Haining China Leather City Co., Ltd.
2025 Annual Internal Control Self-Evaluation Report
To all shareholders of Haining China Leather City Co., Ltd.:
In accordance with the "Basic Norms for Enterprise Internal Control" and its supporting guidelines, as well as other internal control regulatory requirements (collectively referred to as the "Enterprise Internal Control Norms System"), and based on the company's internal control system and evaluation measures, we have conducted an evaluation of the effectiveness of the company's internal control as of December 31, 2025 (the "Internal Control Evaluation Base Date"), based on daily and special supervision of internal control.
I. Important Statement
In accordance with the Enterprise Internal Control Norms System, the establishment, improvement, and effective implementation of internal control, the evaluation of its effectiveness, and the truthful disclosure of the internal control evaluation report are the responsibilities of the company's Board of Directors. The Supervisory Board supervises the establishment and implementation of internal control by the Board of Directors. In accordance with the requirements of the reform of the Supervisory Board, and in conjunction with the company's actual situation, the "Articles of Association" and other relevant systems were formulated and revised on September 12, 2025, abolishing the company's Supervisory Board and transferring its functions to the Audit Committee. The management is responsible for organizing and leading the daily operation of the company's internal control. The company's Board of Directors, Audit Committee, directors, and senior management guarantee that the content of this report contains no false records, misleading statements, or major omissions, and assume individual and joint legal responsibility for the authenticity, accuracy, and completeness of the report's content.
The objective of the company's internal control is to reasonably ensure that business operations are legal and compliant, assets are safe, financial reports and related information are true and complete, operating efficiency and effectiveness are improved, and development strategies are achieved. Due to the inherent limitations of internal control, it can only provide reasonable assurance for achieving these objectives. Furthermore, due to changes in circumstances, internal control may become inappropriate, or the degree of compliance with control policies and procedures may decrease. Therefore, there is a certain risk in inferring the future effectiveness of internal control based on the results of the internal control evaluation.
II. Conclusion of Internal Control Evaluation
Based on the determination of material weaknesses in the company's financial reporting internal control, as of the Internal Control Evaluation Base Date, there are no material weaknesses in financial reporting internal control. The Board of Directors believes that the company has maintained effective financial reporting internal control in all material aspects in accordance with the Enterprise Internal Control Norms System and relevant regulatory requirements.
Based on the determination of material weaknesses in the company's non-financial reporting internal control, as of the Internal Control Evaluation Base Date, the company has not found any material weaknesses in non-financial reporting internal control.
No factors have occurred between the Internal Control Evaluation Base Date and the issuance date of this Internal Control Evaluation Report that affect the conclusion of the internal control effectiveness evaluation.
III. Internal Control Evaluation Work
(1) Scope of Internal Control Evaluation