SUPCON Technology Co., Ltd

2024 Internal Control Evaluation Report

All shareholders of SUPCON Technology Co., Ltd.:

In accordance with the provisions of the Basic Standards for Enterprise Internal Control and its supporting guidelines and other internal control regulatory requirements (hereinafter referred to as the "Enterprise Internal Control Specification System"), combined with the Company's (hereinafter referred to as the Company's) internal control system and evaluation methods, and on the basis of daily supervision and special supervision of internal control, we evaluated the effectiveness of the Company's internal control as of December 31, 2024 (the reference date of the internal control evaluation report). I. Important Notices

It is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control, evaluate its effectiveness, and truthfully disclose the internal control evaluation report in accordance with the provisions of the enterprise's internal control system. The Supervisory Board supervises the establishment and implementation of internal controls by the Board of Directors. Managers are responsible for organizing and leading the day-to-day operation of the company's internal controls. The Board of Directors, the Board of Supervisors, the directors, supervisors and senior management of the Company guarantee that there are no false records, misleading statements or material omissions in the content of this report, and assume individual and joint legal liability for the authenticity, accuracy and completeness of the content of the report.

The goal of the company's internal control is to reasonably ensure the legal compliance of operation and management, asset security, true and complete financial reports and related information, improve operational efficiency and effectiveness, and promote the realization of development strategy. Due to the inherent limitations of internal controls, it can only provide reasonable assurance that the above objectives will be achieved. In addition, there is a risk that the effectiveness of future internal controls will be inferred based on the results of internal control evaluations because changes in circumstances may lead to inappropriate internal controls or reduced compliance with control policies and procedures.

Conclusions of the internal control evaluation

1. Whether the company has any material deficiencies in the internal control over financial reporting on the reference date of the internal control evaluation report

□ Yes √ No

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

√ valid □ invalid

According to the identification of material deficiencies in the Company's internal control over financial reporting, there were no material deficiencies in the internal control over financial reporting as of the reference date of the internal control evaluation report, and the Board of Directors believes that the Company has maintained effective internal control over financial reporting in all material respects in accordance with the requirements of the standard system of internal control of the Company and relevant regulations.

3. Whether material deficiencies in internal control over non-financial reporting were found

□ Yes √ No

According to the identification of material deficiencies in the Company's internal control over non-financial reporting, the Company did not find any material deficiencies in the internal control over non-financial reporting as of the reference date of the internal control evaluation report.

4. Factors influencing the conclusion of the internal control effectiveness evaluation between the benchmark date of the internal control evaluation report and the date of issuance of the internal control evaluation report

□ Applicable √ Not applicable

There were no factors affecting the conclusion of the internal control effectiveness evaluation between the benchmark date of the internal control evaluation report and the date of issuance of the internal control evaluation report.

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

√ Yes □ No

6. Whether the disclosure of material deficiencies in the internal control audit report of non-financial reporting is consistent with the disclosure in the company's internal control evaluation report√ and whether it is □ or no

Evaluation of internal control

(1) Scope of internal control evaluation

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

1. The main units included in the scope of evaluation include: the company and the subsidiaries included in the scope of consolidated statements

2. Proportion of units included in the scope of evaluation:

Indicator Proportion (%)

The ratio of the total assets of the units included in the evaluation scope to the total assets of the company's consolidated financial statements is 100

The ratio of the total operating income of the units included in the evaluation scope to the total operating income of the company's consolidated financial statements is 100

3. The main operations and matters to be included in the scope of the evaluation include:

Corporate Governance, Management Structure, Development Strategy, Human Resources, Administrative Management, Information Communication, Corporate Culture, Risk Management, Internal Supervision, Budget Management, Fund Management, Financial Reporting, Accounting, Asset Management, Related Party Transactions, Financial Management, Procurement Management, Sales Management, Engineering Management, Production and Operation Management, Quality Management, Safety and Environmental Protection, Investment and M&A, Guarantee Business, Legal Affairs, Research and Development, Information System, etc.

4. High-risk areas to focus on include:

Sales management, procurement management, production and operation management, R&D and development management, capital management, investment management, etc.

5. Whether the above-mentioned units, businesses and matters included in the scope of evaluation, as well as high-risk areas, cover the main aspects of the company's operation and management, and whether they exist

in major omissions

□ Yes √ No

6. Whether there is a statutory exemption

□ Yes √ No

7. Other Notes

not

(2) The basis for internal control evaluation and the criteria for identifying internal control deficiencies

The company organizes and carries out internal control evaluation in accordance with the enterprise internal control standard system and other internal control supervision requirements.

1. Whether the specific criteria for identifying internal control deficiencies have been adjusted from previous years

□ Yes √ No

The Board of Directors of the Company distinguishes between internal control over financial reporting and non-financial reporting internal control in accordance with the requirements for the identification of material, important and general deficiencies in the internal control system of the enterprise, combined with factors such as the company's size, industry characteristics, risk appetite and risk tolerance, and researches and determines the specific identification standards for internal control deficiencies applicable to the Company, which are consistent with those of previous years.

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

The quantitative criteria for the evaluation of internal control deficiencies in financial reporting determined by the Company are as follows:

Indicator Name Quantitative Standard for Major Defects Quantitative Standard for Important Defects Quantitative Standard for General Defects

Operating Income Misstatement Amount≧ 1% of Operating Income 1% > Misstated Amount ≧ Operating Income Misstated Amount< 0.5% of Operating Income 0.5% Total Assets Misstated Amount≧ 1% of Total Assets 1% > Misstated Amount≧ Total Assets Misstated Amount< total assets

0.5% 0.5%

Illustrate:

Losses that may be caused or resulting from internal control deficiencies related to the income statement shall be measured by the operating income indicator; Losses that may result from or result from internal control deficiencies are related to the balance sheet and are measured by the total assets indicator.

The qualitative criteria for the evaluation of internal control deficiencies in financial reporting determined by the Company are as follows:

Nature of the defect Qualitative criteria

Defects, alone or in combination with other deficiencies, that prevent or detect and correct material errors in financial reporting in a timely manner

newspapers, including but not limited to:

1. The control environment is ineffective;

2. Fraud by the company's directors, supervisors and senior management;

3. The company has made substantial corrections to the published financial reports;

4. Material misstatement in the current financial report discovered by the certified public accountant but not identified by the company's internal control; 5、

The audit committee and the internal audit department are ineffective in supervising the company's internal control over financial reporting.

Deficiencies, either alone or in combination with other deficiencies, which result in a timely failure to prevent or detect and correct in a timely manner, do not constitute a material in the financial report

Misstatements that are materially misstated but require management's attention, including but not limited to:

1. Failure to select and apply accounting policies in accordance with GAAP;

2. Failure to establish anti-fraud procedures and control measures;

3. There is no corresponding control mechanism for the accounting treatment of unconventional or special transactions, or it is not implemented and there is none

corresponding compensatory controls;

4. There are one or more deficiencies in the control of the financial reporting process at the end of the period and the preparation of the financial report cannot be reasonably guaranteed

Reports achieve true and complete goals.

General defects Control deficiencies other than the above-mentioned major defects and important defects.

Illustrate:

not

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

The quantitative criteria for the evaluation of internal control deficiencies in non-financial reporting determined by the Company are as follows:

Indicator Name Quantitative Standard for Major Defects Quantitative Standard for Important Defects Quantitative Standard for General Defects

Operating income Direct property loss ≧ operating income 1% > direct property loss ≧ operating direct property loss < 1% of operating income 0.5% of income 0.5% of total assets Direct property loss ≧ total assets 1% > direct property loss ≧ assets Direct property loss< total assets

1% of 0.5% of total 0.5%

Illustrate:

not

The qualitative criteria for the evaluation of internal control deficiencies in non-financial reporting determined by the Company are as follows:

Nature of the defect Qualitative criteria

Major Defects If there is a high probability of a defect occurring, it can seriously reduce the efficiency or effectiveness of the work, or greatly increase the uncertainty of the effect

or make it seriously deviate from the expected goal as a major defect, including but not limited to: 1. The company's decision-making process is not scientific

learning and unreasonable, resulting in serious deviations from strategic goals and major mistakes; 2. Violation of national laws and regulations; 3、

the loss of management personnel or key technical personnel; 4. Negative news in the media is frequent; 5. The knot of internal control evaluation

In particular, major or important deficiencies have not been rectified; 6. Lack of system control or systematic failure of important business

Effect.

Important Defects If there is a high probability of defects, they can significantly reduce the efficiency or effectiveness of the work, or significantly increase the uncertainty of the effect

Qualitatively, or significantly deviating from the intended target, is a major drawback.

General Defects If the defect is less likely to occur, it will reduce the efficiency or effectiveness of the work, or increase the uncertainty of the effect, or

Diverting it from the intended goal is a general defect.

Illustrate:

not

(3) Identification and rectification of internal control deficiencies

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

1.1. Material Defects

Whether the company had any material deficiencies in internal control over financial reporting during the reporting period

□ Yes √ No

1.2. Important Defects

Whether the company had any significant deficiencies in internal control over financial reporting during the reporting period

□ Yes √ No

1.3. General Defects

not

1.4. After the above-mentioned rectification, on the base date of the internal control evaluation report, whether the company has any material internal control over financial reporting that has not completed the rectification

flaw

□ Yes √ No

1.5. After the above-mentioned rectification, it is important that the Company has no internal control over financial reporting that has not been rectified as of the reference date of the internal control evaluation report

flaw

□ Yes √ No

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

2.1. Material Defects

Whether the company found any material deficiencies in internal control over non-financial reporting during the reporting period

□ Yes √ No

2.2. Material Defects

Whether the Company found any material deficiencies in internal control over non-financial reporting during the reporting period

□ Yes √ No

2.3. General Defects

not

2.4. After the above-mentioned rectification, on the base date of the internal control evaluation report, whether the company found that the internal control over non-financial reporting that had not completed the rectification was heavy

Big flaws

□ Yes √ No

2.5. After the above-mentioned rectification, on the reference date of the internal control evaluation report, whether the company found that the internal control over non-financial reporting that had not completed the rectification was heavy

To be defective

□ Yes √ No

4. Explanation of other major matters related to internal control

1. Rectification of internal control deficiencies in the previous year

□ Applicable √ Not applicable

2. The operation of internal control in the current year and the direction of improvement in the next year

√ Applicable □ Not applicable

In 2024, the Company's internal control was effectively implemented, no material deficiencies or material deficiencies were found in the financial and non-financial reports, the financial reports were true and reliable, the assets were safe, and the business was compliant and legal, achieving the objectives of internal control.

In 2025, the company will further strengthen its awareness of internal control, continue to deepen the construction of the internal control system, and continue to standardize the company's internal control system

Strengthen internal control supervision and inspection, improve the level of internal control management, and ensure the long-term and healthy development of the company.

3. Explanation of other major matters

□ Applicable √ Not applicable

CHAIRMAN OF THE BOARD OF DIRECTORS (AUTHORIZED BY THE BOARD OF DIRECTORS): CUI SHAN

SUPCON Technology Co., Ltd

March 29, 2025