Shanghai Feile Audio Co., Ltd. 2025 Annual Report Audit Opinion Statement

Tianzhi International Certified Public Accountants (Special General Partnership) accepted the engagement from Shanghai Feilo Acoustics Co., Ltd. (hereinafter referred to as “Feilo Acoustics” or the “Company”) to audit the Company’s consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements for 2025, the consolidated and parent company cash flow statements, the consolidated and parent company statements of changes in shareholders’ equity, and the related notes to the financial statements, and issued a standard unmodified audit report (Tianzhi Yi Zi [2026] No. 9094).

Core contents of the audit opinion

The audit institution is of the view that, in all material respects, the Company’s 2025 financial statements have been prepared in accordance with the provisions of the Accounting Standards for Business Enterprises, and fairly reflect the Company’s consolidated and parent company financial position as of December 31, 2025, as well as the Company’s consolidated and parent company operating results and cash flows for 2025.

Key audit matters and responses

Revenue recognition from product sales

Background of the matter

In 2025, the total amount of Feilo Acoustics’ operating revenue was RMB 1,814,230,770.36, with revenue from principal business operations of RMB 1,796,143,836.31. Among this, revenue from product sales accounted for 81.36% of total revenue from principal business operations. As revenue is one of the Company’s key performance indicators and product sales revenue constitutes a significant proportion, there is an inherent risk that management may achieve specific targets through inappropriate revenue recognition. Therefore, it is identified as a key audit matter.

Audit response measures

2. Internal control testing: understand, test, and evaluate the design and operating effectiveness of key internal controls related to revenue recognition by management, to ensure the compliance of the revenue recognition process.
3. Inspection of contract terms: review the principal sales contracts, identify the performance obligations in the contracts, verify the contract terms and conditions related to obtaining control of the relevant goods from customers, and evaluate the appropriateness of the accounting policy for revenue recognition.
4. Substantive analytical procedures: compare the gross profit margin on sales with the prior period and with companies in the same industry, assess the reasonableness of the recognition of operating revenue and costs, and check for abnormal fluctuations.
5. Tests of details: take samples to inspect documents related to revenue, such as sales contracts, invoices, delivery acceptance slips, acceptance documents, and customer confirmation documents, and assess whether revenue recognition complies with the Company’s accounting policies.
6. Cutoff testing: select samples of revenue transactions recorded before and after the date of the balance sheet, verify documents such as delivery notes or customer account statements, and assess whether revenue has been recorded in the appropriate accounting period.
7. Related party screening: check the business information of newly added customers and customers with significant changes in sales, and assess whether there are unrecognized potential related party relationships and transactions.

Recognition of investment income from equity-accounted investees

Background of the matter

In 2025, Feilo Acoustics’ investment income recognized using the equity method from equity-accounted investees was RMB 70,489,449.19, exceeding the net profit attributable to shareholders of the parent company. As this investment income amount is significant and therefore important to the financial statements, it is identified as a key audit matter.

Audit response measures

2. Internal control assessment: understand the key internal controls related to investment and evaluate the reasonableness of the design of these internal controls, to ensure the standardization of the investment accounting process.
3. Assessment by component auditors: assess the independence and professional competence of the component auditors for equity-accounted investees that are material in terms of financial significance, to ensure the reliability of the audit work.
4. Financial data analysis: obtain the financial statements and financial data of important equity-accounted investees, perform analytical procedures, and discuss the financial performance of important equity-accounted investees with the management of the components, to identify and assess the risks of material misstatement in the financial statements of the important equity-accounted investees.
5. Communication and review: communicate with the component auditors of important equity-accounted investees to understand and assess their risk assessments of financial information of important equity-accounted investees, the responses taken to the assessed risks, and the execution of audit procedures. Through interviews and review of execution, evaluate whether the audit work performed by the component auditors is appropriate.
6. Inspection of vouchers: inspect accounting vouchers related to investment income to confirm the authenticity of the investment income.
7. Review of presentation and disclosures: check whether the information related to investment income has been presented and disclosed appropriately in the financial statements.

Statement on independence and responsibilities of the audit institution

Tianzhi International Certified Public Accountants has carried out the audit in accordance with the provisions of the Chinese Standards on Auditing for Certified Public Accountants, and is independent of Feilo Acoustics. It applied the independence requirements for public interest entities and fulfilled other responsibilities regarding professional ethics. The audit institution believes that the audit evidence obtained is sufficient and appropriate, and provides a basis for expressing the audit opinion.

Statement on other information

The management of Feilo Acoustics is responsible for other information. The other information includes information covered in the Company’s 2025 annual financial report, but excludes the financial statements and the audit report. The audit institution’s audit opinion on the financial statements does not cover the other information, nor does it provide any form of assurance conclusion on the other information. In connection with the audit of the financial statements, the audit institution’s responsibility is to read the other information, and in doing so, consider whether there is any material inconsistency between the other information and the financial statements or the circumstances known during the audit, or whether there appears to be any material misstatement. Based on the work performed, the audit institution has not found any material misstatement with respect to the other information.

Responsibilities of management and those charged with governance for the financial statements

The management of Feilo Acoustics is responsible for preparing the financial statements in accordance with the Accounting Standards for Business Enterprises, so that they achieve a fair presentation, and for designing, implementing, and maintaining necessary internal controls to ensure that the financial statements do not contain material misstatements caused by fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and using the going concern assumption, unless management plans to liquidate, terminate operations, or has no other realistic alternative. Those charged with governance are responsible for supervising the Company’s financial reporting process.

Responsibilities of certified public accountants for the audit of the financial statements

The objective of the certified public accountants is to obtain reasonable assurance that the financial statements as a whole are free from material misstatement caused by fraud or error, and to issue an audit report containing the audit opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with the audit standards will always detect a material misstatement when it exists. Misstatements may be caused by fraud or error. If it is reasonably expected that misstatements, individually or in aggregate, may affect the economic decisions made by users of the financial statements based on the financial statements, misstatements are generally considered material.

In performing the audit in accordance with the audit standards, the certified public accountants use professional judgment and maintain professional skepticism, and at the same time perform the following:

1. Identify and assess the risks of material misstatement of the financial statements caused by fraud or error, design and implement audit procedures to respond to these risks, and obtain sufficient and appropriate audit evidence as the basis for expressing the audit opinion.
2. Understand internal controls relevant to the audit, in order to design appropriate audit procedures.
3. Evaluate the appropriateness of accounting policies selected by management and the reasonableness of accounting estimates and related disclosures made by management.
4. Reach conclusions on the appropriateness of management’s use of the going concern assumption, and, based on the audit evidence obtained, whether there is a material uncertainty related to matters or circumstances that may cast significant doubt on the Company’s ability 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 the related transactions and matters.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company, to express an audit opinion on the financial statements, and be responsible for guiding, supervising, and executing the group audit, and assume full responsibility for the audit opinion.

The certified public accountants communicate with those charged with governance regarding matters such as the planned audit scope, timing, and major audit findings, including communicating identified internal control deficiencies that are of concern during the audit. They also provide a statement to those charged with governance on compliance with professional ethical requirements related to independence, and communicate with those charged with governance all relationships and other matters that may reasonably be considered to affect independence, as well as related safeguards (if applicable). From the matters communicated with those charged with governance, identify which matters are most important for the audit of the current period’s consolidated financial statements, thereby constituting key audit matters, and describe these matters in the audit report, unless laws and regulations prohibit public disclosure of these matters, or in extremely rare circumstances, if it is reasonably expected that the negative consequences of communicating a matter in the audit report would outweigh the benefits to the public interest, then determine that the matter should not be communicated in the audit report.

This is to state.

Tianzhi International Certified Public Accountants (Special General Partnership) Chinese Certified Public Accountant: Li Jinghao (Project Partner) Chinese Certified Public Accountant: Kuang Nian March 26, 2026

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