Special Explanation by the Board of Directors Regarding Matters Involved in the Non-Standard Audit Opinion Report
Lion New Energy Technology (Henan) Co., Ltd. (hereinafter referred to as "the Company" or "Lion Technology") has had its 2021 financial statements audited by Zhongshen Yatai Accounting Firm (Special General Partnership), which issued an audit report on April 29, 2022, with the number Zhongshen Yatai Audit [2022] No. 000572, expressing an inability to issue an opinion. The reason for the inability to express an opinion is due to the significance of the matters described in the "Basis for Inability to Express an Opinion" section, which prevented the acquisition of sufficient and appropriate audit evidence to form a basis for an audit opinion on the financial statements.
According to the relevant provisions of the "Shenzhen Stock Exchange Stock Listing Rules" and "Rules for the Disclosure of Information by Companies Issuing Securities No. 14 - Handling of Non-Standard Unqualified Audit Opinions and Related Matters," the board of directors makes the following special explanation regarding the matters involved in the non-standard audit opinion:
1. Explanation of the Non-Standard Audit Opinion Issued by the Registered Accountant
(1) Basis for Inability to Express an Opinion
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Debt Forgiveness Matters
As described in Note 6.52 of the financial statements, Lion Technology generated an investment income of 2,140,487,000 yuan from debt restructuring in 2021, of which the investment income from debt forgiveness by creditors in December 2021 amounted to 2,082,521,700 yuan. The amount of debt involved in the debt forgiveness notices issued by creditors to Lion Technology and its subsidiaries as of November 30, 2021, was 4,030,278,100 yuan, with a total debt forgiveness amount of 3,404,198,500 yuan. Among this, the debt forgiveness amount from creditors who are shareholders of the listed company was 1,321,676,800 yuan, while other creditors forgave debts amounting to 2,082,521,700 yuan. Due to the inability to obtain sufficient and appropriate audit evidence regarding the debt forgiveness by creditors other than those who are shareholders of the listed company, we cannot assess the authenticity and commercial reasonableness of the debt forgiveness matters made by other creditors. -
Inability to Determine the Appropriateness of Preparing Financial Statements on a Going Concern Basis
As noted in the financial statements in Notes 2.2 (Going Concern) and 13.2 (Contingent Matters), Lion Technology has incurred operating losses for many years, with a net profit attributable to shareholders of the listed company of -1,117,578,400 yuan after deducting non-recurring gains and losses. At the end of the period, out of 1,243,593,600 yuan in short-term borrowings, 1,173,493,000 yuan was overdue, and there were numerous litigation matters, with some assets being seized and frozen by the court. These circumstances indicate significant uncertainties that may lead to substantial doubts about Lion Technology's ability to continue as a going concern. Although Lion Technology disclosed management's analysis and improvement measures regarding going concern, we still cannot determine whether the management's use of the going concern assumption in preparing the 2021 financial statements is appropriate. -
Incomplete Financial Information of Overseas Subsidiary Durion Energy AG
Lion Technology holds a 55% stake in its subsidiary Durion Energy AG (registered in Düdingen, Switzerland), which had a net asset value of -7,342,100 yuan and a net profit of -2,125,200 yuan for the year 2021. As of the date of this audit report, the overseas intermediary engaged by Lion Technology has failed to provide complete financial information and audit reports for Durion Energy AG for the years 2020 and 2021, preventing us from obtaining sufficient and appropriate audit evidence to assess the correctness of Durion Energy AG's financial statement presentation and, consequently, the impact of this matter on the financial statements.