthese cGCPs, cGLPs or other regulatory requirements through periodic inspections of study sponsors, investigators and study sites. If\nwe or any of our CROs fail to comply with applicable cGCPs, cGLPs or other regulatory requirements, the relevant data generated in our\npreclinical studies and clinical trials may be deemed unreliable and the TFDA, the U.S. FDA or other comparable regulatory authorities\nmay require us to perform additional clinical trials before approving our marketing applications. There can be no assurance that upon\ninspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials complies with cGCPs\nrequirements. In addition, our clinical trials must be conducted with drug candidates or products produced under governmental requirements.\nFailure to comply with these regulations may require us to repeat preclinical studies and clinical trials, which would delay the regulatory\napproval process.\n\n** **\n\n**We are highly dependent on third parties to supply the drug raw\nmaterials, such as API, for our developing and manufacturing activities, and the lack of availability or significant increases in cost\nof such drug raw materials could adversely influence our business.**\n\n \n\nThe development and manufacture of drug products\nare complex and require significant expertise and capital investment, including the development of advanced manufacturing techniques and\nprocess controls. Currently, our drug raw materials for our developing and manufacturing activities are supplied by multi-source suppliers.\nIn addition, we believe that adequate alternative sources for such supplies exist. However, there is a risk that, if supplies are interrupted\nor if the costs of such drug materials were to significantly increase, our business would be materially harmed. For example, the COVID-19\npandemic, the monkeypox outbreak, geopolitical risk, wars and military conflicts could have an extensive impact on the production and\nsupplies of active ingredients or other raw materials and result in a potential shortage of supply.\n\n \n\nAs mentioned elsewhere in this annual report,\nour API-1 supplier withdrew their consent to reference their Drug Master File on file with the U.S. FDA due to the relocation and restructuring\nof their manufacturing facility. The API-1 we used to perform our clinical trials of Botreso® is now unavailable to us,\ncausing delays and additional expenses in the development of our drug candidates. As disclosed in “Item 14. Material Modifications\nto the Right of Security Holders and Use of Proceeds”, approximately US$6 million have been allocated to fund the additional\nR&D, CMC, and Phase III trials of Botreso® using API-2. The estimated time for completing the Phase III trials of Botreso®\nusing API-2 is approximately 1 to 2 years, depending on the processing and approval time from the U.S. FDA.\n\n \n\nWe have been conducting further research and development on Botreso®\nand identified an additional source for the botanical drug substance API-2.  API-1 and API-2 are similar drug substances covered\nby the same patent owned by us; however, because they are sourced from raw materials manufactured in different locations, the U.S. FDA\nconsiders them to be different botanical drug substances. Therefore, we will conduct comparability study for API-1 and API-2. On June 26,\n2023, the U.S. FDA informed us that the information we provided on API-2 was not sufficient to demonstrate comparability with API-1. In\naddition to current unavailability of API-1, the U.S. FDA explained that we had not demonstrated a statistically significant difference\nbetween Botreso® with API-1 and placebo in the primary efficacy endpoint in the MCS-2-US-a study. The U.S. FDA stated that\nwithout new clinical information, any resubmission of the NDA for Botreso® would be at risk of the U.S. FDA refusing to\naccept the application, a RTF action. We submitted a Type D WRO meeting request to the U.S. FDA on December 12, 2023. We asked that\nthe U.S. FDA provide a written response to questions focused on obtaining U.S. FDA review and comments on a new, proposed Phase III clinical\ntrial protocol for Botreso® with API-2 and a PK study. We proposed to address CMC information for Botreso®\nin a separate, future meeting. The U.S. FDA granted our WRO meeting request, and clarified that they viewed the meeting as a Type C meeting\nbecause it encompasses an entirely new drug development program, including Phase I PK study and Phase III clinical trial for Botreso®\nmade from API-2, which the U.S. FDA characterizes as a new product with a new active pharmaceutical ingredient. We plan to schedule a\nspecial CMC meeting with the U.S. FDA in 2024 to discuss API-2, providing comprehensive CMC information for U.S. FDA review and comments.\nWe have completed the CMC documentation on the active pharmaceutical ingredient-2 (API-2) and a plan to establish comparability between\nAPI-1 and API-2 and submitted it to the U.S. FDA on October 16, 2024, and are awaiting feedback from the U.S. FDA. This process does\nnot indicate a “shortage” of API-2. As of the date of this annual report, the Company is still in the process of providing\nthe information required by the U.S. FDA and has not yet successfully demonstrated the comparability of API-1 and API-2.  If the\nU.S. FDA confirms that API-1 and API-2 are comparable and deems the study results using API-2 acceptable, we will proceed to re-submit\nour NDA.\n\n \n\n43\n\n \n\n \n\nHowever, if we experience a shortage in supply of\nactive ingredients or other raw materials, including API-2, whether due to the aforementioned factors or otherwise, we could not supply\nadequate levels of our drug candidates. Identifying a suitable replacement and demonstrating its equivalence to API-2 could require extensive\nresearch and development efforts, potentially leading to additional costs and delays. Additionally, substituting the original ingredient\nwith an alternative substance may necessitate conducting further clinical trials to assess the safety and efficacy of such new material.\nThese additional trials could prolong the time to market for our products and increase regulatory scrutiny, further impacting our business\noperations and financial performance.\n\n** **\n\n**We expect to seek to establish collaborations and, if we are not\nable to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.**\n\n \n\nWe may form or seek strategic alliances, create\ncollaborations, or enter into licensing arrangements with third parties that we believe will complement or augment our development and\ncommercialization efforts with respect to our drug candidates and any future drug candidates that we may develop. Any of these relationships\nmay require us to incur recurring or non-recurring expenses and other charges, increase our near and long-term expenditures, or disrupt\nour management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation\nprocess is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic collaboration or other\nalternative arrangements for our drug candidates because they may be deemed to be at too early a stage of development for collaborative\neffort and third parties may not view our drug candidates as having the requisite potential to demonstrate safety and efficacy. If and\nwhen we collaborate with a third party for the development and commercialization of a drug candidate, we can expect to relinquish some\nor all of the control over the future success of that drug candidate to the third party.\n\n \n\nFurther, collaborations involving our drug candidates\nare subject to additional risks, which include, but are not limited to, the following:\n\n \n\n●collaborators may have significant discretion in determining\nthe efforts and resources that they will apply to a collaboration;\n\n \n\n●collaborators may not pursue the development and commercialization\nof our drug candidates or may elect not to continue or renew the development or commercialization programs based on clinical trial results,\nchange in their strategic focus due to the acquisition of competitive drugs, increased competition, availability of funding, or other\nexternal factors;\n\n \n\n●collaborators may delay clinical trials, provide insufficient\nfunding for a clinical trial, discontinue a clinical trial, repeat or conduct new clinical trials, or require a new formulation of a\ndrug candidate for clinical testing;\n\n \n\n●collaborators could independently develop, or develop with\nthird parties, drugs that compete directly or indirectly with our drug candidates or future drugs;\n\n \n\n●collaborators with marketing and distribution rights to one\nor more of our drug candidates or future drugs may not commit sufficient resources to their marketing and distribution;\n\n \n\n●collaborators may not properly maintain or defend our intellectual\nproperty rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation\nthat could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability;\n\n \n\n●collaborators may not always be cooperative or responsive\nin providing their services in a clinical trial;\n\n \n\n●disputes may arise between us and a collaborator that cause\na delay or termination of the research, development or commercialization of our drug candidates, or that result in costly litigation\nor arbitration that diverts management attention and resources;\n\n \n\n●collaborations may be terminated and, if terminated, may\nresult in a need for additional capital to pursue further development or commercialization of the applicable drug candidates;\n\n \n\n●collaborators may self-own intellectual property covering\nour drug candidates or future drugs that results from our collaborating with them, and in such cases, we would not have the exclusive\nright to commercialize such intellectual property; and\n\n \n\n●we may not be able to receive agreed development fees, royalties\nor milestone payments we expected when seeking collaborations.\n\n \n\n44\n\n \n\n \n\nAs a result, if we enter into collaboration agreements\nor license our drugs, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate these\ncollaborations or licenses with our existing operations and company culture, which could delay our timelines or otherwise adversely affect\nour business.\n\n \n\nIf we are unable to reach agreements with suitable\ncollaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a drug candidate, reduce or\ndelay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope\nof any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own\nexpense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise\nand additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do\nnot have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to\nfurther develop our drug candidates or bring them to market and generate product sales revenue, which would harm our business, financial\ncondition, results of operations and prospects.\n\n** **\n\n**Negotiations of collaborations are complex and time-consuming, and\nwe may not able to find suitable collaborators and enter into agreements with them.**\n\n \n\nAny collaboration agreements that we enter into\nin the future may contain restrictions on our ability cooperate with other potential collaborators. We may not be able to negotiate collaborations\non a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the drug candidate\nfor which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay\nits potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development\nor commercialization activities at our own expense.\n\n** **\n\n**RISKS RELATED TO OUR INTELLECTUAL PROPERTY**\n\n** **\n\n**If we are unable to obtain and maintain patent and other intellectual\nproperty protection for our drug candidates, or if the scope of such intellectual property rights obtained is not sufficiently broad,\nthird parties could develop and commercialize products and technologies similar or identical to ours and compete directly against us,\nand our ability to successfully commercialize any product or technology may be adversely affected.**\n\n \n\nOur success depends, in large part, on our ability\nto protect our proprietary technology and drug candidates from competition by obtaining, maintaining, defending and enforcing our intellectual\nproperty rights, including patent rights. As of the date of this annual report, our portfolio of self-own patents consisted of 29 issued\npatents in 16 countries and regions. We seek to protect and intend to seek to protect the drug candidates and technology that we consider\ncommercially important by filing patent applications globally, relying on trade secrets or pharmaceutical regulatory protection or employing\na combination of these methods. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary\nor desirable patent applications in all jurisdictions at a reasonable cost or in a timely manner. It is also possible that we will fail\nto identify patentable aspects of our research and development output before it is too late to obtain patent protection.\n\n \n\nThe patent position of biotechnology and pharmaceutical\ncompanies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of\nmuch litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.\nOur self-own pending and future patent applications may not result in patents being issued which protect our technology or drug candidates\nor which effectively prevent others from commercializing competitive technologies and drug candidates. The patent examination process\nmay require us to narrow the scope of the claims of self-own pending and future patent applications, which may limit the scope of patent\nprotection that may be obtained. We cannot assure that all of the potentially relevant prior art relating to our self-own patents and\npatent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent application from being issued\nas a patent.\n\n \n\nEven if patents do issue on any of these applications,\nthere can be no assurance that a third party will not challenge their validity, enforceability, or scope, which may result in the patent\nclaims being narrowed or invalidated, or that we will obtain sufficient claim scope in those patents to prevent a third party from competing\nsuccessfully with our drug candidates. We may become involved in interference, *inter partes*review, post grant review, *ex parte*\nre-examination, derivation, opposition or similar other proceedings challenging our patent rights or the patent rights of others. An adverse\ndetermination in any such proceeding could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize\nour technology or drug candidates and compete directly with us, or result in our inability to manufacture or commercialize drug candidates\nwithout infringing third-party patent rights. Thus, even if our self-own patent applications issue as patents, they may not issue in a\nform that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any\ncompetitive advantage.\n\n \n\n45\n\n \n\n \n\nOur competitors may be able to circumvent our self-own\npatents by developing similar or alternative technologies or drug candidates in a non-infringing manner. The issuance of a patent is not\nconclusive as to its scope, validity or enforceability, and our self-own patents may be challenged in the courts or patent offices in\nthe U.S., Taiwan and other countries. Such challenges may result in patent claims being narrowed, invalidated or held unenforceable, which\ncould limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and drug\ncandidates, or limit the duration of the patent protection of our technology and drug candidates. Given the amount of time required for\nthe development, testing and regulatory review of new drug candidates, patents protecting such assets might expire before or shortly after\nsuch assets are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing\ndrug candidates similar or identical to ours.\n\n \n\nChanges in either the patent laws or interpretation\nof the patent laws in the U.S. and other countries may diminish the value of our self-own patents or narrow the scope of our patent\nprotection. For instance, under the America Invents Act enacted in 2011, the U.S. moved to this first-to-file system in early 2013\nfrom the previous system under which the first to make the claimed invention was entitled to the patent. Assuming the other requirements\nfor patentability are met, the first to file a patent application is entitled to the patent. Publications of discoveries in the scientific\nliterature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not\npublished until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make\nthe inventions claimed in our self-own patents or pending patent applications, or that we were the first to file for patent protection\nof such inventions.\n\n** **\n\n**We enjoy only limited geographical protection with respect to certain\npatents and may not be able to protect our intellectual property rights throughout the world.**\n\n \n\nFiling and prosecuting patent applications and defending\npatents covering our drug candidates in all countries throughout the world could be prohibitively expensive. Competitors may use our technologies\nin jurisdictions where we have not obtained patent protection to develop their own drug candidates and, further, may export otherwise\ninfringing drug candidates to territories, where we have patent protection, but enforcement rights are not as strong as those in the U.S. These\ndrug candidates may compete with our drug candidates, and our self-own patents or other intellectual property rights may not be effective\nor sufficient to prevent them from competing.\n\n \n\nThe laws of some jurisdictions do not protect intellectual\nproperty rights to the same extent as the laws or rules and regulations in the U.S., and many companies have encountered significant difficulties\nin protecting and defending such rights in such jurisdictions. The legal systems of certain countries, particularly certain developing\ncountries, are not as favorable as other jurisdictions with regard to the enforcement of patents, trade secrets and other intellectual\nproperty protection, which could make it difficult for us to stop the infringement of our self-own patents or marketing of competing drug\ncandidates in violation of our proprietary rights generally and specifically in certain jurisdictions. Proceedings to enforce our patent\nrights in other jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from\nother aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our self-own patent applications\nat risk of not issuing as patents, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that\nwe initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce\nour intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual\nproperty that we develop. Furthermore, while we intend to protect our intellectual property rights in our expected significant markets,\nwe cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our\ndrug candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate, which may have\nan adverse effect on our ability to successfully commercialize our drug candidates in all of our expected significant foreign markets.\nIf we encounter difficulties in protecting, or are otherwise precluded from effectively protecting, the intellectual property rights important\nfor our business in such jurisdictions, the value of these rights may be diminished, and we may face additional competition from others\nin those jurisdictions.\n\n \n\nSome countries also have compulsory licensing laws\nunder which a patent owner may be compelled to grant licenses to third parties. In addition, some countries limit the enforceability of\npatents against government agencies or government contractors. In those countries, the patent owner may have limited remedies, which could\nmaterially diminish the value of such patents. If we are forced to grant a license to third parties with respect to any patents relevant\nto our business, our competitive position may be impaired.\n\n \n\nEnforcing our intellectual property rights against\nthird parties may also cause such third parties to file other counterclaims against us, which could be costly to defend and could require\nus to pay substantial damages, cease the sale of certain drugs or enter into a license agreement and pay royalties (which may not be possible\non commercially reasonable terms or at all).\n\n \n\n46\n\n \n\n** **\n\n**Obtaining and maintaining our patent protection depends on compliance\nwith various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent\nprotection could be reduced or eliminated for non-compliance with these requirements.**\n\n \n\nPeriodic maintenance fees, renewal fees, annuity\nfees and various other government fees on patents and applications will be due to be paid to government patent agencies over the lifetime\nof our owned or licensed patents and applications. In certain circumstances, we rely on our licensing partners to pay these fees due to\npatent agencies. The government agencies require compliance with several procedural, documentary, fee payment and other similar provisions\nduring the patent application process. We are also dependent on our licensors to take the necessary action to comply with these requirements\nwith respect to our licensed intellectual property. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other\nmeans in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse\nof the patent or patent application, resulting in a partial or complete loss of patent rights in the relevant jurisdiction. In such an\nevent, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material\nadverse effect on our business, financial condition, results of operations and prospects.\n\n** **\n\n**Terms of our future self-own patents may not be sufficient to effectively\nprotect our drug candidates and business in certain jurisdictions.**\n\n \n\nIn many countries where we file applications for\npatents, the term of an issued patent is generally 20 years from the earliest claimed filing date of a non-provisional patent application\nin the applicable country. Although various extensions may be available, the life of a patent and the protection it affords are limited.\nEven if we obtain patents covering our drug candidates, we may still be open to competition from other companies, as well as generic medications\nonce the patent life has expired for a drug. For example, while there are patent regulations in the PRC in respect of regulatory data\nprotection of new drugs containing new chemical components, there are currently no other clear mechanisms providing patent term extension\nor patent linkages for other drugs in the PRC. Therefore, it is possible that a lower-cost generic drug can emerge onto the market\nmuch more quickly. For additional information regarding potential generic competition for our products in China, see “ — The\nuncertainty of patent linkage, patent term extension and data and market exclusivity for our future drug products could increase the risk\nof early generic competition with our products in our primary sales markets.” These factors may result in weaker protection for\nus against generic competition in jurisdictions similar to the PRC than could be available to us in other jurisdictions, such as the U.S. In\naddition, patents which we expect to obtain in the PRC or similar jurisdictions may not be eligible to be extended for patent terms lost\nduring clinical trials and the regulatory review process.\n\n \n\nIf we are unable to obtain patent term extensions\nor if such extensions are less than requested for, our competitors may obtain approval of competing products following our patent expirations\nand our business, financial condition, results of operations and prospects could be materially harmed as a result.\n\n** **\n\n**If the TFDA, the U.S. FDA or comparable foreign regulatory authorities\napprove generic versions of any of our products that receive marketing approval, or such authorities do not grant our products appropriate\nperiods of data exclusivity before approving generic versions of our products, the sales of our products could be adversely affected.**\n\n \n\nOnce an NDA is approved, the drug candidate covered\nthereby becomes a “reference-listed drug” in the U.S. FDA’s publication, “Approved Drug Products with Therapeutic\nEquivalence Evaluations,” or the Orange Book. Manufacturers may seek approval of generic versions of reference-listed drugs through\nsubmission of abbreviated new drug applications, or ANDAs, in the U.S. In support of an ANDA, a generic manufacturer need not conduct\nclinical trials. Rather, the applicant generally must show that its product has the same active ingredients, dosage form, strength, route\nof administration and conditions of use or labeling as the reference-listed drug and that the generic version is bioequivalent to the\nreference-listed drug, meaning it is absorbed in the body at the same rate and to the same extent. Generic products may be significantly\nless costly to bring to market than the reference-listed drug and companies that produce generic products are generally able to offer\nthem at lower prices. Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product\nor reference-listed drug may be typically lost to the generic product.\n\n \n\nCompetition that our products may face from generic\nversions of our products could negatively impact our future revenue, profitability and cash flows and substantially limit our ability\nto obtain a return on our investments in those drug candidates.\n\n \n\n47\n\n \n\n** **\n\n**The uncertainty of patent linkage, patent term extension and data\nand market exclusivity for our future drug products could increase the risk of early generic competition with our products in our primary\nsales markets.**\n\n \n\nIn the U.S., the Federal Food, Drug and Cosmetic\nAct, as amended by the Drug Price Competition and Patent Term Restoration Act, or the Hatch-Waxman Act, provides the opportunity for patent-term\nrestoration, meaning a patent term extension of up to five years to reflect patent term lost during certain portions of product development\nand the U.S. FDA regulatory review process. The Hatch-Waxman Act also has a process for patent linkage, pursuant to which the U.S. FDA\nwill stay approval of certain follow-on applications during the pendency of litigation between the follow-on applicant and the patent\nholder or licensee, generally for a period of 30 months. Finally, the Hatch-Waxman Act provides for statutory exclusivities that\ncan prevent submission or approval of certain follow-on marketing applications. For example, federal law provides a five-year period of\nexclusivity within the U.S. to the first applicant to obtain approval of a new chemical entity and three years of exclusivity\nprotecting certain innovations to previously approved active ingredients where the applicant was required to conduct new clinical investigations\nto obtain approval for the modification. These provisions, designed to promote innovation, can prevent competing products from entering\nthe market for a certain period of time after the U.S. FDA grants marketing approval for the innovative product.\n\n \n\nDepending upon the timing, duration and specifics\nof any U.S. FDA marketing approval process for any drug candidates we may develop, one or more of our self-own U.S. patents, if issued,\nmay be eligible for limited patent term extension under the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent extension term of\nup to five years as compensation for patent term lost during clinical trials and the U.S. FDA regulatory review process. A patent\nterm extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of drug approval, only one patent\nmay be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended.\nThe application for patent term extension is subject to approval by the U.S. Patent and Trademark Office, or USPTO, in conjunction\nwith the U.S. FDA. However, we may not be granted an extension because of, for example, failing to exercise due diligence during\nthe testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of\nrelevant patents, or otherwise failing to satisfy applicable requirements. Furthermore, the applicable time period or the scope of patent\nprotection afforded could be less than we request. If we are unable to obtain a patent term extension for a given patent or the term of\nany such extension is less than we request, the period during which we will have the right to exclusively market our drug will be shortened\nand our competitors may obtain earlier approval of competing drugs, and our ability to generate revenues could be materially and adversely\naffected.\n\n \n\nIn Taiwan, the Patent Act grants the patent holder\nof drugs for human purposes the right to extend the patent term. Pursuant to the Patent Act, the patent term might be extended up to five years\nto reflect patent term lost during the clinical trial process and the Taiwan FDA regulatory review process. In addition, the Patent Act\nand the Pharmaceutical Affairs Act also provide the patent linkage process. As Taiwan adopts a double-track examination system in terms\nof patent prosecution, including the examination of Taiwan Intellectual Property Office (“TIPO”) and the examination of the\ncourt, under the patent linkage process, the Taiwan FDA will stay approval of certain follow-on applications during the pendency of the\ninvalidation action and the pendency of litigation between the follow-on applicant and the patent holder or licensee. The pendency of\nsuch litigation generally lasts for a period of 12-14 months. Finally, the Pharmaceutical Affairs Act provides a five-year period\nof exclusivity to the first applicant to exclusively hold the drug permit and a three-year period of exclusivity to restrict other pharmaceutical\nfirms who may apply for registration of the same drug from citing the application data submitted by the first applicant.\n\n \n\nFor those drug candidates we may develop, one or\nmore of our self-own Taiwan patents, if issued, may be eligible for limited patent term extension under the Patent Act. The Patent Act\nprovides that only one patent may be extended. The application for patent term extension is subject to approval by TIPO, in conjunction\nwith the Taiwan FDA. While the Patent Act explicitly provides that TIPO and the Taiwan FDA should take into consideration the impact\non public health, we may not be granted the extension because of the authorities’ discretion. In addition, if we fail to apply within\napplicable deadlines, fail to apply prior to the expiration of relevant patents, or otherwise fail to satisfy applicable requirements,\nwe may not be granted the extension as well.\n\n \n\nThe Patent Act also provides that the extension\nterm is restricted to be five years as a maximum, implying that we may be granted a shorter extension period than we request. Furthermore,\npursuant to the Patent Act, any person may file an invalidation action of the granted patent term extension to the authorities, together\nwith documents of proof. If anyone files such invalidation action with respect to our patents, the permit of the extension period may\nbe withdrawn by TIPO.\n\n \n\nIf we are unable to obtain a patent term extension\nfor a given patent, or the term of any such extension is less than we request, or our extension permit is withdrawn by TIPO, our competitors\nmay compete with us in an earlier stage, and our ability to generate revenues could be materially and adversely affected.\n\n** **\n\n48\n\n \n\n** **\n\n**Changes in patent law could diminish the value of patents in general,\nthereby impairing our ability to protect our drug candidates.**\n\n \n\nAs is the case with other biotechnology companies,\nour success is heavily dependent on intellectual property, particularly patent rights. Obtaining and enforcing patents in the pharmaceutical\nmarket involves both technological and legal complexity, and is therefore costly, time-consuming, and inherently uncertain. For instance,\nthe America Invents Act includes a number of significant changes that affect the way patent applications will be prosecuted and also may\naffect patent litigation, which could increase the uncertainties and costs surrounding the prosecution of our owned, co-owned and in-licensed\npatent applications and the enforcement or defense of patents issuing from those patent applications, all of which could have a material\nadverse effect on our business, financial condition, results of operations and prospects. Although we do not believe that our currently\nself-own patents and any patents that may issue from our pending patent applications directed to our drug candidates, if issued in their\ncurrently pending forms, will be found invalid, we cannot predict how relevant regulatory authorities’ future decisions may impact\nthe value of our patent rights. There could be similar changes in the laws of foreign jurisdictions that may impact the value of our patent\nrights or our other intellectual property rights.\n\n** **\n\n**We also may be subject to claims that our employees, consultants,\nor advisers have wrongfully used or disclosed alleged trade secrets of their former employers or claims asserting ownership of what we\nregard as our own intellectual property.**\n\n \n\nMany of our employees, consultants, and advisers,\nincluding our senior management, were previously employed at or contracted by other biotechnology or pharmaceutical companies. Some of\nthese employees, consultants, and advisers, including members of our senior management, executed proprietary rights, non-disclosure and\nnon-competition agreements in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary\ninformation or know-how of others in their work for us, we may be subject to claims that we or these employees, consultants or advisors\nhave used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s\nformer employer. We are not aware of any threatened or pending claims related to these matters or concerning the agreements with our senior\nmanagement, but in the future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition\nto paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against\nsuch claims, litigation could result in substantial costs and be a distraction to management. In addition, while we typically require\nour employees, consultants and advisors who may be involved in the development of intellectual property to execute agreements assigning\nsuch intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual\nproperty that we regard as our own, and furthermore, the assignment of intellectual property rights may not be self-executing, or the\nassignment agreements may be breached, each of which may result in claims by or against us related to the ownership of such intellectual\nproperty. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual\nproperty rights. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs,\nbe a distraction to our management and scientific personnel and have a material adverse effect on our business, financial condition, results\nof operations and prospects.\n\n** **\n\n**We may be subject to claims challenging the inventorship of our\npatents and other intellectual property.**\n\n \n\nWe may be subject to claims that former employees,\ncollaborators or other third parties have an interest in our patent rights, trade secrets, or other intellectual property. Litigation\nmay be necessary to defend against these and other claims challenging inventorship or our patent rights, trade secrets or other intellectual\nproperty. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property\nrights, such as exclusive ownership of, or right to use, intellectual property that is important to our therapeutic programs and other\nproprietary technologies we may develop. Even if we are successful in defending against such claims, litigation could result in substantial\ncosts and be a distraction to our management and other employees. Any of the foregoing could have a material adverse effect on our business,\nfinancial condition, results of operations and prospects.\n\n** **\n\n**Intellectual property litigation may lead to unfavorable publicity\nwhich may harm our reputation and any unfavorable outcome from such litigation could limit our research and development activities and/or\nour ability to commercialize our drug candidates.**\n\n \n\nDuring the course of any intellectual property litigation,\nthere could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation. If\nsecurities analysts or investors regard these announcements as negative, the perceived value of our drug candidates, future drugs, programs\nor intellectual property could be diminished. Such announcements could also harm our reputation or the market for our drug candidates,\nwhich could have a material adverse effect on our business.\n\n \n\nIn the event of intellectual property litigation,\nthere can be no assurance that we would prevail, even if the case against us is weak or flawed. If third parties successfully assert their\nintellectual property rights against us, prohibitions against using certain technologies, or prohibitions against commercializing our\ndrug candidates, could be imposed by a court or by a settlement agreement between us and a plaintiff. In addition, if we are unsuccessful\nin defending against allegations that we have infringed, misappropriated or otherwise violated the patent or other intellectual property\nrights of others, we may be forced to pay substantial damage awards to the plaintiff. It is possible that the necessary license will not\nbe available to us on commercially acceptable terms, or at all. This may not be technically or commercially feasible, may render our products\nless competitive, or may delay or prevent the launch of our products to the market. Any of the foregoing could limit our research and\ndevelopment activities, our ability to commercialize one or more drug candidates, or both.\n\n \n\n49\n\n \n\n \n\nMost of our competitors are larger than we are and\nhave substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex intellectual property litigation\nlonger than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to\nraise the funds necessary to conduct our clinical trials, continue our internal research activities, in-license needed technology in the\nfuture, or enter into strategic collaborations that would help us bring our drug candidates to market.\n\n \n\nIn addition, any future intellectual property litigation,\ninterference or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome\nin such litigation or proceedings may expose us or any future strategic partners to loss of our proprietary position, expose us to significant\nliabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all, each of which could\nhave a material adverse effect on our business.\n\n** **\n\n**Claims that our drug candidates or the sale or use of our future\nproducts infringe, misappropriate or otherwise violate the patents or other intellectual property rights of third parties could result\nin costly litigation or could require substantial time and money to resolve, even if litigation is avoided.**\n\n \n\nWe cannot guarantee that our drug candidates or\nthe sale or use of our future products do not and will not in the future infringe, misappropriate or otherwise violate third-party patents\nor other intellectual property rights. Third parties might allege that we are infringing their patent rights or that we have misappropriated\ntheir trade secrets, or that we are otherwise violating their intellectual property rights, whether with respect to the manner in which\nwe have conducted our research, or with respect to the use or manufacture of the compounds we have developed or are developing. The various\nmarkets in which we plan to operate are subject to frequent and extensive litigation regarding patents and other intellectual property\nrights. Some claimants may have substantially greater resources than we have and may be able to sustain the costs of complex intellectual\nproperty litigation to a greater degree and for longer periods of time than we could. Third parties might resort to litigation against\nus or other parties we have agreed to indemnify, which litigation could be based on either existing intellectual property or intellectual\nproperty that arises in the future.\n\n \n\nIt is also possible that we failed to identify,\nor may in the future fail to identify, relevant patents or patent applications held by third parties that cover our drug candidates. Publication\nof discoveries in the scientific or patent literature often lags behind actual discoveries. Therefore, we cannot be certain that we were\nthe first to invent, or the first to file patent applications on, our drug candidates or for their uses, or that our drug candidates will\nnot infringe patents that are currently issued or that are issued in the future. In the event that a third party has also filed a patent\napplication covering one of our drug candidates or a similar invention, our self-own patent application may be regarded as a competing\napplication and may not be issued in the end. Additionally, pending patent applications that have been published can, subject to certain\nlimitations, be later amended in a manner that could cover our products or their use.\n\n \n\nIf a third party were to assert claims of patent\ninfringement against us, even if we believe such third-party claims are without merit, a court of competent jurisdiction could hold that\nthese third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to\ncommercialize the applicable product unless we obtained a license under the applicable patents, or until such patents expire or are finally\ndetermined to be invalid or unenforceable. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover\naspects of our compositions, formulations, or methods of treatment, prevention, or use, the holders of any such patents may be able to\nblock our ability to develop and commercialize the applicable product unless we obtained a license or until such patent expires or is\nfinally determined to be invalid or unenforceable. In addition, defending such claims would cause us to incur substantial expenses and\ncould cause us to pay substantial damages, if we are found to be infringing a third party’s patent rights. These damages potentially\ninclude increased damages and attorneys’ fees if we are found to have infringed such rights willfully. In order to avoid or settle\npotential claims with respect to any patent or other intellectual property rights of third parties, we may choose or be required to seek\na license from a third party and be required to pay license fees or royalties or both, which could be substantial. These licenses may\nnot be available on acceptable terms, or at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could\nresult in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a drug\ncandidate, or be forced, by court order or otherwise, to modify or cease some or all aspects of our business operations, if, as a result\nof actual or threatened patent or other intellectual property claims, we are unable to enter into licenses on acceptable terms. Further,\nwe could be found liable for significant monetary damages as a result of claims of intellectual property infringement.\n\n \n\n50\n\n \n\n \n\nDefending against claims of patent infringement,\nmisappropriation of trade secrets or other violations of intellectual property rights is likely to be costly and time-consuming, regardless\nof the outcome. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation,\nthere is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Thus, even\nif we were to ultimately prevail or settle at an early stage, such litigation could burden us with substantial unanticipated losses. Any\nclaims of infringement, misappropriation or other violation of intellectual property made against us could have a material adverse effect\non our business, financial condition, results of operations and prospects.\n\n** **\n\n**Issued patents covering one or more of our drug candidates could\nbe found invalid or unenforceable if challenged in court.**\n\n \n\nDespite measures we take to obtain and maintain\npatent and other intellectual property rights with respect to our drug candidates, our intellectual property rights could be challenged\nor invalidated. For example, if we were to initiate legal proceedings against a third party to enforce a patent covering one of our drug\ncandidates, the defendant could counterclaim that our self-own patent is invalid and/or unenforceable. Grounds for a validity challenge\ncould be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness, non-enablement,\nlack of sufficient written description or obviousness-type double patenting. Grounds for an unenforceability assertion could be an allegation\nthat someone connected with prosecution of the patent withheld relevant information from the USPTO, the State Intellectual Property Office,\nor the SIPO, or the applicable foreign counterpart, or made a misleading statement, during prosecution. Although we believe that we have\nconducted our patent prosecution in accordance with a duty of candor and in good faith, the outcome following legal assertions of invalidity\nand unenforceability during patent litigation is unpredictable. If a defendant were to prevail on a legal assertion of invalidity and/or\nunenforceability, we could lose at least part, and perhaps all, of the patent protection on a drug candidate. Even if a defendant does\nnot prevail on a legal assertion of invalidity and/or unenforceability, our self-own patent claims may be construed in a manner that would\nlimit our ability to enforce such claims against the defendant and others. Even if we establish infringement, the court may decide not\nto grant an injunction against further infringing activity and instead award only monetary damages, which may not be an adequate remedy.\nIn addition, if the breadth or strength of protection provided by our self-own patents is threatened, it could dissuade companies from\ncollaborating with us to license, develop, or commercialize our current or future drug candidates. Any loss of patent protection could\nhave a material adverse impact on one or more of our drug candidates and our business.\n\n \n\nEven if resolved in our favor, litigation or other\nlegal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our personnel\nfrom their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim\nproceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial\nadverse effect on our stock price. Such litigation or proceedings could substantially increase our operating losses and reduce the resources\navailable for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or\nother resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such\nlitigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual\nproperty portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have\na material adverse effect on our ability to compete in the marketplace. Furthermore, because of the substantial amount of discovery required\nin connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by\ndisclosure during this type of litigation.\n\n** **\n\n**If our trademarks and trade names are not adequately protected,\nwe may not be able to build name recognition in our markets of interest and our competitive position may be adversely affected.**\n\n \n\nAs of the date of this annual report, we had 58\nregistered trademarks in 46 territories. We may not be able to obtain trademark protection in territories that we consider of significant\nimportance to us. In addition, any of our trademarks or trade names, whether registered or unregistered, may be challenged, opposed, infringed,\ncancelled, circumvented or declared generic, or determined to be infringing on other marks, as applicable. We may not be able to protect\nour rights to these trademarks and trade names, which we will need to build name recognition by potential collaborators or customers in\nour markets of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, we\nmay not be able to compete effectively and our business may be adversely affected.\n\n \n\nWe expect to rely on trademarks as one means to\ndistinguish any of our drug candidates that are approved for marketing from the products of our competitors. Once we select trademarks\nand apply to register them, our trademark applications may not be approved. Third parties may oppose our trademark applications, or otherwise\nchallenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products,\nwhich could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Our\ncompetitors may infringe our trademarks and we may not have adequate resources to enforce our trademarks.\n\n** **\n\n51\n\n \n\n** **\n\n**If we are unable to protect the confidentiality of our trade secrets,\nour business and competitive position would be harmed.**\n\n \n\nIn addition to patents, we rely upon unpatented\ntrade secrets, know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect this\ntrade secret and confidential information, in part, by entering into non-disclosure and confidentiality agreements with parties that have\naccess to them, such as our employees, collaborators, CROs, consultants and other third parties. We also enter into confidentiality and\ninvention or patent assignment agreements with our employees and consultants.\n\n \n\nHowever, any of these parties may breach such agreements\nand disclose our proprietary information, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that\na party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.\nIf any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have\nno right to prevent them from using that technology or information to compete with us and our competitive position would be harmed. In\naddition, we face the risk of cybercrime. For instance, someone could hack our information networks and gain illicit access to our proprietary\ninformation, including our trade secrets. Even if we are successful in prosecuting such claims, any remedy awarded may be insufficient\nto fully compensate us for the improper disclosure or misappropriation.\n\n** **\n\n**Intellectual property rights do not necessarily address all potential\nthreats.**\n\n \n\nThe degree of future protection afforded by our\nintellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business,\nor permit us to maintain our competitive advantage. For instance:\n\n \n\n●our competitors may be able to make compounds that are similar\nto our drug candidates but that are not covered by the claims of our self-own patents;\n\n \n\n●we might not have been the first to make the inventions covered\nby the issued patents or pending patent applications that we self-own, which could result in the patents applied for not being issued\nor being invalidated after issuing;\n\n \n\n●we might not have been the first to file patent applications\ncovering certain of our inventions, which could result in the patents applied for not being issued or being invalidated after issuing;\n\n \n\n●others may independently develop similar or alternative technologies\nor duplicate any of our technologies without infringing our intellectual property rights;\n\n \n\n●it is possible that the pending and future self-own patent\napplications will not lead to issued patents;\n\n \n\n●issued self-own patents may not provide us with any competitive\nadvantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors or other third parties;\n\n \n\n●we may obtain patents for certain compounds many years\nbefore we receive regulatory approval for drugs containing such compounds, and because patents have a limited life, which may begin to\nrun out prior to the commercial sale of the related drugs, the commercial value of our patents may be limited;\n\n \n\n●our competitors might conduct research and development activities\nin countries where we do not have patent rights and then use the information learned from such activities to develop competitive drugs\nfor commercialization in our major markets;\n\n \n\n●we may fail to develop additional proprietary technologies\nthat are patentable;\n\n \n\n●we may fail to apply for or obtain adequate intellectual\nproperty protection in all the jurisdictions in which we plan to sell our drug products;\n\n \n\n●third parties may gain unauthorized access to our intellectual\nproperty due to potential lapses in our information systems;\n\n \n\n●the patents of others may have an adverse effect on our business;\nand\n\n \n\n●we may choose not to file a patent in order to maintain certain\ntrade secrets or know-how, and a third party may discover certain technologies containing such trade secrets or know-how through independent\nresearch and development and/or subsequently file a patent covering such intellectual property.\n\n \n\nShould any of these events occur, they could have\na material adverse effect on our business, financial condition, results of operations and prospects.\n\n** **\n\n52\n\n \n\n** **\n\n**RISKS RELATED TO OUR ORDINARY SHARES**\n\n** **\n\n**An active trading market for our ordinary shares may not be sustained.**\n\n \n\nOur ordinary shares have been listed on Nasdaq only since June 17,\n2025, and we cannot assure you that an active trading market for our ordinary shares will be sustained or maintained. The lack of an active\ntrading market may impair the value of your shares and your ability to sell your shares at the time you wish to sell them. An inactive\ntrading market may also impair our ability to raise capital by selling our ordinary shares and entering into strategic partnerships or\nacquiring other complementary products, technologies or businesses by using our ordinary shares as consideration. In addition, if we fail\nto satisfy exchange listing standards, we could be delisted, which would have a negative effect on the price of our ordinary shares.\n\n** **\n\n**The trading price of our ordinary shares may continue to be volatile,\nwhich could result in substantial losses to investors.**\n\n \n\nThe price of our ordinary shares have fluctuated\nsubstantially since our IPO. As a relatively small-capitalization company with relatively small public float, we may experience greater\nstock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. Such volatility,\nincluding any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making\nit difficult for prospective investors to assess the rapidly changing value of our ordinary shares.\n\n \n\nMoreover, the volatility and fluctuation of the\ntrading price of our ordinary shares may happen because of broad market and industry factors, like the performance and fluctuation of\nthe market prices of other companies with business operations located mainly in Taiwan that have listed their securities in the U.S. A\nnumber of Taiwan companies have listed or are in the process of listing their securities on U.S. stock markets. The securities of\nsome of these companies have experienced significant volatility, including price declines in connection with their initial public offerings.\nThe trading performances of these Taiwan companies’ securities after their offerings may affect the attitudes of investors toward\nTaiwan companies listed in the U.S. in general and consequently may impact the trading performance of our ordinary shares, regardless\nof our actual operating performance.\n\n \n\nIn addition to market and industry factors, the\nprice and trading volume for our ordinary shares may be highly volatile for factors specific to our own operations, including the following: \n\n \n\n●variations in our income, earnings and cash flow;\n\n \n\n●announcements of new investments, acquisitions, strategic\npartnerships or joint ventures by us or our competitors;\n\n \n\n●announcements of new services and expansions by us or our\ncompetitors;\n\n \n\n●changes in financial estimates by securities analysts;\n\n \n\n●detrimental adverse publicity about us, our services or our\nindustry;\n\n \n\n●additions or departures of key personnel;\n\n \n\n●release of lock-up or other transfer restrictions on our\noutstanding equity securities or sales of additional equity securities; and\n\n \n\n●potential litigation or regulatory investigations.\n\n \n\nAny of these factors may result in large and sudden\nchanges in the volume and price at which our ordinary shares trade. Furthermore, the stock market in general experiences price and volume\nfluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad market and industry\nfluctuations may adversely affect the market price of our ordinary shares.\n\n \n\n53\n\n \n\n \n\nIn addition, if the trading volumes of our ordinary\nshares are low, persons buying or selling in relatively small quantities may easily influence prices of our ordinary shares. This low\nvolume of trades could also cause the price of our ordinary shares to fluctuate greatly, with large percentage changes in price occurring\nin any trading day session. Holders of our ordinary shares may also not be able to readily liquidate their investment or may be forced\nto sell at depressed prices due to low volume trading. If high spreads between the bid and asked prices of our ordinary shares exist at\nthe time of purchase, the stock would have to appreciate substantially on a relative percentage basis for an investor to recoup their\ninvestment. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our\nordinary shares. As a result of this volatility, investors may experience losses on their investment in our ordinary shares. A decline\nin the market price of our ordinary shares also could adversely affect our ability to issue additional ordinary shares or other of our\nsecurities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our ordinary\nshares will develop or be sustained. If an active market does not develop, holders of our ordinary shares may be unable to readily sell\nthe shares they hold or may not be able to sell their shares at all.\n\n \n\nIn the past, shareholders of public companies have\noften brought securities class action suits against those companies following periods of instability in the market price of their securities.\nIf we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources\nfrom our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations.\nAny such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future.\nIn addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse\neffect on our financial condition and results of operations.\n\n** **\n\n**If securities or industry analysts do not publish research or reports\nabout our business, or if they adversely change their recommendations regarding our ordinary shares, the market price for our ordinary\nshares and trading volume could decline.**\n\n \n\nThe trading market for our ordinary shares may be influenced by research\nor reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ordinary\nshares, the market price for our ordinary shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly\npublish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume\nfor our ordinary shares to decline.\n\n** **\n\n**We have broad discretion to determine how to use the net proceeds\nfrom our IPO and may use them in ways that may not enhance our results of operations or the price of the ordinary shares.**\n\n \n\nWe initially intended to primarily use our net\nproceeds from our IPO for researching and developing new drugs and clinical trials. However, as of the date of this annual report, we\nhave used US$15,000 thousand for a loan to Linkage Gladden Enterprise Ltd., and US$2,495 thousand towards researching and developing new\ndrugs and clinical trials, with the remaining funds used for general corporate purposes. Our management has broad discretion over the\nuse of net proceeds from our IPO, and we could spend the net proceeds from our IPO in ways the holders of the ordinary shares may not\nagree with or that do not yield a favorable return. The failure by our management to apply these funds effectively could have a material\nadverse effect on our business, financial condition and results of operation. You will not have the opportunity, as part of your investment\ndecision, to assess whether the net proceeds from our IPO are being used appropriately. You must rely on the judgment of our management\nregarding the application of the net proceeds of our IPO.\n\n** **\n\n54\n\n \n\n** **\n\n**The sale or availability for sale of substantial amounts of our\nordinary shares could adversely affect their market price.**\n\n \n\nSales of substantial amounts of our ordinary shares\nin the public market, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and\ncould materially impair our ability to raise capital through equity offerings in the future. The ordinary shares sold in our IPO are freely\ntradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, and\nshares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144\nand Rule 701 under the Securities Act and the applicable lock-up agreements. There were 76,027,667 ordinary shares outstanding immediately\nafter our IPO. In connection with our IPO, our directors and officers and holders of more than 5% of our outstanding shares as of the\neffective date of this registration statement entered into customary lock-up agreements in favor of the underwriters for a period of twelve\n(12) months from the date of our IPO. Most of our holders of less than 5% of our outstanding shares as of the effective date of the\nregistration statement entered into customary lock-up agreements in favor of the underwriters for a period of six (6) months from\nthe closing of our IPO, which expired in December 2025. Additionally, ordinary shares held by Taizhou City Optimization and Upgrade Investment\nPartnership (Limited Partnership) are subject to lock-up for five (5) years from the closing date of our IPO. We have agreed with the\nunderwriters that, for a period of twelve (12) months from the closing of our IPO, we and any successors of us will not (a) offer,\npledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right\nor warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of us or any securities\nconvertible into or exercisable or exchangeable for shares of capital stock of us; (b) file or caused to be filed any registration\nstatement with the SEC relating to the offering of any shares of our capital stock or any securities convertible into or exercisable or\nexchangeable for shares of our capital stock; or (c) enter into any swap or other arrangement that transfers to another, in whole\nor in part, any of the economic consequences of ownership of our capital stock, whether any such transaction described in clause (a),\n(b) or (c) above is to be settled by delivery of shares of our capital stock or such other securities, in cash or otherwise.\nHowever, the underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the Financial\nIndustry Regulatory Authority, Inc. In December 2025, following the expiration of the lock-up agreements signed by our shareholders holding\nless than 5%, the price of our ordinary shares experienced substantial decrease. We cannot predict what effect, if any, the expiration\nof the other lock-up agreement or market sales of securities held by our significant shareholders or any other shareholder or the availability\nof these securities for future sale will have on the market price of our ordinary shares.\n\n** **\n\n**Because we do not expect to pay dividends in the foreseeable future\nafter our IPO, you must rely on price appreciation of our ordinary shares for return on your investment.**\n\n \n\nWe do not expect to pay any cash dividends in\nthe foreseeable future. Therefore, you should not rely on an investment in our ordinary shares as a source for any future dividend income.\n\n \n\nOur board of directors has complete discretion as\nto whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of\nfuture dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements\nand surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions\nand other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ordinary shares will likely\ndepend entirely upon any future price appreciation of our ordinary shares. There is no guarantee that our ordinary shares will appreciate\nin value after our IPO or even maintain the price at which you purchased the ordinary shares. You may not realize a return on your investment\nin our ordinary shares and you may even lose your entire investment in our ordinary shares.\n\n** **\n\n**There can be no assurance that we will not be a passive foreign\ninvestment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could subject U.S. investors in our ordinary\nshares or ordinary shares to significant adverse U.S. federal income tax consequences.**\n\n \n\nWe will be classified as a passive foreign investment\ncompany, or PFIC, for United States federal income tax purposes for any taxable year if either (a) 75% or more of our gross\nincome for such year consists of certain types of “passive” income or (b) 50% or more of the value of our assets (generally\ndetermined on the basis of a quarterly average) during such year produce or are held for the production of passive income (the “asset\ntest”). We will be treated as owning our proportionate share of the assets and earnings of any other corporation in which we own,\ndirectly or indirectly, more than 25% (by value) of the stock. Based upon our income and assets during the 2025 taxable year, including\ngoodwill and other unbooked intangibles not reflected on our balance sheet (taking into account the proceeds from our IPO) and projections\nas to the market price of our ordinary shares immediately following our IPO, we were not classified as a PFIC for the 2025 taxable year.\n\n \n\n55\n\n \n\n \n\nAlthough for the 2025 taxable year, we were not\nclassified as a PFIC, because the value of our assets for purposes of the asset test may be determined by reference to the market price\nof our ordinary shares, fluctuations in the market price of our ordinary shares may cause us to be classified as a PFIC for subsequent\ntaxable years. The determination of whether we will be classified as a PFIC will also depend, in part, on the composition of our\nincome and assets. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid\nassets and the cash raised in our IPO. If we determine not to deploy significant amounts of cash for active purposes, our risk of being\na PFIC may substantially increase. It is also possible that the U.S. Internal Revenue Service, or the IRS could challenge our classification\nof certain income and assets as non-passive, which could result in our company being or becoming a PFIC for the current or future taxable years.\nBecause PFIC status is a factual determination made annually after the close of each taxable year, we will make this determination following\nthe end of any particular tax year, and there can be no assurance that we will not be a PFIC for any future taxable year.\n\n \n\nIf we are a PFIC in any taxable year, a U.S. Holder\n(as defined in “Item 10. Additional Information—E. Taxation — U.S. Federal Income Tax Considerations”)\nmay incur significantly increased U.S. income tax on gain recognized on the sale or other disposition of the ordinary shares and\non the receipt of distributions on the ordinary shares to the extent such distribution is treated as an “excess distribution”\nunder the U.S. federal income tax rules, and such U.S. Holder may be subject to burdensome reporting requirements. Further,\nif we are a PFIC for any year during which a U.S. Holder holds our ordinary shares, we generally will continue to be treated as a\nPFIC for all succeeding years during which such U.S. Holder holds our ordinary shares, unless we were to cease to be a PFIC\nand the U.S. Holder were to make a “deemed sale” election with respect to the ordinary shares. For more information see\n“Item 10. Additional Information—E. Taxation — U.S. Federal Income Tax Considerations — PFIC\nRules.”\n\n** **\n\n**Our memorandum and articles of association contain anti-takeover\nprovisions that could have a material adverse effect on the rights of holders of our ordinary shares.**\n\n \n\nOur second amended and restated memorandum and articles\nof association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control\ntransactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium\nover prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar\ntransaction. Our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or\nmore series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and\nthe qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and\nliquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preferred shares could\nbe issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult.\nIf our board of directors decides to issue preferred shares, the price of our ordinary shares may fall and the voting and other rights\nof the holders of our ordinary shares may be materially and adversely affected.\n\n** **\n\n**You may face difficulties in protecting your interests, and your\nability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.**\n\n \n\nWe are an exempted company incorporated under the\nlaws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised)\nof the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions\nby minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed\nby the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent\nin the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not\nbinding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman\nIslands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the U.S. In\nparticular, the Cayman Islands has a less developed body of securities laws than the U.S. Some U.S. states, such as Delaware,\nhave more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies\nmay not have standing to initiate a shareholder derivative action in a federal court of the U.S.\n\n \n\nShareholders of Cayman Islands exempted companies\nlike us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these\ncompanies. No shareholder (other than a director of the Company) shall have any right of inspecting any accounting record or book or document\nof the Company except as conferred by law or authorised by the board of directors of the Company or the Company in general meeting. This\nmay make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit\nproxies from other shareholders in connection with a proxy contest.\n\n \n\nCertain corporate governance practices in the Cayman\nIslands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the\nU.S. Currently, we plan to rely on home country practice with respect to any corporate governance matter and, our shareholders may\nbe afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.\n\n \n\n56\n\n \n\n \n\nAs a result of all of the above, our public shareholders\nmay have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or\ncontrolling shareholders than they would as public shareholders of a company incorporated in the U.S.\n\n** **\n\n**Certain judgments obtained against us by our shareholders may not\nbe enforceable.**\n\n \n\nWe are a Cayman Islands company and substantially\nall of our assets are located outside of the U.S. Substantially all of our current operations are conducted in Taiwan. In addition,\nall of our current directors and officers are nationals and residents of countries and regions other than the U.S. Substantially\nall of the assets of these persons are located outside the U.S. As a result, it may be difficult or impossible for you to bring an\naction against us or against these individuals in the U.S. in the event that you believe that your rights have been infringed under\nthe U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman\nIslands, Taiwan, Singapore, Hong Kong and the PRC may render you unable to enforce a judgment against our assets or the assets of our\ndirectors and officers. For more information regarding the relevant laws of the Cayman Islands, Taiwan, Singapore, Hong Kong and the PRC.\n\n** **\n\n**We have incurred increased costs as a result of being a public company.**\n\n \n\nAs a public company, we have incurred significant\nlegal, accounting, and other expenses that we did not incur as a private company prior to our IPO. The Sarbanes-Oxley Act of 2002,\nas well as rules subsequently implemented by the SEC and the Nasdaq, impose various requirements on the corporate governance practices\nof public companies. Compliance with these rules and regulations has increased our legal and financial compliance costs and to make some\ncorporate activities more time-consuming and costly. For example, operating as a public company has made it more difficult and more expensive\nfor us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur\nsubstantially higher costs to obtain the same or similar coverage. In addition, we have incurred additional costs associated with our\npublic company reporting requirements.\n\n** **\n\n**The obligation to disclose information publicly may put us at a\ndisadvantage to competitors that are private companies.**\n\n \n\nAs a publicly listed company, we are required to\nfile annual reports with the Securities and Exchange Commission. In some cases, we need to disclose material agreements or results of\nfinancial operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information,\nwhich would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as a U.S.-listed public\ncompany, we are governed by U.S. laws that some of our competitors are not required to follow. To the extent compliance with U.S. laws\nincreases our expenses or decreases our competitiveness against such companies, our public listing could affect our results of operations.\n\n** **\n\n**We are a foreign private issuer within the meaning of the rules\nunder the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.**\n\n \n\nBecause we are a foreign private issuer under the\nExchange Act, we are exempt from certain provisions of the securities rules and regulations in the U.S. that are applicable\nto U.S. domestic issuers, including:\n\n \n\n●the rules under the Exchange Act requiring the filing\nof quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;\n\n \n\n●the sections of the Exchange Act regulating the solicitation\nof proxies, consents, or authorizations in respect of a security registered under the Exchange Act;\n\n \n\n●the sections of the Exchange Act requiring insiders\nto file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short\nperiod of time; and\n\n \n\n●the selective disclosure rules by issuers of material nonpublic\ninformation under Regulation FD.\n\n \n\nWe are required to file an annual report on Form 20-F\nwithin four months of the end of each fiscal year. In addition, under Nasdaq rules we must furnish a Form 6-K to the SEC within six\nmonths following the end of the second fiscal quarter, containing interim financial statements covering the first two fiscal quarters.\n. However, the information we are required to file with or furnish to the SEC is less extensive and less timely than that required to\nbe filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would\nbe made available to you were you investing in a U.S. domestic issuer.\n\n \n\n57\n\n \n\n** **\n\n**Because we are a foreign private issuer and are exempt from certain\nNasdaq corporate governance standards applicable to U.S. issuers, you have less protection than you would have if we were a domestic issuer.**\n\n \n\nNasdaq listing rules require listed companies to\nhave, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and\nwe may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one\nyear of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to\nconsist of independent directors. Thus, although a director must act in the best interests of our Company, it is possible that fewer board\nmembers will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result.\nAdditionally, Nasdaq listing rules mandate that U.S. domestic issuers establish a compensation committee, a nominating and corporate governance\ncommittee, and an audit committee, each composed solely of independent directors. We, as a foreign private issuer, are not subject to\nthese requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders\nbe given the opportunity to vote on all equity compensation plans and material revisions to those plans, as well as certain ordinary share\nissuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on\nsuch matters, with regard to the requirement that a majority of our Board consists of independent directors and to appoint a nominating\nand corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq\nlisting rules with respect to certain corporate governance standards which may afford less protection to investors.\n\n** **\n\n**We are an emerging growth company, and the reduced disclosure requirements\napplicable to emerging growth companies may make our ordinary shares less attractive to investors.**\n\n \n\nWe are an emerging growth company, as defined in\nthe JOBS Act, and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of\nthe completion of our IPO. However, if certain events occur prior to the end of such five-year period, including if we become a “large\naccelerated filer,” our annual gross revenues exceed US$1.235 billion or we issue more than US$1.0 billion of non-convertible\ndebt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as\nwe remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are\napplicable to other public companies that are not emerging growth companies. We have taken advantage of reduced reporting burdens in this\nannual report. In particular, in this annual report, we have provided only two years of audited consolidated financial statements\nand have not included all of the executive compensation related information that would be required if we were not an emerging growth company.\nWe cannot predict whether investors will find our ordinary shares less attractive if we rely on these exemptions. If some investors find\nour ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and the trading price\nof our ordinary shares may be reduced or more volatile.\n\n \n\nIn addition, the JOBS Act provides that an emerging\ngrowth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows\nan emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies.\n\n** **\n\n**If we cannot continue to satisfy the listing requirements and other\nrules of the Nasdaq Global Market, our securities may be delisted, which would negatively impact the price of our securities and your\nability to sell them.**\n\n \n\nOur ordinary shares are listed on the Nasdaq Global\nMarket, in order to maintain our listing on the Nasdaq Global Market, we are required to comply with certain rules of the Nasdaq Global\nMarket, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares\nand various additional requirements. Even if we initially met the listing requirements and other applicable rules of the Nasdaq Global\nMarket, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Global\nMarket criteria for maintaining our listing, our securities could be subject to delisting.\n\n \n\nIf the Nasdaq Global Market subsequently delists\nour securities from trading, we could face significant consequences, including:\n\n \n\n●a limited availability for market quotations for our securities;\n\n \n\n●reduced liquidity with respect to our securities;\n\n \n\n●a determination that our ordinary shares are a “penny\nstock,” which would require brokers trading in our ordinary shares to adhere to more stringent rules and possibly result in a reduced\nlevel of trading activity in the secondary trading market for our ordinary shares;\n\n \n\n●limited amount of news and analyst coverage; and\n\n \n\n●a decreased ability to issue additional securities or obtain\nadditional financing in the future.\n\n** **\n\n58"}