Audit Opinion - The audit opinion states that the financial statements of Jiangsu Litong Electronics Co., Ltd. fairly reflect the company's financial position as of December 31, 2024, and its operating results and cash flows for the year 2024 [2]. Key Audit Matters - Revenue recognition is identified as a key audit matter due to inherent risks associated with improper revenue recognition to meet specific targets. The company's revenue for 2024 primarily comes from the sales of precision metal stamping components, electronic components, and computing services [3][4]. - Long-term asset impairment is another key audit matter, as the book value of fixed assets, construction in progress, and right-of-use assets collectively accounts for 49.17% of total assets as of December 31, 2024. The impairment testing involves significant management judgment and estimates [4][5]. Financial Statements Overview - The company’s financial statements are prepared based on the going concern assumption, indicating no significant doubts about its ability to continue operations for the next 12 months [10]. - The company’s registered capital is RMB 259.93 million, with a total of 259.93 million shares, and its stock has been listed on the Shanghai Stock Exchange since December 24, 2018 [10]. Accounting Policies - The company adheres to the Chinese Accounting Standards, ensuring that the financial statements provide a true and complete reflection of its financial status, operating results, and cash flows [11]. - The company uses the weighted average method for inventory valuation and recognizes inventory at the lower of cost or net realizable value [28]. Financial Performance - The company’s revenue for the year 2024 is primarily derived from its core business activities, including the sale of precision metal components and electronic components, as well as computing services [3][4].

Group 1 - The audit report indicates that the financial statements of Huahong Semiconductor Co., Ltd. fairly reflect its financial position as of December 31, 2024, and its operational results for the year 2024 [1][2] - The audit was conducted in accordance with Chinese CPA auditing standards, ensuring independence and adherence to professional ethics [1][2] - Key audit matters included long-term asset impairment and the fair value determination of equity investments, which were significant due to their complexity and the management's judgment involved [2][3] Group 2 - The company is responsible for preparing financial statements in accordance with accounting standards, ensuring they reflect a true and fair view of its financial position [4][5] - The management is tasked with assessing the company's ability to continue as a going concern and disclosing relevant matters [5] - The governance layer oversees the financial reporting process, ensuring compliance and accuracy [5] Group 3 - The financial statements are prepared based on the going concern assumption, and the company has adopted specific accounting policies and estimates relevant to its operations [8][9] - The company’s financial reporting is in compliance with the accounting standards issued by the Ministry of Finance, ensuring transparency and reliability [8][9] - The company’s functional currency is the US dollar, while the financial statements are presented in Renminbi [9] Group 4 - The company has established significant accounting policies regarding inventory, fixed assets, and financial instruments, ensuring accurate measurement and reporting [10][11] - The impairment of long-term assets and the valuation of equity investments are critical areas requiring significant management judgment [2][3] - The company employs a perpetual inventory system and measures inventory at the lower of cost or net realizable value [24]