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Panlong Pharmaceutical: Raised Funds Management System

Shenzhen Stock Exchange

2026/04/28

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

Shaanxi Panlong Pharmaceutical Group Co., Ltd.

Raised funds management system

(April 2026)

Chapter 1 General Provisions

Article 1 In order to standardize the management of funds raised by Shaanxi Panlong Pharmaceutical Group Co., Ltd. (hereinafter referred to as the "Company") and improve the efficiency of the use of raised funds, in accordance with the "Company Law of the People's Republic of China", the "Securities Law of the People's Republic of China" (hereinafter referred to as the "Securities Law"), the "Initial Public Offering Stock Registration and Management Measures", the "Shenzhen Stock Exchange Stock Listing Rules", and the "Shenzhen Stock Exchange Listed Companies Supervision Guidelines 1 No. - Standardized Operation of Main Board Listed Companies, "Supervisory Rules for Fund Raising by Listed Companies," "Articles of Association of Shaanxi Panlong Pharmaceutical Group Co., Ltd." (hereinafter referred to as "Articles of Association") and other relevant laws and regulations, and in light of the actual situation of the company, this system is formulated.

Article 2 The term "raised funds" as mentioned in this management system refers to the funds raised by the company from investors through the issuance of securities to unspecified objects (including initial public offerings of stocks, rights issues, additional issuances, issuance of convertible corporate bonds, issuance of separately traded convertible corporate bonds, issuance of warrants, etc.) and issuance of stocks to specific objects and used for specific purposes.

After the funds raised from the issuance of stocks, convertible bonds or other securities are in place, the company should go through capital verification procedures in a timely manner, and an accounting firm with securities qualifications will issue a capital verification report.

Article 3 The company's board of directors shall fully demonstrate the feasibility of the investment project with raised funds, be convinced that the investment project has good market prospects and profitability, continue to pay attention to the storage, management and use of raised funds, effectively prevent investment risks, and improve the efficiency of the use of raised funds.

Article 4 The company's board of directors shall be responsible for establishing and improving the management measures for the use of raised funds by the company and ensuring the effective implementation of the management measures, organizing the specific implementation of projects for the use of raised funds, and ensuring the openness, transparency and standardization of the use of raised funds.

If an investment project with raised funds (hereinafter referred to as a "raised investment project") is implemented through a company's subsidiary or other enterprise controlled by the company, the company shall ensure that the subsidiary or other controlled enterprise complies with its raised fund management system.

Article 5 The directors and senior managers of a company shall be diligent and responsible to ensure the safety of the funds raised by the company, and shall not control a listed company to change the use of raised funds without authorization or in disguised form.

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

Article 6 The funds raised by a company shall be used in accordance with the purposes listed in the prospectus or other issuance documents to unspecified objects. If a company changes the use of funds listed in the prospectus or other issuance documents to unspecified targets, it must make a resolution at the shareholders' meeting.

Article 7 The funds raised by a company shall be earmarked for specific purposes. The company's use of raised funds should comply with national industrial policies and relevant laws and regulations, practice the concept of sustainable development, and fulfill social responsibilities. In principle, it should be used for its main business, which is conducive to enhancing the company's competitiveness and innovation capabilities.

Except for financial enterprises, investment projects with raised funds shall not be used for financial investment, and shall not be invested directly or indirectly in companies whose main business is the purchase and sale of securities.

For the understanding and application of financial investments, refer to the implementation of the relevant provisions of the "Opinions on the Application of Relevant Provisions of Articles 9, 10, 11, 13, 40, 57, and 60 of the Measures for the Administration of Securities Issuance and Registration of Listed Companies - Opinions on the Application of Securities and Futures Laws No. 18".

Article 8 If the company uses raised funds in violation of national laws, regulations and the company's articles of association or changes the purpose of raised funds without fulfilling statutory approval procedures, causing the company to suffer losses, the relevant responsible persons shall bear liability including but not limited to civil compensation.

Chapter 2 Special Account Storage of Raised Funds

Article 9 The company shall deposit the raised funds in a special account established with the approval of the board of directors for centralized management and use. The special account for raised funds shall not store non-raised funds or be used for other purposes.

If a company has raised funds twice or more, it shall set up an independent special account for raised funds.

If the actual net amount of raised funds exceeds the planned amount of raised funds (hereinafter referred to as "over-raised funds"), it should also be deposited in a special account for raised funds management.

Article 10 The company shall sign a three-party supervision agreement (hereinafter referred to as the "Agreement") with the sponsor institution or independent financial consultant and the commercial bank where the raised funds are deposited (hereinafter referred to as the "commercial bank") at the latest within one month after the raised funds are received. The agreement should at least include the following:

(1) The company shall centrally deposit the raised funds in a special account;

(2) The account number of the special account for raised funds, the items of raised funds involved in the special account, and the deposit amount;

(3) If the company’s cumulative withdrawals from the special account at one time or within 12 months exceed RMB 50 million or 20% of the net raised funds, the company and the commercial bank shall promptly notify the sponsor or independent financial advisor;

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

(4) The commercial bank shall issue bank statements to the company every month and send a copy to the sponsor or independent financial consultant;

(5) The sponsor or independent financial consultant can go to the commercial bank to inquire about the special account information at any time;

(6) The supervisory responsibilities of the sponsor or independent financial advisor, the notification and cooperation responsibilities of the commercial bank, and the supervision methods of the sponsor or independent financial advisor and the commercial bank on the use of funds raised by the company;

(7) The rights, obligations and liability for breach of contract of the company, commercial bank, sponsor or independent financial consultant;

(8) If the commercial bank fails to issue statements to the sponsor in a timely manner or notify the special account of large withdrawals three times, or fails to cooperate with the sponsor in inquiring and investigating the special account information, the company may terminate the agreement and cancel the special account for raised funds.

If a company implements an investment project through its holding subsidiary, a tripartite supervision agreement shall be signed by the company, the holding subsidiary that implements the investment project, a commercial bank, and a sponsor or independent financial advisor. The company and its holding subsidiary shall be regarded as a common party.

If the raised funds are invested in overseas projects, in addition to complying with the provisions of the first paragraph, the company and the sponsoring agency shall also take effective measures to ensure the safety and standard use of the raised funds invested in overseas projects, and disclose relevant specific measures and actual results in the "Special Report on the Storage, Management and Actual Use of the Company's Raised Funds".

The company shall promptly announce the main contents of the tripartite agreement after it is signed.

If the above agreement is terminated early before the expiration of the validity period, the company shall sign a new agreement with the relevant parties within one month from the date of termination of the agreement and make a timely announcement.

Chapter 3 Use of Raised Funds

Article 11 The company shall use the raised funds prudently, ensure that the use of raised funds is consistent with the commitments in the issuance application documents, and shall not change the investment direction of the raised funds without authorization. Companies should truly, accurately and completely disclose the actual use of raised funds. When circumstances arise that seriously affect the normal progress of the fund-raising plan, an announcement shall be made in a timely manner.

Article 12 In principle, the funds raised by a company's investment projects shall be used for the company's main business. Except for financial enterprises, the raised funds shall not be used for high-risk investments such as securities investment and derivatives trading or to provide financial assistance to others, nor may they be directly or indirectly invested in companies whose main business is the purchase and sale of securities.

The company shall not change the use of raised funds in disguised form through pledges, entrusted loans or other means.

Article 13 The company shall ensure the authenticity and fairness of the use of raised funds and prevent the raised funds from being used

The controlling shareholders, actual controllers and other related parties of Shaanxi Panlong Pharmaceutical Group Co., Ltd.’s raised funds management system occupy or misappropriate the funds, and take effective measures to prevent related parties from using the raised investment projects to obtain improper benefits.

If the company discovers that the controlling shareholders, actual controllers and other related parties have appropriated the raised funds, it shall promptly require the occupier to return the funds and disclose the reasons for the occupation, the impact on the company, the repayment and rectification plan and the rectification progress. The board of directors shall investigate the legal liability of the relevant entities in accordance with the law.

Article 14 The plan for the use of raised funds shall be prepared and approved in accordance with the following procedures:

(1) The plan for the use of raised funds shall be prepared by year and project;

(2) The specific execution department shall prepare the "Annual Use Plan of Raised Funds";

(3) Review and approval by the president;

(4) Review and approval by the chairman;

(5) Execution by specific execution departments.

Article 15 The use of raised funds shall be applied for and approved in accordance with the following procedures:

(1) Fill in the application form for the specific use department;

(2) The financial person in charge signs the opinion;

(3) Approval by the president;

(4) Execution by the financial department.

Article 16 If any of the following situations occurs in a fundraising project, the company shall promptly conduct a fresh demonstration of the project’s feasibility, expected income, etc., and decide whether to continue to implement the project:

(1) The market environment involved in the investment project has undergone major changes;

(2) After the raised funds are received, the investment project is put on hold for more than one year;

(3) The completion period of the investment plan of raised funds is exceeded and the investment amount of raised funds does not reach 50% of the relevant plan amount;

(4) Other abnormal circumstances occur in the investment project.

If the company encounters the circumstances specified in the preceding paragraph, it shall promptly disclose it. The company should disclose the progress of the project, the reasons for abnormalities, and the specific circumstances of re-evaluation during the reporting period in the latest periodic report. If it is necessary to adjust the investment plan of raised funds, it should also disclose the adjusted investment plan of raised funds; if it involves changing the investment project of raised funds, the relevant review procedures for changing the use of raised funds shall apply.

Article 17 If the investment project with raised funds is not expected to be completed within the original time limit, the company plans to postpone its implementation

The fund-raising management system of Shaanxi Panlong Pharmaceutical Group Co., Ltd. shall be reviewed and approved by the board of directors in a timely manner, and the sponsor or independent financial consultant shall issue clear opinions. The company should promptly disclose the specific reasons for failure to complete the project on schedule, explain the current deposit and account status of the raised funds, whether there are any circumstances that affect the normal progress of the plan to use the raised funds, the expected completion time and phased investment plan, measures to ensure on-schedule completion after extension, etc.

Article 18 When a company uses raised funds for the following matters, it shall be reviewed and approved by the board of directors, and shall be disclosed in a timely manner after the sponsor or independent financial advisor issues clear opinions:

(1) Use raised funds to replace self-owned funds that have been invested in the raised investment project in advance;

(2) Use temporarily idle raised funds for cash management;

(3) Use temporarily idle raised funds to temporarily supplement working capital;

(4) Change the use of raised funds;

(5) Change the implementation location of investment projects with raised funds;

(6) Use surplus funds to raise funds;

(7) The excess raised funds will be used for projects under construction and new projects, to repurchase the company's shares and cancel them in accordance with the law. If a company changes the purpose of raised funds, uses excess raised funds, or uses surplus raised funds to meet the standards for review by the shareholders' meeting, it must also be reviewed and approved by the shareholders' meeting.

If relevant matters involve related transactions, asset purchases, external investments, etc., review procedures and information disclosure obligations must also be performed in accordance with Chapter 6 of the Stock Listing Rules.

Article 19 After the completion of a single or all investment projects with raised funds, if the remaining funds (including interest income) are less than 10% of the net raised funds of the project, the company shall perform corresponding procedures in accordance with the first paragraph of Article 18 of this system to use the remaining funds.

If the surplus funds (including interest income) reach or exceed 10% of the net amount of funds raised for the project, the company's use of the surplus funds must also be reviewed and approved by the shareholders' meeting.

If the remaining funds (including interest income) are less than 5 million yuan or less than 1% of the net raised funds of the project, they may be exempted from the aforementioned procedures, and their use shall be disclosed in the annual report.

Article 20 If a company uses raised funds to replace self-raised funds that have been invested in investment projects with raised funds in advance, it must be reviewed and approved by the board of directors. If the sponsor expresses a clear opinion, the company shall disclose relevant information in a timely manner. In principle, the company should implement the replacement within six months after the raised funds are transferred into the special account.

During the implementation of an investment project with raised funds, in principle, payment should be made directly with raised funds. If it is really difficult to pay directly with raised funds in matters such as paying personnel salaries, purchasing overseas products and equipment, etc., you can use the raised funds to pay directly.

The raised funds management system of Shaanxi Panlong Pharmaceutical Group Co., Ltd. will be replaced within six months after the self-raised funds are paid.

If the company has disclosed in the issuance application documents that it intends to use raised funds to replace pre-invested self-raised funds and the pre-invested amount is determined, it shall make an announcement before the replacement is implemented.

Article 21 A company may conduct cash management of temporarily idle raised funds, and cash management shall be implemented through a special account for raised funds or a publicly disclosed special settlement account for products. If cash management is implemented through a product-specific settlement account, the account shall not store non-raised funds or be used for other purposes. The implementation of cash management shall not affect the normal progress of the investment plan of raised funds. When opening or canceling a product-specific settlement account, the company shall make a timely announcement.

Cash management products should meet the following conditions:

(1) Products with high security such as structured deposits and certificates of deposit must not be non-principal guaranteed;

(2) The liquidity is good, and the product term shall not exceed twelve months;

(3) Cash management products are not allowed to be pledged.

If a company uses temporarily idle raised funds for cash management, it shall be reviewed and approved by the board of directors. The sponsor shall issue a clear opinion and promptly announce the following:

(1) Basic information on the funds raised this time, including the time when the funds are received, the amount of funds raised, the net amount of funds raised, investment plan, etc.;

(2) The use of raised funds and the reasons why raised funds are idle;

(3) The amount and period of cash management, whether there is any disguised change in the use of raised funds, and measures to ensure that the normal progress of investment projects with raised funds will not be affected;

(4) The income distribution method, investment scope, safety analysis provided by the product issuer of cash management products, the risk control measures taken by the company to ensure the safety of funds, etc.;

(5) Opinions issued by the sponsor or independent financial advisor.

Companies should promptly disclose risk warning announcements to the outside world when the financial status of cash management product issuers deteriorates, or investment products face losses, and explain the risk control measures taken by the company to ensure the safety of funds.

If a company uses temporarily idle raised funds for cash management and any situation occurs that may harm the interests of the company and investors, it must promptly disclose the relevant situation and planned countermeasures.

Article 22 If a company uses idle raised funds to temporarily replenish working capital, it shall do so through a special account for raised funds, which shall be limited to production and operating activities related to its main business, and shall meet the following conditions:

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

(1) Shall not change the use of raised funds in any disguised manner or affect the normal progress of the investment plan of raised funds;

(2) The funds raised last time used to temporarily supplement working capital have been returned;

(3) The period of a single temporary replenishment of working capital shall not exceed twelve months;

(4) Do not use idle raised funds to directly or indirectly conduct high-risk investments such as securities investments and derivatives transactions.

Article 23 If a company uses idle raised funds to temporarily supplement working capital, it shall be reviewed and approved by the company's board of directors. The sponsor shall promptly announce the following content after issuing a clear opinion:

(1) Basic information on the funds raised this time, including the time when the funds are received, the amount of funds raised, the net amount of funds raised and the investment plan, etc.;

(2) Usage of raised funds;

(3) The amount and period of idle raised funds to replenish working capital;

(4) The amount of financial expenses expected to be saved by using idle raised funds to replenish working capital, the reasons for insufficient working capital, whether there is any disguised change in the use of raised funds, and measures to ensure that the normal progress of projects with raised funds will not be affected;

(5) Opinions issued by the sponsor or independent financial consultant;

(6) Other contents required by the exchange.

Before the expiration date of the supplementary working capital, the company should return this part of the funds to the special account for raised funds, and make a timely announcement after all the funds are returned. If the company expects to be unable to return this part of the funds to the special account for raised funds on time, it shall perform the review procedures in accordance with the requirements of the preceding paragraph before the expiration date and make a timely announcement. The announcement shall include the whereabouts of the funds, the reasons why they cannot be returned, the reasons and deadlines for continued use to supplement working capital, etc.

Article 24 The company shall properly arrange the use plan of excess raised funds based on the company’s development plan and actual production and operation needs. The excess raised funds should be used for projects under construction and new projects, repurchasing the company's shares and canceling them in accordance with the law. The company shall clarify the specific use plan of the excess raised funds at the latest when the entire raised investment project of the same batch is completed, and put it into use according to the plan.

When a company uses super-raised funds to invest in projects under construction and new projects, it should fully disclose information such as the construction plan, investment necessity and rationality, investment cycle and rate of return of the relevant projects. If the project involves related transactions, asset purchases, external investments, etc., it should also perform review procedures and information disclosure obligations in accordance with Chapter 6 of the Stock Listing Rules and other provisions.

The use of over-raised funds shall be resolved by the board of directors in accordance with the law. The sponsor shall issue clear opinions and submit them to the shareholders' meeting for review. The company shall promptly and fully disclose the necessity and rationality of the use of over-raised funds and other relevant matters.

Information on the fund-raising management system of Shaanxi Panlong Pharmaceutical Group Co., Ltd.

If it is indeed necessary to use temporarily idle over-raised funds for cash management or temporary supplement of working capital, the necessity and rationality should be explained. If a company uses temporarily idle over-raised funds for cash management or temporary supplement of working capital, the amount, time limit and other matters shall be reviewed and approved by the board of directors, the sponsor shall issue a clear opinion, and the company shall disclose relevant information in a timely manner.

The company shall explain the use of excess raised funds and the use plan for the next year in a special report on the deposit, management and use of the company's raised funds.

Article 25 The company shall, based on the actual production and operation needs of the enterprise, submit it to the board of directors or shareholders’ meeting for review and approval, and then use the excess raised funds in a planned manner in the following order:

(1) Supplement the funding gap of investment projects with raised funds;

(2) Temporarily supplement working capital;

(3) Carry out cash management;

Article 26 When a company uses super-raised funds to invest in projects under construction or new projects, it shall fully disclose information such as the construction plan, investment necessity and rationality, investment cycle and rate of return of the relevant projects; if it implements the project through a subsidiary or other enterprise controlled by the company, it shall ensure that the subsidiary or other controlled enterprise complies with the provisions of this system.

Chapter 4 Change of Use of Raised Funds

Article 27 If a company has the following circumstances, it will be deemed as a change in the purpose of raised funds:

(1) Cancel or terminate the original investment project with raised funds, implement new projects or permanently replenish working capital;

(2) Change the entity implementing the investment project with raised funds;

(3) Change the implementation method of investment projects with raised funds;

(4) Other circumstances determined by the China Securities Regulatory Commission and the exchange.

If the company has the circumstances specified in Paragraph 1 of the preceding paragraph, the sponsor shall explain in detail the main reasons for changes in the investment projects with raised funds and the rationality of the previous recommendation opinions based on the documents related to the raised funds disclosed in the previous period. If a company uses raised funds for cash management, temporary replenishment of working capital, or uses excess raised funds beyond the limit, period or purpose determined by the board of directors or shareholders meeting procedures, and the circumstances are serious, it will be deemed as unauthorized use.

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

Change the use of raised funds.

If the implementation entity of the raised funds investment project changes between the company and its wholly-owned subsidiary, or if it only involves a change in the implementation location of the raised investment project, it will not be regarded as a change in the purpose of the raised funds. Relevant changes should be resolved by the board of directors without going through the shareholders' meeting review process. The sponsor should issue clear opinions and the company should disclose relevant information in a timely manner.

Article 28 The projects used for raising funds shall be consistent with the projects promised in the issuance application documents and shall not be changed in principle. If it is indeed necessary to change the fund-raising project due to reasonable reasons such as market changes, it must be reviewed by the company's board of directors and submitted to the shareholders' meeting for review and approval in accordance with legal procedures. If related transactions are involved, related directors or related shareholders should abstain from voting.

Article 29 In principle, the raised funds after the company's change should be invested in the main business.

The company's board of directors should select new investment projects scientifically and prudently, conduct feasibility analysis on the new investment projects, and be sure that the investment projects have good market prospects and profitability, can effectively prevent investment risks, and improve the efficiency of the use of raised funds.

Article 30 If a company intends to change the investment project to a joint venture, it shall carefully consider the necessity of the joint venture on the basis of fully understanding the basic situation of the joint venture parties, and the company shall hold the controlling stake to ensure effective control of the investment project.

Article 31 If a company changes the implementation location of an investment project with raised funds, it shall make a timely announcement after deliberation and approval by the company's board of directors, explaining the change, reasons, impact on the implementation of the investment project with raised funds, and the opinions of the sponsor.

Article 32 If a company changes the purpose of raised funds to acquire the assets (including equity) of the controlling shareholder or actual controller, it shall ensure that it can effectively avoid horizontal competition and reduce related transactions after the acquisition.

Article 33 After the completion of a single or all investment projects with raised funds, if the remaining funds (including interest income) are less than 10% of the net raised funds of the project, they shall be reviewed and approved by the board of directors and the sponsor shall issue a clear approval opinion before they can be used.

Article 34 Before the completion of all projects with raised funds, the company has surplus funds due to project termination and plans to change part of the raised funds into permanent supplementary working capital, which shall meet the following requirements:

(1) The funds raised have been received for more than one year;

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

(2) It will not affect the implementation of other fund-raising projects;

(3) Fulfill the approval procedures and information disclosure obligations in accordance with the requirements for changes in the use of raised funds.

Chapter 5 Management and Supervision of Raised Funds

Article 35 The company's accounting department shall set up a ledger for the use of raised funds and record in detail the expenditure of raised funds and the investment in raised funds projects.

The company's internal audit institution should inspect the storage, management and use of raised funds at least once every quarter, and report the inspection results to the audit committee in a timely manner.

If the audit committee believes that there are irregularities or major risks in the company's management of raised funds or that the internal audit institution fails to submit an inspection result report in accordance with the provisions of the preceding paragraph, it shall report to the board of directors in a timely manner. The board of directors shall promptly report to the exchange and make an announcement after receiving the report.

Article 36 The company's board of directors shall continue to pay attention to the actual storage, management and use of raised funds, comprehensively verify the progress of investment projects with raised funds every half year, issue special reports on the storage, management and use of raised funds for half-year and annual periods, and hire an accounting firm to issue an assurance report on the storage, management and use of annual raised funds. Relevant special reports should include the basic situation of the raised funds and the storage, management and use of the funds as prescribed by the stock exchange. The company shall disclose the assurance report and periodic report issued by the accounting firm in qualified media at the same time.

If there is a discrepancy between the actual investment progress of an investment project using raised funds and the investment plan, the company shall explain the specific reasons. If the actual annual use of raised funds for an investment project differs by more than 30% from the estimated use amount of the most recently disclosed raised funds investment plan, the company shall adjust the raised funds investment plan and disclose the latest annual raised funds investment plan, the current actual investment progress, the adjusted annual investment plan, and the reasons for changes in the investment plan in special reports and periodic reports on the deposit, management, and use of raised funds. The company shall cooperate with the continuous supervision work of the sponsor or independent financial consultant and the audit work of the accounting firm, and promptly provide or apply to the bank for the necessary information related to the storage, management and use of raised funds.

The accounting firm shall conduct reasonable verification on whether the special report of the board of directors has been in accordance with the relevant provisions of the stock exchange and this management system and whether it truthfully reflects the actual storage, management, and use of the annual raised funds, and propose verification conclusions.

If the assurance conclusion is a "reserved conclusion", "negative conclusion" or "unable to reach a conclusion", the company's board of directors shall analyze the reasons for the conclusion raised by the certified public accountant in the assurance report, propose corrective measures and disclose them in the annual report.

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

Article 37 If the sponsor or independent financial consultant discovers abnormalities in the storage, management and use of the company's raised funds, it shall conduct on-site verification in a timely manner and report to the stock exchange in a timely manner. The sponsor or independent financial consultant shall conduct on-site inspections on the storage, management and use of the company's raised funds at least once every six months. After the end of each accounting year, the sponsor or independent financial consultant shall issue a special verification report and disclose the storage, management and use of the company's annual raised funds.

If an accounting firm issues a "reserved conclusion", "negative conclusion" or "unable to draw a conclusion" verification conclusion regarding the storage, management and use of the company's raised funds, the sponsor or independent financial advisor shall also carefully analyze the reasons why the accounting firm raised the above verification conclusion in its verification report and provide clear verification opinions.

If the sponsor or independent financial consultant discovers that the company or the commercial bank has failed to perform the tripartite agreement as agreed, or if it discovers that there are major violations or major risks in the company's management of raised funds during an on-site inspection of the company, it should urge the company to make timely rectifications and report to the exchange.

Article 38 The company's audit committee has the right to supervise the use of raised funds.

Article 39 If a company purchases assets from a specific object by issuing securities as a method of payment, it shall ensure that the ownership transfer procedures for the above-mentioned assets purchased are completed before the new shares are listed on the market. The law firm hired by the company shall issue a special legal opinion on the completion of the relevant asset transfer procedures.

Article 40 If a company purchases assets from a specific target by issuing securities as a method of payment or raises funds for the acquisition of assets, the relevant parties shall strictly abide by and perform the relevant commitments related to the acquisition of assets, including but not limited to the profit forecast for realizing the asset and the company's profit forecast after raising funds.

Article 41 The company's board of directors shall explain in the annual report the performance of relevant commitments involving the above-mentioned acquisition of assets during the reporting period.

Article 42 If a company pre-invests raised funds in an investment project with self-raised funds, and if the raised funds are used to replace self-raised funds after the raised funds are in place, it shall be implemented within six months after the raised funds are transferred to the special account.

During the implementation of investment projects with raised funds, in principle, payment should be made directly with raised funds. If it is really difficult to pay directly with raised funds in matters such as paying personnel salaries, purchasing overseas products and equipment, etc., replacement can be implemented within six months after payment with self-raised funds.

The replacement of raised funds shall be reviewed and approved by the board of directors, the sponsor shall issue clear opinions, and the company shall disclose relevant information in a timely manner.

Article 43 The company shall cooperate with the sponsor's continuous supervision and on-site inspection, as well as the audit work of the accounting firm, and promptly provide or apply to the bank for the necessary information related to the storage, management and use of raised funds.

Shaanxi Panlong Pharmaceutical Group Co., Ltd. Raised Fund Management System

Chapter 6 Penalties

Article 44 During the storage, use, change, and supervision of raised funds, participating company directors, senior managers, and other staff members shall perform their duties diligently and diligently, urge the company to standardize the use of raised funds, consciously maintain the safety of the company's raised funds, and shall not participate in, assist, or condone the company's unauthorized or disguised change of the use of raised funds.

Article 45 If any staff member involved in the management of raised funds involved in this system violates laws, administrative regulations or the company's articles of association and the provisions of this system, he shall bear responsibility in accordance with relevant regulations. If his intentional or gross negligence causes economic losses to the company, he shall also bear liability for compensation.

Chapter 7 Supplementary Provisions

Article 46 Unless otherwise clearly marked, the terms “above”, “within” and “before” in this management system include the original number, and the terms “exceed” and “less than” do not include the original number.

Article 47 Matters not covered by this system shall be handled in accordance with the relevant provisions of relevant laws, administrative regulations, and normative documents.

Article 48 This management system shall be interpreted and revised by the company's board of directors.

Article 49 This management system shall be reviewed and approved by the shareholders’ meeting.