/[Periodic Report] Sino-Swiss Pharmaceuticals: 2025 Annual Report

NEWS

[Periodic Report] Sino-Swiss Pharmaceuticals: 2025 Annual Report

NEEQ

2026/04/22

Sino-Swiss Pharmaceuticals NEEQ: 430645

Tianjin Zhongrui Pharmaceutical Co., Ltd.

Tianjin Zhongrui Pharmaceutical Co.,Ltd.

annual report

2025

Important tips

The company’s controlling shareholders, actual controllers, directors, supervisors and senior managers guarantee that the information contained in this report does not contain any false records.

contains, misleading statements or major omissions, and shall bear individual and joint liability for the authenticity, accuracy and completeness of its contents.

Wang Honggang, the person in charge of the company, Qu Xiujie, the person in charge of accounting work, and Qu Xiujie, the person in charge of the accounting department (accounting supervisor), guarantee the annual

The financial report in the report is true, accurate and complete.

3. This annual report has been reviewed and approved by the board of directors of the listed company, and there are no directors who did not attend the review.

4. Zhongxinghua Accounting Firm (Special General Partnership) issued a standard unqualified audit report on the company.

This annual report involves forward-looking statements such as future plans, which does not constitute the company’s substantive commitment to investors. Investors and related parties should

Be aware of the risks and understand the differences between plans, forecasts and commitments.

This annual report has been included in "9. Analysis of major risks faced by the company" in "Section 2 Accounting Data, Operational Conditions and Management Analysis"

Investors should pay attention to the analysis of the company's major risk factors during the reporting period.

1. Business Overview

(1) Business model and implementation of business plan

The company's business is the research and development, production and sales of chemical raw materials, pharmaceutical excipients, food, feed additives and other products. The company's industry is the manufacturing of chemical raw materials. The company sells the products it produces to preparation, food and feed processing companies, providing them with qualified, high-quality products and obtaining product sales revenue and profits. Relying on the rich experience accumulated in the industry, the company has the necessary production qualifications such as national industrial product production license, pharmaceutical production license, feed additive production license, and safety production license. The company's products are sold domestically through direct sales. The direct sales customers are domestic chemical preparations, food, feed processing and other enterprises. The company's export sales adopt a combination of direct sales and agency sales. The company sells products abroad both through direct sales and through agents of domestic trading companies.

The company's main products include:

Niacin is also called vitamin B3. It is one of the 13 essential vitamins for the human body. This product is used in chemical raw materials, food additives, feed additives, electroplating (increasing the brightness of plated parts) and other industries.
Nicotinamide, this product is used in chemical raw materials, food additives, feed additives and other industries.
Inositol nicotinate is a drug that has the same indications for hyperlipoproteinemia as niacin and can be used as an auxiliary treatment. It can also be used for the auxiliary treatment of coronary heart disease and various peripheral vasospasm diseases (such as obliterative arteriosclerosis, acral arteriospasm, migraine, etc.).

The upstream of the company's business is mainly the manufacturing industry of chemical preparations, and the downstream is the pharmaceutical, food and feed processing industry.

During the reporting period, the company still focused on the research and development, manufacturing and distribution of raw materials, pharmaceutical excipients, food, feed additives and other products as its main business, with no major changes from the previous year.

(2) Industry situation

As national and local authorities have increasingly stringent environmental standards and quality requirements for API and preparation manufacturers, companies' costs in production operations and environmental governance have continued to increase, which has led to rising industry thresholds, reduced industry disorder and vicious competition, and curbed the disorderly expansion of production capacity. Companies that attach great importance to environmental protection investment and have rich experience in production safety can better adapt to the stricter regulatory environment, have more stable and reliable supply capabilities, and gradually gain higher market share. Tighter environmental protection supervision and more benign market competition will be conducive to the development of outstanding companies in the industry and provide favorable opportunities for industry companies to become bigger and stronger.

(3) Identification status related to innovation attributes

√Applicable □Not applicable

"Specialized, Specialized and New" certification □National level √Provincial (municipal) level

"Single Champion" recognition □National level □Provincial (municipal) level

"High-tech enterprise" certification √Yes

Details 1. Tianjin Specialized, Specialized and New Small and Medium-sized Enterprises: In 2023, Tianjin Zhongrui Pharmaceutical Co., Ltd. was recognized and issued a plaque by Tianjin Industry and Information Technology Bureau and Tianjin Municipal Finance Bureau, and Tianjin Zhongrui Pharmaceutical Co., Ltd. was recognized as Tianjin Specialized, Specialized and New Small and Medium-sized Enterprises.

High-tech Center: In 2009, it was recognized and publicized by Tianjin Science and Technology Bureau and issued a certificate

certificate, Tianjin Zhongrui Pharmaceutical Co., Ltd. was recognized as a high-tech enterprise and passed multiple re-elections.

The new certification and reexamination are still within the validity period.

2. Main accounting data and financial indicators

Unit: Yuan

Profitability Current period Same period last year Increase or decrease ratio % Operating income 84,637,836.95 115,285,814.97 -26.58% Gross profit margin % 24.33% 31.53% -

Net profit attributable to shareholders of the listed company -2,167,676.08 11,029,569.79 -119.65% Net profit attributable to shareholders of the listed company after deducting extraordinary gains and losses -2,245,191.77 9,753,780.03 -123.02%

Weighted average return on equity % (based on vesting -1.23% 5.68% -

Calculated based on the net profit of shareholders of the listed company)

Weighted average return on equity % (based on vesting -1.28% 5.03% -

Deduction of non-recurring losses for shareholders of listed companies

Calculation of net profit after earnings)

Basic earnings per share -0.06 0.29 -119.65%

Solvency ability End of the current period End of the previous year Increase or decrease ratio % Total assets 319,632,148.01 342,604,601.08 -6.71% Total liabilities 117,099,799.92 132,345,928.97 -11.52% Net assets attributable to shareholders of the listed company 176,099,390.19 177,166,717.31 -0.60% Net assets per share attributable to shareholders of the listed company 4.66 4.68 -0.43% Asset-liability ratio % (parent company) 23.66% 27.61% -

Asset-liability ratio % (consolidated) 36.64% 38.63% -

Current ratio 1.04 1.00 -

Interest coverage ratio 0.71 5.14 -

Operating conditions Current period Same period last year Increase/decrease ratio % Net cash flow generated from operating activities -7,522,432.91 18,811,525.56 -139.99% Accounts receivable turnover rate 13.67 21.28 -

Inventory turnover 2.30 2.48 -

Growth situation for the current period Same period last year Increase or decrease ratio % Total assets growth rate % -6.71% 6.30% -

Operating income growth rate% -26.58% 31.66% -

Net profit growth rate % -253.50% 365.49% -

3. Financial situation analysis

(1) Analysis of assets and liabilities

Unit: Yuan

Item End of the current period Change ratio at the end of the previous year %

% of total assets % of total assets

Amount Amount

Proportion % Proportion %

Monetary funds 50,369,995.73 15.76% 87,460,486.76 25.53% -42.41% Notes receivable 3,827,924.76 1.20% 2,982,771.78 0.87% 28.33% Accounts receivable 5,512,360.76 1.72% 6,868,651.13 2.00% -19.75% Prepaid accounts 8,570,838.49 2.68% 6,063,337.94 1.77% 41.36% Other receivables 921,569.70 0.29% 1,510,989.50 0.44% -39.01%Inventory 32,012,875.14 10.02% 23,612,195.76 6.89% 35.58%Other current assets 5,598,341.61 1.75% 3,282,212.16 0.96% 70.57%Fixed assets 123,332,624.84 38.59% 163,864,004.96 47.83% -24.73%Construction in progress 72,304,643.99 22.62% 33,051,304.25 9.65% 118.76%Intangible assets 8,494,704.39 2.66% 8,969,227.94 2.62% -5.29%Goodwill 1,000.00 0.00% 1,000.00 0.00% 0.00%Long-term deferred expenses 336,276.21 0.11% 535,052.62 0.16% -37.15%Right-of-use assets 3,115,589.93 0.97% 1,686,573.69 0.49% 84.73% Deferred income tax assets 659,534.30 0.21% 429,339.59 0.13% 53.62% Assets

Other non-current assets 4,573,868.16 1.43% 2,287,453.00 0.67% 99.95%

Short-term borrowings 69,500,000.00 21.74% 49,000,000.00 14.30% 41.84% Long-term borrowings 9,700,000.00 3.03% 9,900,000.00 2.89% -2.02% Accounts payable 11,224,868.10 3.51% 16,694,545.93 4.87% -32.76% Employee benefits payable 1,150,375.27 0.36% 1,054,045.69 0.31% 9.14% Taxes payable 72,094.63 0.02% 989,475.20 0.29% -92.71%Other payables 15,347,420.50 4.80% 37,149,255.52 10.84% -58.69%Other current liabilities 2,558,291.14 0.80% 2,771,202.49 0.81% -7.68%Deferred income tax liability 541,126.10 0.17% 337,314.74 0.10% 60.42% Debt

10,600,000.00 3.09% -100.00% non-current liabilities due within one year

Contract liabilities 2,570,807.50 0.80% 943,928.69 0.28% 172.35% Estimated liabilities 640,132.46 0.20% 531,375.00 0.16% 20.47%

Reasons for major changes in the project

Monetary funds decreased by 42.41% during the same period. The main reason was that the company predicted that the price of raw materials would increase and invested a large amount of funds into raw material reserves. 2. Prepayments increased by 41.36% during the same period, mainly due to the subsidiary Inner Mongolia's renovation of factories and production lines in the current period, and the increase in prepayments for engineering equipment. 3. Other receivables decreased by 39.01% during the same period, mainly because the temporary deposit was returned after the relevant obligations were completed.
Inventory increased by 35.58% during the same period, mainly due to the company's reserve of raw materials and finished products and project construction.
Other current assets increased by 70.57% during the same period. The main reason was that the input tax to be deducted increased. The company purchased goods, production equipment, and engineering assets for production and operation, and the amount of input tax paid increased accordingly.
Construction in progress increased by 118.46% during the same period. The main reason was that the subsidiary Inner Mongolia renovated its factories and production lines in this period and increased project expenditures. 7. Long-term deferred expenses decreased by 37.15% during the same period, mainly due to the decrease in amortization of expenses.
Right-of-use assets increased by 84.73% during the same period, mainly due to the company's new leases in this period.
Deferred income tax assets increased by 53.62% during the same period, mainly due to the increase in new leases in the current period and the deductible temporary differences corresponding to lease liabilities.
Other non-current assets increased by 99.95% over the same period, mainly due to the increase in long-term unsettled engineering equipment payments from the subsidiary Inner Mongolia Heruiwei Technology.
Short-term borrowings increased by 41.84% over the same period, mainly due to the increase in borrowings required by the subsidiary Inner Mongolia for production and operations.
Accounts payable decreased by 32.76% during the same period, mainly due to payment settlement.
Taxes payable decreased by 92.71% during the same period, mainly due to the decrease in income during the period and the corresponding decrease in taxes and fees.
Other payables decreased by 58.69% during the same period, mainly due to the payment of non-operating loans and advances with shareholders and employees. 15. Deferred income tax liabilities increased by 60.42% during the same period, mainly due to the increase in new leases in the current period and the increase in deferred income tax liabilities corresponding to right-of-use assets.
Contract liabilities increased by 172.35% during the same period, mainly because the company received a large amount of advance payments from customers but has not yet fully performed its contractual obligations.

(2) Business situation analysis

Profit composition

Unit: yuan for the current period and the same period last year

Items for the current period and the same period last year accounted for operating income accounted for operating income

Amount Amount Change in amount %

Proportion % Proportion %

Operating income 84,637,836.95 - 115,285,814.97 - -26.58% Operating cost 64,049,376.44 75.67% 78,934,223.86 68.47% -18.86%Gross profit margin% 24.33% - 31.53% - -

Taxes and surcharges 1,587,818.83 1.88% 1,749,541.18 1.52% -9.24%Administrative expenses 11,563,558.97 13.66% 10,866,700.39 9.43% 6.41%Sales expenses 3,729,513.11 4.41% 3,088,130.69 2.68% 20.77%R&D expenses 6,922,883.12 8.18% 10,082,547.99 8.75% -31.34%Financial expenses 2,265,903.69 2.68% 1,367,626.42 1.19% 65.68%Other income 585,556.50 0.69% 328,032.02 0.28% 78.51%Investment income 100,182.59 0.12% 270,023.18 0.23% -62.90%Credit impairment loss -1,022,339.50 -1.21% -64,118.00 -0.06% 1,494.47% Asset disposal income -1,269,546.06 -1.50% 100.00% Operating profit -7,094,255.68 -8.38% 9,730,981.64 8.44% -172.90%Non-operating income 34,718.97 0.04% 295,842.54 0.26% -88.26%Non-operating expenses 269,579.17 0.32% 76,201.03 0.07% 253.77%Income tax expense 1,497,557.10 1.77% 4,200,390.89 3.64% -64.35%

Reasons for major changes in the project

Operating income decreased by 26.58% during the same period, mainly because the vitamin B industry as a whole was in a stage of deep adjustment during the reporting period, with overcapacity and intensified market competition. At the same time, affected by the fluctuation of the international trade environment and adjustments to tariff policies in some markets, the company's foreign trade business was short-term.

We will face certain challenges during the period, and the above are the main reasons for the decrease in income.

The main reason for the decrease in gross profit margin is that during the reporting period, the prices of major vitamin B complex industries were on the decline, resulting in a decrease in gross profit margin.
R&D expenses decreased by 31.34% during the same period, mainly due to the decrease in R&D activities in this period. As the core R&D projects entered a mature stage, the company’s R&D

Costs fall due to economies of scale.

Financial expenses increased by 65.68% during the same period, mainly due to the increase in bank loans and increased financial expenses in the current period.
Other income increased by 78.51% during the same period, mainly because the subsidiary Inner Mongolia received a special fund of 500,000.
Investment income decreased by 62.90% during the same period, mainly due to the decrease in the company's financial management income.
Credit impairment losses increased by 1494.47% over the same period, mainly because the subsidiary Inner Mongolia Xinglin Pharmaceutical's receivables were not expected to be recovered in full.

The amount of provision for bad debts is RMB 1 million.

Asset disposal income decreased by 100% during the same period, mainly due to the removal of scrapped assets by the company during this period.
Operating profit decreased by 172.90% during the same period. The main reason is that in 2025, the vitamin B industry as a whole is in a stage of deep adjustment, and production capacity

Oversupply and intensified market competition continue to test the industry's resilience, and price competition has put widespread pressure on short-term profit margins.

Operating income decreased by 26.55% over the same period. In 2025, the vitamin B industry as a whole is in a stage of deep adjustment. Overcapacity and intensified market competition continue to test the industry's resilience, and price competition brings widespread pressure on short-term profit margins. At the same time, downstream customers continue to carry out inventory optimization, causing market demand to slow down in stages. Against this background, the company took the initiative to optimize the order structure,

Some low-value, low-gross profit orders were abandoned to maintain long-term profit quality and brand positioning, resulting in a decline in revenue.

Income composition

Unit: Yuan

Item Amount for the current period Amount for the previous period Change percentage %

Main business income 82,547,744.18 114,077,870.44 -27.64% Other business income 2,090,092.77 1,207,944.53 73.03% Main business cost 63,145,783.77 78,908,660.77 -19.98% Other business costs 903,592.67 25,563.09 3,434.76%

Analysis by product category

√Applicable □Not applicable

Unit: yuan operating cost

Operating income ratio Gross profit margin ratio

Same as last year

Category/item Operating income Operating cost Gross profit margin % Same period last year Increase or decrease period same period last year

Increase or decrease % percentage

Increase or decrease %

Vitamin B 54,186,350.21 46,925,466.46 13.40% -24.60% -23.34% -1.43% Group

Cardiovascular 27,970,727.05 16,064,515.18 42.57% -33.69% -8.96% -15.60%

Dimethyl sulfone 390,666.92 155,802.13 60.12% 736.32% 208.27% 68.31% sulfone

Analysis by region

√Applicable □Not applicable

Unit: yuan operating cost

Operating income ratio Gross profit margin ratio

Same as last year

Category/item Operating income Operating cost Gross profit margin % Same period last year Increase or decrease period same period last year

Increase or decrease % percentage

Increase or decrease %

Domestic trade 73,303,901.77 55,696,115.32 24.02% -25.76% -16.33% -8.56% Foreign trade 9,243,842.41 7,449,668.45 19.41% -39.75% -39.63% -0.16% Reasons for changes in revenue composition

In 2025, the vitamin B industry as a whole will be in a stage of deep adjustment. Overcapacity and intensified market competition will continue to test the industry's resilience, and price competition will bring widespread pressure on short-term profit margins. At the same time, downstream customers continue to carry out inventory optimization, causing market demand to slow down in stages. Against this background, the Company proactively optimizes its order structure and abandons some low-value, low-gross profit orders to maintain long-term profitability quality and brand positioning. Despite the corresponding correction in short-term revenue, this move has laid a healthier product and customer base for the company to prepare for the next stage of high-quality development. In addition, affected by fluctuations in the international trade environment and adjustments to tariff policies in some markets, the company's foreign trade business faces certain challenges in the short term. We are actively promoting market diversification and supply chain resilience building to enhance business sustainability and risk resistance.

Major customers

Unit: Yuan

Annual sales % Whether there is any related serial number Customer sales amount

Ratio % system

1 First place 4,573,097.33 5.40% No

2 Inner Mongolia Baiyi Pharmaceutical Co., Ltd. 4,197,345.14 4.96% No

3 Third place 4,072,566.40 4.81% No

4 Fourth place 2,016,371.69 2.38% No

5 Fifth place 1,922,663.72 2.27% No

Total 16,782,044.28 19.82% -

Major suppliers

Unit: Yuan

Annual Procurement Proportion Whether there is any related serial number Supplier Procurement Amount

Ratio % system

1 First place 35,471,681.42 41.42% No

2 Second place 5,840,707.96 6.82% No

3 Third place 3,146,017.70 3.67% No

4 Tianjin Wuqing Baichuan Gas Sales Co., Ltd. 2,731,513.35 3.19% No

5 Fifth place 1,456,889.82 1.70% No

Total 48,646,810.25 56.80% -

(3) Cash flow analysis

Unit: Yuan

Item Amount for the current period Amount for the previous period Change percentage % Net cash flow generated from operating activities -7,522,432.91 18,811,525.56 -139.99% Net cash flow generated from investing activities -12,882,865.24 -9,082,650.55 41.84% Net cash flow generated from financing activities -16,779,954.73 27,567,319.82 -160.87%

cash flow analysis

The net cash flow generated from operating activities decreased by 139.99% during the same period, mainly due to the overall market downturn and shrinking demand in the industry in which the company operates.

Sales revenue dropped sharply, which directly led to a sharp drop in the scale of cash withdrawals. The company’s depreciation, personnel salaries, rent and other fixed expenses will be difficult to recover in the short term.

Compression in the same proportion creates rigid pressure on cash outflows.

The net cash flow generated from investing activities increased by 41.84% over the same period, mainly due to the renovation and renovation of the production line of the subsidiary Inner Mongolia and the purchase of a large number of

Production equipment.

The net cash flow generated from financing activities decreased by 160.87% during the same period, mainly due to the large cash outflow of the company to repay debts and pay dividends.

increase.

Investment status analysis

(1) Major holding subsidiaries and joint-stock companies

√Applicable □Not applicable

Unit: Yuan Gong Principal Company

Registered capital Total assets Net assets Operating income Net profit Name Type Industry name Type Wutian Chemical 1,700,000 4,602,424.58 2,379,929.67 2,323,161.47 430,014.09 Tianjin Industrial Materials Co., Ltd., Chemical Chemical Co., Ltd. Trial agent company manufacturing and sales; import and export of goods

. Chinese ginseng medicine 168,086,00 205,212,510.1 88,746,770.7 21,297,409.7 (22,392,993.32Swiss stock products 0 6 9 7) (Company produced in Mongolia; ancient food) Pharmaceuticals Tianye Added shares Dosage stock Raw materials Production limit; company feed additive production; cosmetics production. Ningshen Chemical 10,000,000 34,512,041.68 -424,607.42 390,666.92 16,298.51 Xia Gu Gongrui Company Changwei Company Pinke Sales Technology Sales; exclusive use company Chemical Company Sales of chemical products; sales of daily chemical products; fertilizer

for sale

Business analysis of major participating companies

√Applicable □Not applicable

Company name Relevance to the company’s business Purpose of holding Ningxia Ruiwei Technology Co., Ltd. Sales of chemical products; sales of special chemical products Expanding the market

sales; sales of daily chemical products; sales of fertilizers.

Acquisition and disposal of subsidiaries during the reporting period

□Applicable √Not applicable

(2) Investment in financial products

□Applicable √Not applicable

Entrusted financial management by non-financial institutions, high-risk entrusted financial management or entrusted financial management with a single significant amount

□Applicable √Not applicable

(3) Structural entities controlled by the company

□Applicable √Not applicable

(4) Including private equity fund managers within the scope of consolidation

□Applicable √Not applicable

5. Research and development status

(1) R&D expenditures

Unit: Yuan Item Amount/proportion of the current period Amount/proportion of the previous period R&D expenditure amount 6,922,883.12 10,082,547.99 Proportion of R&D expenditure to operating income % 8.18% 8.75% Capitalized proportion of R&D expenditure %

(2) R&D personnel

Education level Number of people at the beginning of the term Number of people at the end of the term Ph.D. 0 0 Master's degree 0 0 Bachelor's degree or below 32 36 Total R&D personnel 32 36

R&D personnel as a proportion of total employees 23.53% 24.16%

(3) Patent status

Item Quantity in this period Quantity in previous period

Number of patents owned by the company 26 26

Number of invention patents owned by the company 2 2

(4) R&D project status

The company has its own R&D team with unique and rich technical capabilities. During the reporting period, some of the company's products were technologically upgraded, improving resources conservation and reducing environmental pollution, which brought positive impact to the company's development.

6. Explanation of key audit matters

√Applicable □Not applicable

(1) Revenue recognition:

Description of the matter

As stated in Note "V. 35" to the consolidated financial statements of Zhongrui Pharmaceutical, Zhongrui Pharmaceutical's operating income in 2025 was RMB 84,637,800, which is an important component of the consolidated income statement of Zhongrui Pharmaceutical and is a key performance indicator. The inherent risk of misstatement of operating income is relatively high. Therefore, we identify revenue recognition as a key audit matter.

(2) Consolidation of projects under construction:

Description of the matter

As stated in notes "V. 8" and "V. 9" to the consolidated financial statements of Zhongrui Pharmaceutical Company, the book value of Zhongrui Pharmaceutical's construction in progress on December 31, 2025 was 72.3046 million yuan, and the book value of fixed assets was 123.3326 million yuan. Construction in progress increased by 118.76% compared to the same period. During the reporting period, RMB 30.7485 million was transferred from fixed assets to construction in progress due to production line renovation, and a new construction in progress of RMB 8.5048 million was added. Since the expected holding purpose of construction in progress and the timing of transfer to fixed assets to start depreciation are dependent on management's judgment, and the closing book amount of fixed assets is large, we regard the confirmation of construction in progress as a key audit matter.

7. Corporate Social Responsibility

√Applicable □Not applicable

During the reporting period, on the one hand, the company actively carried out production and operation work, strived to develop markets, optimize business models, protect the legitimate rights and interests of employees in accordance with the law, strive to improve employee happiness index, and build a harmonious atmosphere between the company and employees; on the other hand, the company established and maintained a good image of integrity, law-abiding, and fairness, paid taxes in accordance with the law, proactively assumed its obligations to the natural environment, social and economic development, actively maintained national unity and social stability, and supported social welfare undertakings. The company has integrated corporate social responsibility into the company's business development and pursued common progress and development with customers, employees, shareholders and society.

8. Future Outlook

Whether to voluntarily disclose

□Yes √No

9. Analysis of major risks faced by the company

Name of major risk matters Brief description of major risk matters

As a special product, the safety and effectiveness of medicine are related to the life safety of patients. Countries around the world have adopted strict supervision and management measures. In order to protect the interests of patients, my country implements unified legal supervision of pharmaceutical production. If industry supervision and drug approval cannot be carried out, the risks

If the relevant regulations of the national pharmaceutical production supervision and administration department are finally met, the company's production and operation license will be suspended or canceled, which will have a significant impact on the company's production and operation.

Due to factors such as enterprise size and capital, companies are limited in their ability to attract human resource risk management and product R&D talents. To a certain extent, the lack of human resources has adversely affected the company's development.

The company's equity structure is relatively dispersed, with the top five shareholders holding 26.74%, 24.31%, 11.17%, 8.65%, and 6.20%. There is no single shareholder holding more than 30% of the company's equity, nor is there a single shareholder controlling the company's general meeting of shareholders and board of directors. Although the company's top five shareholders have made a commitment to voluntarily follow the "National Small and Medium Enterprises Share Transfer System Business Rules (Trial)" for share locking requirements for controlling shareholders and actual controllers, there is a risk of change in control rights after the above-mentioned lock-up expiration equity dispersion risk. In addition, due to the dispersed ownership of the company, there may be a risk of missing market opportunities if the decision-making efficiency is not high. The company's shareholders Xiao Yuanhai, Liu Changsuo, Li Naikuan, and Daodao Longda signed the "Concert Acting Persons Agreement" on July 31, 2020, becoming persons acting in concert. After signing the agreement, Xiao Yuanhai, Liu Changsuo, Li Naikuan, and Dadao Longda collectively hold 77.07% of the company's equity. Xiao Yuanhai, Liu Changsuo, and Li Naikuan are the company's controlling shareholders and actual controllers, and Daodao Longda is the controlling shareholder and actual controller of the concerted action.

The company's wholly-owned subsidiary Henry Tianli rents the land and production workshop of the Village Committee of North Street, Chengguan Town, Wuqing District, Tianjin City and conducts production and operations here. In 2005, Henry Tianli built a building (production workshop) on the leased land. Since the land is subject to the risk of asset ownership defects

Due to the nature of the land, the buildings built on the land failed to go through relevant land planning procedures and obtain relevant ownership certificates. Therefore, the buildings built had asset ownership defects.

Have there been any significant changes in major risks in this period: No major changes have occurred in major risks in this period

Is there a risk of being transferred out of the innovation layer Yes √ No

Section 3 Major Events

1. Index of major events

Matter Yes or No Index whether there are any litigation or arbitration matters √Yes □No 3.2.(1) Whether there is provision of guarantee √Yes □No 3.2.(2) Whether external loans are provided □Yes √No

Is there any situation where shareholders and their related parties occupy or transfer the company’s funds, assets and other resources? □ Yes √ No 3.2. (3) Resources

Whether there are related transactions √Yes □No 3.2.(4) Whether there are acquisitions and sales of assets, external investments and other matters that have been reviewed and approved by the shareholders’ meeting □Yes √No

and business mergers that occurred during the reporting period

Is there an equity incentive plan, employee stock ownership plan or other employee incentive measures? Yes √No

Is there any share repurchase matter □Yes √No

Whether there are any disclosed commitments √Yes □No 3.2.(5) Whether there are assets that have been sealed, detained, frozen or mortgaged or pledged √Yes □No 3.2.(6) Whether there are matters subject to investigation and punishment □Yes √No

Is there any breach of trust? □Yes √No

Are there any other major matters that should be disclosed? Yes √No

2. Details of major events (if the matter exists, please fill in the form below)

(1) Litigation and arbitration matters

Litigation and arbitration matters that occurred during the reporting period

√Applicable □Not applicable

Unit: Yuan Nature Cumulative amount Proportion of net assets at the end of the period %

as plaintiff/applicant

As defendant/respondent 108,757.46 0.05%

as a third person

Total 108,757.46 0.05%

Major litigation and arbitration matters disclosed in the form of temporary announcements

The company had no major litigation or arbitration matters during the reporting period

(2) Guarantee matters that occur in the company

Provide guarantees for listed companies and subsidiaries within the scope of consolidated statements

√Yes □No

Unit: yuan quilt

guarantor

Guarantee period

Whether

To hang

Is the license plate company controlled by the company? Fulfillment

Actual performance Responsible shares Necessary serial number Guarantee amount Guarantee liability Guarantee balance Amount of decision taken by the guarantor Type Type of guarantor Actual supervision Start and end of the policy program Control measures and procedures

its control

Made

enterprise

Sino-Swiss

(within

2025 2026

It's over

Year 3 Year 3

(previously) and 1 8,000,000 8,000,000 8,000,000 Month Month Jointly and severally Yes No Pharmaceutical Timely fulfillment

27 24

share bank

day day

limited

company

Sino-Swiss

(Within 2025 2026

Mongolian year year old) 12 12 ago and 2 10,000,000 10,000,000 10,000,000 Jointly and severally Yes No Pharmaceutical Month Month Shili Shares 10 19 Bank Limited Day Day

company

Total - 18,000,000 18,000,000 18,000,000 - - - - - -

Performance of guarantee contracts that may bear or have assumed joint liability for repayment

None

Summary of guarantees provided by the company

Unit: Yuan

Summary of items Guarantee amount Guarantee balance Guarantees provided by the listed company during the reporting period (including guarantees for on-balance sheet subsidiaries) 18,000,000 18,000,000 The company and its on-balance sheet subsidiaries are shareholders, actual controllers and related parties of the listed company

provide guarantee

The company is directly or indirectly responsible for the liabilities of debtors whose asset-liability ratio exceeds 70% (excluding the original amount).

Guarantee provided by the guarantor

The amount of the company's total guarantee exceeding 50% of the net assets (excluding the principal amount)

The company provides guarantees for companies issuing statements during the reporting period

Guarantee situations that should be highlighted

□Applicable √Not applicable

Estimated guarantee and execution status

□Applicable √Not applicable

(3) Occupation or transfer of company funds, assets and other resources by shareholders and their related parties

During the reporting period, the company did not have any shareholders or its related parties occupying or transferring the company's funds, assets and other resources.

(4) Related transactions of the company during the reporting period

Unit: Yuan

Routine related transactions Estimated amount Amount incurred Purchase of raw materials, fuel, power, and receipt of labor services

Selling products, merchandise, and providing services

The types of daily related transactions applicable to the company stipulated in the company's articles of association

Others

Other major related transactions Amount under consideration Transaction amount Acquisition and sale of assets or equity

Joint external investments with related parties

Provide financial assistance

provide guarantee

Entrusted financial management

Accept guarantee 35,500,000.00

Related transactions of enterprise group finance company Estimated amount Incurred amount deposit

loan

The necessity and continuity of major related transactions and their impact on the company’s production and operations

Accept guarantee:

Tianjin Pushun Branch of Shanghai Pudong Development Bank provided the company with a working capital loan of 10 million yuan, guaranteed by the company's legal person Wang Honggang, deputy general manager Liu Changsuo, deputy general manager Li Naikuan, and director Xiao Yuanhai.

Wuqing Chengguan Branch of Tianjin Rural Commercial Bank provided the company with a working capital loan of 7.5 million yuan, guaranteed by the company's legal person Wang Honggang. The Tianjin Hongqiao Branch of the Bank of Shanghai provided the company with a working capital loan of 10 million yuan, and the company's legal person Wang Honggang, deputy general manager Liu Changsuo, deputy general manager Li Naikuan, and director Xiao Yuanhai provided guarantees.

The company's subsidiary Zhongrui (Inner Mongolia) Pharmaceutical Co., Ltd. signed a loan contract with the Wuhai Electric Power Branch of the Bank of Inner Mongolia. The loan amount is 8 million yuan. The loan period is from March 27, 2025 to March 24, 2026. The company used part of its fixed assets, machinery and equipment as collateral, and Tianjin Zhongrui Pharmaceutical Co., Ltd. and the company's chairman Wang Honggang and his spouse Wang Wei provided guarantees.

The guarantee provided by related parties to the company is the amount of the company's net income.

Related parties provide loans to the company without any interest.

Illegal related party transactions

□Applicable √Not applicable

(5) Performance of commitments

Commitment begins Commitment ends Commitment fulfillment Subject of commitment Commitment source Commitment type Specific content of commitment

Date Date Kuang holds 5% of the shares. October 2013 - The increase or decrease in the listed shares. Please refer to the "Details of the commitments of directors and supervisors currently being implemented on October 10, 2013. Details of commitments held by directors and supervisors"

high

Director October 2013 - Listing Commitment on sales restriction See "Details of Commitment Matters Currently being implemented"

"Details of the situation" stated on the 10th of the month

Senior Management November 2014 - Issuance Restriction Commitment See "Details of Commitment Matters in Progress" on November 12

Actual control July 2020 - Acquisition Acting in concert See "Details of commitments being performed by the party or holding company as of July 31"

shareholders

Details of overdue and unfulfilled commitments

Shareholders holding more than 5% of the company's shares, directors, supervisors and senior managers signed the "Commitment on Reducing and Avoiding Related Transactions". The specific content of the commitment is as follows: "1. After the date of this commitment, I (the company) will try to avoid related transactions with Zhongrui Pharmaceutical and its subsidiaries; 2. For related transactions that cannot be avoided or occur due to reasonable reasons, I (the company) will strictly abide by the "Company Law" and other relevant regulations. The Company shall comply with relevant laws, regulations, normative documents and the provisions of the Articles of Association and Related Party Transaction Management System, follow the principles of equal value, paid and fair transactions, perform legal procedures and enter into relevant agreements or contracts, disclose information in a timely manner, and ensure the fairness of related transactions; 3. I (the Company) promise not to damage the legitimate rights and interests of Zhongrui Pharmaceutical and other shareholders through related transactions; 4. My (our company’s) commitments regarding related party transactions will also apply to important related parties such as my spouse, parents, spouse’s parents, brothers, sisters and their spouses, children over 18 years old and their spouses, spouse’s brothers and sisters, and parents of my children’s spouses. I will facilitate the performance of related party transaction commitments by the above-mentioned persons within my legal authority.”

There were no violations of the above commitments during this period.

The company’s shareholders Xiao Yuanhai, Liu Changsuo, Wang Honggang and Li Naikuan serve as directors of the company. All four of them promise that: during their term of office, the shares they transfer each year will not exceed 25% of the total number of shares they hold in the company; and they will not transfer their shares in the company within six months after their resignation.

There were no violations of the above commitments during this period.

Zhang Jie, a shareholder of the company, is a senior manager of the company. I promise that during my tenure, the shares transferred each year shall not exceed 25% of the total shares held by her in the company; within six months after leaving her job, the shares held by her in the company shall not be transferred.

There were no violations of the above commitments during this period.

Shareholders Xiao Yuanhai, Liu Changsuo, Li Naikuan, and Daodao Longda signed the "Persons Acting in Concert Agreement" on July 31, 2020, and became persons acting in concert. After signing the agreement, Xiao Yuanhai, Liu Changsuo, Li Naikuan, and Dadao Longda collectively hold 67.9036% of the company's equity and are the company's controlling shareholders and actual controllers.

There were no violations of the above commitments during this period.

(6) Assets that have been seized, detained, frozen or mortgaged or pledged

Unit: Yuan

Restricted rights as a proportion of total assets

Asset name Asset category Book value Reason for occurrence

Type Example%

Monetary funds Bank deposits frozen 486,591.00 0.15% Judicial frozen

Fixed assets Fixed assets Mortgage 117,687,309.89 36.82% Bank loan mortgage

Intangible assets Intangible assets Mortgage 5,017,564.38 1.57% Bank loan mortgage

Total - - 123,191,465.27 38.54% -

The impact of restricted asset rights on the company

None

Section 4 Share Changes, Financing and Profit Distribution

1. Common stock capital situation

(1) Common stock capital structure

Unit: Shares at the beginning of the period and at the end of the period

Nature of shares Changes in the current period

Quantity Proportion % Quantity Proportion % Total number of unrestricted shares 17,432,745 46.10% 0 17,432,745 46.10% Unlimited

Including: Controlling shareholder, actual control 4,402,419 11.64% 0 4,402,419 11.64% Sales note

people

stocks

Directors, supervisors and senior executives 4,589,247 12.14% 0 4,589,247 12.14% shares

Core employees 0 0% 0 0 0% Total number of restricted shares 20,385,222 53.90% 0 20,385,222 53.90% Limited

Including: Controlling shareholder, actual control 13,207,271 34.92% 0 13,207,271 34.92% Sale note

people

stocks

Directors, supervisors and senior executives 13,767,759 36.41% 0 13,767,759 36.41% shares

Core employees 0 0% 0 0 0%Total share capital 37,817,967 - 0 37,817,967 -

Number of common shareholders 30 Changes in share capital structure

□Applicable √Not applicable

(2) Information about the top ten shareholders of ordinary shares

Unit: shares held at the end of the period, held at the end of the period

Held at the end of the period Held at the end of the period No. of shareholders Shareholdings at the beginning of the period Shareholdings at the end of the period Quality of holdings

Restricted shares Unlimited shares Number of shares frozen by law Number of changes Number of shares Ratio of pledged shares

Quantity Number of shares Number of shares % Quantity

Amount 1 Xiao Yuanhai 10,111,679 0 10,111,679 26.74% 7,583,761 2,527,918 0 0 2 Dadalong 9,194,830 0 9,194,830 24.31% 6,437,500 2,757,330 0 0

reach

3 Liu Changsuo 4,224,952 0 4,224,952 11.17% 3,168,715 1,056,237 0 0 4 Li Naikuan 3,273,059 0 3,273,059 8.65% 2,454,795 818,264 0 0 5 Gao Baofeng 2,346,421 0 2,346,421 6.20% 0 2,346,421 0 0 6 Chen Bin 1,774,821 0 1,774,821 4.69% 0 1,774,821 0 0 7 Zhang Guilan 1,035,558 0 1,035,558 2.74% 0 1,035,558 0 0 8 Xu Yueli 799,697 0 799,697 2.11% 0 799,697 0 0 9 Wang Honggang 747,316 0 747,316 1.98% 560,488 186,828 0 0 10 Wang Yongchao 622,406 0 622,406 1.65% 0 622,406 0 0

Total 34,130,739 0 34,130,739 90.24% 20,205,259 13,925,480 0 0 Explanation of the top ten shareholders of ordinary shares

√Applicable □Not applicable

2. Controlling shareholders and actual controllers

Whether to merge and disclose

√Yes □No

There were no changes in the controlling shareholder and actual controller during the reporting period.

Are there any special investment terms that have not yet been fulfilled?

□Yes √No

3. Issuance of common shares and use of raised funds during the reporting period

(1) Stock issuance during the reporting period

□Applicable √Not applicable

(2) Usage of raised funds that lasted to the reporting period □ Applicable √ Not applicable

Relevant information on preference shares that have survived to the current period □Applicable √Not applicable
Bond financing that lasts to the current period □Applicable √Not applicable
Convertible bonds surviving to the current period □Applicable √Not applicable

7. Equity distribution

(1) Profit distribution and transfer of reserve funds to share capital during the reporting period □ Applicable √ Not applicable

Implementation of profit distribution and conversion of reserve funds into share capital □Applicable √Not applicable

(2) Equity distribution plan

□Applicable √Not applicable

Section 5 Industry Information

□Environmental management company √Pharmaceutical manufacturing company □Software and information technology service company

□Computer, communication and other electronic equipment manufacturing companies □Professional technical service companies □Internet and related service companies □Retail companies □Agriculture, forestry, animal husbandry and fishery companies □Education companies □Film and television companies □Chemical companies □Health industry companies □Advertising companies □Lithium battery companies □Construction companies □Not applicable

1. Macroeconomic policies

•Notice of the State Food and Drug Administration on the pilot work on optimizing the review and approval procedures for supplementary applications for overseas-produced drugs (2025-11-07)

•Notice from the General Affairs Department of the State Food and Drug Administration on the launch of the new version of the "Drug Production License" and "Radioactive Drug Production License" styles (2025- 10-30)

•Announcement of the State Food and Drug Administration on further matters related to the issuance of "Drug Production License" (2025 No. 35) (2025-04- 07)

•Announcement of the State Food and Drug Administration on matters related to the implementation of the 2025 version of the Pharmacopoeia of the People's Republic of China (2025 No. 32) (2025- 03-25)

•Notice of the Center for Drug Evaluation of the State Food and Drug Administration on the release of the "Technical Guiding Principles for Pharmaceutical Change Management Plan after Approval of Chemical Drugs (Trial)" (No. 46, 2025)

•Notice on the public solicitation of opinions on the "Guidelines for the Continuous Manufacturing Inspection of Chemical APIs (Draft for Comment)" 2025-12-18 Announcement of the State Food and Drug Administration on the Issuance of Regulations on the Management of Export Drug Inspection and Export Certificates for Pharmaceutical Manufacturers (2025 No. 113) 2025- 11-25

•Notice on the release of the "Process Validation Inspection Guide" 2025-04-07

•Tianjin Municipal Food and Drug Administration’s Announcement on Launching a Pilot Reform to Optimize the Review and Approval Procedures for Drug Supplementary Applications 2025-01-24

2. Business qualifications

The company's industry is pharmaceutical manufacturing, and the company's business qualifications mainly include pharmaceutical production licenses, environmental management system certifications, etc. During the reporting period, the company did not experience any situation that affected the effective existence of its business qualifications.

3. Main medicines (products)

(1) Basic information on drugs (products) on sale

√Applicable □Not applicable

Drug (product) name

Dosage form API

Therapeutic fields/purposes: cardiovascular and cerebrovascular diseases, etc.

Start and end period of invention patent Not applicable

The drug (product) registration category is biomedicine

Is it a protected variety of traditional Chinese medicine? No

Is it a prescription drug? No

Is it a new drug (product) launched during the reporting period? No

Production volume

sales volume

During the reporting period, there were no changes in the main products and related information.

(2) Production and sales of pharmaceutical products

√Applicable □Not applicable

Classification analysis of revenue and costs of pharmaceutical (product) products

Therapeutic areas/Main drugs Operating income Operating costs Gross profit margin (product) products/Others (please) Operating income Operating costs Gross profit margin Year-on-year increase Year-on-year increase Year-on-year increase

listed) Minus % Minus % Minus % Vitamin niacin 14,903,357.70 11,761,395.64 21.08% 7.69% -1.41% 7.28% Vitamin niacinamide 50,831,744.06 46,361,759.33 8.79% -13.56% -18.16% 5.12% Hyperlipidemia Inositol Nicotinate 4,195,314.12 1,514,149.37 63.91% -72.79% -76.13% 5.05% Urinary system medication Hydrochlorothiazide 69,292.03 76,539.12 -10.46% -87.08% -86.95% -41.50%azine

Nafamostat mesylate 63,716.81 100.00% -95.19%

Isosulfide blue 35,398.23 100.00% -92.00%

Urinary system medicine hydrochloride 667,323.00 753,815.50 -12.96% -13.80% 8.18% -12.96% Prazosin

Stimulant dopamine hydrochloride 9,663,451.39 1,593,076.78 83.51% -49.63% -27.02% 83.51% Skeletal muscle relaxant besylsulfonate 484,990.70 250,118.36 48.43% -45.82% -39.91% 48.43% atracurium

Cytoprotective agent amifostine 211,139.67 13,783.55 93.47% -71.96% -93.38% 93.47% Anti-tuberculosis drug isoniazid 485,553.09 524,408.48 -8.00% 74.74% 13.02% -8.00% ischemic cerebrovascular disease hydrochloride 545,796.46 140,935.51 74.18% 100% 74.18% Fasudil

Total 82,157,077.26 62,989,981.64 - - - -

Inositol nicotinate for hyperlipidemia, the operating income of this period decreased by 72.79% year-on-year, and the gross profit margin increased by 5.05% year-on-year, mainly because the market demand in this period decreased and cost control had a certain effect.
For the stimulant dopamine hydrochloride, the operating income for this period decreased by 49.63% year-on-year and the operating cost did not change much. The main reason is that in 2023, as an Internet celebrity product, the market demand was high, and the unit price rose sharply. During the reporting period, the unit price slowly returned to normal levels.
The production scale of hydrochlorothiazide for urinary system drugs, fasudil hydrochloride for ischemic cerebrovascular disease, terazosin hydrochloride for urinary system drugs, skeletal muscle relaxant cisatracurium besilate, cell protective agent amifostine, and anti-tuberculosis drug isoniazid is relatively small, which can easily lead to relatively large changes.
Nafamostat mesylate and isosulfan blue are R&D and sales products, and sales are R&D samples, so there is no cost.
Sales model analysis

The sales of pharmaceutical products such as APIs and pharmaceutical intermediates have their own particularities. The suppliers of APIs are long-term and stable and will not be easily changed. As a supplier of APIs, the company develops domestic and foreign markets through a combination of direct sales and distribution. Its customers are mainly large domestic and foreign pharmaceutical companies or drug distributors. Its sales areas are mainly China, EU countries, the United States, India, South America, etc.

Winning bids in centralized bidding and procurement of major pharmaceutical (products) products

□Applicable √Not applicable

(3) Situation of major drugs (products) that have been included, newly entered and withdrawn from the national essential medicine catalog and the national medical insurance catalog □ Applicable √ Not applicable

4. Intellectual Property Rights

(1) Core technologies of major pharmaceutical (products)

The company attaches great importance to patent technology protection during its research and development process. As of December 31, 2025, the company has authorized 2 invention patents, 24 utility models, and 3 software registration rights.

(2) Well-known or famous trademarks

√Applicable □Not applicable

Jinrui, a famous trademark, sells well at home and abroad.

(3) Major intellectual property legal disputes or controversial matters

□Applicable √Not applicable

5. Research and development status

(1) Overall R&D situation

Since its establishment, the company has always adhered to the scientific outlook on development and regarded technology research and development and talent training as the company's development goals. In order to enhance the company's core competitiveness and promote technological innovation and achievement transformation, the company has established a research and development model of coordinated development of independent research and development and cooperative research and development. The company's research and development institution is established in the production technology department to coordinate and manage technology research and development work. Establish a project management system to provide process improvement solutions to the production department to optimize production lines; realize the industrialization of patented technologies and complete the transformation of R&D results.

(2) Major R&D projects

Top five R&D projects with R&D investment

Unit: Yuan serial number R&D project Amount of R&D investment in this period Accumulated R&D investment amount R&D (registration) stage 3-aminopyridine compound

1 2,066,782.59 3,731,830.51 Completed process in pilot stage

Berberine hydrochloride

2 1,799,186.97 2,305,145.95 Pilot stage

Process research

Selective β1 receptor

body blocker hydrochloric acid

3 930,091.83 4,035,559.02 Landiolol synthesis in pilot stage

Process research

a positioning outpost

lymph node biopsy

4 765,282.20 2,005,802.75 The dye isosulfide blue in the pilot stage

Synthesis process research

Based on gastric mucosa

Effective protection and restoration

5 mechanism of high-purity methyl sulfone refining process 586,003.59 837,859.00

art research

Total 6,147,347.18 12,916,197.23 -

This year, it is necessary to strengthen research on industrial amplification and solve engineering problems that may arise during large-scale production, such as reaction equipment selection, amplification effects, continuous production, etc., to achieve a smooth transition from laboratory to industrial production, reduce production costs, and improve market competitiveness.

R&D projects included in priority review and approval categories

□Applicable √Not applicable

Other R&D projects that have a significant impact on core competitiveness □Applicable √Not applicable
Major R&D projects stopped or canceled

□Applicable √Not applicable

Information on drugs (products) that have been submitted to regulatory authorities for approval, completed registration or obtained production approval □Applicable √Not applicable
Major government R&D subsidies, funding, subsidies and tax incentives □Applicable √Not applicable
Other research and development information voluntarily disclosed

□Applicable √Not applicable

6. Commissioned production of medicines (products)

□Applicable √Not applicable

7. Quality Management

(1) Basic situation

The company has established a relatively complete quality management and control system, and strictly controls the entire production process in accordance with GMP and other relevant requirements, so that the entire production process from raw materials entering the factory to finished products leaving the factory is under control.

(2) Major quality and safety issues

□Applicable √Not applicable

8. Production safety and environmental protection

(1) Basic situation

The company firmly establishes safety and environmental protection awareness, insists on safety and environmental protection, and ensures "zero accidents" in safety and environmental protection. The company has always taken the implementation of corporate responsibilities as the main line and the goal of preventing various accidents. It has paid close attention to safety and environmental protection infrastructure, increased investment in safety and environmental protection, stepped up the pace of hidden danger rectification, strengthened on-site safety and environmental protection management, continuously improved the intrinsic safety of the company, continued to improve safety and environmental protection production conditions, and ensured the company's safe production.

During the reporting period, the company had no safety incidents.

(2) Situations involving hazardous wastes and hazardous chemicals

√Applicable □Not applicable

The hazardous wastes generated by our company during the production and operation process include: waste activated carbon (hazardous waste category HW49-900-039-49), the annual production volume is about 20 tons, the distillation kettle residue (hazardous waste category HW11-900-013-11), the annual production volume is about 20 tons, the distillation kettle residue (containing chlorine, hazardous waste category HW11-900-013-11 ), with an annual output of about 20 tons, and a small amount of quality inspection waste liquid. The company has built a temporary storage warehouse for hazardous waste to store hazardous waste. All the hazardous waste generated is handed over to Tianjin Binhai Hejia Veolia Environmental Services Co., Ltd. for processing and is transferred every six months in accordance with regulations. The above situation has been recorded in the Tianjin Hazardous Waste Comprehensive Supervision Information System.

Our company is a user of hazardous chemicals. The hazardous chemicals involved mainly include dimethylformamide, hydrochloric acid, liquid alkali, manganese dioxide, nitric acid, etc. The annual usage does not meet the certification requirements, so there is no use license. The company has a strict management system for storage, receipt, etc., and strictly follows the specification requirements during use and storage.

(3) Situations involving biological products

□Applicable √Not applicable

(4) Major environmental pollution incidents or penalties

□Applicable √Not applicable

9. Segmented business

(1) Processing of traditional Chinese medicine pieces and production of proprietary Chinese medicines

□Applicable √Not applicable

(2) Consistency evaluation of generic drugs

□Applicable √Not applicable

(3) Biosimilar drug production and research and development

□Applicable √Not applicable

Section 6 Corporate Governance

1. Directors, supervisors and senior managers

(1) Basic situation

Unit: Share

End of term ordinary

Nature Starting and ending dates of employment Number of ordinary shares held at the beginning of the period Number of ordinary shares held at the end of the period Name Position Date of birth Shareholding ratio Number of shares Change Number of shares

Start date End date Example%

Cui Baogang Director Male October 1964 2023 5 2026 5 0 0 0 0%

Month 11th Month 10th

Xiao Yuanhai Director Male October 1958 2023 5 2026 5 10,111,679 0 10,111,679 26.7378%

Month 11th Month 10th

Liu Changsuo Director Male April 1961 2023 5 2026 5 4,224,952 0 4,224,952 11.1718%

Month 11th Month 10th

Zhou Ying Director Female December 1964 2023 5 2026 5 0 0 0 0%

Month 11th Month 10th

Wang Honggang Director Male April 1967 2023 5 2026 5 747,316 0 747,316 1.9761% long, month 11, month 10

general manager

reason

Li Naikuan Dong Male October 1962 2023 5 2026 5 3,273,059 0 3,273,059 8.6548% event , month 11, month 10

Vice President

manager

Gao Zhanyou Dong Male October 1946 2023 5 2026 5 0 0 0 0 % things , month 11, month 10

director

meeting secret

book

Zhang Yanqing Supervisor Female April 1970 2023 5 2026 5 0 0 0 0% meeting Main month 11th month 10th

seat

Xu Liqiang Supervisor Male December 1977 2023 5 2026 5 0 0 0 0%

Month 11th Month 10th

Xu Haixia Supervisor Female August 1975 2023 5 2026 5 0 0 0 0%

Month 11th Month 10th

Relationship between directors, supervisors, senior managers and shareholders:

Xiao Yuanhai, Liu Changsuo, Li Naikuan, and Dadao Longda signed the "Concert Acting Persons Agreement" on July 31, 2020, and became concerted parties. After signing the agreement, Xiao Yuanhai, Liu Changsuo, and Li Naikuan became the company's controlling shareholders and actual controllers, and Dadao Longda became the controlling shareholder and actual controller of the concerted action. Director and board secretary Gao Zhanyou and shareholder Gao Baofeng have a father-daughter relationship. In addition, there is no mutual relationship between directors, supervisors and senior managers and between controlling shareholders and actual controllers.

(2) Status of the Audit Committee

□Applicable √Not applicable

(3) Changes

□Applicable √Not applicable

Professional background, main work experience, etc. of new directors, supervisors, and senior managers during the reporting period

□Applicable √Not applicable

(4) Equity incentives for directors and senior managers

□Applicable √Not applicable

2. Employee situation

(1) Current employees (company and holding subsidiaries)

Classification by nature of work Number of people at the beginning of the period New in this period Decreased in this period Number of people at the end of the period Administrative staff 18 2 0 20 Production staff 71 0 8 63 Sales staff 14 3 0 17 Technical staff 30 10 0 40 Financial staff 7 2 0 9 Total employees 140 17 8 149

Classification by education level Number of people at the beginning of the period Number of people at the end of the period

Doctoral degree 0 0 Master degree 0 0 Bachelor degree 38 27 Junior college 27 28 Junior college or below 75 94

Total employees 140 149

Employee compensation policies, training plans, and the number of retired employees who need to bear the costs of the company, etc.

Employee remuneration policy: The company adjusts employee remuneration based on various factors such as employees’ employment years, work performance, contribution value and other factors.
Training plan: The company always attaches great importance to the training and development of employees. Based on the characteristics of employees' positions, it has developed a series of training plans and talent cultivation projects, including: new employee induction training, job skills training, business and management skills training, etc. It is committed to building a learning enterprise and cultivating excellent teams with professional competitiveness to support the sustainable development of the company's business. Excellent teams with professional competitiveness support the sustainable development of the company's business.
The company does not bear expenses for employees who resign.

(2) Situation of core employees (the company and its holding subsidiaries)

□Applicable √Not applicable

3. Corporate governance and internal control

Matter Yes or No Whether the investment institution has appointed directors □Yes √No Whether the internal supervision agency has objections to the supervision matters this year □Yes √No Whether the management has introduced professional managers □Yes √No Whether there are new related parties during the reporting period □Yes √No

(1) Basic situation of corporate governance

The company strictly complies with the requirements of the "Company Law", "Securities Law", "Measures for the Supervision and Administration of Unlisted Public Companies" and other relevant laws, regulations and normative documents, constantly improves the company's corporate governance structure, establishes and improves the company's internal management and control system, standardizes operations, strictly discloses information, and protects the interests of investors. The company has established a corporate governance structure in which each person performs his or her duties, takes responsibility for each other, cooperates with each other, and restricts each other, and has formed a series of management systems including the Articles of Association, the Rules of Procedure for the General Meeting of Shareholders, the Rules of Procedure for the Board of Directors, and the Rules of Procedure for the Board of Supervisors.

During the reporting period, the general meeting of shareholders, the board of directors, the board of supervisors and the management all operated independently and effectively in accordance with their powers and respective rules of procedure stipulated in relevant laws, regulations and the Articles of Association. The company operates in strict accordance with laws and regulations, the Articles of Association and the internal management system. The company's directors, supervisors and senior managers all faithfully perform their obligations. In the future, the company will continue to pay close attention to industry development trends and new policies issued by regulatory agencies, and formulate corresponding management systems in a timely manner based on the company's actual situation to ensure the company's healthy and sustainable development.

(2) Opinions of internal supervision agencies on supervision matters

The Board of Supervisors found no major risk matters in the company during its supervision activities during the year, and the Board of Supervisors had no objections to the supervisory matters of the year.

(3) Explanation on the company’s ability to maintain independence and independent operation

Business independence: The company and its holding subsidiaries have independent and complete business systems, are able to operate independently, conduct independent accounting and decision-making, and bear independent responsibilities and risks, and have the ability to operate independently in the market.
Independence in personnel: The company's legal person governance structure is sound, and the company's directors, supervisors and senior managers are all in compliance with the Company Law, The company is legally elected and appointed according to the Articles of Association; the company has established an independent human resources system and personnel employment and appointment and removal system, established an independent salary, welfare and social security system, and signed labor contracts with all employees and paid social insurance premiums; none of the company's directors, supervisors, senior managers and technical personnel hold positions and receive remuneration in the controlling shareholder and other enterprises controlled by it, and the company's financial personnel do not work part-time in the controlling shareholder and other enterprises controlled by it.
Complete and independent assets: The company has an independent, complete and clear asset structure. The ownership and use rights of major assets related to the company's business operations are owned by the company; the company independently registers, establishes accounts, accounts for and manages the assets it owns; the company's asset ownership is clear and complete, and there is no dependence on the controlling shareholder, actual controller or other companies controlled by it.
Institutional independence: The company has independent autonomy in setting up institutions; in accordance with the relevant provisions of relevant laws, regulations and normative documents, the company has formulated the "Articles of Association" and set up corresponding organizational structures, with the shareholders' meeting as the highest authority, the board of directors as the decision-making body, and the board of supervisors as the supervisory body. The company has a legal person governance structure and has established an organizational structure that is in line with its own business operating characteristics; all agencies and departments of the company exercise their powers and operate independently in accordance with the Articles of Association and various rules and regulations; the company's business premises are completely separated from the controlling shareholders and actual controllers, and there is no mixed operation or shared office.
Financial independence: The company has an independent financial department, equipped with full-time financial personnel, implements independent accounting, and can make financial decisions independently; the company has opened an independent basic settlement account and does not share bank accounts with shareholder units or any other units or individuals; as an independent taxpayer, the company independently declares taxes and performs payment obligations in accordance with the law.

(4) Evaluation of major internal management systems

The company's current internal control system is formulated in accordance with the Company Law, Articles of Association and relevant national laws and regulations, combined with the company's own actual situation, meets the requirements of modern enterprise systems, and does not have major flaws in completeness and rationality.

4. Investor Protection

(1) Implementation of cumulative voting system

□Applicable √Not applicable

(2) Provision of online voting

□Applicable √Not applicable

(3) Arrangements for differences in voting rights

□Applicable √Not applicable

Section 7 Financial Accounting Report

1. Audit report

Whether to audit Yes

Audit opinion Unqualified opinion

√None □Emphasis section

Special paragraphs in the audit report □Other matters paragraph □Material uncertainty about going concern paragraph

□Explanation of uncorrected material misstatements in other information contained in the other information paragraphs

Audit report number: Zhongxing Huashenzi (2026) No. 00007471

Name of audit institution Zhongxinghua Accounting Firm (Special General Partnership)

Address of the audit institution: Floor 20, Building B, Lize SOHO, No. 20 Lize Road, Fengtai District, Beijing

Audit report date April 21, 2026

Name and serial number of the signing certified public accountant: Yuan Chunran Li Xianhui

Signing period 1 year 1 year year year

Whether the accounting firm has changed? No

Continuous service period in accounting firm: 6 years

Accounting firm audit remuneration (11.5 million

Yuan)

Audit report

Zhongxing Huashenzi (2026) No. 00007471

All shareholders of Tianjin Zhongrui Pharmaceutical Co., Ltd.:

1. Audit opinions

We have audited the financial statements of Tianjin Zhongrui Pharmaceutical Co., Ltd. (hereinafter referred to as "Zhongrui Pharmaceutical"), including the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, the consolidated and parent company cash flow statements, the consolidated and parent company statements of changes in shareholders' equity, and relevant financial statement notes for 2025.

We believe that the accompanying financial statements have been prepared in accordance with the Accounting Standards for Business Enterprises in all material respects and fairly reflect the consolidated and parent company's financial position of Sino-Swiss Pharmaceuticals as of December 31, 2025, as well as the consolidated and parent company's operating results and cash flows in 2025.

2. The basis for forming audit opinions

We performed the audit work in accordance with the Chinese Certified Public Accountants Auditing Standards. Our responsibilities under these standards are further described in the "CPA's Responsibilities for the Audit of Financial Statements" section of the auditor's report. In accordance with the Chinese Code of Independence for Certified Public Accountants and the Chinese Code of Professional Ethics for Certified Public Accountants, we are independent of Sino-Swiss Pharmaceuticals and have fulfilled other responsibilities in professional ethics. We believe that the audit evidence we obtained is sufficient and appropriate and provides a basis for issuing an audit opinion.

3. Key audit matters

Key audit matters are matters that, based on our professional judgment, are considered to be most important in the audit of the current period's financial statements. The response to these matters is based on the audit of the financial statements as a whole and the formation of audit opinions. We do not express opinions on these matters individually. We have determined that the following matters are key audit matters that need to be communicated in the audit report.

(1) Revenue recognition:

Description of the matter

Audit response

Regarding the key audit matter of recognition of operating income, the audit procedures we implemented mainly include:

① Understand the key internal controls related to revenue, evaluate the design of these controls, determine whether they are implemented, and test the effectiveness of the relevant internal controls;

② Check the sales contracts of major customers, identify individual performance obligations and control transfer terms in the contracts, and evaluate whether the timing of revenue recognition meets the requirements of corporate accounting standards;

③Execute analysis procedures to determine the rationality of changes in sales revenue and gross profit margin;

④ Carry out detailed testing. For domestic sales revenue, sample sales contracts, orders, sales invoices, warehouse outgoing orders, etc.; for export sales, obtain customs information and check it with book records, and sample sales contracts, export customs declaration documents and other supporting documents;

⑤ Combined with the accounts receivable confirmation procedure, conduct confirmation of sales status of important customers;

⑥ Perform cut-off testing on sales revenue recognized before and after the balance sheet date to evaluate whether sales revenue is included in the appropriate period;

⑦ Check whether the information related to operating income has been appropriately presented in the financial statements.

(2) Consolidation of projects under construction:

Description of the matter

Audit response

The audit procedures we perform for the confirmation of projects under construction mainly include:

① Understand and evaluate the effectiveness of internal control design related to projects under construction, and test the effectiveness of key control execution;

② Understand the intention of purchasing and holding assets with the management, and analyze the commercial reasons and rationality of the transaction; ③ Obtain the ownership certificate of the project under construction and check the integrity of the asset ownership;

④ Check the site of the project under construction on-site to understand the status and progress of the project under construction, and determine whether it meets the conditions for carrying forward fixed assets and the completeness of the accounting for the project under construction;

⑤ Obtain company-related meeting resolutions, evaluation reports, procurement contracts, payment documents, purchase invoices and other information for new projects under construction, and check whether they have been authorized for approval and whether the amount recorded for projects under construction is correct;

⑥ Check whether the project under construction has been properly presented and disclosed in the financial statements in accordance with the provisions of the Accounting Standards for Business Enterprises.

4. Other information

The management of Zhongrui Pharmaceutical (hereinafter referred to as the management) is responsible for other information. Other information includes information covered in Sino-Swiss Pharmaceuticals' 2025 annual report, but does not include the financial statements and our auditor's report.

Our audit opinion on the financial statements does not cover other information, nor do we express any form of assurance conclusion on other information.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the audit or otherwise appears to be materially misstated.

If we determine, based on the work we have performed, that other information is materially misstated, we should report that fact. We have nothing to report in this regard.

5. Responsibility of management and those charged with governance for financial statements

The management is responsible for preparing financial statements in accordance with the provisions of the Accounting Standards for Business Enterprises to achieve fair reflection, and to design, implement and maintain necessary internal controls so that the financial statements are free of material misstatements due to fraud or errors.

When preparing financial statements, management is responsible for assessing Zhongrui Pharmaceutical's ability to continue as a going concern, disclosing matters related to continuing operations (if applicable), and applying the going concern assumption, unless management plans to liquidate Zhongrui Pharmaceutical, terminate operations or has no other realistic option.

Those charged with governance are responsible for overseeing Sino-Swiss Pharmaceuticals' financial reporting process.

6. Responsibility of certified public accountants for auditing financial statements

Our goal is to obtain reasonable assurance as to whether the financial statements as a whole are free of material misstatements due to fraud or error, and to issue an audit report containing an audit opinion. Reasonable assurance is a high level of assurance, but it does not guarantee that an audit performed in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements may result from fraud or error and are generally considered material if they are reasonably expected, individually or in the aggregate, to affect the economic decisions made by users of financial statements based on the financial statements.

In the process of performing audits in accordance with the auditing standards, we exercised professional judgment and maintained professional skepticism. At the same time, we also perform the following tasks:

(1) Identify and assess the risks of material misstatement of financial statements due to fraud or errors, design and implement audit procedures to respond to these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. Because fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls, the risk of failing to detect a material misstatement resulting from fraud is higher than the risk of failing to detect a material misstatement resulting from error.

(2) Understand the internal controls related to auditing in order to design appropriate audit procedures, but the purpose is not to express an opinion on the effectiveness of internal controls.

(3) Evaluate the appropriateness of the accounting policies adopted by management and the reasonableness of accounting estimates and related disclosures.

(4) Draw conclusions on the appropriateness of management’s use of the going concern assumption. At the same time, based on the audit evidence obtained, a conclusion is drawn as to whether there are significant uncertainties in matters or conditions that may cause significant doubts about Sino-Swiss Pharmaceuticals' ability to continue as a going concern. If we conclude that significant uncertainty exists, auditing standards require us to draw the attention of users to the relevant disclosures in the financial statements in our audit report; if the disclosures are insufficient, we should issue a qualified opinion. Our conclusions are based on information available as of the date of the auditor's report. However, future events or conditions may cause Sino-Swiss Pharmaceuticals to cease to continue as a going concern.

(5) Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.

(6) Obtain sufficient and appropriate audit evidence regarding the financial information of Sino-Swiss Pharmaceuticals entities or business activities to express an opinion on the financial statements. We are responsible for directing, supervising and performing group audits. We bear full responsibility for our audit opinions.

We communicate with those charged with governance on matters such as the planned audit scope, timing and significant audit findings, including

We identify internal control deficiencies of concern that we identified during our audit.

Zhongxinghua Certified Public Accountants (Special General Partnership) Chinese Certified Public Accountant: Yuan Chunran

(Project Partner)

Beijing, China Chinese Certified Public Accountant: Li Xianhui

April 21, 2026

2. Financial statements

(1) Consolidated balance sheet

Unit: Yuan

Item Notes December 31, 2025 Current assets as of December 31, 2024:

Monetary funds 5. 1 50,369,995.73 87,460,486.76 Settlement reserve fund

Loan funds

trading financial assets

Derivative financial assets

Notes receivable V. 2 3,827,924.76 2,982,771.78 Accounts receivable V. 3 5,512,360.76 6,868,651.13 Accounts receivable financing

Prepayments V. 4 8,570,838.49 6,063,337.94 Premiums receivable

Reinsurance accounts receivable

Receivable reinsurance contract reserves

Other receivables 5. 5 921,569.70 1,510,989.50 Including: interest receivable

Dividends receivable

Buy financial assets under resale agreements

Inventory 5.6 32,012,875.14 23,612,195.76 Including: data resources

contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 5.7 5,598,341.61 3,282,212.16

Total current assets 106,813,906.19 131,780,645.03 Non-current assets:

Granting loans and advances

debt investment

Other debt investments

long-term receivables

long term equity investment

Other equity instrument investments

Other non-current financial assets

investment real estate

Fixed assets V. 8 123,332,624.84 163,864,004.96 Construction in progress V. 9 72,304,643.99 33,051,304.25 Productive biological assets

oil and gas assets

Right-of-use assets V. 10 3,115,589.93 1,686,573.69 Intangible assets V. 11 8,494,704.39 8,969,227.94 Including: data resources

development expenditure

Among them: data resources

Goodwill V. 12 1,000.00 1,000.00 Long-term deferred expenses V. 13 336,276.21 535,052.62 Deferred income tax assets V. 14 659,534.30 429,339.59 Other non-current assets V. 15 4,573,868.16 2,287,453.00 Total non-current assets 212,818,241.82 210,823,956.05

Total assets 319,632,148.01 342,604,601.08 Current liabilities:

Short-term borrowings 5. 17 69,500,000.00 49,000,000.00 Borrowing from the Central Bank

borrowing funds

Trading financial liabilities

Derivative financial liabilities

Notes payable

Accounts payable 5. 18 11,224,868.10 16,694,545.93 Advance receipts

Contract liabilities V. 19 2,570,807.50 943,928.69 Financial assets sold and repurchased

Taking deposits and placing deposits with other banks

Agent for buying and selling securities

Agent underwriting securities funds

Employee benefits payable V. 20 1,150,375.27 1,054,045.69 Taxes payable V. 21 72,094.63 989,475.20 Other payables V. 22 15,347,420.50 37,149,255.52 Including: interest payable

Dividends payable

Handling fees and commissions payable

Reinsurance accounts payable

Liabilities held for sale

Non-current liabilities due within one year V. 23 10,600,000.00 Other current liabilities V. 24 2,558,291.14 2,771,202.49

Total current liabilities 102,423,857.14 119,202,453.52 Non-current liabilities:

insurance contract reserves

Long-term borrowings 5. 25 9,700,000.00 9,900,000.00 Bonds payable

Among them: preferred shares

perpetual bond

Lease liabilities V. 26 3,289,042.34 1,824,197.95 Long-term payables

Long-term employee benefits payable

Estimated liabilities V. 27 640,132.46 531,375.00 Deferred income V. 28 505,641.88 550,587.76 Deferred income tax liabilities V. 14 541,126.10 337,314.74 Other non-current liabilities

Total non-current liabilities 14,675,942.78 13,143,475.45

Total liabilities 117,099,799.92 132,345,928.97 Owners’ equity (or shareholders’ equity):

Equity V. 29 37,817,967.00 37,817,967.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve V. 30 60,559,442.22 60,559,442.22 Less: treasury shares

other comprehensive income

Special reserves V. 31 1,362,813.18 262,464.22 Surplus reserve V. 32 22,901,826.73 21,589,825.96 General risk reserve

Undistributed profits 5. 33 53,457,341.06 56,937,017.91 Total equity attributable to owners of the parent company (or shareholders’ equity) 176,099,390.19 177,166,717.31

Minority shareholders’ equity 26,432,957.90 33,091,954.80 Total owners’ equity (or shareholders’ equity) 202,532,348.09 210,258,672.11 Liabilities and owners’ equity (or shareholders’ equity) 319,632,148.01 342,604,601.08

profit) total

Legal representative: Wang Honggang Person in charge of accounting work: Qu Xiujie Person in charge of accounting department: Qu Xiujie

(2) Balance sheet of the parent company

Unit: Yuan

Item Notes December 31, 2025 Current assets as of December 31, 2024:

Monetary funds 43,473,027.25 77,849,447.43 Trading financial assets

Derivative financial assets

Notes receivable 2,817,285.86 202,010.57 Accounts receivable 13.1 2,984,343.71 4,954,410.13 Accounts receivable financing

Prepayments 246,350.00 1,338,535.60 Other receivables 13.2 105,521,918.18 72,492,566.66 Including: interest receivable

Dividends receivable

Buy financial assets under resale agreements

Inventory 17,371,345.79 13,361,829.78 Including: data resources

contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 909,368.10

Total current assets 173,323,638.89 170,198,800.17 Non-current assets:

debt investment

Other debt investments

long-term receivables

Long-term equity investment 13.3 119,369,532.22 119,369,532.22 Other equity instrument investments

Other non-current financial assets

investment real estate

Fixed assets 6,418,295.93 7,682,217.72 Construction in progress

productive biological assets

oil and gas assets

Right-of-use assets 1,639,837.95

Intangible assets 1,558,200.00 1,795,261.67 Including: data resources

development expenditure

Among them: data resources

goodwill

Long-term deferred expenses 248,840.05 535,052.62 Deferred income tax assets 314,685.51 64,500.00 Other non-current assets

Total non-current assets 129,549,391.66 129,446,564.23

Total assets 302,873,030.55 299,645,364.40 Current liabilities:

Short-term borrowings 51,500,000.00 34,000,000.00 Trading financial liabilities

Derivative financial liabilities

Notes payable

Accounts payable 3,799,514.60 6,151,629.66 Advance payments

Financial assets sold and repurchased

Employee benefits payable 546,817.55 435,421.40 Taxes payable 49,255.46 916,253.42 Other payables 24,042.50 22,741,945.99 Including: interest payable

Dividends payable

Contract liabilities 2,402,665.91 724,902.14 Liabilities held for sale

Non-current liabilities due within one year 7,600,000.00 Other current liabilities 1,720,293.83 273,487.28

Total current liabilities 60,042,589.85 72,843,639.89 Non-current liabilities:

Long-term borrowings 9,700,000.00 9,900,000.00 Bonds payable

Among them: preferred shares

perpetual bond

Lease liabilities 1,667,903.38

long-term payables

Long-term employee benefits payable

Estimated liabilities

deferred income

Deferred income tax liabilities 245,975.70

Other non-current liabilities

Total non-current liabilities 11,613,879.08 9,900,000.00

Total liabilities 71,656,468.93 82,743,639.89 Owners’ equity (or shareholders’ equity):

Share capital 37,817,967.00 37,817,967.00 Other equity instruments

Among them: preferred shares

perpetual bond

Capital reserve 60,150,327.32 60,150,327.32 less: treasury shares

other comprehensive income

Special reserves 1,194,829.37

Surplus reserve 22,901,826.73 21,589,825.96 General risk reserve

Undistributed profits 109,151,611.20 97,343,604.23 Total owners’ equity (or shareholders’ equity) 231,216,561.62 216,901,724.51 Liabilities and owners’ equity (or shareholders’ equity) 302,873,030.55 299,645,364.40

profit) total

(3) Consolidated income statement

Unit: Yuan

Project Notes 2025 2024

Total operating income 5. 34 84,637,836.95 115,285,814.97 Including: operating income 5. 34 84,637,836.95 115,285,814.97 Interest income

Premiums earned

Fee and commission income

Total operating costs 90,125,946.16 106,088,770.53 Including: operating costs 5. 34 64,049,376.44 78,934,223.86 Interest expenses

Handling fees and commission expenses

surrender deposit

Net compensation expenses

Net withdrawal of insurance liability reserves

policy dividend payout

Reinsurance cost

Taxes and surcharges V. 35 1,587,818.83 1,749,541.18 Sales expenses V. 36 3,729,513.11 3,088,130.69 Administrative expenses V. 37 11,570,450.97 10,866,700.39 R&D expenses V. 38 6,922,883.12 10,082,547.99 Financial expenses 5. 39 2,265,903.69 1,367,626.42 Including: interest expenses 5. 39 2,338,942.92 2,178,434.60

Interest income 5. 39 123,190.39 729,623.58 Plus: other income 5. 40 585,556.50 328,032.02 Investment income (losses are listed with "-") 5. 41 100,182.59 270,023.18

Including: income from investments in associates and joint ventures

Profit (losses are listed with "-")

Termination of financial assets measured at amortized cost

Recognize income (losses are listed with "-")

Exchange gains (losses are listed with "-")

Net exposure hedging income (losses are listed with a “-” sign)

Gains from changes in fair value (losses are listed with a “-” sign)

Credit impairment losses (losses are listed with "-") 5. 42 -1,022,339.50 -64,118.00

Asset impairment losses (losses are listed with "-")

Asset disposal income (losses are listed with "-") 5. 43 -1,269,546.06

Operating profit (losses are listed with "-") -7,094,255.68 9,730,981.64 plus: non-operating income 5. 44 34,718.97 295,842.54 minus: non-operating expenses 5. 45 269,579.17 76,201.03
Total profits (total losses are listed with "-") -7,329,115.88 9,950,623.15 Less: income tax expenses 5. 46 1,497,557.10 4,200,390.89
Net profit (net loss is listed with "-") -8,826,672.98 5,750,232.26 Among them: the net profit realized by the merged party before the merger

(1) Classification by business continuity: - - -

Net profit from continuing operations (net loss is listed with "-") -8,826,672.98 5,750,232.26
Net profit from discontinued operations (net loss is listed with "-")

(2) Classification by ownership: - - -

Profit and loss of minority shareholders (net loss is listed with "-") -6,658,996.90 -5,279,337.53
Net profit attributable to owners of the parent company (net loss -2,167,676.08 11,029,569.79 is listed with a "-")

6. Net amount of other comprehensive income after tax

(1) Other comprehensive income attributable to owners of the parent company

net of tax

Other comprehensive income that cannot be reclassified into profit or loss

(1) Remeasurement of changes in defined benefit plan

(2) Other comprehensive income that cannot be transferred to profit or loss under the equity method

(3) Changes in fair value of other equity instrument investments

(4) Changes in the fair value of the company’s own credit risk

(5) Others

Other comprehensive income that will be reclassified into profit and loss

(1) Other comprehensive income that can be converted to profit or loss under the equity method

(2) Changes in fair value of other debt investments

(3) Financial assets are reclassified and included in other comprehensive income

Amount

(4) Credit impairment provisions for other debt investments

(5) Cash flow hedging reserve

(6) Translation differences of foreign currency financial statements

(7) Others

(2) Taxes on other comprehensive income attributable to minority shareholders

Net amount after

Total comprehensive income -8,826,672.98 5,750,232.26

(1) Total comprehensive income attributable to owners of the parent company -2,167,676.08 11,029,569.79

(2) Total comprehensive income attributable to minority shareholders -6,658,996.90 -5,279,337.53

8. Earnings per share:

(1) Basic earnings per share (yuan/share) -0.06 0.29

(2) Diluted earnings per share (yuan/share) -0.06 0.29 Legal representative: Wang Honggang Person in charge of accounting work: Qu Xiujie Person in charge of the accounting department: Qu Xiujie

(4) Income statement of the parent company

Unit: Yuan

Project Notes 2025 2024

Operating income 13. 4 77,056,227.08 107,496,583.87 Less: operating costs 13. 4 50,037,272.22 67,943,472.80 Taxes and surcharges 539,105.19 703,068.03 Sales expenses 2,024,064.51 2,018,460.62 Administrative expenses 4,128,295.43 4,647,151.48 Research and development expenses 3,466,172.54 5,061,023.53

Financial expenses 1,664,003.56 724,135.86 Including: interest expenses 1,693,417.22 1,428,164.00

Interest income 76,386.85 619,105.07 plus: other income 850.63 251,895.40 Investment income (losses are listed with "-") 13.5 44,272.13 153,915.86

Including: income from investments in associates and joint ventures

Profit (losses are listed with "-")

Termination of financial assets measured at amortized cost

Recognize income (losses are listed with "-")

Exchange gains (losses are listed with "-")

Net exposure hedging income (losses are listed with a “-” sign)

Gains from changes in fair value (losses are listed with a “-” sign)

Credit impairment losses (losses are listed with a “-” sign) 525.00 Asset impairment losses (losses are listed with a “-” sign)

Asset disposal income (losses are listed with "-") -417,684.51

Operating profit (losses are listed with "-") 14,824,751.88 26,805,607.81 Plus: non-operating income 22,910.93 26,250.11 Less: non-operating expenses 181,197.74
Total profits (total losses are listed with "-") 14,666,465.07 26,831,857.92 Less: income tax expenses 1,546,457.33 4,146,806.95
Net profit (net loss is listed with "-") 13,120,007.74 22,685,050.97

(1) Net profit from continuing operations (net losses are filled in with "-" in columns 13,120,007.74 22,685,050.97)

(2) Net profit from discontinued operations (net loss is filled in with "-"

column)

5. Net amount of other comprehensive income after tax

(1) Other comprehensive income that cannot be reclassified into profit or loss

Remeasure the changes in defined benefit plan
Other comprehensive income that cannot be transferred to profit or loss under the equity method
Changes in fair value of other equity instrument investments
Changes in the fair value of the company’s own credit risk

5.Others

(2) Other comprehensive income that will be reclassified into profit and loss 1. Other comprehensive income that can be converted into profit and loss under the equity method 2. Changes in the fair value of other debt investments

Amount of financial assets reclassified into other comprehensive income 4. Credit impairment provisions for other debt investments
Cash flow hedging reserve
Translation differences of foreign currency financial statements

7.Others

Total comprehensive income 13,120,007.74 22,685,050.97

7. Earnings per share:

(1) Basic earnings per share (yuan/share)

(2) Diluted earnings per share (yuan/share)

(5) Consolidated cash flow statement

Unit: Yuan

Project Notes 2025 2024

1. Cash flow generated from operating activities:

Cash received from sales of goods and provision of services 97,563,924.15 106,876,620.07 Net increase in customer deposits and inter-bank deposits

Net increase in borrowing from the central bank

Net increase in borrowing funds from other financial institutions

Cash received from premiums from the original insurance contract

Net cash received from reinsurance business

Net increase in policyholders’ savings and investment funds

Cash collected from interest, fees and commissions

Net increase in borrowing funds

Net increase in repurchase business funds

Net cash received from buying and selling securities on behalf of agents

Tax refunds received 150,785.87 552,310.03 Other cash received related to operating activities V. 47 75,884,662.60 56,409,225.16

Subtotal of cash inflows from operating activities 173,599,372.62 163,838,155.26 Cash paid for purchasing goods and receiving services 72,435,669.77 54,066,619.40 Net increase in customer loans and advances

Net increase in deposits with central banks and inter-banks

Cash used to pay compensation from the original insurance contract

Net increase in financial assets held for trading purposes Net increase in placement funds

Cash payments for interest, fees and commissions

Cash payment for policy dividends

Cash paid to and for employees 15,969,725.55 14,774,722.89 Various taxes and fees paid 7,694,259.08 8,187,630.99 Cash paid to other operating activities 5. 47 85,022,151.13 67,997,656.42 Subtotal of cash outflows from operating activities 181,121,805.53 145,026,629.70

Net cash flow from operating activities -7,522,432.91 18,811,525.56

2. Cash flow generated from investing activities:

Cash received from recovery of investment 5,600,000.00 Cash received from investment income 100,182.59 270,023.18 Cash received from disposal of fixed assets, intangible assets and other long-term assets 153,004.64

Net cash returned

Net cash received from disposal of subsidiaries and other business units

Other cash received related to investing activities 1,149,371.07 1,008,050.63

Subtotal of cash inflows from investing activities 1,402,558.30 6,878,073.81 Cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets 14,285,423.54 15,960,724.36

Cash paid for investments

Net increase in mortgage loans

Net cash received from subsidiaries and other business units

Other cash payments related to investing activities

Subtotal of cash outflows from investing activities 14,285,423.54 15,960,724.36

Net cash flow generated from investing activities -12,882,865.24 -9,082,650.55

3. Cash flow generated from financing activities:

Absorbing cash received from investments

Including: cash received by subsidiaries from investment by minority shareholders

Cash received from borrowing 69,500,000.00 79,000,000.00 Cash received from issuing bonds

Other cash received related to financing activities 6,552,913.33

Subtotal of cash inflows from financing activities 69,500,000.00 85,552,913.33 Cash paid to repay debts 59,800,000.00 55,300,000.00 Cash paid to distribute dividends, profits or pay interest 24,930,612.63 2,401,768.51 including: dividends and profits paid by subsidiaries to minority shareholders

Other cash payments related to financing activities 1,549,342.10 283,825.00 Subtotal of cash outflows from financing activities 86,279,954.73 57,985,593.51

Net cash flow generated from financing activities -16,779,954.73 27,567,319.82

Impact of exchange rate changes on cash and cash equivalents -14,601.83 176,149.62
Net increase in cash and cash equivalents -37,199,854.71 37,472,344.45 Plus: opening balance of cash and cash equivalents 87,083,259.44 49,610,914.99
Balance of cash and cash equivalents at the end of the period 49,883,404.73 87,083,259.44 Legal representative: Wang Honggang Person in charge of accounting work: Qu Xiujie Person in charge of the accounting department: Qu Xiujie

(6) Cash flow statement of the parent company

Unit: Yuan

Project Notes 2025 2024

1. Cash flow generated from operating activities:

Cash received from selling goods and providing services 87,403,093.20 123,521,103.89 Tax refunds received 148,253.85 552,310.03 Cash received from other operating activities 75,105,099.14 55,901,305.91

Subtotal of cash inflows from operating activities 162,656,446.19 179,974,719.83 Cash paid for purchasing goods and receiving services 56,865,956.80 72,505,235.73 Cash paid to and for employees 7,668,479.54 6,769,307.54 Various taxes and fees paid 6,498,578.42 7,006,832.86 Other cash payments related to operating activities 112,014,412.52 60,726,240.65 Subtotal of cash outflows from operating activities 183,047,427.28 147,007,616.78

Net cash flow from operating activities -20,390,981.09 32,967,103.05

2. Cash flow generated from investing activities:

Cash received from recovery of investment 25,010,000.00 Cash received from investment income 44,272.13 153,915.86 Cash received from disposal of fixed assets, intangible assets and other long-term assets 101,004.64

Net cash returned

Net cash received from disposal of subsidiaries and other business units

Other cash received related to investing activities 1,149,371.07 1,231,656.18

Subtotal of cash inflows from investing activities 1,294,647.84 26,395,572.04 Cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets 307,575.24 2,059,710.75

Cash paid for investment 22,010,000.00 Net cash paid to acquire subsidiaries and other business units

Cash payments related to other investing activities 18,567,486.66 Subtotal of cash outflows from investing activities 307,575.24 42,637,197.41

Net cash flow generated from investing activities 987,072.60 -16,241,625.37

3. Cash flow generated from financing activities:

Absorbing cash received from investments

Cash received from borrowing 51,500,000.00 44,000,000.00 Cash received from issuing bonds

Other cash received related to financing activities

Subtotal of cash inflows from financing activities 51,500,000.00 44,000,000.00 Cash paid to repay debts 41,800,000.00 30,300,000.00 Cash paid to distribute dividends, profits or pay interest 24,344,784.88 1,401,040.71 Cash paid to other financing activities 311,926.60

Subtotal of cash outflows from financing activities 66,456,711.48 31,701,040.71

Net cash flow generated from financing activities -14,956,711.48 12,298,959.29

Impact of exchange rate changes on cash and cash equivalents -14,600.21 176,149.62
Net increase in cash and cash equivalents -34,375,220.18 29,200,586.59 Plus: opening balance of cash and cash equivalents 77,848,247.43 48,647,660.84
Closing balance of cash and cash equivalents 43,473,027.25 77,848,247.43

(7) Consolidated statement of changes in shareholders’ equity

Unit: Yuan 2025

Owner's equity attributable to parent company

Other equity workers Part 1

Like him

Items Less: Owner's equity and capital Comprehensive special surplus Risk Minority shareholders' equity equity Preferred inventory Undistributed profits Total reserves and insurance

Continue shares first

He received it accurately

stocks bonds

Be prepared

Closing balance of the previous year 37,817,967.00 60,559,442.22 262,464.22 21,589,825.96 56,937,017.91 33,091,954.80 210,258,672.11Add: Changes in accounting policies

Early error correction

Enterprises under common control

Business merger

Others

Balance at the beginning of the year 37,817,967.00 60,559,442.22 262,464.22 21,589,825.96 56,937,017.91 33,091,954.80 210,258,672.11
Increases and decreases in the current period 1,100,348.96 1,312,000.77 -3,479,676.85 -6,658,996.90 -7,726,324.02 amount (decreases are marked with “-”

(Fill in the number)

(1) Total comprehensive income -2,167,676.08 -6,658,996.90 -8,826,672.98

(2) Owner’s investment

and reduce capital

Common shares invested by shareholders

2． Capital invested by other equity instrument holders

The amount of share-based payment included in owners’ equity 4. Others

(3) Profit distribution 1,312,000.77 -1,312,000.77 1. Withdrawal from surplus reserve 1,312,000.77 -1,312,000.77 2. Withdraw general risk reserve

Distributions to owners (or shareholders)
Others

(4) Internal carryover of owners’ equity

Conversion of capital reserves to capital (or share capital)
Convert surplus reserves to capital (or share capital)
Surplus reserve to make up for losses
Changes in defined benefit plans are carried forward to retained earnings 5. Other comprehensive income is carried forward to retained earnings

6.Others

(5) Special reserves 1,100,348.96 1,100,348.96 1. Withdrawal in this period 2,274,657.93 2,274,657.93 2. Used in this period 1,174,308.97 1,174,308.97

(6) Others

Closing balance of the year 37,817,967.00 60,559,442.22 1,362,813.18 22,901,826.73 53,457,341.06 26,432,957.90 202,532,348.09

2024

Owner's equity attributable to parent company

Other equity workers Part 1

Like him

Items Less: Owner’s equity and capital Comprehensive Special Surplus Risk Minority interests

Share capital, long-term inventory, undistributed profits, including public reserves and reserves, public reserve insurance

Continue shares first

He received it accurately

stocks bonds

Be prepared

Closing balance of the previous year 37,817,967.00 60,559,442.22 19,321,296.11 70,866,758.17 38,371,292.33 226,936,755.83 Add: changes in accounting policies

Early error correction

Enterprises under common control

Business merger

Others

Balance at the beginning of the year 37,817,967.00 60,559,442.22 19,321,296.11 70,866,758.17 38,371,292.33 226,936,755.83
Increases and decreases in the current period 262,464.22 2,268,529.85 - -5,279,337.53 -16,678,083.72 Amount (decrease marked with "-" 13,929,740.26

(Fill in the number)

(1) Total comprehensive income 11,029,569.79 -5,279,337.53 5,750,232.26

(2) Owner’s investment and capital reduction

Common shares invested by shareholders

2． Capital invested by other equity instrument holders

The amount of share-based payment included in owners’ equity 4. Others

2,268,529.85 - -22,690,780.20

(3) Profit distribution

24,959,310.05 1. Withdrawal from surplus reserve 2,268,529.85 -2,268,529.85 2. Withdrawal of general risk allowance - -22,690,780.20 22,690,780.20 3. Distributions to owners (or shareholders)

Others

(4) Internal carryover of owners’ equity

Capital reserve is converted into capital (or share capital) 2. Surplus reserve is converted into capital (or share capital) 3. Surplus reserve is used to make up for losses
Set up a benefit plan

Variable amount carried forward and retained

benefit

Other comprehensive income

Carry forward retained earnings

6.Others

(5) Special reserves 262,464.22 262,464.22 1. Withdrawal in this period 1,302,523.46 1,302,523.46 2. Used in this period 1,040,059.24 1,040,059.24

(6) Others

Closing balance of the year 37,817,967.00 60,559,442.22 262,464.22 21,589,825.96 56,937,017.91 33,091,954.80 210,258,672.11 Legal representative: Wang Honggang Person in charge of accounting work: Qu Xiujie Person in charge of accounting department: Qu Xiujie

(8) Statement of changes in shareholders’ equity of the parent company

Unit: Yuan 2025

Other equity instruments

Less: Others General

Item Youyong Owner’s Equity Combined Capital Other Capital Reserve Inventory Comprehensive Special Reserve Surplus Reserve Risk Undistributed Profit

Continue to prepare for other stock income calculations first

stocks bonds

Closing balance of the previous year 37,817,967.00 60,150,327.32 21,589,825.96 97,343,604.23 216,901,724.51 Add: changes in accounting policies

Early error correction

Others

Balance at the beginning of the year 37,817,967.00 60,150,327.32 21,589,825.96 97,343,604.23 216,901,724.51
Increases and decreases in the current period 1,194,829.37 1,312,000.77 11,808,006.97 14,314,837.11 (decreases are filled in with "-"

column)

(1) Total comprehensive income 13,120,007.74 13,120,007.74

(2) Owner’s investment and capital reduction

Common shares invested by shareholders 2. Capital invested by other equity instrument holders
The amount of share-based payment included in owners’ equity
Others

(3) Profit distribution 1,312,000.77 -1,312,000.77 1. Withdrawal from surplus reserve 1,312,000.77 -1,312,000.77 2. Extract general risk reserves 3. Distributions to owners (or shareholders)

Others

(4) Internal carryover of owners’ equity

Conversion of capital reserves to capital (or share capital)
Convert surplus reserves to capital (or share capital)
Surplus reserve to make up for losses
Change amount of defined benefit plan

Carry forward retained earnings

Other comprehensive income carried forward and retained

savings income

6.Others

(5) Special reserves 1,194,829.37 1,194,829.37 1. Withdrawal in this period 1,258,115.61 1,258,115.61 2. Used in this period 63,286.24 63,286.24

(6) Others

Closing balance of the year 37,817,967.00 60,150,327.32 1,194,829.37 22,901,826.73 109,151,611.20 231,216,561.62

2024

Other equity instruments

Items Less: Treasury Other Comprehensive Special Reserves General Risk Owners’ Equity and Share Capital Priority Perpetual Capital Reserves Surplus Reserves Undistributed Profits

Other combined income from stock deposits, insurance reserves, calculation

stocks bonds

Closing balance of the previous year 37,817,967.00 60,150,327.32 19,321,296.11 99,617,863.31 216,907,453.74 Add: changes in accounting policies

Early error correction

Others

Balance at the beginning of the year 37,817,967.00 60,150,327.32 19,321,296.11 99,617,863.31 216,907,453.74
Amount of increase or decrease in the current period 2,268,529.85 -2,274,259.08 -5,729.23 (decreases are indicated with "-")

(1) Total comprehensive income 22,685,050.97 22,685,050.97

(2) Owner’s investment and capital reduction

Common shares invested by shareholders

2． Capital invested by other equity instrument holders

The amount of share-based payment included in owners’ equity
Others

2,268,529.85 - -22,690,780.20

(3) Profit distribution

24,959,310.05 1. Withdrawal from surplus reserve 2,268,529.85 -2,268,529.85 2. Withdraw general risk reserve

Distribution to owners (or shareholders) - -22,690,780.20 22,690,780.20 4. Others

(4) Internal carryover of owners’ equity

Conversion of capital reserves to capital (or share capital)
Convert surplus reserves to capital (or share capital)
Surplus reserve to make up for losses
Changes in defined benefit plans are carried forward to retained earnings
Other comprehensive income carried forward to retained earnings

6.Others

(5) Special reserves 1. Extract this issue 2. Used in this issue

(6) Others

Closing balance of the year 37,817,967.00 60,150,327.32 21,589,825.96 97,343,604.23 216,901,724.51

Tianjin Zhongrui Pharmaceutical Co., Ltd.

Notes to the 2025 Annual Financial Statements

(Unless otherwise stated, the unit of amount is RMB)

1. Basic situation of the company

Company registration place, organizational form and headquarters address

Tianjin Zhongrui Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company" or the "Company") was registered with the Wuqing Branch of the Tianjin Administration for Industry and Commerce on March 4, 2004. The unified social credit code is 91120000758130319M. The company's registered address is on the east side of Beihuan Road, Chengguan Town, Wuqing District, Tianjin. The registered capital is 37,817,967 yuan. The legal representative is Wang Honggang.

The company’s business nature and main operating activities

The company belongs to the pharmaceutical manufacturing industry, and its business scope mainly includes: raw materials (nicotinic acid, nicotinamide, inositol nicotinate, terazosin hydrochloride, fasudil hydrochloride, flupentixol dihydrochloride, melitracen hydrochloride, clopidogrel hydrogen sulfate, tamsulosin hydrochloride , strontium ranelate, cisatracurium besylate, amifostine, levetiracetam, pramipexole hydrochloride, tenofovir disoproxil fumarate, lercanidipine hydrochloride, dopamine hydrochloride, febuxostat), pharmaceutical excipients (glycerin, ethanol); food additives Additives: production of nicotinic acid and nicotinamide; feed additives: production of nicotinic acid and nicotinamide; cosmetics production; medical packaging material manufacturing; technical services, technology development, technical consultation, technology exchange, technology transfer, technology promotion; import and export of goods; production of chemical products (excluding licensed chemical products); sales of chemical products (excluding licensed chemical products) (except for projects prohibited by national laws and regulations and projects subject to approval according to law, business activities can only be carried out after approval by relevant departments). The company's main business segment is the manufacturing of APIs and pharmaceutical excipients. The main products include: APIs, pharmaceutical excipients, etc., which are mainly used in the sales of APIs and pharmaceutical excipients.

Approval and issuance of financial reports

This financial statement has been approved for issuance by the company's board of directors on April 21, 2026.

2. Basis for preparation of financial statements

Basics of preparation

The Company's financial statements are based on the going concern assumption, based on actual transactions and events, and in accordance with the "Accounting Standards for Business Enterprises - Basic Standards" issued by the Ministry of Finance and various specific accounting standards, application guidelines for Accounting Standards for Business Enterprises, interpretations of Accounting Standards for Business Enterprises and other relevant regulations (hereinafter collectively referred to as "Accounting Standards for Business Enterprises").

In accordance with the relevant provisions of the Accounting Standards for Business Enterprises, the Company's accounting is based on the accrual basis. Except for certain financial instruments, these financial statements are measured on the basis of historical cost. If an asset is impaired, corresponding impairment provisions will be made in accordance with relevant regulations.

Continued operations

The financial statements are presented on a going concern basis. The company has the ability to continue operating for at least 12 months from the end of the reporting period.

3. Important accounting policies and accounting estimates

The company and its subsidiaries are engaged in the production and operation of APIs. Based on the actual production and operation characteristics and the provisions of relevant accounting standards for enterprises, the company and its subsidiaries have formulated a number of specific accounting policies and accounting estimates for various transactions and events. Please see the following descriptions for details.

Statement on compliance with corporate accounting standards

The financial statements prepared by the Company comply with the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect the Company’s consolidated and parent company’s financial status as of December 31, 2025, as well as the consolidated and parent company’s operating results, consolidated and parent company’s cash flows and other relevant information in 2025.

Accounting period

The company's accounting period is divided into annual and interim periods. Accounting interim period refers to the reporting period shorter than a complete accounting year. The company's fiscal year adopts the Gregorian calendar year, that is, from January 1 to December 31 each year.

Business cycle

The company uses 12 months as an operating cycle and uses it as the liquidity classification standard for assets and liabilities.

Accounting standard currency

RMB is the currency of the main economic environment in which the Company and its domestic subsidiaries operate. The Company and its domestic subsidiaries use RMB as the functional currency for accounting. The currency used by the Company in preparing these financial statements is RMB.

Accounting treatment methods for business combinations under the same control and those not under the same control

Business merger refers to a transaction or event that combines two or more separate enterprises to form a reporting entity. Business mergers are divided into business combinations under the same control and business combinations not under the same control.

(1) Business merger under common control

The enterprises participating in the merger are ultimately controlled by the same party or the same parties before and after the merger, and the control is not temporary. It is a business merger under the same control. In the case of a business merger under the same control, the party that obtains control over other companies participating in the merger on the merger date is the merging party, and the other companies participating in the merger are the merged parties. The merger date refers to the date when the merging party actually obtains control over the merged party.

The assets and liabilities acquired by the company in a business merger are measured according to the book value of the merged party's assets and liabilities (including the goodwill formed by the ultimate controlling party's acquisition of the merged party) on the merger date in the ultimate controlling party's consolidated financial statements; the difference between the book value of the net assets acquired and the book value of the merger consideration paid (or the total face value of the shares issued) is adjusted to the equity premium in the capital reserve. If the equity premium in the capital reserve is insufficient to offset, the retained earnings are adjusted.

All direct expenses incurred by the merging party for the business combination shall be included in the current profits and losses when incurred.

(2) Business merger not under common control

If the enterprises participating in the merger are not ultimately controlled by the same party or the same parties before and after the merger, it is a business merger not under the same control. For a business combination not under common control, the party that obtains control over other companies participating in the merger on the acquisition date is the purchaser, and the other companies participating in the merger are the purchased parties. The purchase date refers to the date when the purchaser actually obtains control over the purchased party.

For business combinations not under common control, the cost of the combination includes the assets paid by the purchaser on the acquisition date to obtain control of the purchased party, liabilities incurred or assumed, and the fair value of equity securities issued. Intermediary fees such as auditing, legal services, evaluation consulting, and other management fees incurred for the business combination are included in the current profits and losses when incurred. The transaction costs of equity securities or debt securities issued by the purchaser as consideration for the merger are included in the initial recognition amount of the equity securities or debt securities. The contingent consideration involved is included in the merger cost according to its fair value on the purchase date. If new or further evidence of the existing conditions on the purchase date arises within 12 months after the purchase date and the contingent consideration needs to be adjusted, the combined goodwill will be adjusted accordingly. The merger costs incurred by the purchaser and the identifiable net assets obtained in the merger are measured at the fair value on the acquisition date. The difference between the merger cost and the fair value of the acquiree's identifiable net assets on the acquisition date is recognized as goodwill. If the merger cost is less than the fair value share of the acquiree's identifiable net assets obtained in the merger, the fair value of the acquiree's identifiable assets, liabilities and contingent liabilities acquired and the measurement of the merger costs are first reviewed. After the review, if the merger cost is still less than the fair value share of the acquiree's identifiable net assets obtained in the merger, the difference shall be included in the current profit and loss.

If the deductible temporary difference obtained by the purchaser from the purchased party is not recognized on the purchase date because it does not meet the conditions for recognition of deferred income tax assets, it will be deducted 12 days after the purchase date. Within a month, if new or further information is obtained indicating that the relevant circumstances on the purchase date already exist, and it is expected that the economic benefits brought by the deductible temporary differences of the purchased party on the purchase date can be realized, the relevant deferred income tax assets will be recognized, and the goodwill will be reduced at the same time. If the goodwill is insufficient to be offset, the difference will be recognized as the current profit and loss; except for the above circumstances, if the deferred income tax assets related to the business combination are recognized, they will be included in the current profit and loss.

If the merger of enterprises not under the same control realized in stages through multiple transactions is a "package transaction", the accounting treatment shall be carried out with reference to the descriptions in the previous paragraphs of this part and Note 3.13 "Long-term Equity Investment"; if it is not a "package transaction", the relevant accounting treatment shall be carried out by distinguishing individual financial statements and consolidated financial statements:

In individual financial statements, the sum of the book value of the equity investment in the purchased party held before the purchase date and the new investment cost on the purchase date is regarded as the initial investment cost of the investment; if the equity investment in the purchased party held before the purchase date involves other comprehensive income, it will be related to it when disposing of the investment. Other comprehensive income is accounted for on the same basis as the acquiree's direct disposal of relevant assets or liabilities (that is, except for the corresponding share of the change caused by the acquiree's remeasurement of the net liabilities or net assets of the defined benefit plan calculated according to the equity method, the rest is transferred to the investment income of the current period).

In the consolidated financial statements, the equity of the purchased party held before the purchase date is remeasured according to the fair value of the equity on the purchase date, and the difference between the fair value and its book value is included in the investment income of the current period; if the equity of the purchased party held before the purchase date involves other comprehensive income, other related Other comprehensive income shall be accounted for on the same basis as the acquiree's direct disposal of relevant assets or liabilities (that is, except for the corresponding share of changes caused by the acquiree's remeasurement of the net liabilities or net assets of the defined benefit plan calculated according to the equity method, the rest shall be converted into investment income for the current period on the purchase date).

Control judgment standards and preparation methods of consolidated financial statements

(1) Judgment criteria for control

The scope of consolidation in consolidated financial statements is determined based on control. Control means that the company has power over the investee, enjoys variable returns by participating in the investee's relevant activities, and has the ability to use its power over the investee to affect the amount of returns. This usually includes an investee in which the parent company owns more than half of the voting rights and a company that holds less than half of the voting rights but has more than half of the voting rights in the invested unit through an agreement with other investors of the invested unit; has the right to decide the financial and operating decisions of the invested unit according to the company's articles of association or agreement; has the right to appoint and remove a majority of the members of the board of directors of the invested unit; and holds a majority of the voting rights in the board of directors of the invested unit.

(2) Method of preparing consolidated financial statements

The Company begins to include the subsidiary in the scope of consolidation from the date it obtains actual control over the net assets and production and operation decisions of the subsidiary; it ceases to be included in the scope of consolidation from the date it loses actual control. For subsidiaries disposed of, the operating results and cash flows before the date of disposal have been appropriately included in the consolidated income statement and consolidated cash flow statement; for subsidiaries disposed of in the current period, the opening balance of the consolidated balance sheet will not be adjusted. For subsidiaries added through business combinations not under common control, their operating results and cash flows after the acquisition date have been appropriately included in the consolidated income statement and consolidated cash flow statement, and the opening numbers and comparative numbers of the consolidated financial statements will not be adjusted. For subsidiaries added through a business combination under common control, their operating results and cash flows from the beginning of the current period to the date of merger have been appropriately included in the consolidated income statement and consolidated cash flow statement, and the comparative figures of the consolidated financial statements have been adjusted at the same time.

When preparing consolidated financial statements, if the accounting policies or accounting periods adopted by a subsidiary and the Company are inconsistent, necessary adjustments will be made to the financial statements of the subsidiary in accordance with the Company's accounting policies and accounting periods. For subsidiaries acquired through business combinations not under common control, their financial statements will be adjusted based on the fair value of the identifiable net assets on the date of acquisition.

All significant intra-company balances, transactions and unrealized profits are eliminated when preparing consolidated financial statements.

The portion of the subsidiary's shareholders' equity and net profit and loss for the current period that is not owned by the company is separately presented as minority shareholders' equity and minority shareholders' profit and loss in the consolidated financial statements under shareholders' equity and net profit. The share of minority shareholders' equity in the current period's net profit and loss of a subsidiary is listed as the "minority shareholders' profit and loss" item under the net profit item in the consolidated income statement. If the losses of a subsidiary shared by minority shareholders exceed the minority shareholders' share of the subsidiary's opening shareholders' equity, the minority shareholders' equity will still be offset.

When the control over the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, the remaining equity is remeasured according to its fair value on the date of loss of control. The difference between the sum of the consideration obtained for disposing of the equity and the fair value of the remaining equity, minus the share of the original subsidiary's net assets calculated continuously from the date of purchase based on the original shareholding ratio, shall be included in the investment income in the period when control is lost. Other comprehensive income related to the equity investment of the original subsidiary will be accounted for on the same basis as the acquiree's direct disposal of relevant assets or liabilities when control is lost (that is, except for the changes caused by the remeasurement of the net liabilities or net assets of the defined benefit plan in the original subsidiary, the rest will be converted into investment income for the current period). Thereafter, the remaining equity will be subsequently measured in accordance with relevant regulations such as "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment" or "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments". For details, see Note 3.13 "Long-term Equity Investment" or Note 3.10 "Financial Instruments".

If the company disposes of its equity investment in a subsidiary step by step through multiple transactions until it loses control, it needs to distinguish whether each transaction in which it disposes its equity investment in the subsidiary until it loses control is a package deal. The terms, conditions and economic impact of various transactions for the disposal of equity investments in subsidiaries meet one or more of the following circumstances, which usually indicate that multiple transactions should be accounted for as a package deal: ① These transactions are entered into at the same time or with consideration of each other's influence; ② Only these transactions as a whole can achieve a complete business result; ③ The occurrence of a transaction depends on the occurrence of at least one other transaction; ④ A transaction is uneconomical when viewed alone, but it is economical when considered together with other transactions. If it does not belong to a package deal, each transaction will be accounted for in accordance with the applicable principles of "partial disposal of long-term equity investment in a subsidiary without losing control" and "loss of control of the original subsidiary due to disposal of part of the equity investment or other reasons" as appropriate. If the various transactions involving the disposal of equity investments in a subsidiary until the loss of control belong to a package transaction, each transaction will be accounted for as a transaction in which the subsidiary is disposed of and control is lost; however, the difference between the price of each disposal and the share of the net assets of the subsidiary corresponding to the disposal investment before the loss of control is recognized as other comprehensive income in the consolidated financial statements, and is transferred to the profit and loss of the current period when control is lost.

Classification of joint arrangements and accounting treatment of joint operations

A joint arrangement refers to an arrangement that is jointly controlled by two or more parties. The Company divides joint arrangements into joint operations and joint ventures based on the rights enjoyed and obligations assumed in the joint arrangements. Joint operation refers to a joint arrangement in which the company enjoys the relevant assets of the arrangement and assumes the relevant liabilities of the arrangement. A joint venture refers to a joint arrangement in which the Company only has rights to the net assets of the arrangement.

The Company's investment in joint ventures is accounted for using the equity method and is handled in accordance with the accounting policies described in Note 3, 13(2)② "Long-term equity investments accounted for using the equity method".

For joint operations, the company, as a joint venturer, recognizes the assets held separately by the company and the liabilities assumed separately, as well as the assets held jointly and the liabilities borne jointly by the company's share; the income generated from the sale of the company's share of the output of the joint operation is recognized; the income generated by the sale of the output of the joint operation is recognized according to the company's share; the expenses incurred by the company alone are recognized, and the expenses incurred by the joint operation are recognized according to the company's share.

When the company invests or sells assets to a joint operation as a joint venture (the assets do not constitute a business, the same below), or purchases assets from the joint operation, before the assets are sold to a third party, the company only recognizes the portion of the profits and losses arising from the transaction that are attributable to other participants in the joint operation. If such assets suffer impairment losses that comply with the provisions of "Accounting Standards for Business Enterprises No. 8 - Asset Impairment" and other provisions, the Company will recognize the loss in full if the Company invests or sells the assets to the joint operation; if the Company purchases assets from the joint operation, the Company will recognize the loss based on its share.

Determination standards for cash and cash equivalents

The Company's cash and cash equivalents include cash on hand, deposits that can be used for payment at any time, and investments held by the Company that are short-term (generally due within three months from the date of purchase), highly liquid, easily convertible into known amounts of cash, and have little risk of value changes.

Foreign currency business and foreign currency statement conversion

(1) Conversion method for foreign currency transactions

When the company's foreign currency transactions are initially recognized, they are converted into the amount in the recording currency according to the spot exchange rate on the transaction date. However, the company's foreign currency exchange business or transactions involving foreign currency exchange are converted into the amount in the recording currency according to the actual exchange rate.

(2) Conversion method for foreign currency monetary items and foreign currency non-monetary items

On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The resulting exchange differences are included in the current profit and loss, except that: ① the exchange differences arising from special foreign currency borrowings related to the acquisition and construction of assets that qualify for capitalization are treated in accordance with the principle of capitalization of borrowing costs; and ② the exchange differences arising from changes in the book balances of foreign currency monetary items available for sale other than amortized costs are included in other comprehensive income, and are included in the current profit and loss.

Foreign currency non-monetary items measured at historical cost are still measured using the amount in the recording currency converted at the spot exchange rate on the date of the transaction. Foreign currency non-monetary items measured at fair value are converted using the spot exchange rate on the date when the fair value is determined. The difference between the converted accounting functional currency amount and the original accounting functional currency amount is treated as a change in fair value (including exchange rate changes), and is included in the current profit and loss or recognized as other comprehensive income.

Financial instruments

A financial asset or financial liability is recognized when the Company becomes a party to a financial instrument contract.

(1) Classification, recognition and measurement of financial assets

Based on the business model of managing financial assets and the contractual cash flow characteristics of financial assets, the company divides financial assets into: financial assets measured at amortized cost; financial assets measured at fair value with changes included in other comprehensive income; financial assets measured at fair value with changes included in current profits and losses.

Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss; for other types of financial assets, the relevant transaction costs are included in the initial recognition amount. For accounts receivable or notes receivable arising from the sale of products or provision of services that do not contain or take into account significant financing components, the amount of consideration that the company is expected to be entitled to receive shall be regarded as the initial recognition amount.

①Financial assets measured at amortized cost

The Company's business model for managing financial assets measured at amortized cost is to collect contractual cash flows as the goal, and the contractual cash flow characteristics of such financial assets are consistent with the basic lending arrangements, that is, the cash flows generated on a specific date are only payments of principal and interest based on the outstanding principal amount. For such financial assets, the Company adopts the actual interest rate method and conducts subsequent measurement at amortized cost. Gains or losses arising from amortization or impairment are included in the current profits and losses. ②Financial assets measured at fair value with changes included in other comprehensive income

The Company's business model for managing such financial assets aims at both collecting contractual cash flows and selling them, and the contractual cash flow characteristics of such financial assets are consistent with the basic lending arrangements. The Company measures such financial assets at fair value and changes in them are included in other comprehensive income, but impairment losses or gains, exchange gains and losses and interest income calculated according to the effective interest method are included in the current profit and loss.

In addition, the Company designates certain investments in non-trading equity instruments as financial assets measured at fair value through other comprehensive income. The company includes the relevant dividend income of this type of financial assets in the current profit and loss, and the changes in fair value are included in other comprehensive income. When the financial asset is derecognised, the accumulated gains or losses previously included in other comprehensive income will be transferred from other comprehensive income to retained earnings and will not be included in the current profit or loss.

③Financial assets measured at fair value and changes included in current profits and losses

The Company classifies financial assets other than the above-mentioned financial assets measured at amortized cost and financial assets measured at fair value through other comprehensive income as financial assets measured at fair value through profit or loss for the current period. In addition, at the time of initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Company designated some financial assets as financial assets measured at fair value and whose changes are included in current profits and losses. For such financial assets, the company uses fair value for subsequent measurement, and changes in fair value are included in the current profit and loss.

(2) Classification, recognition and measurement of financial liabilities

Financial liabilities are classified upon initial recognition into financial liabilities measured at fair value through profit or loss and other financial liabilities. For financial liabilities measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss, and the relevant transaction costs of other financial liabilities are included in their initial recognition amount.

①Financial liabilities measured at fair value and changes included in current profits and losses

Financial liabilities at fair value through profit or loss include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated as fair value through profit or loss upon initial recognition.

Trading financial liabilities (including derivatives belonging to financial liabilities) are subsequently measured at fair value. Except for those related to hedging accounting, changes in fair value are included in current profits and losses.

For a financial liability designated as a financial liability measured at fair value through profit or loss for the current period, changes in the fair value of this liability caused by changes in the company's own credit risk are included in other comprehensive income. When the liability is derecognised, the accumulated changes in its fair value caused by changes in its own credit risk included in other comprehensive income are transferred to retained earnings. The remaining changes in fair value are included in the current profit and loss. If handling the impact of changes in the credit risk of such financial liabilities in the above manner will cause or expand accounting mismatches in profits and losses, the company will include all gains or losses from the financial liabilities (including the amount affected by changes in the company's own credit risk) into the profits and losses of the current period.

②Other financial liabilities

Except for financial liabilities and financial guarantee contracts formed by the transfer of financial assets that do not meet the conditions for termination of recognition or continued involvement in the transferred financial assets, other financial liabilities are classified as financial liabilities measured at amortized cost, and are subsequently measured at amortized cost. Gains or losses arising from termination of recognition or amortization are included in the current profits and losses.

(3) Recognition basis and measurement method of financial asset transfer

Financial assets that meet one of the following conditions shall be derecognized: ① The contractual right to collect cash flows from the financial asset terminates; ② The financial asset has been transferred, and almost all the risks and rewards of the ownership of the financial asset are transferred to the transferee; ③ The financial asset has been transferred, and although the enterprise neither transfers nor retains almost all the risks and rewards of the ownership of the financial asset, it has given up control of the financial asset.

If an enterprise neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, and does not give up control of the financial asset, the relevant financial assets will be recognized to the extent of its continued involvement in the transferred financial assets, and the relevant liabilities will be recognized accordingly. The degree of continued involvement in the transferred financial assets refers to the level of risk faced by the enterprise due to changes in the value of the financial assets.

If the overall transfer of financial assets meets the conditions for derecognition, the difference between the book value of the transferred financial assets and the sum of the consideration received for the transfer and the cumulative amount of changes in fair value originally included in other comprehensive income will be included in the current profit and loss.

If the partial transfer of financial assets meets the conditions for derecognition, the book value of the transferred financial assets will be apportioned between the derecognized and non-deactivated parts according to their relative fair values, and the difference between the sum of the consideration received due to the transfer and the cumulative amount of changes in fair value originally included in other comprehensive income that should be apportioned to the derecognized part and the apportioned aforementioned book amount shall be included in the current profit and loss.

When the company sells financial assets with recourse, or endorses and transfers financial assets it holds, it needs to determine whether substantially all the risks and rewards of ownership of the financial assets have been transferred. If almost all the risks and rewards of the ownership of the financial asset have been transferred to the transferee, the financial asset will be derecognised; if almost all the risks and rewards of the ownership of the financial asset have been retained, the recognition of the financial asset will not be deactivated; if almost all the risks and rewards of the ownership of the financial asset have neither been transferred nor retained, the company will continue to judge whether the enterprise retains control over the asset, and perform accounting treatment according to the principles described in the previous paragraphs.

(4) Derecognition of financial liabilities

If the current obligation of a financial liability (or part thereof) has been discharged, the Company shall terminate the recognition of the financial liability (or part thereof). The company (borrower) signs an agreement with the lender to replace the original financial liability by assuming a new financial liability, and if the contract terms of the new financial liability are substantially different from the original financial liability, the original financial liability will be terminated and a new financial liability will be recognized at the same time. If the company makes substantial modifications to the contract terms of the original financial liability (or part thereof), it will terminate the recognition of the original financial liability and recognize a new financial liability in accordance with the modified terms.

If a financial liability (or part thereof) is derecognised, the Company will include the difference between its book value and the consideration paid (including non-cash assets transferred out or liabilities assumed) into the current profit and loss.

(5) Offset of financial assets and financial liabilities

When the company has the legal right to offset the recognized amount of financial assets and financial liabilities, and the legal right is currently enforceable, and the company plans to settle on a net basis or realize the financial assets and pay off the financial liabilities at the same time, the financial assets and financial liabilities will be listed in the balance sheet as the net amount after offsetting each other. Otherwise, financial assets and financial liabilities are presented separately in the balance sheet and are not offset against each other.

(6) Determination method of fair value of financial assets and financial liabilities

Fair value refers to the price that can be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. If there is an active market for a financial instrument, the Company determines its fair value using the quoted price in the active market. Quotes in active markets refer to prices that are easily obtainable on a regular basis from exchanges, brokers, industry associations, pricing service agencies, etc., and represent the prices of market transactions that actually occur in fair transactions. If there is no active market for a financial instrument, the Company uses valuation techniques to determine its fair value. Valuation techniques include reference to prices used in recent market transactions between parties who are familiar with the situation and voluntary transactions, reference to the current fair value of other financial instruments that are substantially the same, discounted cash flow methods and option pricing models, etc. When valuing, the company adopts valuation techniques that are applicable under the current circumstances and supported by sufficient available data and other information, selects input values that are consistent with the characteristics of the assets or liabilities considered by market participants in transactions of related assets or liabilities, and gives priority to the use of relevant observable input values whenever possible. Non-inputable values are used when the relevant observable input values cannot be obtained or are impracticable to obtain.

Impairment of financial assets

The financial assets that the company needs to confirm impairment losses are financial assets measured at amortized cost and debt instrument investments measured at fair value with changes included in other comprehensive income, which mainly include notes receivable, accounts receivable, contract assets, other receivables, debt investments, other debt investments, long-term receivables, etc. In addition, for some financial guarantee contracts, impairment provisions are made and credit impairment losses are recognized in accordance with the accounting policies described in this section.

(1) Recognition method of impairment provision

Based on expected credit losses, the Company makes impairment provisions and recognizes credit impairment losses for each of the above items in accordance with its applicable expected credit loss measurement method (general method or simplified method).

Credit loss refers to the difference between all contractual cash flows receivable under the contract and all cash flows expected to be received by the company, discounted at the original actual interest rate, that is, the present value of all cash shortfalls. Among them, for purchased or originated financial assets that have suffered credit impairment, the company discounts them according to the credit-adjusted actual interest rate of the financial assets.

The general method of measuring expected credit losses means that the company evaluates on each balance sheet date whether the credit risk of financial assets has increased significantly since initial recognition. If the credit risk has increased significantly since initial recognition, the company measures loss provisions at an amount equivalent to the expected credit losses during the entire duration; if the credit risk has not increased significantly since initial recognition, the company measures loss provisions at an amount equivalent to the expected credit losses within the next 12 months. The Company considers all reasonable and evidence-based information, including forward-looking information, when assessing expected credit losses.

For financial instruments with low credit risk on the balance sheet date, the Company assumes that its credit risk has not increased significantly since initial recognition and chooses to measure loss provisions based on expected credit losses within the next 12 months.

(2) Criteria for judging whether credit risk has increased significantly since initial recognition

If the default probability of a financial asset within the expected duration determined on the balance sheet date is significantly higher than the default probability within the expected duration determined at initial recognition, it indicates that the credit risk of the financial asset has increased significantly. Except for special circumstances, the Company uses the change in default risk within the next 12 months as a reasonable estimate of the change in default risk throughout the entire duration to determine whether credit risk has increased significantly since initial recognition.

Generally, if the credit risk of a financial instrument is overdue for more than 30 days, the Company considers that the credit risk of the financial instrument has increased significantly, unless there is conclusive evidence that the credit risk of the financial instrument has not increased significantly since initial recognition.

The company will consider the following factors when assessing whether credit risk has increased significantly:

Whether there is a significant change in the actual or expected operating results of the debtor;
Whether there have been significant adverse changes in the regulatory, economic or technological environment in which the debtor operates;
Whether there has been a significant change in the value of the collateral used as collateral for the debt or the quality of the guarantee or credit enhancement provided by a third party. These changes are expected to reduce the debtor's economic incentives to repay within the time limit specified in the contract or affect the probability of default;
Whether the debtor’s expected performance and repayment behavior have changed significantly;
Whether the company’s credit management methods for financial instruments have changed, etc.

On the balance sheet date, if the Company determines that a financial instrument has only low credit risk, the Company assumes that the credit risk of the financial instrument has not increased significantly since initial recognition. If the default risk of a financial instrument is low, the borrower has a strong ability to fulfill its contractual cash flow obligations in the short term, and even if there are adverse changes in the economic situation and operating environment in the longer term, it may not necessarily reduce the borrower's performance of its contractual cash obligations, then the financial instrument is considered to have lower credit risk. (3) Portfolio method to assess expected credit risk on a portfolio basis

The Company evaluates the credit risk of financial assets with significantly different credit risks individually, such as: accounts receivable from related parties; accounts receivable that are in dispute with the other party or involved in litigation or arbitration; accounts receivable that have obvious signs that the debtor is likely to be unable to fulfill its repayment obligations, etc.

In addition to financial assets for individual assessment of credit risk, the Company divides financial assets into different groups based on common risk characteristics. The common credit risk characteristics adopted by the Company include: aging portfolio, related party portfolio, etc., and assesses credit risk on a portfolio basis.

(4) Accounting treatment method for impairment of financial assets

At the end of the period, the Company calculates the estimated credit losses of various financial assets. If the estimated credit losses are greater than the carrying amount of the current impairment provisions, the difference will be recognized as impairment losses; if it is less than the carrying amount of the current impairment provisions, the difference will be recognized as impairment gains.

(5) Methods for determining credit losses of various financial assets

①Notes receivable

The Company measures loss provisions for notes receivable based on an amount equivalent to the expected credit losses during the entire duration. Based on the credit risk characteristics of notes receivable, they are divided into different combinations:

Combination name Basis for determining combination Provision method

Bank acceptance bills refer to historical credit loss experience, combined with current conditions and

Ticket type

Commercial acceptance bill Expected measurement of future economic conditions Bad debt provision ② Accounts receivable and contract assets

For receivables and contract assets that do not contain significant financing components, the Company measures loss provisions based on an amount equivalent to the expected credit losses during the entire duration.

For receivables and contract assets that contain significant financing components, the Company chooses to always measure loss provisions at an amount equivalent to the expected credit losses during the duration.

In addition to accounts receivable for individual credit risk assessment, they are divided into different combinations based on their credit risk characteristics: Determine the combination

Item Method for measuring expected credit losses

Basis

With reference to historical credit loss experience, combined with current conditions and bank acceptance bill types receivable, forecasts of future economic conditions, through default risk exposure and the overall

Duration expected credit loss rate, calculate expected credit losses

Definitely combined

Item Method for measuring expected credit losses

Basis

Refer to historical credit loss experience, combined with current conditions and accounts receivable - credit risk characteristic group

Aging portfolio Forecasting future economic conditions, preparing the aging of accounts receivable and the entire portfolio

Duration expected credit loss rate comparison table to calculate expected credit losses

Related parties within the scope of consolidation are verified by Accounts Receivable - Related Parties within the scope of consolidation with reference to historical credit losses, combined with current conditions and predictions of future economic conditions.

Current portfolio

Through the default risk exposure and the expected credit loss rate of the entire duration of the party portfolio, the

Portfolio expected credit loss rate is 0%

a. The aging of the company’s receivables is calculated from the date of occurrence.

In the portfolio, the aging portfolio is used to accrue expected credit losses on a portfolio basis:

Provision for notes receivable, Provision for accounts receivable, Provision for contract assets, Aging of other receivables

Proportion (%) Proportion (%) Proportion (%) Proportion (%) Within 1 year

0.00 0.00 0.00 0.00 (including 1 year)

1-2 years 10.00 10.00 10.00 10.00 2-3 years 50.00 50.00 50.00 50.00 More than 3 years 100.00 100.00 100.00 100.00 b. Judgment criteria for bad debt provisions accrued individually based on individual identification:

When one or more events that have an adverse impact on the expected future cash flows of a financial asset occur, the financial asset becomes a credit-impaired financial asset. Evidence that a financial asset has been credit-impaired includes the following observable information:

The issuer or debtor encounters major financial difficulties;
The debtor violates the contract, such as default or overdue payment of interest or principal;
The creditor grants concessions to the debtor that the debtor would not make under any other circumstances due to economic or contractual considerations related to the debtor's financial difficulties;
The debtor is likely to go bankrupt or undergo other financial reorganization;
Financial difficulties of the issuer or debtor cause the active market for the financial asset to disappear;
Purchase or originate a financial asset at a substantial discount that reflects the fact that a credit loss has occurred.

Credit impairment of financial assets may be caused by the combined effect of multiple events and may not be individually identifiable.

caused by the incident.

③Other receivables

The company measures impairment losses based on whether the credit risk of other receivables has increased significantly since initial recognition, and uses an amount equivalent to the expected credit losses in the next 12 months or the entire duration. In addition to other receivables whose credit risk is assessed individually, they are divided into different combinations based on their credit risk characteristics:

Combination name Basis for determining combination Provision method

Reference to historical credit loss experience, combined with current conditions and

Forecast of future economic conditions, through default risk exposure portfolio - Related party transactions

and the expected credit loss rate throughout the duration, calculate the expected credit loss rate

use loss

Portfolio 2 Accounts receivable with the same age have similar credit risk characteristics. Aging analysis method

Inventory

(1) Classification of inventory

Inventories mainly include raw materials, work-in-progress and self-made semi-finished products, turnover materials, finished products, inventory goods, etc. (2) Pricing method issued

Inventories are valued at actual cost when acquired, and inventory costs include purchase costs, processing costs and other costs. Prices are calculated using the weighted average method upon receipt and delivery.

(3) The inventory inventory system is a perpetual inventory system.

(4) Amortization method for low-value consumables and packaging materials

Low-value consumables are amortized according to the one-time amortization method when they are used; packaging materials are amortized according to the one-time amortization method when they are used.

(3) Recognition standards and accrual methods for inventory depreciation provisions

The net realizable value of inventories refers to the estimated selling price of inventories in daily activities minus the estimated costs to be incurred upon completion, estimated sales expenses and related taxes. When determining the net realizable value of inventories, it is based on the conclusive evidence obtained and the purpose of holding the inventories and the impact of events after the balance sheet date are also considered.

On the balance sheet date, inventories are measured at the lower of cost and net realizable value. When the net realizable value is lower than the cost, the inventory depreciation reserve is withdrawn. Provision for inventory impairment is usually made based on the difference between the cost of a single inventory item and its net realizable value.

After the provision for inventory depreciation is made, if the factors that previously caused the inventory value to be written down have disappeared, causing the net realizable value of the inventory to be higher than its book value, the amount of the inventory depreciation provision that was originally accrued will be reversed, and the amount reversed will be included in the current profit and loss.

Long-term equity investment

The long-term equity investment referred to in this section refers to the long-term equity investment in which the company has control, joint control or significant influence on the invested unit. Long-term equity investments that the Company does not have control, joint control or significant influence over the investee are accounted for as financial assets measured at fair value through profit or loss for the current period. If they are non-trading, the Company may choose to designate them as financial assets measured at fair value through other comprehensive income at the time of initial recognition. For details on its accounting policies, see Note 3.10 "Financial Instruments".

Joint control refers to the company’s shared control over an arrangement in accordance with relevant agreements, and decisions related to the arrangement must be made only with the unanimous consent of the parties sharing control. Significant influence means that the company has the power to participate in decision-making on the financial and operating policies of the investee, but it is not able to control or jointly control the formulation of these policies with other parties.

(1) Determination of investment cost

For long-term equity investments obtained through a business combination under common control, the initial investment cost of the long-term equity investment shall be the share of the book value of the shareholders' equity of the merged party in the consolidated financial statements of the ultimate controlling party on the date of merger. The difference between the initial investment cost of long-term equity investment and the cash paid, non-cash assets transferred and the book value of debts assumed shall be adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings shall be adjusted. If the issuance of equity securities is used as the merger consideration, on the merger date, the share of the shareholders' equity of the merged party/the book value in the consolidated financial statements of the ultimate controlling party will be used as the initial investment cost of the long-term equity investment, and the total face value of the issued shares will be used as share capital. The difference between the initial investment cost of the long-term equity investment and the total face value of the shares issued will be adjusted to the capital reserve; if the capital reserve is insufficient for offset, the retained earnings will be adjusted.

For long-term equity investments obtained through a business combination not under common control, the initial investment cost of the long-term equity investment shall be the merger cost on the acquisition date. The merger cost includes the sum of the assets paid by the purchaser, liabilities incurred or assumed, and the fair value of the equity securities issued.

Intermediary fees such as auditing, legal services, evaluation and consulting, and other related management fees incurred by the merging party or purchaser during a business merger shall be included in the current profit and loss when incurred.

Equity investments other than long-term equity investments formed through business combinations are initially measured at cost. Depending on the way in which the long-term equity investment is obtained, the cost is determined based on the actual cash purchase price paid by the company, the fair value of the equity securities issued by the company, the value stipulated in the investment contract or agreement, the fair value or original book value of the assets exchanged in non-monetary asset exchange transactions, the fair value of the long-term equity investment itself, etc. Fees, taxes and other necessary expenses directly related to obtaining long-term equity investment are also included in the investment cost. For additional investments that can exert significant influence on the investee or implement joint control but do not constitute control, the cost of long-term equity investment is the sum of the fair value of the original equity investment determined in accordance with the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments" plus the cost of the new investment. (2) Subsequent measurement and profit and loss recognition methods

Long-term equity investments that have joint control (except for joint operators) or significant influence on the investee unit are accounted for using the equity method. In addition, the company's financial statements adopt the cost method to account for long-term equity investments that can control the invested unit.

① Long-term equity investment calculated using the cost method

When accounting using the cost method, long-term equity investment is valued at the initial investment cost, and the cost of long-term equity investment is adjusted when additional investment or withdrawal of investment is made. Except for the actual price paid when acquiring the investment or the cash dividends or profits that have been declared but not yet distributed included in the consideration, the current investment income is recognized according to the cash dividends or profits declared and distributed by the investee. ② Long-term equity investment accounted for by equity method

When accounting using the equity method, if the initial investment cost of a long-term equity investment is greater than the fair value share of the investee's identifiable net assets at the time of investment, the initial investment cost of the long-term equity investment will not be adjusted; if the initial investment cost is less than the fair value share of the investee's identifiable net assets at the time of investment, the difference will be included in the current profit and loss, and the cost of the long-term equity investment will be adjusted at the same time.

When accounting using the equity method, investment income and other comprehensive income are recognized respectively according to the share of the net profit or loss and other comprehensive income realized by the investee, and the book value of the long-term equity investment is adjusted at the same time. The book value of the long-term equity investment is calculated based on the profit or cash dividend declared by the investee to be distributed, and the book value of the long-term equity investment is reduced accordingly. For other changes in the owner's equity of the investee other than net profits and losses, other comprehensive income and profit distribution, the book value of the long-term equity investment is adjusted and included in the capital reserve. When confirming the share of the investee's net profits and losses, the net profit of the investee is adjusted and recognized based on the fair value of the investee's identifiable assets when the investment is obtained. If the accounting policies and accounting periods adopted by the invested unit are inconsistent with those of the Company, the financial statements of the invested unit shall be adjusted in accordance with the Company's accounting policies and accounting periods, and investment income and other comprehensive income shall be recognized accordingly. For transactions between the company and associates and joint ventures, if the assets invested or sold do not constitute business, the unrealized internal transaction profits and losses shall be offset according to the proportion attributable to the company, and investment profits and losses shall be recognized on this basis. However, if the unrealized internal transaction losses between the company and the investee are impairment losses on the transferred assets, they will not be offset. If the assets invested by the company into a joint venture or associated enterprise constitute a business, and the investor obtains a long-term equity investment but does not obtain control, the fair value of the invested business shall be used as the initial investment cost of the new long-term equity investment. The difference between the initial investment cost and the book value of the invested business shall be fully included in the current profit and loss. If the assets sold by the company to a joint venture or associate constitute a business, the difference between the consideration obtained and the book value of the business shall be fully included in the current profit and loss. If the assets purchased by the company from associates and joint ventures constitute a business, accounting treatment shall be carried out in accordance with the provisions of "Accounting Standards for Business Enterprises No. 20 - Business Merger", and the gains or losses related to the transaction shall be recognized in full.

When confirming the share of the net losses incurred by the investee, the book value of the long-term equity investment and other long-term interests that essentially constitute the net investment in the investee are reduced to zero. In addition, if the company has an obligation to bear additional losses to the investee, it will recognize estimated liabilities based on the estimated obligations and include them in the current investment losses. If the invested unit realizes net profit in the subsequent period, the company will resume recognition of the income sharing amount after the income sharing amount makes up for the unrecognized loss sharing amount.

For long-term equity investments in associates and joint ventures held by the company before the first implementation of the new accounting standards, if there is any equity investment debit balance related to the investment, the amount will be included in the current profit and loss based on the straight-line amortization of the original remaining period.

③ Acquisition of minority shares

When preparing consolidated financial statements, the difference between the new long-term equity investment due to the purchase of minority shares and the share of the subsidiary's net assets calculated continuously from the purchase date (or merger date) based on the new shareholding ratio will be adjusted to the capital reserve. If the capital reserve is insufficient for offset, the retained earnings will be adjusted.

④ Disposal of long-term equity investments

In the consolidated financial statements, if the parent company partially disposes of the long-term equity investment in the subsidiary without losing control, the difference between the disposal price and the net assets of the subsidiary corresponding to the disposal of the long-term equity investment is included in shareholders' equity; if the parent company partially disposes of the long-term equity investment in the subsidiary, resulting in the loss of control over the subsidiary, it shall be handled in accordance with the relevant accounting policies described in Note 3.6, (2) "Method for Preparing Consolidated Financial Statements".

For the disposal of long-term equity investments under other circumstances, the difference between the book value of the disposed equity and the actual price obtained shall be included in the current profit and loss.

For long-term equity investments accounted for using the equity method, if the remaining equity after disposal is still accounted for using the equity method, the portion of other comprehensive income originally included in shareholders' equity at the time of disposal will be accounted for in proportion and on the same basis as the investee's direct disposal of relevant assets or liabilities. Owner's equity recognized due to changes in other owners' equity of the investee other than net profit and loss, other comprehensive income and profit distribution shall be carried forward to the current profit and loss on a proportional basis.

For long-term equity investments accounted for using the cost method, if the remaining equity after disposal is still accounted for using the cost method, other comprehensive income recognized by using the equity method or financial instrument recognition and measurement standards before obtaining control over the investee shall be calculated using the method directly related to the investee. Accounting treatment is carried out on the same basis as the disposal of relevant assets or liabilities, and the profits and losses of the current period are carried forward in proportion; changes in other owners' equity other than net profits and losses, other comprehensive income and profit distribution in the net assets of the investee recognized due to the use of equity method accounting are carried forward to the profits and losses of the current period in proportion.

If the company loses control over the invested unit due to the disposal of part of its equity investment, when preparing individual financial statements, if the remaining equity after disposal can jointly control or exert significant influence on the invested unit, it shall be accounted for according to the equity method instead, and the remaining equity shall be deemed to have adopted equity since the time of acquisition. If the remaining equity after disposal cannot jointly control or exert significant influence on the invested unit, the accounting treatment shall be carried out in accordance with the relevant provisions of the financial instrument recognition and measurement standards, and the difference between its fair value and book value on the date of loss of control shall be included in the current profit and loss. For other comprehensive income recognized due to the use of equity method accounting or financial instrument recognition and measurement standards before the company obtains control of the invested unit, when it loses control of the invested unit, it will be accounted on the same basis as the invested unit's direct disposal of relevant assets or liabilities. Other changes in owner's equity in the net assets of the invested unit recognized due to the use of equity method accounting, except for net profit and loss, other comprehensive income and profit distribution, will be carried forward to the current profit and loss when it loses control of the invested unit. Among them, if the remaining equity after disposal is accounted for using the equity method, other comprehensive income and other owners' equity will be carried forward in proportion; if the remaining equity after disposal is accounted for in accordance with the financial instrument recognition and measurement standards, all other comprehensive income and other owners' equity will be carried forward.

If the company loses joint control or significant influence on the investee due to the disposal of part of its equity investment, the remaining equity after disposal will be accounted for in accordance with the financial instrument recognition and measurement standards, and the difference between its fair value and book value on the date of loss of joint control or significant influence will be included in the current profit and loss. Other comprehensive income recognized due to the use of the equity method for accounting in the original equity investment shall be accounted for on the same basis as the investee's direct disposal of relevant assets or liabilities when the use of the equity method is terminated. Owner's equity recognized due to changes in the investee's other owner's equity other than net profit and loss, other comprehensive income and profit distribution shall all be transferred to the investment income of the current period when the use of the equity method is discontinued.

The company disposes the subsidiary's equity investment step by step through multiple transactions until it loses control. If the above-mentioned transactions are a package deal, each transaction will be accounted for as a transaction in which the subsidiary's equity investment is disposed of and control is lost. Before the loss of control, the difference between the price of each disposal and the book value of the long-term equity investment corresponding to the equity disposed is first recognized as other comprehensive income. When control is lost, it will be transferred to the current profit and loss of the loss of control.

Fixed assets

(1) Fixed assets recognition conditions

Fixed assets refer to tangible assets held for the production of goods, provision of labor services, leasing or operation and management, and with a useful life of more than one accounting year. Fixed assets are recognized only when the economic benefits related to them are likely to flow into the company and their costs can be measured reliably. Fixed assets are initially measured at cost and taking into account the impact of expected disposal costs.

(2) Depreciation methods for various types of fixed assets

From the next month after the fixed assets reach their intended usable condition, depreciation is calculated using the straight-line method over their useful lives. The useful lives, estimated net residual values and annual depreciation rates of various types of fixed assets are as follows:

Category Depreciation method Depreciation life (years) Salvage value rate (%) Annual depreciation rate (%) Houses and buildings Straight-line method 25-40 5.00 2.38-3.8 Production equipment Straight-line method 8-12 5.00 7.92-11.88 Tools and equipment Straight-line method 5 5.00 19.00 Transportation equipment Straight-line method 4-6 5.00 15.83-23.76 Office equipment Average age method 3-5 5.00 19-31.67

The estimated net residual value refers to the amount currently obtained by the company from the disposal of the asset after deducting the estimated disposal expenses, assuming that the fixed asset has reached its expected useful life and is in its expected state at the end of its useful life.

(3) Impairment testing method and impairment provision accrual method for fixed assets

Please refer to Note 3, 18 "Impairment of Long-term Assets" for details on the impairment testing method and impairment provision method for fixed assets. (4) Other instructions

Subsequent expenditures related to a fixed asset, if the economic benefits related to the fixed asset are likely to flow in and its cost can be measured reliably, will be included in the cost of the fixed asset, and the book value of the replaced part will be derecognized. Other subsequent expenditures other than these shall be included in the current profits and losses when incurred.

When a fixed asset is in a state of disposal or no economic benefits are expected to be generated through use or disposal, the fixed asset is derecognised. The difference between the disposal income from the sale, transfer, scrapping or damage of fixed assets after deducting their book value and relevant taxes is included in the current profit and loss.

The company will review the service life, estimated net residual value and depreciation method of fixed assets at least at the end of the year. If any changes occur, they will be treated as changes in accounting estimates.

Projects under construction

The company's projects under construction are divided into two types: self-operated construction and outsourcing construction. Construction in progress will be transferred to fixed assets when the project is completed and reaches the intended usable state. The criteria for judging the intended usable state should meet one of the following conditions: the physical construction (including installation) of the fixed assets has been completed or substantially completed; trial production or trial operation has been carried out, and the results show that the asset can operate normally or can stably produce qualified products, or the trial operation results show that it can operate normally or do business; the amount of expenditure on the fixed assets constructed is very small or almost no longer occurs; the fixed assets purchased and constructed have met the design or contract requirements, or are basically consistent with the design or contract requirements.

When the project under construction reaches the intended usable state, it will be transferred to fixed assets according to the actual cost of the project. If the asset has reached its intended usable state but has not yet completed the final settlement, the estimated value will be transferred to fixed assets first. After the final settlement has been processed, the original estimated value will be adjusted based on the actual cost, but the originally accrued depreciation will not be adjusted.

Please refer to Note 3, 18 "Impairment of Long-term Assets" for details on the impairment testing method and impairment provision accrual method for projects under construction.

Borrowing costs

Borrowing costs include borrowing interest, amortization of discounts or premiums, auxiliary expenses, and exchange differences arising from foreign currency borrowings. Borrowing costs directly attributable to the acquisition, construction or production of assets that meet the capitalization conditions shall be capitalized when asset expenditures have been incurred, borrowing costs have been incurred, and the acquisition, construction or production activities necessary to bring the assets to the intended usable or salable state have begun; capitalization shall cease when the assets constructed or produced that meet the capitalization conditions have reached the intended usable or salable state. The remaining borrowing costs are recognized as expenses in the current period.

The interest expenses actually incurred on special borrowings in the current period shall be capitalized after deducting the interest income from unused borrowing funds deposited in banks or investment income from temporary investments; the capitalization amount of general borrowings shall be determined based on the weighted average of asset disbursements exceeding the part of special borrowings multiplied by the capitalization rate of the occupied general borrowings. The capitalization rate is calculated and determined based on the weighted average interest rate of general borrowings.

During the capitalization period, all exchange differences on special foreign currency borrowings are capitalized; exchange differences on general foreign currency borrowings are included in the current profits and losses.

Assets that qualify for capitalization refer to fixed assets, investment real estate, inventories and other assets that require a considerable period of acquisition, construction or production activities to reach the intended usable or salable state.

If an asset that meets the capitalization conditions is abnormally interrupted during the acquisition, construction or production process, and the interruption lasts for more than 3 months, the capitalization of borrowing costs will be suspended until the acquisition, construction or production activities of the asset are restarted.

Assets that meet the conditions for capitalization refer to fixed assets, investment real estate, inventories and other assets that require a considerable period of acquisition, construction or production activities to reach the intended usable or salable state.

Intangible assets

(1) Intangible assets

Intangible assets refer to identifiable non-monetary assets without physical form owned or controlled by the company.

Intangible assets are initially measured at cost. Expenditures related to intangible assets are included in the cost of intangible assets if the relevant economic benefits are likely to flow into the company and their costs can be measured reliably. Expenditures on other items other than these are included in the current profits and losses when incurred.

Acquired land use rights are usually accounted for as intangible assets. For self-developed and constructed factories and other buildings, the related land use right expenditures and building construction costs are accounted for as intangible assets and fixed assets respectively. In the case of purchased houses and buildings, the relevant price will be allocated between the land use rights and the buildings. If it is difficult to reasonably allocate, all of them will be treated as fixed assets.

From the time an intangible asset with a limited service life becomes available for use, its original value minus the estimated net residual value and the cumulative amount of impairment provisions that have been made are amortized evenly in installments using the straight-line method over its estimated service life. Intangible assets with indefinite useful lives are not amortized.

The service life, determination basis and amortization method of intangible assets with limited service life are as follows:

Project Estimated service life Based on land use rights 50 years Certificated period of water rights 20 years Contract term non-patented technology 5 years Estimated service life

At the end of the period, the service life and amortization method of intangible assets with limited service life are reviewed, and any changes are treated as changes in accounting estimates. In addition, the useful life of intangible assets with an indefinite useful life is also reviewed. If there is evidence that the intangible asset will bring economic benefits to the enterprise for a foreseeable period, its useful life is estimated and amortized in accordance with the amortization policy for intangible assets with a limited useful life.

(2) Research and development expenditures

The Company's internal research and development project expenditures are divided into research stage expenditures and development stage expenditures.

Expenditures in the research stage are included in the current profits and losses when incurred.

The scope of the company's R&D expenditures includes materials, labor and labor costs used for R&D, amortization of R&D equipment, amortization of other intangible assets and fixed assets used in the development process, water and electricity expenses and other expenses.

The Company’s specific standards for dividing expenditures in the research phase and development phase of internal research and development projects:

The research stage is the stage of original planned investigation and research activities to obtain and understand new scientific or technical knowledge; the development stage is the stage of applying research results or other knowledge to a plan or design to produce new or substantially improved materials, devices, products and other activities before commercial production or use.

Expenditures in the development stage that meet the following conditions at the same time are recognized as intangible assets. Expenditures in the development stage that do not meet the following conditions are included in the current profit and loss:

① It is technically feasible to complete the intangible asset so that it can be used or sold;

② Have the intention to complete the intangible asset and use or sell it;

③ The way intangible assets generate economic benefits includes being able to prove that there is a market for the products produced using the intangible assets or that the intangible assets themselves have a market. If the intangible assets will be used internally, their usefulness can be proven;

④ Have sufficient technical, financial and other resource support to complete the development of the intangible assets, and have the ability to use or sell the intangible assets;

⑤ Expenditures attributable to the development stage of the intangible asset can be measured reliably.

If it is impossible to distinguish between expenditures in the research stage and expenditures in the development stage, all R&D expenditures incurred will be included in the current profit and loss. (3) Impairment testing method and impairment provision accrual method for intangible assets

Please refer to Note 3, 18 "Impairment of Long-term Assets" for details of the impairment testing method and impairment provision method of intangible assets.

Impairment of long-term assets

For non-current non-financial assets such as fixed assets, projects under construction, intangible assets with limited useful lives, right-of-use assets, investment properties measured using the cost model, and long-term equity investments in subsidiaries, joint ventures, and associates, the Company determines whether there are signs of impairment on the balance sheet date. If there is any indication of impairment, the recoverable amount is estimated and an impairment test is performed. Goodwill, intangible assets with indefinite useful lives and intangible assets that have not yet reached a usable state are subject to impairment testing every year regardless of whether there are signs of impairment.

If the impairment test results show that the recoverable amount of the asset is lower than its book value, impairment provisions will be made based on the difference and included in the impairment loss. The recoverable amount is the higher of the asset's fair value less disposal costs and the present value of the asset's expected future cash flows. The fair value of an asset is determined based on the sales agreement price in an arm's length transaction; if there is no sales agreement but there is an active market for the asset, the fair value is determined based on the buyer's bid for the asset; if there is no sales agreement and there is an active market for the asset, the fair value of the asset is estimated based on the best information available. Disposal costs include legal fees, related taxes, transportation fees and direct costs incurred in bringing the assets to a salable condition. The present value of the estimated future cash flows of an asset is determined by selecting an appropriate discount rate to discount the estimated future cash flows generated during the continued use and final disposal of the asset. Asset impairment provisions are calculated and recognized on the basis of individual assets. If it is difficult to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs is determined. An asset group is the smallest combination of assets that can independently generate cash inflows.

For goodwill that is presented separately in the financial statements, when conducting impairment testing, the book value of the goodwill is allocated to the asset group or combination of asset groups that are expected to benefit from the synergy effects of the business combination. If the test results indicate that the recoverable amount of an asset group or combination of asset groups containing amortized goodwill is lower than its book value, the corresponding impairment loss will be recognized. The amount of impairment loss first deducts the book value of the goodwill allocated to the asset group or asset group combination, and then deducts the book value of other assets in proportion to the proportion of the book value of other assets in the asset group or asset group combination except goodwill.

Once the above-mentioned asset impairment losses are recognized, the portion whose value has been restored will not be reversed in subsequent periods.

Long-term deferred expenses

Long-term deferred expenses are expenses that have been incurred but should be borne by the reporting period and subsequent periods with an amortization period of more than one year. The company's long-term deferred expenses mainly include decoration and fixed asset renovation expenses. Long-term deferred expenses are amortized on a straight-line basis over the expected benefit period.

Contract liabilities

Contract liabilities refer to the company's obligation to transfer goods to customers for consideration it has received or receivable from customers. If the customer has paid the contract consideration or the company has obtained the unconditional right to receive payment before the company transfers the goods to the customer, the company will list the amount received or receivable as a contract liability at the earlier of the customer's actual payment and the due payment. Contract assets and contract liabilities under the same contract are presented on a net basis, and contract assets and contract liabilities under different contracts are not offset.

Employee compensation

The company's employee compensation mainly includes short-term employee compensation, post-employment benefits, and termination benefits. Among them:

Short-term compensation mainly includes wages, bonuses, allowances and subsidies, employee welfare fees, medical insurance premiums, maternity insurance premiums, work-related injury insurance premiums, housing provident funds, labor union funds and employee education funds, non-monetary benefits, etc. The company recognizes actual short-term employee benefits as liabilities during the accounting period when employees provide services to the company, and includes them in current profits and losses or related asset costs. Among them, non-monetary benefits are measured at fair value.

Post-employment benefits mainly include basic pension insurance and unemployment insurance. Post-employment benefit plans include defined contribution plans. If a defined contribution plan is adopted, the corresponding deposit amount payable shall be included in the relevant asset cost or current profit and loss when incurred.

When the company terminates the labor relationship with employees before the expiration of the employee's labor contract, or makes a proposal to provide compensation to encourage employees to voluntarily accept redundancy, when the company cannot unilaterally withdraw the dismissal benefits provided by the termination of labor relationship plan or layoff proposal, and the company confirms the costs related to the restructuring involving the payment of dismissal benefits, whichever is earlier, the employee compensation liabilities arising from the dismissal benefits are recognized and included in the current profit and loss. However, if dismissal benefits are not expected to be fully paid twelve months after the end of the annual reporting period, they will be treated as other long-term employee benefits.

Internal employee retirement plans are treated on the same principles as the above-mentioned termination benefits. The company will include the wages and social insurance premiums to be paid to early retirees from the date when the employees stop providing services to the normal retirement date, etc., when the conditions for recognition of estimated liabilities are met, and included in the current profit and loss (dismissal benefits).

Other long-term employee benefits provided by the company to employees that comply with the defined contribution plan shall be accounted for according to the defined contribution plan. Otherwise, they shall be accounted for according to the defined benefit plan.

Estimated liabilities

Obligations arising from contingencies such as external guarantees, litigation matters, product quality guarantees, loss-making contracts, etc. become current obligations borne by the company. When the performance of this obligation is likely to cause economic benefits to flow out of the company, and the amount of the obligation can be measured reliably, the company will recognize the obligation as a provisional liability.

The Company initially measures estimated liabilities based on the best estimate of the expenditure required to fulfill relevant current obligations, and reviews the book value of estimated liabilities on the balance sheet date.

If all or part of the expenses required to settle estimated liabilities are expected to be compensated by a third party, the compensation amount will be recognized separately as an asset when it is basically certain that it will be received, and the recognized compensation amount will not exceed the book value of the estimated liabilities.

Income

When the contract between the company and the customer meets the following conditions at the same time, revenue is recognized when the customer obtains control of the relevant goods: the parties to the contract have approved the contract and promised to perform their respective obligations; the contract clarifies the rights and obligations of the parties to the contract related to the transferred goods or the provision of labor services; the contract has clear payment terms related to the transferred goods; the contract has commercial substance, that is, the performance of the contract will change the risk, time distribution or amount of the company's future cash flows; the consideration that the company is entitled to receive for transferring goods to the customer is likely to be recovered.

On the contract inception date, the Company identifies each individual performance obligation that exists in the contract, and allocates the transaction price to each individual performance obligation in accordance with the relative proportion of the stand-alone selling price of the goods promised by each individual performance obligation. When determining the transaction price, the impact of variable consideration, significant financing components in the contract, non-cash consideration, consideration payable to customers and other factors was considered.

For each individual performance obligation in the contract, if one of the following conditions is met, the company will recognize the transaction price allocated to the individual performance obligation as revenue according to the performance progress during the relevant performance period: the customer obtains and consumes the company at the same time that the company performs the contract. The economic benefits brought by the performance of the contract; the customer can control the goods under construction during the company's performance of the contract; the goods produced by the company during the performance of the contract have irreplaceable uses, and the company has the right to collect payment for the cumulative performance part that has been completed so far during the entire contract period. The progress of contract performance is determined using the input method or the output method according to the nature of the transferred goods. When the progress of contract performance cannot be reasonably determined and the costs incurred by the company are expected to be compensated, revenue will be recognized based on the amount of costs incurred until the progress of contract performance can be reasonably determined.

If one of the above conditions is not met, the company will recognize revenue at the transaction price allocated to the individual performance obligation at the point when the customer obtains control of the relevant goods. When judging whether the customer has obtained control of the goods, the company considers the following signs: the company has the current right to receive payment for the goods, that is, the customer has current payment obligations for the goods; the company has transferred the legal ownership of the goods to the customer, that is, the customer already has the legal ownership of the goods; the company has The commodity is physically transferred to the customer, which means that the customer has physically taken possession of the commodity; the enterprise has transferred the main risks and rewards of ownership of the commodity to the customer, that is, the customer has obtained the main risks and rewards of ownership of the commodity; the customer has accepted the commodity; and other signs indicate that the customer has obtained control of the commodity.

Government subsidies

Government subsidies refer to the monetary assets and non-monetary assets that the company obtains free of charge from the government, excluding capital invested by the government as an investor and enjoying corresponding owner's rights and interests. Government subsidies are divided into asset-related government subsidies and income-related government subsidies. If the government subsidy is a monetary asset, it shall be measured according to the amount received or receivable. If the government subsidy is a non-monetary asset, it shall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured at the nominal amount. Government subsidies measured according to the nominal amount are directly included in the current profit and loss.

Government subsidies related to assets are recognized as deferred income and included in current profits and losses in installments in a reasonable and systematic manner within the useful life of the relevant assets. If government subsidies related to income are used to compensate for relevant costs, expenses or losses in the future period, they are recognized as deferred income and included in the current profit and loss during the period when the relevant costs, expenses or losses are recognized; if they are used to compensate for relevant costs, expenses or losses that have already occurred, they are directly included in the current profits and losses.

Government subsidies that include both asset-related parts and income-related parts are distinguished and accounted for separately. If it is difficult to distinguish, the whole is classified as income-related government subsidies.

Government subsidies related to the company's daily activities shall be included in other income or offset related costs and expenses according to the nature of the economic business; government subsidies unrelated to daily activities shall be included in non-operating income and expenses.

When a confirmed government subsidy needs to be returned, if there is a relevant deferred income balance, the book balance of the relevant deferred income will be offset, and the excess will be included in the current profit and loss; in other cases, it will be directly included in the current profit and loss.

Deferred income tax assets/deferred income tax liabilities

Based on the difference between the book value of assets and liabilities and their tax basis (if the tax basis of items not recognized as assets and liabilities can be determined in accordance with tax laws, the difference between the tax basis and their book amount), deferred income tax assets or deferred income tax liabilities are calculated and recognized according to the applicable tax rate during the period when the asset is expected to be recovered or the liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that taxable income will be available against which the deductible temporary differences can be utilised. On the balance sheet date, if there is conclusive evidence that sufficient taxable income is likely to be obtained in the future period to offset the deductible temporary differences, deferred income tax assets that have not been recognized in previous accounting periods will be recognized.

On the balance sheet date, the book value of the deferred tax assets is reviewed. If it is likely that sufficient taxable income will not be available in the future period to offset the benefits of the deferred tax assets, the book value of the deferred tax assets will be written down. The amount of the write-down is reversed when it is probable that sufficient taxable income will be obtained.

The company's current income tax and deferred income tax are included in the current profit and loss as income tax expenses or income, but do not include income tax arising from the following situations: business mergers; transactions or events directly recognized in owner's equity.

When the company has the legal right to settle on a net basis and intends to settle on a net basis or acquire assets and pay off liabilities at the same time, the company's current income tax assets and current income tax liabilities are presented at the net amount after offsetting.

Leasing

(1) The company serves as the lessee

The company's leased assets mainly include buildings, buildings and equipment.

On the start date of the lease period, the Company recognizes right-of-use assets and lease liabilities for leases other than short-term leases and low-value asset leases, and recognizes depreciation expenses and interest expenses respectively during the lease period.

The company uses the straight-line method in each period of the lease term to include lease payments for short-term leases and low-value asset leases into current expenses.

①Right-of-use assets

Right-of-use assets refer to the lessee’s right to use the leased assets during the lease term. On the lease commencement date. Right-of-use assets are initially measured at cost. This cost includes: ① the initial measurement amount of the lease liability; ② the lease payment amount paid on or before the start date of the lease term, and if there is a lease incentive, the amount related to the lease incentive that has been enjoyed is deducted; ③ the initial direct costs incurred by the lessee; ④ the lessee's expected costs to dismantle and remove the leased asset, restore the site where the leased asset is located, or restore the leased asset to the state agreed upon in the lease terms.

The company's right-of-use assets are depreciated using the straight-line method. If it is reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, depreciation will be accrued within the estimated remaining useful life of the leased asset; if it is not reasonably certain that the ownership of the leased asset will be obtained at the expiration of the lease term, depreciation will be accrued during the shorter of the lease term and the remaining useful life of the leased asset.

The company determines whether the right-of-use assets have been impaired and performs accounting treatment in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 8 - Impairment of Assets".

②Lease liabilities

Lease liabilities are initially measured based on the present value of the unpaid lease payments at the beginning of the lease term. Lease payments include: ① fixed payments (including substantial fixed payments), if there are lease incentives, the amount related to lease incentives is deducted; ② variable lease payments that depend on an index or ratio; ③ payments expected to be made based on the residual value of the guarantee provided by the lessee; ④ the exercise price of the purchase option, provided that the lessee is reasonably certain that the option will be exercised; ⑤ payments required to exercise the option to terminate the lease, provided that the lease term reflects that the lessee will exercise the option to terminate the lease;

The company uses the interest rate implicit in the lease as the discount rate; if the interest rate implicit in the lease cannot be reasonably determined, the company's incremental borrowing rate is used as the discount rate. The company calculates the interest expense of the lease liability in each period during the lease term based on a fixed periodic interest rate and includes it in financial expenses. The periodic interest rate refers to the discount rate used by the Company or a revised discount rate.

Variable lease payments that are not included in the measurement of lease liabilities are included in the current profit and loss when actually incurred.

When the company's evaluation results of the lease renewal option, lease termination option or purchase option change, the lease liability will be remeasured based on the present value calculated by the changed lease payment and the revised discount rate, and the book value of the right-of-use asset will be adjusted accordingly. When the actual lease payments, the expected amount payable of the guaranteed residual value, or the variable lease payments that depend on an index or ratio change, the lease liability is remeasured based on the present value of the changed lease payments and the original discount rate, and the book value of the right-of-use asset is adjusted accordingly.

③Short-term leasing and low-value asset leasing

For short-term leases (leases with a lease period of no more than 12 months on the lease start date) and low-value asset (value less than 2,000 yuan) leases, the company adopts a simplified treatment method and does not recognize right-of-use assets and lease liabilities. Instead, the lease payments are included in the relevant asset costs or current profits and losses according to the straight-line method or other systematic and reasonable methods during each period of the lease term. (2) The company serves as the lessor

① Operating lease

The Company adopts the straight-line method to recognize the lease receipts from operating leases as rental income for each period during the lease term. Variable lease payments related to operating leases that are not included in lease receipts are included in the current profit and loss when they actually occur.

②Financial lease

On the start date of the lease period, the Company recognizes the finance lease receivable and derecognizes the finance lease assets. Financing lease receivables are initially measured based on the net lease investment (the sum of the unguaranteed residual value and the present value of the lease payments not yet received at the start of the lease period discounted at the interest rate implicit in the lease), and interest income during the lease period is calculated and recognized based on a fixed periodic interest rate. Variable lease payments obtained by the Company that are not included in the measurement of net lease investment are included in the current profit and loss when actually incurred.

Changes in important accounting policies and accounting estimates

(1) Changes in accounting policies

Impact No. Contents and reasons for changes in accounting policies

Report item name Amount The Ministry of Finance issued relevant accounting treatments for standard warehouse receipt transactions on July 8, 2025

Implement the Q&A and clearly stipulate that according to the financial instrument recognition and measurement standards, enterprises must

The exchange frequently signs contracts for buying and selling standard warehouse receipts to earn the price difference without withdrawing the standard.

The warehouse receipt corresponds to the physical goods, which usually indicates that the company has the ability to receive the contract subject matter in the short term.

It is a practice to sell them again within a certain period of time to obtain profits from short-term fluctuations, and the company should sign them

The contract for buying and selling standard warehouse receipts is regarded as a financial instrument and shall be recognized and measured according to the financial instrument.

accounting treatment in accordance with the provisions of the standards. After the enterprise obtains the standard warehouse receipt in accordance with the aforementioned contract,

If it is sold again in the short term, the sales revenue should not be recognized, but the consideration received should be

The difference in the book value of the standard warehouse receipts sold is included in investment income;

Standard warehouse receipts sold should be reported as other current assets. For standard warehouse receipts obtained in accordance with the aforementioned contract, if the accounting mismatch can be eliminated or significantly reduced, the enterprise will

An enterprise may choose to measure at fair value at the time of initial recognition and its changes shall be included in the current profit and loss.

And applied consistently to all standard warehouse receipts that meet the selection criteria. Selected for initial confirmation

If the enterprise selects standard warehouse receipts that are measured at fair value and whose changes are included in the current profit and loss, the enterprise will

This choice cannot be revoked during this period.

According to the "About Strict Implementation of Accounting Standards for Business Enterprises and Effectively Do a Good Job in Enterprises' 2025 Annual Report"

According to the requirements of the "Notice on Reporting Work" (Financial Accounting [2025] No. 33), the enterprise must implement the above standards.

If the accounting treatment method is adjusted in accordance with the relevant provisions on quasi-warehouse receipts, the comparative period of the financial statements shall be

information to adjust.

(2) Changes in accounting estimates

The Company's major accounting estimates have not changed during the reporting period.

4. Taxes

Main tax types and tax rates

Type of tax Tax calculation basis Tax rate or levy rate

Based on income from sales of goods and taxable services calculated in accordance with tax laws

Value-added tax Calculate the output tax, and deduct the input tax allowed to be deducted in the current period 13%

After that, the difference is the value-added tax payable

Corporate income tax Taxable income 15% urban maintenance and construction tax Calculated and levied based on the actual turnover tax paid 7% Education fee surcharge Calculated and levied based on the actual turnover tax paid 3% Local education surcharge Calculated and levied based on the actual turnover tax paid 2% Real estate tax Real estate tax on self-use properties, based on 70% of the original value of the property 1.2%

The income tax rate for each subsidiary to pay income tax independently

Name of tax payer Income tax rate

Tianjin Henry Chemical Co., Ltd. 20%

Zhongrui (Inner Mongolia) Pharmaceutical Co., Ltd. 15%

Ningxia Ruiwei Technology Co., Ltd. 20%

Tax incentives and approvals

According to the provisions of Paragraph 2 of Article 28 of the Enterprise Income Tax Law, the Company and its subsidiary Zhongrui (Inner Mongolia) Pharmaceutical Co., Ltd. are high-tech enterprises and enjoy a preferential corporate income tax rate of 15%. The certificate is valid for three years.

The company's subsidiaries - Tianjin Hentianli Chemical Co., Ltd. and Ningxia Ruiwei Technology Co., Ltd. are small and low-profit enterprises that comply with the "Enterprise Income Tax Law of the People's Republic of China" and the implementation regulations. The portion of the taxable income not exceeding 1 million yuan is reduced. 25% is included in the taxable income, and the corporate income tax is paid at the rate of 20%; for the annual taxable income exceeding 1 million yuan but not exceeding 3 million yuan, a reduced rate of 50% is included in the taxable income, and the corporate income tax is paid at the tax rate of 20%.

5. Notes on Consolidated Financial Statement Items

Unless otherwise specified, the following annotated items (including notes on major items in the company's financial statements) refer to "end of the period" as of December 31, 2025, "end of the previous year" as of December 31, 2024, "current period" as of 2025, and "previous period" as of 2024.

Monetary funds

Item Closing balance Cash on hand at the end of the previous year 133,987.56 20,769.51 Bank deposits 49,749,417.17 87,062,489.93 Other monetary funds 486,591.00 377,227.32 Total 50,369,995.73 87,460,486.76 of which: total amount deposited abroad

Note: Other monetary funds include: Subsidiary Ningxia Ruiwei's funds of RMB 486,591.00 were judicially frozen due to a dispute over a project contract.

Notes receivable

(1) Classified presentation of notes receivable

Item Ending balance Last year’s end balance

Bank acceptance bill 3,827,924.76 2,982,771.78 Commercial acceptance bill

Subtotal 3,827,924.76 2,982,771.78 Less: provision for bad debts

Total 3,827,924.76 2,982,771.78 (2) Notes receivable endorsed at the end of the period and not yet due on the balance sheet date

Item Amount derecognized at the end of the period Amount not derecognized at the end of the period Bank acceptance bill 5,300,171.75 2,224,086.16

Item Amount derecognized at the end of the period Amount not derecognized at the end of the period Commercial acceptance bill

Total 5,300,171.75 2,224,086.16

Accounts receivable

(1) Disclosure based on aging

Account aging Closing balance Last year’s closing balance Within 1 year 5,484,415.76 6,868,651.13 1 to 2 years 1,031,050.00

More than 5 years 400,000.00 400,000.00 Subtotal 6,915,465.76 7,268,651.13 Less: bad debt provision 1,403,105.00 400,000.00 Total 5,512,360.76 6,868,651.13

(2) Classified presentation according to bad debt accrual method

Ending balance

Book balance Bad debt provision

Category

Proportion Book value amount Amount Provision proportion (%)

(%)

Individual provision

Receivables for bad debt provisions 1,400,000.00 20.24 1,400,000.00 100.00

Accounts

Total by group

Provision for bad debts should be made 5,515,465.76 79.76 3,105.00 0.06 5,512,360.76 Accounts receivable

Among them: aging

5,515,465.76 79.76 3,105.00 0.06 5,512,360.76 combination

Total 6,915,465.76 —— 1,403,105.00 —— 5,512,360.76

(continued)

Balance at the end of the previous year

Book balance Bad debt provision

Category

Proportion Book value amount Amount Provision proportion (%)

(%)

Bad individual provision

400,000.00 5.50 400,000.00 100.00

accounts receivable

Provision based on combination

Accounts receivable for bad debt provisions 6,868,651.13 94.50 6,868,651.13

Balance at the end of the previous year

Book balance Bad debt provision

Category

Proportion Book value amount Amount Provision proportion (%)

(%)

Among them: aging

6,868,651.13 94.50 6,868,651.13 combination

Total 7,268,651.13 —— 400,000.00 —— 6,868,651.13

①Accounts receivable with single provision for bad debts at the end of the period

Ending balance

Accounts receivable (by unit) Provision

Book balance Bad debt provision Provision basis

Proportion

Nanjing Hekai Chemical Technology Co., Ltd. 400,000.00 400,000.00 100.00 See the description for details

Payment by the other party Jiangsu Xinglin Pharmaceutical Co., Ltd. 1,000,000.00 1,000,000.00 100.00

Lower willingness

Total 1,400,000.00 1,400,000.00 —— ——

Continue the above table

Balance at the end of the previous year

Accounts receivable (by unit) Provision

Book balance Bad debt provision Provision basis

Proportion

Nanjing Hekai Chemical Technology Co., Ltd. 400,000.00 400,000.00 100.00 Please refer to the description for details Total 400,000.00 400,000.00 —— ——

Explanation: Nanjing Hekai Chemical Technology Co., Ltd. has been sued by multiple units and has become insolvent. The possibility of recovery is very small. ②In the combination, accounts receivable for which bad debt provisions are made based on the aging combination

Ending balance

Item Provision Proportion Book Balance Bad Debt Provision

(%) Within 1 year 5,484,415.76

1 to 2 years 31,050.00 3,105.00 10.00 Total 5,515,465.76 3,105.00

(3) Bad debt provisions

Amount of changes in the current period

end of previous year

Category Recovery or write-off or verification Closing balance Provision

reversal pin

Individual provision

400,000.00 1,000,000.00 1,400,000.00 Bad debt provision

Aging combination 3,105.00 3,105.00

Amount of changes in the current period

end of previous year

Category Recovery or write-off or verification Closing balance Provision

reversal pin

Total 400,000.00 1,003,105.00 1,403,105.00

(5) Accounts receivable with top five closing balances by debtors

The ending balance of accounts receivable accounts for the ending balance of accounts receivable. The ending balance of bad debt provision is the name of the debtor.

Amount Proportion of total (%) Amount

Jiangsu Xinglin Pharmaceutical Co., Ltd. 1,000,000.00 14.46 1,000,000.00 Ningxia Ziguangtianhua Methionine Co., Ltd.

869,935.00 12.58

limited liability company

Daqing Haineng Chemical Technology Co., Ltd.

755,225.00 10.92

company

China Resources Secco Pharmaceutical Co., Ltd.

420,000.00 6.07

company

Jilin Baiao Biotechnology Co., Ltd.

330,000.00 4.77

company

Total 3,375,160.00 48.80 1,000,000.00

Prepayment

(1) Prepayments are listed based on aging

Ending balance Last year's end balance

Aging Ratio Ratio Amount Amount

(%) (%) Within 1 year 8,570,838.49 100.00 3,644,254.71 60.10 1 to 2 years 2,419,083.23 39.90Total 8,570,838.49 —— 6,063,337.94 ——

(2) Prepayments of the top five ending balances by prepayment objects

Name of the unit that accounts for the total closing balance of prepaid accounts Closing balance

Proportion (%)

Shandong Rensheng Precision Machining Co., Ltd. 1,050,000.00 12.25 Huanghua Mingxuan Trading Co., Ltd. 1,348,008.60 15.73 Jiangsu Jiashang Environmental Protection Technology Co., Ltd. 705,500.00 8.23 Jiangsu Guanli Chemical Equipment Manufacturing Co., Ltd. 609,000.00 7.11 Tianyu Chengxu Construction Group Co., Ltd. Wuhai Branch 600,000.00 7.00

Total 4,312,508.60 50.32

Other receivables

Item Ending balance Last year’s end balance

interest receivable

Dividends receivable

Other receivables 921,569.70 1,510,989.50 Total 921,569.70 1,510,989.50 (1) Other receivables

① Disclosure based on aging

Aging of accounts Ending balance Last year’s end balance

Within 1 year 21,569.70 1,425,000.00 1 to 2 years 1,000,000.00 6,530.00 2 to 3 years 160,225.00 3 to 4 years

4 to 5 years

More than 5 years 30,000.00 30,000.00 Subtotal 1,051,569.70 1,621,755.00 Less: Bad debt provision 130,000.00 110,765.50 Total 921,569.70 1,510,989.50 ② Classification by nature of payment

Nature of the payment Book balance at the end of the period Balance at the end of the previous year Security deposit 1,030,000.00 1,190,225.00 Reserve fund 100,000.00 Current account 14,757.02 331,530.00 Withholding and payment 6,812.68

Subtotal 1,051,569.70 1,621,755.00 Less: Bad debt provision 130,000.00 110,765.50 Total 921,569.70 1,510,989.50 ③ Bad debt provision accrual

The first stage The second stage The third stage

Whole life period Whole life period expected

Bad debt provision Total expected credit losses (unexpected credit losses (incurred) in the next 12 months

expected credit losses

Credit impairment occurs) Credit impairment)

Balance at the end of the previous year 80,765.50 - 30,000.00 110,765.50 Other receivables at the end of the previous year

The book balance of this period is:

——Transfer to the second stage

——Transfer to the third stage

The first stage The second stage The third stage

Whole life period Whole life period expected

Bad debt provision Total expected credit losses (unexpected credit losses (incurred) in the next 12 months

expected credit losses

Credit impairment occurs) Credit impairment)

——Return to the second stage

——Return to the first stage

Provision in this period 19,234.50 19,234.50 Transferred in this period

Sales in this period

Write-off in this period

Other changes

Ending balance 100,000.00 30,000.00 130,000.00 ④ Bad debt provisions

Amount of changes in the current period

end of previous year

Category Recovery or transfer Write-off or verification Closing balance Provision

Return sales

Provision for bad debts 110,765.50 19,234.50 130,000.00 Total 110,765.50 19,234.50 130,000.00 ⑤ Other receivables with top five closing balances collected by debtors

Accounting for other receivables

Account Account Name of bad debt provision unit Closing balance Ratio of total closing balance

Nature Age Closing balance

Example(%)

Ningxia Ziguangtianhua Methionine Guarantee 1-2

1,000,000.00 95.10

Acid Co., Ltd. Gold Year 100,000.00 Tianjin Wahaha Hongzhen Food Guarantee 5

30,000.00 2.85 30,000.00 Pin Beverage Trading Co., Ltd. Gold Years and above

—

Total —— 1,030,000.00 97.95 130,000.00

—

Inventory

(1) Inventory classification

Ending balance

Project

Book balance Provision for inventory decline Book value Raw materials 11,632,846.55 11,632,846.55 Work in progress 234,538.46 234,538.46 Inventory goods 19,919,885.81 19,919,885.81 Turnover materials 225,604.32 225,604.32

Ending balance

Project

Book balance Provision for inventory decline Total book value 32,012,875.14 32,012,875.14

(continued)

Balance at the end of the previous year

Project

Book balance Provision for inventory decline Book value Raw materials 10,198,329.31 10,198,329.31 Work in progress 2,203,324.52 2,203,324.52 Inventory goods 10,851,404.30 10,851,404.30 Material procurement 50,467.26 50,467.26 Turnover materials 308,670.37 308,670.37 Total 23,612,195.76 23,612,195.76

Other current assets

Item Closing balance The balance at the end of the previous year is to be deducted for taxes 2,482,875.59 942,597.14 Input tax to be certified 2,341,825.87 2,339,615.02 Prepaid corporate income tax 773,640.15

Total 5,598,341.61 3,282,212.16

Fixed assets

Item Ending balance Last year’s end balance

Fixed assets 123,332,624.84 163,864,004.96 Liquidation of fixed assets

Less: Impairment provision

Total 123,332,624.84 163,864,004.96

(1) Fixed assets

①Fixed assets

Housing and Office Transportation Production Production Facilities

Total items

Building Equipment Tools Equipment

1. Original book value

Ending balance of the previous year 94,025,17 1,105, 1,767, 7,698, 108,704, 213,301, amount 7.20 207.89 407.94 944.10 782.79 519.92
Increase in current period 10,088 131,23 393,946. 535,274. Amount .50 8.94 92 36

10,088 131,23 393,946. 535,274. (1) Purchase

.50 8.94 92 36

Housing and Office Transportation Production Production Facilities

Item Total Building Equipment Tools Appliances

(2) Projects under construction

transfer in

(3) Others

Decrease in funds for this period 537,481.9 173,89 298,10 19,658 42,610,3 43,639,4 2 9.39 9.66 .12 33.65 82.74

(1) Disposal or reporting 173,89 298,10 19,658 12,399,3 12,891,0 Waste 9.39 9.66 .12 43.48 10.65 537,481.9 30,210,9 30,748,4 (2) Others

2 90.17 72.09 93,487,69 941,39 1,600, 7,679, 66,488,3 170,197,

Ending balance

5.28 7.00 537.22 285.98 96.06 311.54

2. Accumulated depreciation

Ending balance of the previous year 10,793,79 609,70 1,309, 5,194, 31,529,5 49,437,5 8.63 5.66 968.62 500.84 41.21 14.96
Increased funds in this period 3,280,668 90,281 150,83 359,68 5,412,34 9,293,81 .57 .74 5.00 1.03 9.10 5.44 3,280,668 90,281 150,83 359,68 5,412,34 9,293,81 (1) Provision

.57 .74 5.00 1.03 9.10 5.44

Decrease in current period 165,00 264,09 18,675 11,418,8 11,866,6 0.28 1.74 .21 76.47 43.70

(1) Disposal or reporting 165,00 264,09 18,675 11,418,8 11,866,6 Waste 0.28 1.74 .21 76.47 43.70 14,074,46 534,98 1,196, 5,535, 25,523,0 46,864,6

Ending balance

7.20 7.12 711.88 506.66 13.84 86.70

3. Impairment provision

The balance at the end of the previous year

Increased funds in this period

(1) Provision

Reduction of funds in this period

(1) Dispose or report

waste

Ending balance

4. Book value

Housing and Office Transportation Production Production Facilities

Total items

Building Equipment Tools Equipment

Book price at the end of the period 79,413,22 406,40 403,82 2,143, 40,965,3 123,332, value 8.08 9.88 5.34 779.32 82.22 624.84
Closing accounts of the previous year 83,231,37 495,50 457,43 2,504, 77,175,2 163,864, face value 8.57 2.23 9.32 443.26 41.58 004.96

(2) Fixed assets with restricted ownership or use rights

Item Closing book value Reason for restriction

For details, see V. 18 Short-term Loans, V. 26 Long-term Houses and Buildings 82,368,544.90

borrow money

For details, see V. 18 Short-term Loans, V. 26 Long-term Production Equipment 35,318,764.99

borrow money

Total 117,687,309.89

Projects under construction

Item Ending balance Last year’s end balance

Construction in progress 71,121,806.10 31,868,466.36 Construction materials 1,182,837.89 1,182,837.89 Less: Impairment provision

Total 72,304,643.99 33,051,304.25 (1) Construction in progress

①Projects under construction

Ending balance Last year's end balance

Item Book balance Impairment Book price Book balance Impairment Book price Provision value Provision value

41,857,6 41,857,6 6,391,73 6,391,73Wuhai Project

45.22 45.22 8.08 8.08Dimethyl sulfone production 29,264,1 29,264,1 25,476,7 25,476,7 production projects 60.88 60.88 28.28 28.28

71,121,8 71,121,8 31,868,4 31,868,4 Total

06.10 06.10 66.36 66.36 ② Changes in important construction projects in progress during the current period

This book

Item capital End of the previous year Increase in the current period Transferred in the current period Others

Ending balance item name Fund source Balance Amount Fixed capital reduction

Amount of output

Uzbekistan Since 6,391,738.0 35,465,907. 41,857,645. Offshore project preparation 8 14 22

This book

Item capital End of the previous year Increase in the current period Transferred in the current period Others

Ending balance item name Fund source Balance Amount Fixed capital reduction

Amount of output

two

Methyl sulfone from 25,476,728. 3,787,432.6 29,264,160. Production project preparation 28 0 88 items

Total 31,868,466. 39,253,339. 71,121,806. Total 36 74 10 (2) Engineering materials

Ending balance Last year's end balance

Item Book balance, allowance for impairment, book price Book balance, allowance for impairment, book price

Amount reserve value Amount reserve value

Machinery equipment 1,182,837 1,182,837 1,182,837 1,182,837 .89 .89 .89 .89

1,182,837 1,182,837 1,182,837 1,182,837Total

.89 .89 .89 .89

Right-of-use assets

Project Plant and Equipment Warehouse Total

1. Original book value

Ending balance of the previous year 2,529,860.53 2,529,860.53
Increase this year 1,913,144.27 1,913,144.27
Decrease amount this year 1,913,144.27 1,913,144.27
Year-end balance 2,529,860.53 1,913,144.27 4,443,004.80

2. Accumulated depreciation

Ending balance of the previous year 843,286.84 843,286.84
Increase this year 210,821.71 273,306.32 484,128.03 (1) Provision 210,821.71 273,306.32 484,128.03
Amount reduced this year

(1) Disposal

Year-end balance 1,054,108.55 273,306.32 1,327,414.87

3. Impairment provision

Ending balance of the previous year
Amount increased this year

(1) Provision

Amount reduced this year

Project Plant and Equipment Warehouse Total (1) Disposal

Year-end balance

4. Book value

Book value at the end of the year 1,475,751.98 1,639,837.95 3,115,589.93
Book value at the end of the previous year 1,686,573.69 1,686,573.69
Intangible assets

(1) Intangible assets

Land use Yellow River water Non-patented technology

Project Software Total Rights Technology

1. Original book value

8,407,932. 2,358,500. 7,594,339. 253,631. 18,614,403.

Ending balance of the previous year

17 00 55 65 37

Increased amount in this period

(1) Purchase

(2) Internal research and development

(3) Increase in business mergers

Reduction amount in this period

8,407,932. 2,358,500. 7,594,339. 253,631. 18,614,403.

Ending balance

17 00 55 65 37

2. Accumulated amortization

1,664,009. 495,285.2 7,407,677. 78,203.2 9,645,175.4

Ending balance of the previous year

15 0 88 0 3

25,363.2

Increased amount in this period 168,158.64 94,340.04 186,661.67 474,523.55

25,363.2

(1) Provision 168,158.64 94,340.04 186,661.67 474,523.55

Reduction amount in this period

1,832,167. 589,625.2 7,594,339. 103,566. 10,119,698.

Ending balance

79 4 55 40 98

3. Impairment provision

Ending balance of the previous year
Increased amount in this period
Reduction amount in this period
Ending balance

4. Book value

6,575,764. 1,768,874. 150,065. 8,494,704.3

Book value at the end of the period

38 76 25 9

Land use Yellow River water Non-patented technology

Project Software Total

power technique

Book price at the end of the previous year 6,743,923. 1,863,214. 175,428. 8,969,227.9

186,661.67

Value 02 80 45 4

Note 1. In August 2019, the company's subsidiary Zhongrui (Inner Mongolia) Pharmaceutical Co., Ltd. signed a Yellow River water rights transfer contract with the Inner Mongolia Autonomous Region Water Rights Collection and Transfer Center Co., Ltd. and the Inner Mongolia Hetao Irrigation District Administration. The total cost is 2.3585 million yuan and the contract period is 25 years.

(2) Intangible assets with restricted ownership or use rights

Item Closing book value Reason for restriction

For details, see V. 18 Short-term Loans, V. 26 Long-term Land Use Rights 6,575,764.38

borrow money

Goodwill

(1) Original book value of goodwill

Increase in this period Decrease in this period

Name of the invested unit Ending balance of the previous year Business merger Disposal of ending balance

formed

Ningxia Ruiwei Technology Co., Ltd. 1,000.00 1,000.00 Total 1,000.00 1,000.00

Long-term deferred expenses

At the end of the previous year, increase in the current period, amortization in the current period, other decreases

Item Closing balance

Balance Amount Amount Amount

Purification workshop 159,210.00 79,680.00 79,530.00 Steam pipeline renovation

151,232.62 89,364.72 61,867.90 Project

Packaging material warehouse 224,610.00 117,167.85 107,442.15 Decoration fee 125,908.00 38,471.84 87,436.16 Total 535,052.62 125,908.00 324,684.41 336,276.21

Deferred income tax assets/deferred income tax liabilities

(1) Details of deferred income tax assets without offset

Ending balance Last year's end balance

Item Deductible temporary differences Deferred income tax Deductible temporary deferred income

Differences in assets Differences Tax asset credit impairment losses 533,105.00 85,121.00 430,000.00 64,500.00 Lease liabilities 3,289,042.34 574,413.30 1,824,197.95 364,839.59

Total 3,822,147.34 659,534.30 2,254,197.95 429,339.59 (2) Details of deferred income tax liabilities without offset

Ending balance Beginning balance

Item Taxable Temporary Taxable Temporary

Deferred income tax liabilities Deferred income tax liabilities

difference difference

Right-of-use assets 3,115,589.93 541,126.10 1,686,573.69 337,314.74Total 3,115,589.93 541,126.10 1,686,573.69 337,314.74 (3) Details of unrecognized deferred income tax assets

Item Ending balance Last year’s end balance

Deductible losses 81,346,769.48 56,310,528.18 Total 81,346,769.48 56,310,528.18

Other non-current assets

Ending balance

Project

Book balance Impairment provision Book value to be compensated - Caofeidian Project 6,261,246.57 6,261,246.57

Prepayment for long-term asset acquisition 4,573,868.16 4,573,868.16 Total 10,835,114.73 6,261,246.57 4,573,868.16 (continued)

Balance at the end of the previous year

Project

Book balance Impairment provision Book value to be compensated - Caofeidian Project 6,261,246.57 6,261,246.57

Prepayment for long-term asset acquisition 2,287,453.00 2,287,453.00 Total 8,548,699.57 6,261,246.57 2,287,453.00 Note: The State Oceanic Administration issued the "Opinions of the State Oceanic Administration on Further Strengthening the Bohai Sea Ecological Environment Protection Work" on May 18, 2017 (Guohaifa [2017] No. 7). The Caofeidian project is located in the Bohai Sea area. The project has been stopped and transferred to other current assets. The impairment has been fully increased, and the possibility of government compensation is small.

Assets with restricted ownership or use rights

Item Closing book value Reason for restriction

Monetary funds 486,591.00 judicially frozen

Provide guarantee for bank borrowings, see V.17 and V.26 for details. Long fixed assets 117,687,309.89

term loan

Providing guarantees for bank loans, see V.17 and V.26 for details. Long intangible assets 5,017,564.38

term loan

Total 123,191,465.27

Short-term borrowing

(1) Classification of short-term loans

Item Ending balance Last year’s end balance

Guaranteed loan 37,500,000.00 24,000,000.00 Credit loan 14,000,000.00 10,000,000.00 Mortgage + guaranteed loan 18,000,000.00 5,000,000.00 Mortgage loan 10,000,000.00 Total 69,500,000.00 49,000,000.00 Note: ① Guaranteed loan:

The Tianjin Wuqing Branch of the Agricultural Bank of China provided the company with a working capital loan of 10 million yuan, guaranteed by Li Naikuan, the company's deputy general manager.

The Tianjin Branch of Shanghai Pudong Development Bank provided the company with a working capital loan of RMB 10 million, guaranteed by the company's chairman Liu Changsuo, legal person Wang Honggang and director Xiao Yuanhai.

Tianjin Rural Commercial Bank Wuqing Branch provided the company with a working capital loan of 7.5 million yuan, guaranteed by the company's legal person Wang Honggang.

Shanhai Bank Tianjin Branch provided the company with a working capital loan of 10 million yuan, guaranteed by Liu Changsuo, chairman of the company.

③ Credit loan

Guosen Perfume Branch of Industrial and Commercial Bank of China Co., Ltd. provided the company with a working capital loan of RMB 10 million, unsecured and unsecured.

Industrial Bank Tianjin Branch provided the company with a working capital loan of RMB 4 million, unsecured and unsecured.

④ Mortgage + guaranteed loan

The company's subsidiary Zhongrui (Inner Mongolia) Pharmaceutical Co., Ltd. signed a loan contract with the Wuhai Electric Power Branch of the Bank of Inner Mongolia. The loan amount is 8 million yuan. The loan period is from March 27, 2025 to March 24, 2026. The company used part of its machinery and equipment as a mortgage, and Tianjin Zhongrui Pharmaceutical Co., Ltd. and the company's legal person Wang Honggang and his spouse Wang Wei provided guarantees.

The company's subsidiary Zhongrui (Inner Mongolia) Pharmaceutical Co., Ltd. signed a loan contract with the Wuhai Wuda Branch of the Agricultural Bank of China. The loan amount is 10 million yuan. The loan period is from December 10, 2025 to December 19, 2025. The company mortgages its land and above-ground buildings, and its parent company Tianjin Zhongrui Pharmaceutical Co., Ltd. provides a guarantee.

(2) Overdue short-term borrowings that have not been repaid

The Company has no overdue short-term borrowings that have not been repaid.

Accounts payable

(1) Presentation of accounts payable

Item Ending balance Last year’s end balance

Within 1 year 2,052,254.92 6,546,860.48 More than 1 year 9,172,613.18 10,147,685.45 Total 11,224,868.10 16,694,545.93

Contract liabilities

(1) Contract liabilities

Item Ending balance Last year's end balance Performance contract 2,905,012.48 1,038,165.97 Less: Included in other non-current liabilities 334,204.98 94,237.28 Total 2,570,807.50 943,928.69

Employee compensation payable

(1) Presentation of employee benefits payable

Item Ending balance of the previous year Increase in the current period Decrease in the current period Ending balance

Short-term salary 1,054,045.69 16,796,491.91 16,700,162.33 1,150,375.27

2. Post-employment benefits-settings

605,160.56 605,160.56

Contribution plan

3. Dismissal benefits

4. Others due within one year

welfare

Total 1,054,045.69 17,401,652.47 17,305,322.89 1,150,375.27 (2) Short-term compensation presentation

Item Ending balance of the previous year Increase in the current period Decrease in the current period Ending balance

Salaries, bonuses, allowances and

983,627.26 13,927,471.12 13,913,730.34 997,368.04 Subsidy

Employee welfare fees 49,871.40 529,186.07 485,161.67 93,895.80
Social insurance premiums - 1,645,389.39 1,629,008.19 16,381.20 Including: medical insurance premiums - 1,607,249.28 1,590,868.08 16,381.20 work injury insurance premiums - 38,140.11 38,140.11

maternity insurance premium

Housing provident fund - 314,889.00 314,889.00
Trade union funds and employee education

20,547.03 379,556.33 357,373.13 42,730.23 Education funds

Short-term paid absences
Short-term profit sharing plan

Total 1,054,045.69 16,796,491.91 16,700,162.33 1,150,375.27 (3) Presentation of defined contribution plan

Item Ending balance of the previous year Increase in the current period Decrease in the current period Ending balance

Basic pension insurance 586,818.52 586,818.52
Unemployment insurance premium 18,342.04 18,342.04
Enterprise annuity payment

Item Ending balance of the previous year Increase in the current period Decrease in the current period Total ending balance 605,160.56 605,160.56

Taxes payable

Item Ending balance Value-added tax at the end of the previous year 36,643.54 365,275.07 Corporate income tax 1,623.40 524,576.48 Urban maintenance and construction tax 8,090.20 46,321.19 Education surcharge 5,778.76 33,086.61 Personal income tax 10,796.45 10,219.30 Land use tax 3,525.00 3,525.00 Stamp duty 4,935.89 4,609.41 Water conservancy fund 701.39 1,862.14 Total 72,094.63 989,475.20

Other payables

Item Ending balance Interest payable at the end of the previous year 48,191.35 Dividends payable 22,690,780.20 Other payables 15,347,420.50 14,410,283.97 Total 15,347,420.50 37,149,255.52

(1) Interest payable

Item Ending balance Last year’s end balance Interest payable on short-term borrowings 48,191.35 Total 48,191.35

(2) Dividends payable

Item Closing balance Balance at the end of the previous year Ordinary stock dividends 22,690,780.20 Total 22,690,780.20

(3) Other payables

①Display according to nature of payment

Item Closing balance Last year’s closing balance Insurance premiums and personal social security 19,091.77 19,091.77 Shareholder borrowings 14,850,000.00 13,893,531.50 Guarantee deposit 1,675.00 204,031.97 Others 476,653.73 293,628.73 Total 15,347,420.50 14,410,283.97

Non-current liabilities due within one year

Item Closing balance Last year’s closing balance Long-term borrowings due within one year 10,600,000.00 Total 10,600,000.00

Other current liabilities

Item Closing balance Notes receivable whose balance at the end of the previous year has not been terminated 2,245,944.57 2,676,965.21 Output tax to be reversed 312,346.57 94,237.28 Total 2,558,291.14 2,771,202.49

Long-term borrowing

Item Ending balance Last year's end balance Guaranteed borrowings 7,600,000.00 Mortgage + guaranteed borrowings 9,700,000.00 12,900,000.00 Less: Long-term borrowings due within one year 10,600,000.00 Total 9,700,000.00 9,900,000.00 Note:

① The company signed a loan contract with the Tianjin Wuqing Branch of the Bank of China. The loan amount is 10 million yuan. The loan period is from June 28, 2024 to June 20, 2027. The company’s legal person Wang Honggang provides a guarantee and uses the company’s real estate-industrial (warehousing and logistics) buildings as collateral.

Lease liabilities

Increase this year

Item End of previous year

Its current year decrease year-end balance item balance new lease interest this year

him

Lease 2,270,600.0 2,183,486.2 66,685.7 595,751.6 3,925,020.3 Lease payment 0 0 1 0 1 Less:

Unconfirmed financing 446,402.05 270,341.93 80,766.01 635,977.97 Capital expenses

Combined 1,824,197.9 3,289,042.3

——————

Total 5 4

Estimated liabilities

Item Ending balance of the previous year Ending balance Cause of formation Water-saving project operation and maintenance fee, renovation fee 531,375.00 531,375.00 Water-saving project maintenance

Pending litigation 108,757.46

Total 531,375.00 531,375.00

Deferred income

End of last year, current period, current period minus

Item Closing balance Reason for formation

Balance increased less

Government subsidies 550,587.76 44,945.88 505,641.88

Total 550,587.76 44,945.88 505,641.88 —

Among them, projects involving government subsidies:

Ben

This period’s calculation and subsidy items were newly added at the end of the previous year.

Included in other non-operating income, ending balance, assets/revenue balance, subsidy, other changes

Income Amount Amount Interest Related

10KV allocation

550,587.76 44,945.88 505,641.88

Electrical engineering production related

—Total 550,587.76 44,945.88 505,641.88

—

Share capital

Increases and decreases in the current period (+, -)

Fa Gong

Remaining at the end of last year

Item Line Bonus Provident Fund Ending Balance Other Subtotal

new share transfer

shares shares

37,817,967.00 37,817,967.00Total

Capital reserve

Item Ending balance of the previous year Increase in the current period Decrease in the current period Ending balance Equity premium 60,145,901.41 60,145,901.41 Other capital reserves 413,540.81 413,540.81 Total 60,559,442.22 60,559,442.22

Special reserves

Item Ending balance of the previous year Increase in the current period Decrease in the current period Ending balance of safety production expenses 262,464.22 2,274,657.93 1,174,308.97 1,362,813.18 Total 262,464.22 2,274,657.93 1,174,308.97 1,362,813.18

Surplus reserve

Remaining at the end of last year

Item Increase in the current period Decrease in the current period Ending balance

Statutory surplus reserve 17,113,947.39 1,312,000.77 18,425,948.16 Discretionary surplus reserve 4,475,878.57 4,475,878.57 Total 21,589,825.96 1,312,000.77 22,901,826.73

Undistributed profits

Project Current Issue Previous Issue

56,937,017.9 70,866,758.1 Adjustment of undistributed profits at the beginning of the previous period

1 7 Adjust the total amount of undistributed profits at the beginning of the period (increase +, decrease -)

56,937,017.9

Adjusted opening undistributed profits 70,866,758.17

Add: Net profit attributable to shareholders of the parent company for the current period -2,167,676.08 11,029,569.79 Less: Appropriation to statutory surplus reserve 1,312,000.77 2,268,529.85 Appropriation to discretionary surplus reserve

Withdraw general risk reserve

Common stock dividends payable 22,690,780.20 Common stock dividends converted into share capital

53,457,341.0

Undistributed profits at the end of the period 56,937,017.91

Operating income and operating costs

(1) Operating income and operating costs

Amount of current period Amount of previous period

Project

Revenue Cost Revenue Cost Main business 82,547,744.18 63,145,783.77 114,077,870.44 78,908,660.77 Other business 2,090,092.77 903,592.67 1,207,944.53 25,563.09 Total 84,637,836.95 64,049,376.44 115,285,814.97 78,934,223.86

(2) Revenue and cost breakdown information

Amount of current period Amount of previous period

Income Category

Revenue Cost Revenue Cost Vitamin B family 54,186,350.21 46,925,466.46 71,868,138.95 61,213,289.93 Cardiovascular and cerebrovascular products 27,970,727.05 16,064,515.18 42,179,118.66 17,644,830.47Dimethyl sulfoxide 390,666.92 155,802.13 46,712.83 50,540.37Total 82,547,744.18 63,145,783.77 114,093,970.44 78,908,660.77

Taxes and surcharges

Item Amount for the current period Amount for the previous period

Urban maintenance and construction tax 234,560.26 332,694.36 Education surcharge 167,542.97 237,638.77 Stamp tax 71,515.34 77,553.06 Property tax 733,044.36 724,005.46 Land use tax 365,203.68 365,203.68 Vehicle and vessel use tax 6,841.77 6,832.42

Item Amount for the current period Amount for the previous period

Environmental protection tax 4,093.26 2,186.05 Water Conservancy Fund 5,017.19 3,427.38 Total 1,587,818.83 1,749,541.18 Note: For details of various taxes and additional calculation and payment standards, please see Note 4. Taxes.

Sales expenses

Item Amount for the current period Amount for the previous period

Employee compensation 1,401,801.90 1,316,548.75Business entertainment expenses 49,497.15 25,309.24Travel expenses 83,343.03 97,911.43Communication expenses 13,460.00 13,740.00Transportation expenses 1,170,960.34 734,722.40 Exhibition fee 135,031.14 107,187.74 Advertising and business promotion fee 1,280.00 3,386.87 Office fee 165,915.47 98,965.52 Depreciation fee 650,629.80 656,038.74 Other expenses 57,594.28 34,320.00 Total 3,729,513.11 3,088,130.69

Management expenses

Item Amount for the current period Amount for the previous period

Employee compensation 4,640,886.59 4,420,513.05 Intermediary agency service fees 391,934.02 435,755.62 Travel and transportation expenses 246,781.78 327,345.69 Depreciation and amortization 3,556,888.96 3,568,142.77 Business entertainment expenses 107,902.40 184,446.12 Office expenses 391,798.99 378,264.23 Insurance fees 137,167.61 118,369.88 Security fees 110,773.75 185,705.70 Consulting fees 491,610.11 341,357.61 Waste treatment fee 740,049.24 456,698.89 Disability insurance fee 152,731.97 165,061.28 Technical service fee 96,105.07 15,855.85 Labor insurance fee 12,820.98 1,395.92 Testing fee 266,773.61 166,462.28 Litigation fees 10,362.20

Others 215,863.69 101,325.50

Item Amount for the current period Amount for the previous period

Total 11,570,450.97 10,866,700.39

Research and development expenses

Item Amount for the current period Amount for the previous period

Employee compensation 3,098,872.94 2,733,033.28 Material expenses 3,063,594.59 4,797,773.74 Depreciation and amortization expenses 716,032.64 932,923.14 Commissioned external research and development expenses 30,232.01 834,788.11 Other expenses 14,150.94 784,029.72

Total 6,922,883.12 10,082,547.99

Financial expenses

Item Amount for the current period Amount for the previous period

Interest expense 2,338,942.92 2,178,434.60 Less: Interest income 123,190.39 729,623.58 Exchange gains and losses 14,601.83 -176,149.62 Handling fees 12,832.65 14,890.96 Others 22,716.68 80,074.06 Total 2,265,903.69 1,367,626.42

Other income

The current period’s gold and last period’s gold shall be included in the current period’s non-recurring profit and loss items.

amount of amount

20,216.

Stable job return subsidy

44,945. 53,285.

Government subsidies-deferred income

88 88

150,000

innovation funding

.00

100,000

High-tech enterprise awards

.00

2,071.4 3,029.4

Personal tax fee refund

4 7

2,039.1 1,500.0

Job expansion subsidy 2,039.18 8 0

36,500.

Apprenticeship subsidy 36,500.00 Key industry development of the Department of Industry and Information Technology of Inner Mongolia Autonomous Region 500,000

500,000.00Special funds .00

585,556 328,032

Total 538,539.18

.50 .02

Investment income

Item Amount for the current period Amount for the previous period Financial product income 100,182.59 270,023.18 Total 100,182.59 270,023.18

Credit impairment losses

Item Amount for the current period Amount for the previous period

Bad debt losses on accounts receivable -1,003,105.00 525.00 Bad debt losses on other receivables -19,234.50 -64,643.00 Total -1,022,339.50 -64,118.00

Income from asset disposal

Item Amount for the current period Amount for the previous period Amount included in non-recurring gains and losses for the current period Gains or losses on disposal of fixed assets -805,829.25 -805,829.25 Gains on disposal of projects under construction -463,716.81 -463,716.81 Total -1,269,546.06 -1,269,546.06

Non-operating income

Items included in the current period Amount of the current period Amount of the previous period Non-recurring gains and losses

The amount of export credit subsidy is 24,850.00

Unable to pay 8,949.40

Technical transformation subsidy 200,000.00

Wuhai Municipal Bureau of Industry and Information Technology logo analysis digital identity authentication 50,000.00

Others 34,718.97 12,043.14 34,718.97 Total 34,718.97 295,842.54 34,718.97

Non-operating expenses

Included in non-economic items of the current period Amount of the current period Amount of the previous period

Amount of regular profits and losses Tax late payment fees 66,209.60 251.03 66,209.60 Fines 15,900.00 70,000.00 15,900.00 Loss from damage and scrapping of non-current assets 99,990.11 99,990.11 Litigation compensation 6,479.46 6,479.46 Others 81,000.00 5,950.00 81,000.00Total 269,579.17 76,201.03 269,579.17

Among them, the fine details are as follows:

Punishment matters Amount of current period Punishment unit Punishment documents

Wuda District, Wuhai City Fire fine 900.00

District Fire Rescue Brigade (2025) No. 0003

Wuqing, Tianjin

Emergency penalty 15,000.00

District Emergency Management Bureau

Income tax expenses

(1) Income tax expense schedule

Item Amount for the current period Amount for the previous period Current income tax expense 1,673,472.94 3,364,737.85 Deferred income tax expense -26,383.35 935,816.17 Income tax refund -1,278.64 -100,163.13 Self-examination and back tax payment -148,253.85

Total 1,497,557.10 4,200,390.89

(2) Adjustment process of accounting profits and income tax expenses

Item Amount for this period

Total profit -7,329,115.88 Income tax expenses calculated according to statutory/applicable tax rates -1,099,367.38 The impact of different tax rates applicable to subsidiaries -40,389.61 The impact of adjusting income taxes in previous periods

Impact of non-taxable income

The impact of non-deductible costs, expenses and losses 34,689.38 The impact of using deductible losses that have not been recognized as deferred income tax assets in the previous period -86,396.23 The impact of deductible temporary differences or deductible losses that have not been recognized as deferred income tax assets this year

3,715,528.75 rings

Changes in the balance of deferred income tax assets/liabilities at the end of the previous year due to tax rate adjustments

Super deduction for R&D expenses -1,026,507.81 Income tax expense 1,497,557.10

Cash flow statement items

(1) Receive other cash related to operating activities

Item Amount for the current period Interest income for the previous period 123,190.39 729,623.58 Subsidy income 539,357.24 323,850.74 Current accounts 75,187,396.00 55,318,857.70 Restricted monetary funds at the beginning of the year recovered in the current period 376,027.32

Other non-operating income 34,718.97 36,893.14

Total 75,884,662.60 56,409,225.16 (2) Other cash payments related to operating activities

Item Amount for the current period Amount for the previous period Cash expenses paid 8,236,497.82 11,475,034.43 Payment of non-operating expenses 163,109.60 76,201.03 Financial expenses - handling fees 12,832.65 14,890.96 Payment of current account reserves, etc. 76,123,120.06 56,431,530.00 Restricted monetary funds at the end of the period 486,591.00

Total 85,022,151.13 67,997,656.42 (3) Other cash received related to investing activities

Item Amount for the current period Amount for the previous period Borrowing interest 1,149,371.07 1,008,050.63

Total 1,149,371.07 1,008,050.63 (4) Other cash received related to financing activities

Item Amount for the current period Amount for the previous period Shareholder borrowings 6,552,913.33

Total 6,552,913.33 (5) Cash payments related to other financing activities

Item Amount of the current period Amount of the previous period Repay shareholder borrowings 953,590.50

Lease liabilities 595,751.60 283,825.00

Total 1,549,342.10 283,825.00

Supplementary information for cash flow statement

(1) Supplementary information for cash flow statement

Supplementary information Amount for the current period Amount for the previous period

Adjust net profit to cash flow from operating activities:

Net profit -8,826,672.98 5,750,232.26 plus: asset impairment provision

Credit impairment loss 1,022,339.50 64,118.00 Depreciation of fixed assets, depreciation of oil and gas assets, depreciation of productive biological assets

9,777,943.47 8,659,465.42 Depreciation of old and leased assets

Amortization of intangible assets 474,523.55 1,355,912.83 Amortization of long-term prepaid expenses 324,684.41 187,079.76 Losses on disposal of fixed assets, intangible assets and other long-term assets (collection

1,269,546.06

Please fill in the column with "-" sign)

Loss from scrapping of fixed assets (income is listed with "-") 99,990.11

Loss from changes in fair value (income is listed with a “-” sign)

Supplementary information Amount for the current period Financial expenses for the previous period (income is listed with "-") 2,353,544.75 2,002,284.98 Investment losses (income is listed with "-") -100,182.59 -270,023.18 Decrease in deferred income tax assets (increase is listed with "-") -230,194.71 977,980.51 Increase in deferred income tax liabilities (decreases are indicated with "-") 203,811.36 -42,164.34 Decrease in inventories (increases are indicated with "-") -8,400,679.38 14,313,389.25 Decrease in operating receivables (increases are indicated with "-") -964,537.81 -29,238,035.78 Increase in operating payables (decreases are listed with "-") -4,477,526.54 15,796,872.26 Others -49,022.11 -745,586.41 Net cash flow generated from operating activities -7,522,432.91 18,811,525.56

Major investments and financing activities that do not involve cash receipts and payments:

debt to capital

Convertible corporate bonds due within one year

Financing leased fixed assets

Net changes in cash and cash equivalents:

Closing balance of cash 49,883,404.73 87,083,259.44 Less: Closing balance of cash last year 87,083,259.44 49,610,914.99 Add: Closing balance of cash equivalents

Less: Cash equivalents at the end of the previous year

Net increase in cash and cash equivalents -37,199,854.71 37,472,344.45 (2) Composition of cash and cash equivalents

Items remaining at the end of the previous year Ending balance

49,883,404.7 87,083,259.4

1. Cash

3 4 Of which: cash on hand 133,987.56 20,769.51

49,749,417.1 87,062,489.9 Bank deposits that can be used for payment at any time

7 3Other monetary funds available for payment at any time

2. Cash equivalents

Including: Bond investments due within three months

49,883,404.7 87,083,259.4

3. Closing balance of cash and cash equivalents

3 4 Of which: Restricted use of cash and cash equivalents by the parent company or subsidiaries within the group

6. R&D expenditures

R&D expenditures for the current period

Item Amount for the current period Amount for the previous period

Expenditure R&D expenditure 6,922,883.12 10,082,547.99 Capitalized R&D expenditure

Total 6,922,883.12 10,082,547.99 (1) Expenditure R&D expenses

Item Amount for the current period Amount for the previous period

Total 6,922,883.12 10,082,547.99

7. Interests in other entities

Structure of enterprise groups

Shareholding ratio (%)

Note Main Note Business

Name of subsidiary company Time to obtain capital Registered place of business Nature Direct

pick up

Tianjin Hengtianli Chemical Tiantian Pharmaceutical

100.00 Contributed capital to establish Xue Co., Ltd. Jin Jin Jin Industry

Zhongrui (Inner Mongolia) Nei Nei Pharmaceutical

70.00 Capital investment to establish Pharmaceutical Co., Ltd. Mongolia Mongolia Mongolia Industry

Ningxia Ruiwei Technology Ning Ning Ning Pharmaceutical

55.00 Acquisition Co., Ltd. Xia Xia Xia Ye

8. Risks related to financial instruments

The company's main financial instruments include loans, accounts receivable, accounts payable, etc. For detailed descriptions of each financial instrument, please see the relevant items in Note 5 of this note. The risks associated with these financial instruments, and the risk management policies adopted by the Company to mitigate these risks, are described below. The company's management manages and monitors these risk exposures to ensure that the above risks are controlled within limited limits.

The company uses sensitivity analysis techniques to analyze the possible impact of reasonable and possible changes in risk variables on current profits and losses or shareholders' equity. Since any risk variable rarely changes in isolation, and the correlation between variables will have a significant impact on the final impact of a change in a certain risk variable, the following content is based on the assumption that changes in each variable are independent.

(1) Risk management objectives and policies

The company's goal in risk management is to achieve an appropriate balance between risks and returns, reduce the negative impact of risks on the company's operating performance to a minimum, and maximize the interests of shareholders and other equity investors. Based on this risk management objective, the company's basic risk management strategy is to determine and analyze the various risks faced by the company, establish an appropriate risk tolerance bottom line and conduct risk management, and supervise various risks in a timely and reliable manner to control risks within a limited range.

Market risk

(1) Interest rate risk-cash flow change risk

The Company's risk of changes in cash flows of financial instruments due to changes in interest rates is mainly related to floating rate bank borrowings (see Note V. 18 for details). The Company's policy is to maintain floating interest rates on these borrowings.

Interest rate risk sensitivity analysis:

Interest rate risk sensitivity analysis is based on the following assumptions:

 Changes in market interest rates affect interest income or expenses from variable rate financial instruments;

 For fixed-rate financial instruments measured at fair value, changes in market interest rates only affect their interest income or expenses;

 For derivative financial instruments designated as hedging instruments, changes in market interest rates affect their fair value and all interest rate hedges are expected to be highly effective;

 Calculate changes in the fair value of derivative financial instruments and other financial assets and liabilities using the discounted cash flow method using market interest rates on the balance sheet date.

Credit risk

On December 31, 2025, the maximum credit risk exposure that may cause the company's financial losses mainly comes from the loss of the company's financial assets due to the failure of the other party to the contract to perform its obligations and the financial guarantees assumed by the company, specifically including:  The carrying amount of the financial assets recognized in the consolidated balance sheet; for financial instruments measured at fair value, the book value reflects its risk exposure, but not the maximum risk exposure, and its maximum risk exposure will change with changes in fair value in the future.

The Company's working capital is deposited in banks with higher credit ratings, so the credit risk of working capital is lower.

Liquidity risk

When managing liquidity risk, the Company maintains and monitors cash and cash equivalents that management considers sufficient to meet the Company's operating needs and reduce the impact of cash flow fluctuations. The Company's management monitors the use of bank borrowings and ensures compliance with borrowing agreements.

9. Related parties and related transactions

Information about the company’s subsidiaries

For details, please see Note 7.1. Composition of Enterprise Groups.

Other related parties

Names of other related parties Relationship between other related parties and the company

Beijing Borda Biotechnology Development Co., Ltd. Other companies controlled by the company’s directors

Names of other related parties Relationship between other related parties and the company

DaDao Longda (Beijing) Pharmaceutical Technology Development Co., Ltd.

company shareholders

Division

Liu Changsuo Chairman

Wang Honggang General Manager

Li Naikuan Director, Deputy General Manager

Cui Baogang Director

Xiao Yuanhai Director

Gao Zhanyou Director, Secretary of the Board of Directors

Zhou Ying Director

Qu Xiujie Financial Director

Zhang Yanqing Chairman of the Supervisory Board

Xu Liqiang Supervisor

Xu Haixia Supervisor

Ningxia Zhongwei Technology Co., Ltd. is the controlling shareholder of its subsidiary Ruiwei Technology, holding 45% of the shares

Related party transactions

(1) Related transactions related to the purchase and sale of goods, provision and receipt of services

In 2025, there were no related transactions involving the purchase and sale of goods, provision and receipt of services between the company and related parties. (2) Related entrusted management/entrusted management situation

In 2025, there was no related entrusted management/entrusted management between the company and related parties.

(3) Related contracting situation

In 2025, there were no related-party contracting transactions between the company and related parties.

(4) Related leasing situation

In 2025, there were no related leasing transactions between the company and related parties.

(5) Related guarantees

①The company serves as the guaranteed party

Guarantee is the guarantor. Guarantee amount. Guarantee starting date. Guarantee expiration date. Has it been fulfilled?

Bi Liu Changsuo, Wang Honggang, Xiao Yuanhai 10,000,000.00 2025-3-31 2026-3-25 No Wang Honggang 7,500,000.00 2025-9-27 2026-9-23 No Liu Changsuo 10,000,000.00 2025-8-25 2026-8-8 No Wang Honggang, Wang Wei 8,000,000.00 2025-3-27 2026-3-24 No Wang Honggang 9,700,000.00 2024-6-28 2027-6-20 No (6) Related party fund lending

Project name Amount for the current period Amount for the previous period

Removed:

Ningxia Zhongwei Technology Co., Ltd. 14,850,000.00 13,893,531.50 Total 14,850,000.00 13,893,531.50 (7) Asset transfer and debt restructuring of related parties

In 2025, there were no related asset transfers or debt restructuring transactions between the company and related parties.

Accounts receivable and payable from related parties

(1) Payable items

Project name Ending balance Beginning balance

Other payables:

Ningxia Zhongwei Technology Co., Ltd. 14,850,000.00 13,893,531.50 Total 14,850,000.00 13,893,531.50

10. Commitments and contingencies

Major commitments

None.

Contingent matters

(1) Contingent liabilities arising from pending litigation and arbitration and their financial impact

On August 1, 2025, the People's Court of Guannan County, Jiangsu Province issued a civil ruling (2025) Su 0724 Caibao No. 617. Due to an engineering contract dispute between the company Ningxia Ruiwei Technology Co., Ltd. and Lianyungang Qingjiang Chemical Equipment Installation Co., Ltd., the court froze bank deposits of 486,591.00 yuan in the company's name. On December 3, 2025, the People's Court of Guannan County, Jiangsu Province issued the (2025) Su 0724 Minchu No. 8547 Civil Judgment. Ningxia Ruiwei Technology Co., Ltd. needs to pay the plaintiff Lianyungang Qingjiang Chemical Equipment Installation Co., Ltd. 486,561.00 yuan in labor remuneration and capital occupation losses (the capital occupation losses are based on 486,561.00 yuan as the principal since October 2025). The one-year LPR interest rate for the same period will be calculated from the 30th of March until the date of actual payment). At the same time, the company shall bear the preservation fee of RMB 2,593.00 and the case acceptance fee of RMB 4,299.00. On December 16, 2025, Ningxia Ruiwei Technology Co., Ltd. believed that the first-instance judgment contained errors in fact identification and legal application, and filed a written defense against the first-instance judgment.

As of the reporting date, the case has not yet obtained a final verdict. Based on the principle of prudence, the company confirmed an estimated liability of RMB 108,757.46.

11. Events after the balance sheet date

none.

12. Other important matters

Correction of early errors

None.

Debt restructuring

None.

Asset replacement

None.

Annuity plan

None.

Termination of operations

None.

Branch information

None.

Other important matters that have an impact on investors’ decision-making

None.

13. Notes on main items of the company’s financial statements

Accounts receivable

(1) Disclosure based on aging

Aging Closing balance Last year's closing balance within 1 year 2,984,343.71 4,954,410.13 More than 5 years 400,000.00 400,000.00 Subtotal 3,384,343.71 5,354,410.13 Less: bad debt provision 400,000.00 400,000.00

Total 2,984,343.71 4,954,410.13 (2) Classified and presented according to bad debt accrual method

Ending balance

Book balance Bad debt provision

Category

Proportion Book value amount Amount Provision proportion (%)

(%)

Bad individual provision

400,000.00 11.82 400,000.00 100.00 Accounts receivable prepared

Provision based on combination

Accounts receivable for bad debt provision 2,984,343.71 88.18 2,984,343.71

Among them: aging

2,984,343.71 88.18 2,984,343.71 combination

Related parties

Total 3,384,343.71 —— 400,000.00 —— 2,984,343.71 (continued)

Balance at the end of the previous year

Book balance Bad debt provision

Category

Proportion Book value amount Amount Provision proportion (%)

(%)

Bad individual provision

400,000.00 7.47 400,000.00 100.00

accounts receivable

Provision based on combination

Accounts receivable for bad debt provisions 4,954,410.13 92.53 4,954,410.13

Among them: aging

4,703,410.13 87.84 4,703,410.13 combination

Related parties 251,000.00 4.69 251,000.00

Total 5,354,410.13 —— —— 4,954,410.13 ① Accounts receivable for which bad debt provisions are individually made at the end of the period

Ending balance

Accounts receivable (by unit) Provision

Book balance Bad debt provision Provision basis

Proportion

Nanjing Hekai Chemical Technology Co., Ltd. 400,000.00 400,000.00 100.00 See the description for details

Total 400,000.00 400,000.00 ————Continued from the above table

Balance at the end of the previous year

Accounts receivable (by unit) Provision

Book balance Bad debt provision Provision basis

Proportion

Nanjing Hekai Chemical Technology Co., Ltd. 400,000.00 400,000.00 100.00 See the description for details

Total 400,000.00 400,000.00 —— ——Explanation: Nanjing Hekai Chemical Technology Co., Ltd. has been sued by multiple units and has become insolvent. The possibility of recovery is very small. ②In the combination, accounts receivable for which bad debt provisions are made based on the aging combination

Ending balance

Item Provision Proportion Book Balance Bad Debt Provision

(%) Within 1 year 2,984,343.71

Total 2,984,343.71

(3) Bad debt provisions

Amount of changes in the current period

end of previous year

Category Recovery or Transfer Write-off or Approval Ending Balance Balance Provision

Return sales

Individual provision

400,000.00 400,000.00 Bad debt provision

Total 400,000.00 400,000.00 (4) The top five accounts receivable at the end of the period by debtors

The ending balance of accounts receivable accounts for the ending balance of accounts receivable. The ending balance of bad debt provision is the name of the debtor.

Amount Proportion of total (%) Amount

China Resources Secco Pharmaceutical Co., Ltd.

420,000.00 12.41

company

Nanjing Hekai Chemical Technology Co., Ltd.

400,000.00 11.82 400,000.00Company

Qingdao Xingyu Biotechnology Co., Ltd.

260,000.00 7.68

company

Zhengzhou Ruipu Bioengineering Co., Ltd.

256,500.00 7.58

company

Carabao,Tawandang,Co,Ltd 278,340.48 8.22

Total 1,614,840.48 47.71 400,000.00

Other receivables

Item Ending Balance Previous Year Ending Balance

interest receivable

Dividends receivable

Other receivables 72,492,566.66

Total 72,492,566.66 (1) Other receivables

① Disclosure based on aging

Aging Closing balance Last year’s closing balance

Within 1 year 39,006,159.02 72,492,566.66 1 to 2 years 66,515,759.16

More than 5 years 30,000.00 30,000.00 Subtotal 105,551,918.18 72,522,566.66 Less: Bad debt provision 30,000.00 30,000.00

Total 105,521,918.18 72,492,566.66 ② Classification by nature of payment

Nature of payment Book balance at the end of the period Margin balance at the end of the previous year 30,000.00 30,000.00 Current accounts 105,521,918.18 72,492,566.66 Subtotal 105,551,918.18 72,522,566.66 Less: Bad debt provision 30,000.00 30,000.00

Total 105,521,918.18 72,492,566.66 ③ Bad debt provision accrual

The first stage The second stage The third stage

Whole life period Whole life period expected

Bad debt provision Total expected credit losses (unexpected credit losses (incurred) in the next 12 months

expected credit losses

Credit impairment occurs) Credit impairment)

Balance at the beginning of the period 30,000.00 30,000.00 Other receivables at the beginning of the period

Face balance in the current period:

——Transfer to the second stage

——Transfer to the third stage

——Return to the second stage

——Return to the first stage

Provision for this period

Transferred in this period

Sales in this period

Write-off in this period

Other changes

Closing balance 30,000.00 30,000.00 ④ Bad debt provisions

Amount of changes in the current period

end of previous year

Category Recovery or Transfer Write-off or Approval Ending Balance Balance Provision

Return sales

Aging combination 30,000.00 30,000.00

Total 30,000.00 30,000.00 ⑤ Other receivables with top five closing balances collected by debtors

Bad debts shall be accounted for in other receivables

Name of accounting unit Nature of payment Ending balance Ratio of total ending balance

Age Remaining cases at the end of period (%)

Sino-Swiss (Inner Mongolia)

Loan 87,365,759.16 years, 1- 82.77

Pharmaceutical Co., Ltd.

2 years

Ningxia Ruiwei Technology

Loan 18,150,000.00 Within year, 1- 17.20

Ltd.

2 years

Tianjin Wahahahong

Zhen Food and Beverage Trading Co., Ltd. Deposit 30,000.00 0.02 30,000.00

years and above

company

—

Total —— 105,545,759.16 99.99 30,000.00

—

Long-term equity investment

(1) Classification of long-term equity investments

Ending balance Last year's end balance item Book balance minus Book price Book balance Impairment Book value Reserve value

119,369,5 119,369,5 119,369,5 119,369,5 Investment in subsidiaries

32.22 32.22 32.22 32.22 For joint ventures and joint ventures

industry investment

119,369,5 119,369,5 119,369,5 119,369,5Total

32.22 32.22 32.22 32.22 (2) Investment in subsidiaries

This issue

Invested item Ending balance of the previous year Impairment allowance

Closing balance Provision for impairment

Number of positions Increased during the period Decreased during the period Ending balance of provision

Prepare

Sino-Swiss (Inner Mongolia)

Gu) Pharmaceutical Co., Ltd. 117,668,532.22 117,668,532.22

company

Tianjin Hengtian

1,700,000.00 1,700,000.00

Lee Chemical Co., Ltd.

Ningxia Ruiwei

1,000.00 1,000.00

Technology Co., Ltd.

Total 119,369,532.22 119,369,532.22

Operating income and operating costs

Amount of current period Amount of previous period

Project

Revenue Cost Revenue Cost Main business 72,944,024.15 47,120,317.41 102,687,278.39 64,782,092.53 Other business 4,112,202.93 2,916,954.81 4,809,305.48 3,161,380.27

Total 77,056,227.08 50,037,272.22 107,496,583.87 67,943,472.80

Investment income

Item Amount for the current period Amount for the previous period Investment income obtained during the holding period of trading financial assets 44,272.13 153,915.86

Total 44,272.13 153,915.86

14. Supplementary information

Detailed statement of non-recurring profits and losses for the current period

Item Amount

Gains and losses from the disposal of non-current assets, including the write-off portion of asset impairment provisions that have been made;

1,269,546.06

Government subsidies included in the current profit and loss, but are closely related to the company’s normal business operations and comply with national policies and regulations.

538,539.18, except for government subsidies that are enjoyed according to determined standards and have a lasting impact on the company’s profits and losses;

Fund occupation fees charged to non-financial enterprises included in current profits and losses 1,149,371.07
Other non-operating income and expenses other than the above items. -53,662.46
Other profit and loss items that meet the definition of non-recurring profits and losses

Total non-recurring profits and losses before deducting income tax 364,701.73 Less: Amount affected by income tax 148,662.64 Total non-recurring profits and losses after deducting income tax 218,518.55 Amount affected by minority shareholders' profits and losses (loss is represented by "-") 138,523.40

Total 77,515.69

Return on net assets and earnings per share

earnings per share

weighted average net worth

Profit during the reporting period Basic diluted yield (%)

Earnings per share Earnings per share Net profit attributable to the company's ordinary shareholders -1.23 -0.06 -0.06 After deducting extraordinary gains and losses, net profit attributable to ordinary shareholders

-1.28 -0.06 -0.06 net profit

Tianjin Zhongrui Pharmaceutical Co., Ltd.

April 21, 2026

Attachment: Adjustments and Differences in Accounting Information

1. Changes in accounting policies, changes in accounting estimates or correction of major errors, etc.

(1) Retrospective adjustments or restatements of accounting data

□Changes in accounting policies □Correction of accounting errors □Other reasons √Not applicable

(2) Reasons and effects of changes in accounting policies, accounting estimates or correction of major accounting errors

□Applicable √Not applicable

2. Non-recurring profit and loss items and amounts

Unit: Yuan

Item Amount

Profit and loss from disposal of non-current assets, including the write-off of provision for asset impairment of -1,269,546.06

Government subsidies included in the current profit and loss, but closely related to the company's normal operations 538,539.18 business, in compliance with national policies and regulations, and in accordance with the determination

A government that enjoys standards and has a lasting impact on the company's profits and losses

Except for subsidies;

Fund occupation fees charged to non-financial enterprises included in current profits and losses 1,149,371.07

Other non-operating income and expenses other than the above items -53,662.46

Total non-recurring gains and losses 364,701.73 Less: Income tax impact

148,662.64 Impact on minority shareholders’ equity (after tax) 138,523.40

Net non-recurring gains and losses 77,515.69

3. Differences in accounting data under domestic and overseas accounting standards

□Applicable √Not applicable