To All Shareholders of Hongjing Technology Co., Ltd.
The Board of Directors of Hongjing Technology Co., Ltd. has conducted a thorough evaluation of the company's internal control system and presents this evaluation report concerning internal controls related to financial statements as of December 31, 2025. The Board and all directors ensure that this report contains no false records, misleading statements, or significant omissions, and they bear individual and joint responsibility for the truthfulness, accuracy, and completeness of its content.
1. Objectives, Principles, and Scope of Internal Control System
To protect the safety and integrity of assets and ensure the normal conduct of business activities, the company has established relevant internal control systems, including internal accounting controls, internal management controls, and internal audit controls, tailored to its industry, operational methods, asset structure, and specific business circumstances. These systems are continuously supplemented and modified in practice to improve the internal control system, which is strictly adhered to in actual work. The company evaluates the design of its internal control system for completeness and reasonableness, as well as the effectiveness of its execution, in accordance with the Company Law of the People's Republic of China, the Securities Law, and other relevant laws and regulations, as well as the Ministry of Finance's Basic Norms for Enterprise Internal Control.
(1) Objectives of Establishing Internal Control System
- Establish and improve a corporate governance structure that meets modern enterprise management requirements, forming a scientific decision-making mechanism, execution mechanism, and supervision mechanism to ensure the achievement of the company's operational management objectives.
- Establish an effective risk control system, strengthen risk management, enhance risk awareness, and ensure the healthy operation of all business activities.
- Close loopholes, eliminate hidden dangers, prevent and promptly detect and correct various frauds and malpractices, and protect the safety and integrity of company assets.
- Standardize accounting practices to ensure that accounting data is legal, true, and complete, thereby improving the quality of accounting information.
- Ensure compliance with national laws and regulations and the implementation of internal rules and regulations.
- Prevent operational risks, focusing on the company's healthy and long-term development.
(2) Basic Principles for Internal Control System Construction
- Comprehensiveness Principle: The internal control system covers all economic activities, departments, and positions within the company, implementing internal controls at key control points in the business processing to avoid gaps or loopholes.
- Materiality Principle: Internal controls should highlight key areas while ensuring comprehensiveness, applying stricter control measures to significant business matters and high-risk areas to ensure no major deficiencies exist.
- Checks and Balances Principle: The company's organizational structure, position settings, and distribution of responsibilities should be scientifically reasonable and meet the basic requirements of internal control, ensuring clear responsibilities and mutual supervision among different departments and positions.
- Adaptability Principle: The internal control system should adapt to the company's scale, business scope, characteristics, competitive situation, risk level, and specific environment, continuously improving with changes in the external environment, business adjustments, and management requirements.
- Cost-Benefit Principle: Internal controls should reasonably weigh the relationship between cost and benefit while ensuring effectiveness, striving for more effective control at reasonable costs.