The board of directors of Federal Corporation resolved to adjust the production capacity of the Guanyin Factory, and planned to suspend the production fully and temporarily. Cause of the event: Since 2021,the United States Department of Commerce has imposed high anti-dumping duties on passenger and light truck tires from Taiwan and other countries which has seriously impacted the largest proportion of sales in the U.S. market,and the revenue dropped by more than 80% after the Zhongli plant was shut down. Since the US anti-dumping high tariff policy is still in progress, the company has lost its competitiveness in exporting to the US at this stage.

Affected by this, the operation has encountered difficulties and the financial situation has continued to suffer severe losses. Since this year, the global economy has been affected by the pandemic, inflation and the interest rate hike pressure of The Federal Reserve's tightening monetary policy, which has led to a sharp rise in imports and consumer prices, and the pressure on the company's production costs has doubled. Although the company is trying to switch sales markets and negotiating OEM in Southeast Asia, but due to the global economic slump, the Russia-Ukraine War, the pandemic, and inflation, the OEM plan has been delayed.

The company is still unable to get out of loss which led to a gradual deterioration of the operating situation in the past two years, which has caused financial losses and pressure. Production capacity of the fully or partially suspended work items: The production capacity in 2022 is about 1.5 million pieces of tires. Production output of the fully or partially suspended work items: The production output in 2022 is about 1.11 million pieces of tires.

Share of the company operating revenue that the fully or partially suspended work items account for: about more than 90% In order to avoid the expansion of losses and pursue the sustainable operation of the company, considering the best interests of shareholders, the company had to temporarily suspend the production of Guanyin Factory, and re-check the position of the supply chain and the layout of domestic and overseas sales markets.