Leadal Certified Public Accountants (LLP)
Response to the Audit Inquiry Letter Regarding Goertek Digital Technology Co., Ltd.'s Application for Issuance of Shares to Specific Targets
To: Shenzhen Stock Exchange
We have received the "Audit Inquiry Letter Regarding Goertek Digital Technology Co., Ltd.'s Application for Issuance of Shares to Specific Targets" (hereinafter referred to as the "Inquiry Letter") forwarded by Goertek Digital Technology Co., Ltd. (hereinafter referred to as "Goertek" or the "Company"). We have prudently reviewed the financial matters requiring explanation in the Inquiry Letter and now report the situation as follows.
(Note: In this response, the question section is in bold Kai font, and the response section is in Song font. If the total sum in the tables of this response does not match the sum of the individual items, it is due to rounding.)
Question 1
According to the application materials, the total amount of funds to be raised in this issuance shall not exceed 650 million RMB (inclusive). After deducting issuance expenses, the raised funds are intended to be used entirely for supplementing working capital and repaying debts. The issuance target is Changsha Jushen Management Consulting Partnership (Limited Partnership) (hereinafter referred to as "Changsha Jushen"). This issuance will lead to a change in control. Changsha Jushen will hold 23.08% of the issuer's total share capital after this issuance, becoming the issuer's controlling shareholder, and Yang Jipeng will become the actual controller. The current controlling shareholder, Weifang Guojin Industrial Development Co., Ltd. (hereinafter referred to as "Weifang Guojin"), will see its shareholding ratio in the issuer reduced to 18.34%. Weifang Guojin has issued a "Letter of Commitment Not to Seek Control." Hunan Jushen Electronic Co., Ltd. (hereinafter referred to as "Hunan Jushen") is the executive partner of the issuance target, Changsha Jushen, and its actual controller is Yang Jipeng. During the reporting period, the amounts of goods sold and services provided by the Company to Hunan Jushen were 10.871 million RMB, 10.0164 million RMB, 157.2225 million RMB, and 118.2889 million RMB, respectively, accounting for 3.70%, 7.43%, 43.13%, and 76.63% of the operating income for the same period. The sales proportion in 2025 and the first quarter of 2026 was relatively high. During the reporting period, the Company also had related party transactions with Hunan Jushen, such as procurement and borrowing. At the same time, the Company has horizontal competition with enterprises controlled by Yang Jipeng in the field of consumer electronic products.
Please have the issuer: 1. Explain the necessity of this financing by combining the Company's monetary fund balance, debt structure and repayment arrangements, business growth and cash flow status, and operating capital requirements; explain the rationality of using the annualized operating income of the fourth quarter of 2025 to predict the operating income for the next three years in the capital demand calculation, and the net cash flow generated from operating activities for the next three years.
[Chart: Hunan Jushen quarterly income proportion]
The net cash flow and the rationality of the calculation of the newly added minimum cash holding amount, whether the capital expenditure for the next three years has fulfilled the relevant deliberation procedures, and whether it is necessary; combined with the above situation, explain the basis and rationality of the calculation of the scale of raised funds.
Response:
(I) Explain the necessity of this financing by combining the Company's monetary fund balance, debt structure and repayment arrangements, business growth and cash flow status, and operating capital requirements