Audit Report
Zhongxinghua Certified Public Accountants LLP
Address: 20th Floor, Tower B, Lize SOHO, 20 Lize Road, Fengtai District, Beijing, 100073
Phone: (010) 51423818
Fax: (010) 51423816
Table of Contents
- Audit Report
- Audit Report Appendices
- Consolidated and Parent Company Balance Sheet
- Consolidated and Parent Company Income Statement
- Consolidated and Parent Company Cash Flow Statement
- Consolidated Statement of Changes in Equity
- Parent Company Statement of Changes in Equity
- Notes to Financial Statements
- Audit Report Attachments
- Copy of Zhongxinghua Certified Public Accountants LLP Business License
- Copy of Zhongxinghua Certified Public Accountants LLP Practice Certificate
- Copy of Certified Public Accountant Practice Certificate
Audit Report
Zhongxinghua Audit No. (2022) 470218
To all shareholders of Beijing Shuzhi Technology Co., Ltd.:
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Disclaimer of Opinion
We have been engaged to audit the financial statements of Beijing Shuzhi Technology Co., Ltd. (hereinafter referred to as "Shuzhi Technology"), including the consolidated and parent company balance sheet as of December 31, 2021, the consolidated and parent company income statement, consolidated and parent company cash flow statement, consolidated statement of changes in equity, and related notes to the financial statements. We do not express an opinion on the accompanying financial statements of Shuzhi Technology. Due to the significance of the matters described in the "Basis for Disclaimer of Opinion" section, we were unable to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion on the financial statements. -
Basis for Disclaimer of Opinion
(1) Prior Year Non-standard Audit Opinion Matters
Daixin Certified Public Accountants LLP issued a disclaimer of opinion in the audit report for Shuzhi Technology for the year 2020 regarding cash confirmations, the nature of prepayments, other receivables, fund occupation, Jinfu Investment and its accounting treatment, and internal control deficiencies. Due to limitations in audit procedures and evidence obtained, we are still unable to express an opinion on these matters this year and cannot assess their impact on the 2021 financial statements.
(2) Audit Limitations on Significant Subsidiaries
During the audit of Shuzhi Technology's significant subsidiary, Blackbird Hypersonic Investments Ltd. (hereinafter referred to as "BBHI"), we were unable to perform on-site audit work due to objective factors such as the COVID-19 pandemic. Key audit procedures and evidence could not be effectively implemented or obtained remotely. Due to these audit limitations, we cannot determine whether BBHI's 2021 financial statements are true, complete, and accurate.
(3) Limitations on Confirmation Procedures
In accordance with auditing standards, we implemented confirmation procedures for Shuzhi Technology and its subsidiaries' bank and receivable accounts. As of the date of this report, a total of 361 confirmation letters were sent to banks for Shuzhi Technology and its subsidiaries, with one letter not sent (to Hebei Bank Baoding Branch for the special account for raised funds) and eight letters not yet replied. A total of 412 confirmation letters were sent for receivables, with 239 letters not yet replied. For the aforementioned unreturned confirmations, we could not implement alternative audit procedures to obtain sufficient and appropriate audit evidence.
(4) Recognition of Estimated Liabilities
As described in the notes to the financial statements "V. (35)" and "XII. (2)", Shuzhi Technology recognized estimated liabilities of 722,687,178.72 RMB for potential collective lawsuits from small shareholders in 2021. We performed audit procedures on the recognition of these estimated liabilities, but we could not obtain sufficient and appropriate audit evidence to effectively assess the accuracy and completeness of the recognition of key parameters such as the purchase price and expected compensation ratio for shareholders.