Chenxin Pharmaceutical Co., Ltd. 2025 Internal Control Evaluation Report

Company code: 603367 Company abbreviation: Chenxin Pharmaceutical

All shareholders of Chenxin Pharmaceutical Co., Ltd.:

In accordance with the provisions of the "Basic Standards for Enterprise Internal Control" and its supporting guidelines and other internal control regulatory requirements (hereinafter referred to as the "Enterprise Internal Control Standard System"), combined with the company's (hereinafter referred to as the "Company") internal control system and evaluation methods, and on the basis of daily supervision and special supervision of internal control, we evaluated the effectiveness of the company's internal control on December 31, 2025 (the base date of the internal control evaluation report).

1. Important statement

In accordance with the provisions of the enterprise's internal control normative system, it is the responsibility of the company's board of directors to establish, improve and effectively implement internal control, evaluate its effectiveness, and truthfully disclose the internal control evaluation report. The Audit Committee oversees the establishment and implementation of internal controls by the Board of Directors. Managers are responsible for organizing and leading the daily operation of the enterprise's internal controls. The company's board of directors, audit committee, directors and senior management personnel guarantee that there are no false records, misleading statements or major omissions in this report, and bear individual and joint legal responsibility for the authenticity, accuracy and completeness of the report content.

The goal of the company's internal control is to reasonably ensure legal compliance of operation and management, asset safety, authenticity and completeness of financial reports and related information, improve operating efficiency and effectiveness, and promote the realization of development strategies. Due to the inherent limitations of internal control, it can only provide reasonable assurance for achieving the above objectives. In addition, since changes in circumstances may cause internal controls to become inappropriate, or the degree of compliance with control policies and procedures to be reduced, there is a certain risk in inferring the effectiveness of future internal controls based on the results of internal control evaluations.

2. Conclusion of internal control evaluation

1. Whether the company has any major deficiencies in the internal control of financial reporting on the base date of the internal control evaluation report

□Yes √No

2. Conclusion of the evaluation of internal control over financial reporting

√Valid □Invalid

According to the identification of major deficiencies in the company's internal control over financial reporting, there were no major deficiencies in internal control over financial reporting on the base date of the internal control evaluation report. The board of directors believes that the company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the corporate internal control standard system and relevant regulations.

3. Whether significant deficiencies in internal control over non-financial reporting have been discovered

□Yes √No

According to the identification of major deficiencies in the company's internal control over non-financial reporting, the company found no major deficiencies in internal control over non-financial reporting on the base date of the internal control evaluation report.

4. Factors that affect the conclusion of the internal control effectiveness evaluation from the base date of the internal control evaluation report to the issuance date of the internal control evaluation report

□Applicable√Not applicable

There are no factors that affect the conclusion of the internal control effectiveness evaluation between the base date of the internal control evaluation report and the issuance date of the internal control evaluation report.

5. Whether the internal control audit opinion is consistent with the company’s evaluation conclusion on the effectiveness of internal control over financial reporting

√Yes □No

6. Whether the disclosure of major deficiencies in non-financial reporting internal control in the internal control audit report is consistent with the disclosure in the company’s internal control evaluation report

√Yes□No

3. Internal control evaluation work

(1). Scope of internal control evaluation

The company determines the main units, businesses and matters as well as high-risk areas included in the evaluation scope in accordance with the risk-oriented principle.

1. The main units included in the evaluation scope include: Chenxin Pharmaceutical Co., Ltd., Shandong Chenxin Fodu Pharmaceutical Co., Ltd.

2. Proportion of units included in the evaluation scope:

Indicator Proportion (%) The total assets of the units included in the evaluation scope account for the total assets of the company's consolidated financial statements 96.94% The total operating income of the units included in the evaluation scope accounts for the total operating income of the company's consolidated financial statements 95.38%

3. The main businesses and matters included in the evaluation scope include:

Control of purchasing and expense and payment activities, control of sales and collection activities, control of fixed assets management, control of financial management and reporting activities, management control of holding subsidiaries, control of related transactions, control of external guarantees, and control of major investments.

4. High-risk areas of focus include:

Procurement and expense and payment activity control, sales and collection activity control, fixed asset management control, related party and related transaction management control.

5. The above-mentioned units, businesses, matters and high-risk areas included in the evaluation scope cover the main aspects of the company’s operation and management. Are there any major omissions?

□Yes√No

6. Whether statutory exemptions exist

□Yes √No

7. Other instructions

Not applicable

(2). Basis for internal control evaluation and identification standards for internal control deficiencies

The company organizes and carries out internal control evaluation work in accordance with the enterprise's internal control standard system and relevant regulations.

1. Whether the specific identification standards for internal control deficiencies have been adjusted from previous years

□Yes√No

The company's board of directors determines major defects, important defects and general defects in accordance with the company's internal control standard system and in conjunction with the company's regulations.

Based on factors such as model, industry characteristics, risk preference and risk tolerance, we distinguish between financial reporting internal control and non-financial reporting internal control, and study and determine the specific identification standards for internal control deficiencies applicable to the company, which are consistent with previous years.

2. Standards for identifying deficiencies in internal control over financial reporting

The quantitative standards for the evaluation of internal control deficiencies over financial reporting determined by the company are as follows:

Indicator name Major defect quantitative standard Important defect quantitative standard Impact of general defect quantitative standard on financial statements The impact of internal control deficiencies is greater than The impact of internal control deficiencies is greater than The impact of internal control deficiencies is less than 3% of net assets 1.5% of net assets and less than 3% 1.5% of net assets (inclusive)

(inclusive)

Description:

Not applicable

The qualitative standards for the evaluation of internal control deficiencies over financial reporting determined by the company are as follows:

Nature of defects Qualitative standards

Major deficiencies: Fraudulent conduct by the company’s directors and senior managers, corrections of the company’s published financial reports, major misstatements in the current financial report discovered by certified public accountants but not identified by the company’s internal controls, the audit committee and the audit department

Ineffective supervision of the company’s external financial reporting and internal controls over financial reporting;

Important deficiencies: Failure to select and apply accounting policies in accordance with generally accepted accounting principles, failure to establish anti-fraud procedures and control measures, failure to establish corresponding control mechanisms for accounting processing of non-routine or special transactions or failure to implement and have no corresponding compensatory controls, one or more deficiencies in the control of the period-end financial reporting process, and the preparation of which cannot be reasonably guaranteed

financial statements to achieve true and accurate goals.

General defects Not applicable

Description:

Not applicable

3. Standards for identifying deficiencies in internal control over non-financial reporting

The quantitative standards for the evaluation of non-financial reporting internal control deficiencies determined by the company are as follows:

Indicator name Quantitative standard for major defects Quantitative standard for important defects Quantitative standard for general defects Direct property loss The amount of direct property loss is greater than the operating amount The amount of direct property loss is greater than the operating amount The amount of direct property loss is less than 0.5% of the total operating income of the company for the current period and less than 0.5% (inclusive) of the total operating income of the company and 1% (inclusive) of the operating income in the financial statements

part of total business income

Compare with a certain ratio

Description:

Not applicable

The qualitative standards for the evaluation of non-financial reporting internal control deficiencies determined by the company are as follows:

Nature of defects Qualitative standards

Major defects: 1) Serious violation of national laws and regulations;

2. Unscientific project decision-making procedures and lack of democratic decision-making procedures lead to decision-making errors; 3) Loss of management or technical personnel; 4) Frequent negative news in the media;

3. The results of the internal control evaluation, especially the major or important defects, have not been rectified;

4. There is a lack of institutional control over important businesses or the system is systematically ineffective. Important defects: The seriousness of the nature of the business involved in a defect alone or together with other defects, and its direct or potential negative impact.

Defects that do not reach or exceed major defects should still attract management attention; other situations are determined according to the degree of impact. General deficiencies other internal control deficiencies that do not constitute major deficiencies or important deficiencies. Description:

Not applicable

(3). Identification and rectification of internal control deficiencies

1. Identification and rectification of internal control deficiencies over financial reporting

1.1. Major defects

Whether the company has any major deficiencies in internal control over financial reporting during the reporting period

□Yes√No

1.2. Important defects

Whether the company has any important deficiencies in internal control over financial reporting during the reporting period

□Yes √No

1.3. General defects

Not applicable

1.4. After the above rectification, on the base date of the internal control evaluation report, does the company have any major deficiencies in the internal control of financial reporting that have not been rectified?

□Yes√No

1.5. After the above rectification, on the base date of the internal control evaluation report, does the company have any important deficiencies in the internal control of financial reporting that have not been rectified?

□Yes√No

2. Identification and rectification of internal control deficiencies in non-financial reporting

2.1. Major defects

Whether the company discovered any major deficiencies in non-financial reporting internal control during the reporting period

□Yes√No

2.2. Important flaws

Whether the company discovered any important deficiencies in non-financial reporting internal control during the reporting period

□Yes √No

2.3. General defects

Not applicable

2.4. After the above rectifications, on the base date of the internal control evaluation report, has the company discovered any major deficiencies in the internal control of non-financial reporting that have not yet been rectified?

□Yes√No

2.5. After the above rectifications, on the base date of the internal control evaluation report, has the company discovered any important deficiencies in the internal control of non-financial reporting that have not yet been rectified?

□Yes√No

4. Description of other major matters related to internal control

1. Rectification of internal control deficiencies in the previous year

□Applicable √Not applicable

2. Internal control operation status this year and improvement directions for the next year

□Applicable √Not applicable

3. Description of other significant matters

□Applicable √Not applicable

Chairman (authorized by the board of directors): Du Zhenxin Chenxin Pharmaceutical Co., Ltd.

April 3, 2026