Zibo Qixiang Tengda Chemical Co., Ltd. To all shareholders of Zibo Qixiang Tengda Chemical Co., Ltd.:
Based on 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 the company's internal control system and evaluation methods, we have evaluated the effectiveness of the company's internal control as of December 31, 2025 (the "Internal Control Evaluation Report Base Date"), based on daily and special supervision of internal controls.
I. Important Statement
In accordance with the requirements of the Enterprise Internal Control Norms System, it is the responsibility of the company's board of directors to establish, improve, and effectively implement internal controls, evaluate their effectiveness, and disclose the internal control evaluation report truthfully. The Audit Committee of the Board of Directors supervises the establishment and implementation of internal controls 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, directors, and senior management guarantee that this report contains no false records, misleading statements, or material omissions, and they shall bear individual and joint legal liability 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 management is 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 the achievement of these objectives. Furthermore, due to changes in circumstances, internal controls 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 controls based on the results of the internal control evaluation.
II. Internal Control Evaluation Conclusion
Based on the determination of material weaknesses in the company's financial reporting internal control, as of the Internal Control Evaluation Report 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 requirements of the Enterprise Internal Control Norms System and relevant regulations.
Based on the determination of material weaknesses in the company's non-financial reporting internal control, as of the Internal Control Evaluation Report Base Date, the company has not found any material weaknesses in non-financial reporting internal control.
There have been no factors occurring between the Internal Control Evaluation Report Base Date and the issuance date of the Internal Control Evaluation Report that affect the conclusion on the effectiveness of internal control.
III. Internal Control Evaluation Work
(1) Scope of Internal Control Evaluation
The company determines the main entities, businesses, and matters included in the scope of evaluation, as well as high-risk areas, based on a risk-oriented approach.
The main entities included in the scope of evaluation are: Zibo Qixiang Tengda Chemical Co., Ltd., Qingdao Siyuan Chemical Co., Ltd., Qixiang Tengda (Hong Kong) Co., Ltd., Zibo Teng Hui Grease Chemical Co., Ltd., Shandong Qilu Keli Chemical Research Institute Co., Ltd., Zibo Linzi Petrochemical Fuel Co., Ltd., Qixiang Huali New Material Co., Ltd., Guangzhou Qixiang Tengda Supply Chain Co., Ltd., and Zibo Qixiang Tengda Chemical Sales Co., Ltd. The total assets of the entities included in the scope of evaluation account for 100% of the company's consolidated financial statement assets, and their operating revenue accounts for 100% of the company's consolidated financial statement operating revenue.