Audit Opinion
We have audited the financial statements of Dongguan Changlian New Materials Technology Co., Ltd. (hereinafter referred to as "Changlian Technology"), including the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, consolidated and parent company cash flow statements, consolidated and parent company statements of changes in equity, and related notes to the financial statements. We believe that the attached financial statements are prepared in accordance with the provisions of enterprise accounting standards in all material respects and fairly present the financial position of Changlian Technology as of December 31, 2025, as well as the operating results and cash flows for the year 2025.
Basis for Audit Opinion
We conducted our audit in accordance with the auditing standards for certified public accountants in China. The section "Responsibilities of Certified Public Accountants for Auditing Financial Statements" in the audit report further elaborates on our responsibilities under these standards. In accordance with the independence requirements applicable to public interest entities in the independence standards and the code of ethics for certified public accountants in China, we are independent of Changlian Technology and have fulfilled our other responsibilities regarding independence and professional ethics. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our audit opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the period. Our responses to these matters are in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not express a separate opinion on these matters.
1. Revenue Recognition
Key Audit Matter
As shown in Note 5.34 of the attached financial statements, Changlian Technology's operating revenue for the year 2025 was CNY 568.14 million. Since revenue is one of Changlian Technology's key performance indicators, there is an inherent risk that management may manipulate revenue recognition to achieve specific targets or expectations. Therefore, we identified revenue recognition as a key audit matter. Our main audit procedures performed were as follows:
- Understanding, evaluating, and testing the design and implementation of internal controls related to revenue recognition;
- Performing analytical procedures based on product types and sales models to analyze revenue and gross profit for various products, assessing the reasonableness of changes in revenue and gross profit margins;
- Evaluating whether revenue recognition complies with the requirements of enterprise accounting standards, selecting samples of sales contracts to identify contract terms and conditions related to the transfer of control, and discussing with management to assess whether there are significant biases or misstatements in management's recognition of product sales revenue;
- Performing detail testing by selecting samples of recorded revenue transactions during the reporting period, verifying supporting documents such as sales contracts/orders, sales delivery notes, sales invoices, export customs declarations, and bills of lading to check the authenticity and accuracy of sales revenue;
- Conducting cutoff testing on sales revenue, focusing on the accuracy of sales revenue recorded before and after the balance sheet date and whether it is included in the appropriate accounting period;
- Implementing confirmation procedures for sales amounts and receivables from major customers to verify the authenticity and accuracy of recognized revenue.