Guangdong Chaohongji Industrial Co., Ltd. Board of Directors 2025 Annual Internal Control Evaluation Report
To the Shareholders of Guangdong Chaohongji Industrial Co., Ltd.:
Pursuant to the "Basic Norms for Enterprise Internal Control" and its supporting guidelines, as well as other internal control regulatory requirements (hereinafter referred to as the "Enterprise Internal Control Norms System"), and in conjunction with Guangdong Chaohongji Industrial Co., Ltd.'s (hereinafter referred to as the "Company") internal control system and evaluation methods, based on daily supervision and special supervision of internal control, we have evaluated the effectiveness of internal control as of December 31, 2025.
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 Audit Committee supervises the establishment and implementation of internal control by the Board of Directors. 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 they bear individual and joint legal responsibility for the truthfulness, accuracy, and completeness of the report's content.
The objectives of the Company's internal control are to reasonably ensure that business management is legal and compliant, assets are safe, financial reports and related information are true and complete, and to improve operational efficiency and effectiveness, thereby promoting the achievement of development strategies. 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. Internal Control Evaluation Conclusion
Based on the identification of material weaknesses in the Company's financial reporting internal control, there were no material weaknesses in financial reporting internal control as of the internal control evaluation report date. 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 requirements.
Based on the identification of material weaknesses in the Company's non-financial reporting internal control, no material weaknesses in non-financial reporting internal control were found as of the internal control evaluation report date.
No factors have occurred between the internal control evaluation report date and the issuance date of the internal control evaluation report that affect the evaluation conclusion on the effectiveness of internal control.
The internal control audit opinion is consistent with the Company's evaluation conclusion on the effectiveness of financial reporting internal control.
The internal control audit report's disclosure of material weaknesses in non-financial reporting internal control is consistent with the disclosure in the Company's internal control evaluation report.
III. Internal Control Evaluation Work
(I) Scope of Internal Control Evaluation
The Company determines the main entities, business operations, matters, and high-risk areas included in the scope of the evaluation based on a risk-oriented approach.