Jinshi Yao: 2025 Internal Control Self-Evaluation Report

Sichuan Jinshi Asia Pharmaceutical Co., Ltd.

2025 Internal Control Self-Evaluation Report

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 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, directors and senior managers guarantee that there are no false records, misleading statements or major omissions in this report, and bear individual and joint legal liability 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

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.

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.

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.

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. The main units included in the evaluation scope include the parent company and 22 subsidiaries. The 22 subsidiaries are: shareholding ratio, name of subsidiary, main place of business, place of registration, nature of business

Direct Indirect Sichuan Jinshi Dongfang New Material Technology Co., Ltd. Chengdu City Chengdu City Machinery Manufacturing 100.00%

Sichuan Dingrun New Material Technology Co., Ltd. Chengdu City Chengdu City Machinery Manufacturing 100.00% Chengdu Jinsitong Vacuum Technology Co., Ltd. Chengdu City Chengdu City Machinery Manufacturing 71.18%

Hainan Asia Pharmaceutical Co., Ltd. Haikou City Haikou City Pharmaceutical Manufacturing 99.00% 1.00% Hainan Quick Pharmaceutical Co., Ltd. Haikou City Haikou City Pharmaceutical Sales 100.00% Zhejiang Yafeng Pharmaceutical Co., Ltd. Jinhua City Jinhua City Pharmaceutical Manufacturing 100.00%

Jingning She people from Jingning She people from medicine manufacturing, medicine

Zhejiang Kangning Pharmaceutical Co., Ltd. 100.00%

Governing the County Governing the County Drug Sales

Zhejiang Modern Medicinal Plant Co., Ltd. Jinhua City Jinhua City Pharmaceutical Manufacturing 100.00% Hangzhou Biomedical Technology Pioneer Park Co., Ltd. Hangzhou City Hangzhou City Technical Services 100.00%

pharmaceutical manufacturing, housing

Zhejiang Yake Pharmaceutical Co., Ltd. Hangzhou City Hangzhou City 100.00%

Property leasing

Zhejiang Jinshiyao Pharmaceutical Technology Co., Ltd. Hangzhou City Hangzhou City Pharmaceutical Research 100.00%

Hangzhou Yake Property Management Co., Ltd. Hangzhou City Hangzhou City Property Services 100.00% Jinhua Yadong Biochemical Co., Ltd. Jinhua City Jinhua City Pharmaceutical Manufacturing 100.00% Zhejiang Dier Pharmaceutical Co., Ltd. Jinhua City Jinhua City Pharmaceutical Manufacturing 100.00% Zhejiang Kuaike Pharmaceutical Co., Ltd. Lishui City Lishui City Pharmaceutical Sales 100.00% Zhejiang Lishui Kangning Pharmacy Chain Co., Ltd. Lishui City Lishui City Pharmaceutical Sales 100.00%

Jingning She people since Jingning She people since

Zhejiang Jingning Kangning Agricultural Science and Technology Development Co., Ltd. Chinese herbal medicine cultivation 100.00% county governance county governance

Chemical raw materials and chemicals

Zhejiang Jiande Zhengfa Pharmaceutical Co., Ltd. Jiande City Jiande City 70.00%

Manufacturing of academic products

food sales, food

Internet sales of products

Zhejiang Jinxing Technology Co., Ltd. Hangzhou City Hangzhou City 100.00% sales and drug Internet

Internet information services

food sales, food

Internet sales of products

Hangzhou Jinshi Youxuan Health Technology Co., Ltd. Hangzhou City Hangzhou City 60.00% Sales and Drug Internet

Internet information services

Food, health food

product sales; food

Internet sales;

Hangzhou Dier Pharmaceutical Technology Co., Ltd. Hangzhou City Hangzhou City 51.00% food additive sales

sales; cosmetics wholesale

Distribution and retail

pharmaceutical sales; food

products, health food

Hefei Dier Pharmacy Co., Ltd. Hefei City Hefei City 51.00% sales, cosmetics

retail

The total assets of the units included in the evaluation scope account for 100.00% of the total assets of the company's consolidated financial statements, and the total operating income accounts for 100.00% of the total operating income of the company's consolidated financial statements. The main businesses and matters included in the evaluation scope include: the company's organizational structure, development strategy, human resources, social responsibility, company culture, subsidiary management, capital activities, investment business, guarantee business, related transactions, information disclosure, main business, financial management, quality management, etc.

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, and there are no major omissions.

(2) Principles and considerations followed by the company in establishing internal controls

1. The basic principles followed by the company in establishing internal control

In order to improve its operation and management level and risk prevention capabilities and achieve healthy and sustainable development, the company has established an internal control system based on the "Basic Standards for Enterprise Internal Control" and "Enterprise Internal Control Supporting Guidelines" jointly issued by the Ministry of Finance, the China Securities Regulatory Commission, the National Audit Office, the China Banking Regulatory Commission, and the China Insurance Regulatory Commission, and adheres to the following principles:

(1) Principle of comprehensiveness. Internal control should run through the entire process of decision-making, implementation and supervision, covering various businesses and matters of the enterprise and its affiliated units. Establish an effective risk control system, strengthen risk management, and ensure the normal and orderly operation of the company's various business activities.

(2) Principle of importance. Internal control should be based on comprehensive control and focus on important business matters and high-risk areas.

(3) Principle of checks and balances. Internal control should form mutual constraints and mutual supervision in terms of governance structure, institutional setup, distribution of rights and responsibilities, business processes, etc., while taking into account operational efficiency.

(4) Principle of adaptability. Internal control should be adapted to the enterprise's operating scale, business scope, competition status, risk level, etc., and should be adjusted in a timely manner as the situation changes.

(5) Cost-benefit principle. Internal control should weigh implementation costs and expected benefits to achieve effective control at an appropriate cost.

2. Thoughts on company internal control

For companies to achieve their strategic, business and organizational development goals, they need to seize opportunities, pursue growth, take risks, and manage those risks appropriately. Combining the five principles of internal control, the company hopes to achieve the following goals through the establishment of its own internal control system:

(1) The balance between risks and benefits: There is no internal control that is separated from various organizations and departments. Internal control personnel must not only ensure independence, but also become partners of management and departments. Their roles are not antagonistic, but between activities that create corporate value and activities that protect corporate value, and work with them to find a way to conduct business that balances risks and efficiency.

(2) Promotion of innovation: Use the evaluation and improvement mechanisms required by internal control work to become the source of vitality for the company's continuous innovation mechanism, strategic adjustment and self-improvement, and promote the achievement of the company's strategic goals.

(3) Integration of resources: Utilize the cross-department characteristics of internal control work to integrate risks and controls, optimize processes and improve efficiency, and help enterprises integrate resources, information and management activities to meet the requirements of sustained and healthy growth.

(4) Systematic supervision: As the core of supervision power in the three-power separation system of corporate decision-making, execution and supervision, relevant business departments are promoted to self-evaluate the design and operation effectiveness of key control points to ensure the implementation and continuous updating of various supervision methods.

(3) Internal control evaluation work basis and internal control defect identification standards

The company organizes and carries out internal control evaluation work in accordance with the requirements of the enterprise's internal control standard system and the "Shenzhen Stock Exchange GEM Stock Listing Rules" and other relevant laws, regulations and rules.

The company's board of directors differentiated between financial reporting internal control and non-financial reporting internal control based on the company's internal control standard system's identification requirements for major defects, important defects and general defects, combined with factors such as company size, industry characteristics, risk preference and risk tolerance, and studied and determined the specific identification standards for internal control defects applicable to the company. Compared with previous years, the quantitative standards have been revised. The standards for identifying internal control deficiencies determined by the company are as follows:

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

(1) The qualitative standards for the evaluation of internal control deficiencies in financial reporting determined by the company are as follows:

Defects with the following characteristics are major defects: A. The audit committee and the audit department are ineffective in supervising the company's internal control over the company's external financial reporting; B. The company's directors and senior managers engage in fraud and cause important losses and adverse effects to the company; C. The external auditors discovered that there are major misstatements in the current financial report, but the misstatements were not discovered during the internal control operation; D. Other defects that may cause the company to seriously deviate from the control objectives.

Defects with the following characteristics are important defects: A. Failure to select and apply accounting policies in accordance with generally accepted accounting principles; B. Failure to establish anti-fraud procedures and control measures; C. Failure to establish corresponding control procedures for the accounting processing of non-routine or special transactions; D. There are one or more defects in the control of the financial reporting process at the end of the period. Although it does not meet the major defect standard, it affects the true and complete goal of the financial report. Other control deficiencies other than the above-mentioned major deficiencies and important deficiencies are deemed to be general deficiencies.

(2) The quantitative standards for the evaluation of internal control deficiencies in financial reporting determined by the company are as follows:

Financial reporting indicators are divided into potential asset misstatement amounts and profit misstatement amounts. The profit misstatement amount can cover revenue misstatements, expense misstatements, etc.

Quantitative Standards for Financial Reports Major Defects Important Defects General Defects

The amount of asset misstatement is greater than or equal to the total assets, greater than or equal to the total assets, less than 1% of the total assets 0.5%, less than 0.5% of the total assets

1% of

The amount of profit misstatement is greater than or equal to the total profit, is greater than or equal to the total profit, is less than 2% of the total profit, 5%, 2%, is less than the total profit

5%

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

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

Qualitative standards for non-financial reporting internal control deficiencies are mainly based on the degree of impact of deficiencies on the effectiveness of business processes and the likelihood of occurrence.

Defects with the following characteristics are major defects: A. The company's decision-making process leads to major mistakes; B. There is a lack of system control on important businesses or the system has systemic failure and lacks effective compensatory control; C. The possibility of defects is high and will seriously reduce work efficiency (effect) or seriously deviate from expected goals.

Defects with the following characteristics are important defects: A. The company's decision-making process leads to general errors; B. There are defects in important business systems or systems; C. The possibility of defects is high and will significantly reduce work efficiency (effect) or significantly deviate from expected goals.

Defects with the following characteristics are general defects: A. The company's decision-making process is not efficient; B. There are defects in general business systems or systems; C. The possibility of defects occurring is small and will reduce work efficiency (effect) or deviate from expected goals.

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

The non-financial reporting indicator is the amount of potential direct property damage.

Quantitative Standards for Non-Financial Reports Major Defects Important Defects General Defects

The amount of direct property loss is greater than or equal to the total assets, greater than or equal to the total assets, less than 1% of the total assets 2% 1%, less than the total assets

2%

(4) Identification and rectification of internal control deficiencies

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

According to the above-mentioned identification standards of internal control deficiencies in financial reporting, the company did not have any major deficiencies or important deficiencies in internal control over financial reporting during the reporting period.

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

According to the above-mentioned identification standards of internal control deficiencies in non-financial reporting, no major deficiencies or important deficiencies in the company’s internal control over non-financial reporting were found during the reporting period.

(5) Overall situation of the company’s internal control

In order to promote the sustainable development of enterprises, the company regards internal control as a routine and systematic work, which runs through all aspects of enterprise management. At the same time, we should follow the principle of materiality, pay attention to important business matters and high-risk areas, and seize key risk control points.

Everyone is responsible for internal control. This is a process of culture and consciousness building, and it is also a top-to-bottom, full-participation and independent-evaluation system. Only by raising corporate personnel's awareness of organizational goals and the role of internal control in achieving these goals, and motivating them to conscientiously design, implement and continuously improve their own control procedures, can we ensure that internal control work is effectively carried out.

1. The company’s internal control environment

The quality of the company's control environment directly determines the smooth implementation and effectiveness of the internal control system. Based on the basic concept of standardized operation, the company actively strives to create a good control environment, which is mainly reflected in the following aspects:

①Communication and implementation of integrity and moral values

Integrity and ethical values are important components of the control environment and influence the design and operation of a company's important business processes. The company has always attached great importance to the creation and maintenance of this atmosphere. On the one hand, it has implemented a series of internal behavioral norms such as the employee recruitment and evaluation process, the new employee induction training process and the revision of the "Employee Handbook". On the other hand, it has promoted the process of the management team signing the "Compliance Management Responsibility Letter" and the target assessment task statement on an annual basis. It also emphasizes the exemplary and leading role of senior managers in daily operations to form a good value concept from top to bottom.

②Attention to competency

The company's management attaches great importance to the competencies required for specific jobs, and has clear requirements for the professional level and abilities of specific jobs. In accordance with the Labor Contract Law and relevant laws and regulations, and combined with the company's actual situation, the company has formulated human resources policies that are conducive to the company's sustainable development, including hiring, training, job rotation, assessment, rewards and punishments, promotion and elimination, etc., and clarifies the conditions and work requirements for each functional position, ensuring that the selected personnel are qualified for the job responsibilities.

③Standardized governance structure

In accordance with the relevant provisions of the latest laws, regulations and normative documents such as the "Company Law", "Guidelines on the Articles of Association of Listed Companies", "Rules of Shareholders' Meetings of Listed Companies", "Shenzhen Stock Exchange GEM Stock Listing Rules", "Shenzhen Stock Exchange GEM Listed Companies Self-Regulatory Guidelines No. 2 - Standardized Operations of GEM Listed Companies" and other relevant provisions of the latest laws, regulations and normative documents, combined with the actual situation of the company, the company revised the "Articles of Association" and issued an announcement. The powers of the Board of Supervisors are exercised by the Audit Committee of the Board of Directors, and the company's "Rules of Procedure of the Board of Supervisors" shall be abolished accordingly. At the same time, the company has newly formulated the "Resignation Management System for Directors and Senior Managers", "Information Disclosure Suspension and Exemption Management System" and "Public Opinion Management System", and revised and improved some of the company's governance systems. The board of directors strictly follows the newly revised "Articles of Association" and related systems, exercises operating decision-making power within the prescribed scope of responsibilities, and is responsible for the establishment and supervision of the company's internal control system, including establishing and improving internal control policies and plans, supervising the implementation of internal control, and being responsible for the establishment and effective implementation of the company's internal control system. The company's operating management is responsible for the formulation and effective implementation of the internal control system, and ensures the normal operation of the company through command, coordination, management, and supervision of the exercise of operation and management powers by various functional departments, wholly-owned and controlled subsidiaries.

In 2025, the company will strictly follow the rules of procedure of the three meetings and one layer, the "Three Important and One" Decision-making System, the Subsidiary Reporting Group Company Management System and the Major Quality Incident Reporting System, and further implement the reporting, decision-making mechanism, rules of procedure and working procedures to ensure that decision-making, execution and supervision are separated from each other, improve the level of decision-making, prevent decision-making risks, and improve the efficiency of corporate operations. Management principles aimed at achieving controllable risks, transparency and consistency, and taking into account efficiency.

The company continues to optimize and improve, forming a corporate governance structure in which the shareholders' meeting, the board of directors and the management have clear rights and responsibilities, perform their respective duties, coordinate operations, and have strong checks and balances, and exercise their respective decision-making, execution and supervision rights in accordance with the law.

④ Management philosophy and business style

The power distribution among the company's management is reasonable, and the board of directors can effectively supervise the management's behavior so that it can properly perform its duties. The company's management has appropriate competencies and remains stable, ensuring that it can correctly perform its duties and maintain the continuity of its management philosophy and operating style. When it comes to dealing with risks, the company's management maintains a high degree of attention and vigilance, has a responsible attitude towards accounting records and financial reports, and requires rectification suggestions and measures to be put in place for major internal control matters.

⑤Organizational structure

In strict accordance with the provisions and requirements of the Company Law, relevant laws and regulations of the China Securities Regulatory Commission, and the Articles of Association, the company has established a decision-making, supervision, and management system structured by the shareholders' meeting, the board of directors, and the management under the leadership of the board of directors, and operates it effectively. In 2020, the company carried out structural sorting and reconstruction to maximize the synergy of organizational resources. In 2021, the collaborative integration and efficient operation of the four centers and four departments will provide a more direct platform and resources for the development and innovation of the existing main business, fully mobilize the initiative and sense of mission of the existing management team members, and absorb and integrate talents from various functions to form the operating management of the listed company's headquarters, which is conducive to unified and efficient strategy and decision-making, reducing communication levels and improving organizational execution. In 2025, in order to further adapt to market challenges and changes in the internal and external environment, strengthen the company's internal resource integration capabilities, optimize management links, improve operational efficiency, and ensure the company's long-term sustainable development, the company's organizational structure of four centers and four departments will be optimized and adjusted based on the company's mid- to long-term strategic layout and business development needs, forming an organizational structure of six centers and six divisions. Business divisions will be set up with different business units and centers with different functional attributes to provide necessary organizational guarantees for the stable, high-quality, and sustainable development of listed companies.

At the same time, combined with the changes in governance structure, the adjusted organizational structure of the company is as follows:

⑥Assignment of powers and responsibilities

In order to further integrate the group's resources, optimize the management and control model, and achieve cost reduction and efficiency improvement, the company flattened the organizational structure, reduced the vertical reporting levels, and built a unified platform and unified management structure for the group. Simultaneously standardize the internal functional organization setup with "six centers and six business divisions" as the mainstay, clarify the responsibilities and authorities of each center and each business division, strictly implement the principle of separation of incompatible duties, eliminate overlapping functions, lack of rights and responsibilities, and excessive concentration of power, and build an efficient operation mechanism in which each person performs his or her duties, is responsible for each other, coordinates with each other, and restricts each other, and comprehensively improves the overall management, control, and operational efficiency of the group.

In order to effectively control the authorized use and supervise the company's activities, the company has established annual business plans and budget control procedures to ensure that all business activities are within controllable limits. The Financial Management Center uses various measures to reasonably ensure that business activities are carried out in accordance with appropriate authorization; to reasonably ensure that transactions and events can be recorded in the appropriate accounts in a timely manner with the correct amount and during the appropriate accounting period, so that the preparation of financial statements complies with the relevant requirements of the Accounting Standards for Business Enterprises.

2. Company risk assessment measures

The business environment is changing. Based on the adjusted strategic goals of enterprises at different stages of development, the risks they face are uncertain. It is a contradictory and challenging issue to ensure relatively stable internal control to manage uncertain risks. Therefore, companies need to establish an effective risk assessment mechanism and, based on the risk assessment results, use corresponding control measures to control risks within an acceptable level by combining manual control with automatic control, preventive control with discovery control. The control measures adopted by the company include but are not limited to: control of separation of incompatible duties, authorization and approval control, accounting system control, property protection control, budget control, business plan and operational analysis control, target mission statement and performance evaluation control, etc.

3. Important control activities of the company

The company's main business activities have necessary control procedures and processes. The management has clear goals from a financial perspective such as budget and profit, as well as from a non-financial perspective such as important business initiatives and plans. These goals are well communicated within the company and actively implemented.

① Important financial control activities

The company's financial management center has formulated relevant financial management systems ("Entrusted Financial Management System" and "Selection of Accounting Firm Management System") in accordance with laws and regulations such as the "Company Law", "Accounting Law" and "Accounting Standards for Business Enterprises" and their supplementary regulations, and has clarified the processing procedures for accounting vouchers, accounting books and financial reports to ensure:

(1) Business activities are carried out in accordance with appropriate authorization;

(2) Transactions and events can be recorded in the appropriate account in a timely manner with the correct amount, during the appropriate accounting period, so that the preparation of financial statements complies with the relevant requirements of the Accounting Standards for Business Enterprises;

(3) All access to and processing of asset records and records are properly authorized;

(4) Regular reconciliation of book assets and actual assets;

(5) Implement the accounting position responsibility system to ensure complete, accurate and timely records of economic business, and financial statements and related explanations can properly reflect the company's financial status, operating results and cash flow.

The Financial Management Center has established relevant procedures such as transaction authorization control, division of responsibility control, voucher and record control, asset contact and record use control, and information system control. Among them, transaction authorization control divides general authorization and special authorization based on the principle of importance, and clarifies the approval authority and process for daily business and major transactions; division of responsibility control establishes a mutual checks and balances mechanism by reasonably setting up positions, dividing authority, and implementing the separation of incompatible duties; voucher and record control regulates the preparation, delivery, archiving and transaction recording of vouchers. Record verification process; asset access and record use control strictly limit unauthorized personnel’s access to assets, and ensure the safety and integrity of assets through inventory, account verification and other measures; financial reporting control standardizes report preparation, submission, major matter handling and external disclosure processes to ensure that information is true and effective; unified financial information system control relies on UFIDA NC Systematically carry out accounting and report processing, and continue to invest in system development and maintenance; budget preparation, execution and assessment control improve the budget management mechanism, track implementation, analyze differences and guide operation and management practices.

② Important control activities related to business

(1) The company attaches great importance to the fulfillment of social responsibilities, and effectively coordinates economic and social benefits, short-term and long-term interests, self-development and social development, and achieves healthy and harmonious development of enterprises and employees, enterprises and society, and enterprises and the environment.

(2) Attaching great importance to production safety: According to national regulations on production safety and combined with the actual situation of each company, each production company has established a strict production safety management system, operating specifications, etc., strengthened the accountability system for production safety, and effectively achieved production safety. The Supply Chain Management Center establishes regular internal quality and safety audits, implements a working mechanism for supervision, review and guidance, and ensures that all safety measures are implemented. We implement the principle of prevention first, and use various forms such as training, safety evaluations, and internal audits to enhance employees' safety awareness and avoid safety accidents.

(3) Product quality is the lifeline of an enterprise: According to national and industry-related product quality requirements, the production process is standardized, a strict product quality control and inspection system is established, and quality is strictly controlled. Each production company formulates production processes in strict accordance with GMP, and has independent quality management departments and professionals to conduct on-site monitoring and quality inspections. Through training, product re-registration and quality standard upgrades, the stability of product quality and processes is ensured. The Supply Chain Management Center is responsible for supervising and guiding the quality assurance systems of each company and conducting regular internal audits. Each sales company has established a product complaint and after-sales service process to effectively improve product quality and service levels, strive to provide high-quality, safe and healthy products and services to the society, meet the needs of consumers to the greatest extent, be responsible to society and the public, accept social supervision, and assume social responsibilities.

(4) Pay attention to strengthening contract management, seal management, intellectual property management, legal dispute management, etc., conduct regular training and exchanges with relevant internal personnel, inspect and evaluate weak links in various management, and adopt corresponding control measures to effectively safeguard the legitimate rights and interests of the enterprise. For matters that have a major impact, involve high professional skills or complex legal relationships, legal, technical, accounting and other professionals will be organized to participate, and external experts will be hired to participate in related work when necessary. If a legal risk event occurs, clear internal communication channels to ensure timely reporting and handling.

(5) The company’s pharmaceutical business segment, new materials and machinery segment all attach great importance to independent innovation and research and development. Scientific, standardized and risk-controllable research and development project management is an important part of achieving strategic goals and corporate development. Within the company, centralized departments manage the R&D projects of each business segment. Applications for R&D projects need to conduct feasibility studies, select topics based on the company's industrial chain and its own advantages, and fully demonstrate relevant issues such as market demand analysis, input-output analysis, main research content, research ideas, proposed research plans, and risk estimates for the selected project. And organize relevant internal departments and management to make project decisions. The project process management is efficient and controllable. The project leader is fully responsible for the implementation of the project plan, reasonable use of funds, and summarizing and reporting on phased progress. Strengthen the protection and confidentiality mechanism for research and development results and intellectual property rights.

(6) Management of major engineering construction projects: The company implements it in accordance with the "Engineering Construction Management Measures (Trial)" related to infrastructure projects. This system runs through the entire cycle of engineering project management, covering the organization of personnel, planning and project establishment, budgeting, and procurement control in the early stage; during the project implementation process Contract, design, funding, cost, schedule, safety, quality control, etc., as well as key links such as completion acceptance and overall project evaluation in the later stages of the project, clearly define the responsibilities and authority of each department and position in project management, and ensure that management activities are standardized and restricted by corresponding internal control systems. The company has carried out special engineering audits on infrastructure projects to improve the construction management level of infrastructure projects, ensure project cost, project quality, construction safety, controllable construction period, and the future development direction and implementation of infrastructure projects, effectively improve the resource adaptability and market competitiveness of major engineering construction projects after they are put into production, and give full play to the efficiency and effectiveness of project investment.

(7) Procurement management: The company implements the "Procurement and Supplier Management System (Trial)" and actively carries out training and publicity for major procurement. Suppliers strictly follow the approval process such as price inquiry and comparison, credit management and screening, and adopt bidding methods for major procurement projects to ensure that the procurement process is fair, just and open. The procurement process may involve key links such as research and selection of fixed assets, pre-application approval, contract approval, procurement implementation and payment, acceptance and delivery, supplier evaluation, and file management. The process and approval authority are clarified to ensure that the procurement process is standardized. The company actively implements the supplier screening and evaluation mechanism, implements supplier level classification management, and establishes a list of qualified suppliers, thereby improving the stability and reliability of procurement channels. In addition, the company also implements a rotation mechanism for procurement personnel, strengthens legal education, builds a solid awareness of red lines, and ensures the standardization and compliance of procurement activities in an all-round way. In the pharmaceutical business sector, GMP audits are conducted regularly on important suppliers and they are required to rectify problems within a time limit, otherwise the cooperation will be terminated. In the new materials and machinery sector, we conduct on-site visits to important suppliers to ensure the quality and reasonable price of purchased materials. The existing relevant control activities cover the main aspects of the procurement business, match the company's scale and business development, effectively reduce procurement costs, avoid the occurrence of procurement fraud, and enhance the company's market adaptability and competitiveness.

(8) Sales management: The company's pharmaceutical business segment strictly implements GSP control requirements, standardizes and controls the main aspects of the sales business, clarifies the responsibilities and authorities of each position, and ensures the separation of incompatible positions. The corresponding content covers the formulation of sales goals and policies, customer development and first operation review, contract management, price management, shipment and return management, acceptance management, payment collection and other related matters. The existing relevant control activities cover the main aspects of the sales business, match the company's actual sales situation, and improve the efficiency of sales work. At the same time, the company's financial personnel regularly check accounts receivable, and relevant sales personnel make prompt collections, which will help speed up the withdrawal of funds, reduce the occurrence of bad debt losses, and promote the stable growth of the company's sales business.

(9) Management of external investments, external guarantees, related transactions, etc.: The company strictly controls external investments, related transactions, and external guarantees, clarifies the principles, standards, conditions, responsibilities, and approval procedures for external investments, external guarantees, and related transactions, and establishes a scientific decision-making and external information disclosure mechanism to guard against potential risks and avoid and reduce possible losses.

4. Information system and internal information transmission

The company's unified Jinshi Yayao e-home platform is running well. Combined with the unified financial information system, the information system personnel (including financial accounting personnel) work diligently and diligently, and can effectively perform their assigned responsibilities. The company's management has also provided dedicated human and financial resources to ensure the normal and effective operation of the entire information system, continuously improved the construction of internal information sharing and decision-making platforms, gradually improved the information communication channels between various functional departments and subsidiaries, stably maintained a cross-organizational legal internal control liaison system, strengthened the supervision and risk warning functions of each company, and found a balance between creating corporate value and protecting corporate value.

5. Internal supervision and control activities

The company's board of directors has established a special audit committee to conduct irregular inspections on the implementation of the company's internal control system, various operating business controls, external investments, and external guarantee controls to ensure that the board of directors effectively supervises the management, is responsible to the shareholders' meeting, and strictly and conscientiously performs its internal supervision functions, thereby ensuring the effective implementation of the company's internal control system. The company's management attaches great importance to the reports and suggestions of various functional departments and regulatory agencies for internal control, and takes various measures to promptly correct deviations in control operations.

In 2025, the company further implemented the internal supervision mechanism and strengthened the role of the third line of defense. The company continued to promote the internal control and internal audit working group, completed the audit research work on the company's internal control, and regularly followed up on the progress of rectification and optimization matters of each company in previous years, especially on-site audit rectification tracking of engineering construction projects. At the same time, the company's supervision and management department sends dedicated personnel to participate in supplier visits and inspections, and perform supervisory duties during the bidding process to control risks. The company strengthens its understanding of risk management and control by clarifying roles and responsibilities, and will promote the internal control audit and rectification work of each company on an annual basis. Establish separate groups and lines of defense within the organization under the supervision and guidance of the board of directors and management.

Three lines of defense for internal control:

(1) The first line of defense: those responsible for business and processes

The first line of defense is directly responsible for and manages risks and controls, designing and executing control activities to address risks. Risks created, managed or assumed by business activities that could hinder or facilitate the achievement of organizational objectives. Its operational and management functions run throughout the entire organization, so front-line executives and managers have important responsibilities for risk assessment, implementation of control activities, and communication of information to relevant parties.

(2) The second line of defense: systems, processes, systems, etc.

The first line of defense is people. Based on it, the second line of defense should try to enhance the stability, sustainability and comprehensive risk management of enterprise management through standardized systems, processes and information systems to help management ensure that risks and controls are effectively managed. Its standardized operation function is reflected in the management system, mechanism and implementation of rights and responsibilities at all levels, etc., to form a long-term mechanism of internal control so that it can truly serve business management.

(3) The third line of defense: management, internal control, auditing, etc.

The third line of defense is independent of the first and second lines of defense to maintain its objectivity and independence within the organization. Help organizations achieve their objectives by taking a systematic, disciplined approach to assess and improve the effectiveness of risk management, control and governance processes. Its internal supervision and management functions are reflected in the continuous monitoring of risks, independent and objective assessment of the efficiency and effectiveness of risk management and internal control, and the establishment of a unified understanding of risk and control throughout the enterprise.

(6) Key work plans for the company’s internal control

The company's existing internal control system can basically meet the requirements of company management, can provide reasonable guarantee for the preparation of true, complete and fair financial statements, can provide guarantee for the healthy operation of the company's various business activities and the implementation of relevant national laws, regulations and the company's internal rules and regulations, and can protect the safety and integrity of the company's assets. At the same time, combined with the establishment of the company's three lines of defense, the company plans to take the following measures to further improve the management of internal controls:

(1) Based on the management status of the new organizational structure, establish a system of "system docking personnel" in each line to comprehensively sort out various relevant management systems and processes, pay attention to process management, make the system take root, integrate internal control requirements into various management systems, and form a long-term mechanism so that internal control can truly play its role and serve corporate operations and management;

(2) Based on the overall strategic goals, we attach great importance to the construction of internal control and compliance culture and continue to regard it as an important part of the company's corporate culture construction. Through various forms of training, promotion and follow-up implementation, we will continuously improve the awareness and behavioral level of enterprise management personnel on internal control, and improve the implementation effect of enterprise internal control in combination with performance and compliance management;

(3) Risk-oriented, carry out special audits on key projects and high-risk areas to accurately identify problems in internal control in a timely manner, conduct in-depth analysis of the causes of problems, and put forward practical suggestions for improvement, implement inspections and corrections at the same time, and quickly provide feedback to the company. Move risk prevention and control to early warning and in-process control, promote audit supervision and business development to resonate at the same frequency, continue to optimize the internal control system, and build a solid line of defense for the company's steady development;

(4) Further improve the company's financial system construction. The company's accounting system and financial management system will be updated and revised or supplementary regulations will be formulated in a timely manner based on changes in the accounting system and the actual situation of the enterprise;

(5) The company will gradually improve the workflow of annual business plans, budgets and performance management, and improve the comprehensiveness, accuracy and guidance of various budgets for business activities;

(6) Combined with the construction of Jinshiyao e-home platform, strengthen internal control information management and control, promptly embed internal control management requirements into the system platform and continuously optimize it, effectively improve the automatic control capability of the system platform, realize operational management decision-making and execution of closed-loop control, automatic early warning, tracking evaluation and analysis and other supervisory functions, and promote the informatization transformation of internal control work.

4. Description of other major matters related to internal control

The company has no description of other major matters related to internal control.

Board of Directors of Sichuan Jinshi Asia Pharmaceutical Co., Ltd.

April 22, 2026