Review Opinion on the Internal Control Evaluation Report of Entropy Technology Co., Ltd. for the Year 2025
UBS Securities Co., Ltd. (hereinafter referred to as "UBS Securities" or "the Sponsor") acted as the sponsor for the initial public offering of Entropy Technology Co., Ltd. (hereinafter referred to as "Entropy Technology" or "the Company") and its listing on the ChiNext board. In accordance with relevant laws, regulations, and normative documents such as the "Administrative Measures for the Sponsorship of Securities Issuance and Listing," the "ChiNext Stock Listing Rules of the Shenzhen Stock Exchange," and the "Self-Regulatory Guidelines for Listed Companies No. 2 - Standardized Operations of ChiNext Listed Companies," UBS Securities conducted a review of the internal control evaluation report for the year 2025. The specific review findings and opinions are as follows:
I. Conclusion of Internal Control Evaluation
The Company's board of directors believes that, based on the identification of significant deficiencies in internal control over financial reporting, there are no significant deficiencies in financial reporting internal controls as of the evaluation report's reference date. The Company has maintained effective internal controls over financial reporting in all material respects in accordance with the enterprise internal control normative system and relevant regulations. Based on the identification of significant deficiencies in non-financial reporting internal controls, the Company did not find any significant deficiencies in non-financial reporting internal controls as of the evaluation report's reference date. No factors affecting the effectiveness of internal control evaluation conclusions occurred between the reference date of the internal control evaluation report and the date of issuance of the report.
II. Internal Control Evaluation Work
(A) Scope of Internal Control Evaluation
The Company determined the scope of evaluation based on a risk-oriented principle, including major units, businesses, and high-risk areas. The major units included the Company and its wholly-owned and controlled subsidiaries, which accounted for 90.20% of the total assets in the consolidated financial statements and 97.91% of the total operating income in the consolidated financial statements. According to the "Answers to Regulatory Issues on the Implementation of the Enterprise Internal Control Normative System by Listed Companies" issued by the China Securities Regulatory Commission, the Company did not include the newly acquired subsidiary Shenzhen Longzhiyuan Technology Co., Ltd. (renamed "Shenzhen Longzhiyuan Technology Co., Ltd.") and its subsidiaries in the scope of internal control evaluation for the 2025 financial statements. The main businesses and matters included in the evaluation scope covered five aspects: control environment, risk assessment, control activities, information and communication, and internal supervision, specifically including but not limited to governance and organizational structure, internal audit, human resource management, corporate culture, social responsibility, capital activities, sales operations, procurement operations, inventory management, research and development, comprehensive budgeting, external investment management, external guarantee management, related party transactions, and financial reporting. The high-risk areas focused on this year included financial reporting, information disclosure, capital management, and investment decision-making. The aforementioned units, businesses, matters, and high-risk areas included the main aspects of the Company's operational management, with no significant omissions.