OBI capital increases by issuance of stocks to transfer stocks with Amaran Biotechnology Inc. (Announcement of base day and trading counterparty)

1. Type of merger and acquisition (e.g., merger, spin-off, acquisition, or share transfer): Share transfer
2. Date of occurrence of the event: Dec 31, 2020
3. Names of companies participating in the merger and acquisition (e.g., name of the other company participating in the merger, newly established company in a spin-off, acquired company, or company whose shares are transferred): Amaran Biotechnology Inc. (hereinafter refer to as ‘Amaran’)
4. Trading counterparty (e.g., name of the other company participating in the merger, company spinning off, or trading counterparty to the acquisition or share transfer): Tony Chow and 198 shareholders of Amaran (including stakeholders)
5. Trading counterparty is stakeholder: Yes
6. Relationship between the trading counterparty and the Company (investee company in which the Company has re-invested and has shareholding of XX%), explanation of the reasons for the decision to acquire from or transfer shares to an affiliated enterprise or related party, and whether it will affect shareholders’ equity:

(1) Trading counterparties are shareholders of Amaran, including stakeholders and non-stakeholders, for the share transfer event. Amaran informed the shareholders and received approval on share exchange rate based on shareholding ratio noted on shareholders’ list on board of director meeting in fair and open manner. If transferees cannot exchange shares for any reason, Amaran will coordinate with other shareholders to make up the total number of shares for exchange.
(2) The exchange ratio of the share transfer, referred to the fair price on publish securities market of OBI shares and Amaran current financial statement, is reasonable, has no major negative effects on shareholders’ equity and also takes into the considerations of: the financial and operational conditions of OBI and Amaran, the locations of both companies, complementarity and merger and acqusition synergy of products and technologies, and the evaluation report of Amaran company value provided by RSM Taiwan to propose an appraisal of share exchange rate.

7. Purpose of the merger and acquisition:
Given that active immunotherapies in OBI have already been on human clinal stages, and Amaran is our raw material manufacturer of active immunotherapy. The purpose of increase capital by issuance of shares is to achieve resources sharing for strengthening cooperation between OBI and Amaran by ensuring the current stage of clinical supplies, consistent and stable quality and supplies after launching, fully preparing for regulatory inspection before launching, and strengthening OBI CMC manufacturing technologies. 10,693 thousand OBI common shares are exchanged with 53,466 thousand Amaran common shares (67%).
8. Anticipated benefits of the merger and acquisition:

(1) Receive reliable manufacturing base for active immunotherapies and ensure the stable quality and supply
(2) Strengthen OBI CMC manufacturing technologies and QA/QC abilities

9. Effect of the merger and acquisition on net worth per share and earnings per share: By this cooperation opportunity, integrate two parties’ research, manufacturing, and marketing resources. Expecting to raise the competitiveness of both companies. In long term, net worth per share and earning per share will have positive effects after merger and acquisition.
10. Follow up procedure after merger and acquisition: Not applicable
11. Type of consideration and cash source: capital increase by issuance of shares
12. Share exchange ratio and calculation assumptions:

(1) Share exchange ratio: 1 share of OBI common stock for 5 shares of Amaran common stock
(2) Calculation assumption: refer to the fair price on publish securities market for OBI shares and Amaran current financial statement and also taken into the considerations of: the financial and operational conditions of OBI and Amaran, the locations of both companies, complementarity and merger and acquisition synergy of products and technologies, and the evaluation report of Amaran company value provided by RSM Taiwan to propose a reasonable share exchange rate.

13. Whether the CPA, lawyer or securities underwriter issued an opinion on the unreasonableness regarding the transaction: No
14. Name of accounting, law or securities firm: RSM Taiwan
15. Name of CPA or lawyer: Tung-Chang Chen accountant
16. Number of CPA or lawyer license: Taiwan CPA certificate no.2524
17. Reasonable opinion letter of merger and acquisition (M&A) share exchange ratio from independent expert based on M&A share exchange rate and cash distributed to shareholders: (including (1) standard of fixing prices for public tender offer, principle or calculation method and international custom market value approach, and cost method and comparison of discounted cash flow (2) financial status, profitability, and price-to-earnings ratio of acquired company and listed company (3) appraisal purposed based on the public tender offer price, the content and conclusion needs to be explained (4) tender offeror’s margin purchasing repayment plan involves assets or shares of acquired company or existing company after merging as guarantor, should explain financial and operational evaluation of acquired company or existing company after merging):

(1) OBI accountant reviewed the evaluation analysis report of shareholding value by Diwan Financial Advisory Services Co., Ltd (hereinafter refer to as ‘Diwan FAS’) according to ‘Regulation Governing the Acquisition or Disposal of Assets for Public Companies’. Diwan FAS employs the valuation method including: (a) Listed company analogy of market approach: shareholding value evaluated by listed company analogy is calculated according to the listed company analogy of market value multiplies and taken in the considerations of control premium and discount for lack of marketability; (b) Transaction analogy of market approach: calculated according to transaction analogy value multiplies; (c) Discounted cash flow method of income approach: according to 2020-2030 prospective financial information provided by target company and taken in the consideration of discounted for lack of marketability. Discount rate is based on the weighted average cost of the target company to evaluate shareholding value of target company, and to take discount rate and sustainable growth as sensitive factors to analyze value sensitivity. Analyzed shareholding value range per share of target company based on discounted cash flow method of income approach. The value evaluation considered 3 scenarios as achieving rates. (3 scenarios for revenue of specific business based on financial income statement of target company: 100% achieving rate, 75% achieving rate, 50% achieving rate). According to listed company analogy of market approach, transaction analogy, and discounted cash flow method of income approach, the shareholding value ranges per share for above 3 scenarios are finalized as NT$29.83 to 42.46, NT$24.68 to 36.07, and NT$ 19.51 to 29.68, respectively. No major abnormality was observed during the investigation for analysis as previous described.
The shares of OBI, listed company in Taiwan, possess public market price. Based on the historical closing prices per share on public market, shareholding value per share of OBI was finalized between NT$113.39 to 119.50 based on the average closing prices per share of 5 days, 10 days, 20 days, 30 days, 60 days, 90 days before reference date of Aug 31, 2020.
(2) After reviewing valuation analysis report provided by Diwan FAS, no major abnormalities were observed on the final equity value range of target company. Therefore, according to the equity value range of Amaran, 3 scenarios were analyzed and proposed ranges of NT$ 29.83 to 42.46, NT$24.68 to 36.07, and NT$19.51 to 29.68, respectively. Based on the previous description to conclude that 1 share of OBI common stock can exchange with the reasonable share range of Amaran in 3 scenarios are 2.67 to 4.01 shares, 3.14 to 4.84 shares, and 3.82 to 6.13 shares, respectively. OBI finalized the share exchange rate of 1 share of OBI common stock for 5 shares of Amaran common stock, which is higher than the ranges for scenario 1 and 2, and in the range of scenario 3. OBI accountant considered that the share exchange rate will not affect shareholders’ equity.

18. Estimated date of completion: The case of capital increases by issuance of stocks was approved by Financial Supervisory Commission on Nov 12, 2020. After negotiation between Michael Chang, OBI director authorized by board of directors, and Tony Chow, the shareholder representative of Amaran, the share exchange base date is re-agreed to start on Dec 31, 2020.
19. Matters related to company’s right and obligations of existing company or new company experiencing spin-offs (reference 2): Not applicable
20. Basic information of merged company (reference 3): Not applicable
21. Matters related to the spin-off (including estimated value of the business and assets planned to be transferred to the existing company or new company. The total no. of shares to be acquired by the spun-off company or its shareholders, and their respective types and no. Matters related to the reduction, if any, in capital of the spun-off company) (note: not applicable for announcements unrelated to spin-offs): Not applicable
22. Conditions and restrictions for future transfer of shares resulting from the merger and acquisition: None
23. Plans regarding to the merger and acquisition (including 1. Aspiration and plan of future company operation; 2. Any major issues that would affect shareholders’ equity including dissolution, unlisted, major changes on organization, capital, business plan, finance, and production): none
24. Other important terms and conditions: None
25. Other important terms and conditions related to merger and acquisition: No
26. Any objections from directors to the transaction: None
27. Information of stakeholders involved in merger and acquisition (names of natural person director or juridical person director, the explanation of the important aspects of the interest (included but not limited to actual or expected method of investment involving merger and acquisition, shareholding ratio, transaction price, whether involving in merger and acquisition company’s operation and other investment conditions…, etc.), the reasons why the Director was required or not required to abstain, whether the Director has abstained, and the reasons why the Directors approved or against the resolution of merger and acquisition ):
Representatives of Yi Tai Investment Co. Ltd: Michael N. Chang, Tamon Tseng; representatives of Sheng Cheng Investment Co. Ltd: Frank Chen, who is also the director of Amaran, therefore abstaining from voting.
28. Is it related to change of business model: No
29. Explanation of new business model (reference 4): Not applicable
30. Transactions with the counterparty for the past one year and the next year: None
31. Source of funds: Not applicable
32. Any other matters that need to be specified: The details of share exchange and cooperation contract has been resolved by OBI and Amaran at the board of directors meeting on Sep 28, 2020. Tony Chow, a shareholder of Amarn, showed interests in share exchanging authorization, and signed official agreement with OBI on Oct 15, 2020.

1. Public issued companies merged the subsidiaries who have direct or indirect 100 % ownership of issued shares or capital, or subsidiaries with direct or indirect 100% ownership of issued shares or capitol merged between each other will not need to obtain reasonable opinions of share exchange rate, acquisition prices, or distribution of capitol or other properties to shareholders from accountants, lawyers, or securities underwriting.
2. Existing or new built companies absorb the matters related to authorities of extinguished company, including handling governing treasury stocks and securities with the nature of equity issued shares.
3. Main aspects of basic information for companies involving merger and acquisition, including names and types of business.
4. If the business model is changed, please explain including change in business scope, expansion/ reduction of production lines, adjustment of manufacturing process, industry horizontal/ vertical merger, or other change matters related to operational structure.