According to the "National Small and Medium-sized Enterprise Share Transfer System Stock Issuance Business Guide", "National Small and Medium-sized Enterprise Share Transfer System Stock Issuance Business Rules (for Trial Implementation)", "Frequently Asked Questions about Listed Companies' Stock Issuance (3)-Raised Fund Management, Subscription Agreement Special Provisions, Special Types of Listed Companies Financing" (hereinafter referred to as "Share Issuance Questions and Answers (3)") and other relevant laws, regulations and regulatory documents, Shanghai Yanan Pharmaceutical Yangpu Co., Ltd. (hereinafter referred to as the "Company") board of directors Special inspections were conducted on the storage and use of the company's raised funds in the first half of 2021, and the "Special Report on the Deposit and Actual Use of the Company's Raised Funds in the First Half of 2021" was prepared.

1. Basic situation of raised funds
The company has completed one share issuance since its listing.
In January 2018, the company completed the first stock issuance, and raised 60 million yuan of funds. The situation of the raised funds is as follows:
The 11th meeting of the first board of directors and the third extraordinary general meeting of shareholders held in 2017 on September 11, 2017 and September 21, 2017, respectively. According to the “Proposal of Stock Issuance Plan>”, according to the plan, the number of shares issued by the company does not exceed 6 million shares (including 6 million shares), at a price of RMB 10 per share, and the total amount of funds raised by the issuance is expected to not exceed 60 million (including 60 million Yuan). As of October 9, 2017, all the 60 million yuan raised this time has been funded. On October 23, 2017, Zhonghua Certified Public Accountants (Special General Partnership) issued the "Shanghai Yanan Pharmaceutical Yangpu Co., Ltd. Capital Verification Report" numbered Zhonghui Zi (2017) No. 6015 to verify the above-mentioned capital increase . On December 26, 2017, the National Small and Medium-sized Enterprise Share Transfer System Co., Ltd. issued the "Letter Regarding the Registration of the Share Issuance of Shanghai Yan'an Pharmaceutical Yangpu Co., Ltd." to confirm the company's filing application for this stock issuance.

2. Storage and management of raised funds
(1) Management of raised funds
In accordance with the "Measures for the Supervision and Management of Non-listed Public Companies", "Answers to Questions about Stock Issuance (3)" and other relevant laws and regulations, combined with the actual situation of the company, the company formulated the "Raised Funds Management System", and was approved on August 17, 2017. The tenth meeting of the company's first board of directors was deliberated and passed, and it was disclosed on the website of the National Equities Exchange and Quotations System on August 21, and was deliberated and approved by the second extraordinary general meeting of shareholders in 2017. The "Raised Funds Management System" clarifies the graded approval authority, decision-making procedures, risk control measures and information disclosure requirements for the use of raised funds. The company’s stock issuance will strictly follow the requirements of the fund-raising management system and use the raised funds in a lawful and compliant manner. The company held the third meeting of the second session of the board of directors on June 20, 2019, to review and approve the revision of the "Funds Raised Management System", which was disclosed on the website of the National Equities Exchange The general meeting of shareholders deliberated and approved. Relevant regulations on the use of idle raised funds to purchase wealth management products have been revised in the system.
(2) Special account management instructions for special accounts raised
The deposit of funds raised from the company's first stock issuance in 2017 is as follows:
On September 11, 2017, the eleventh meeting of the company's first board of directors deliberated and approved the "Proposal on the Establishment of a Special Account for Fund-raising by the Company" and "Regarding the Signing of the "Tripartite Supervision Agreement on Fund-raising" between the company and the leading securities firm and the bank that deposits the proceeds The resolution of the motion. On October 18, 2017, Shanghai Yanan Pharmaceutical Yangpu Co., Ltd., together with Guotai Junan Securities and China Everbright Bank Co., Ltd. Shanghai Chuansha Sub-branch, signed the "Tripartite Supervision Agreement on Raising Funds". There are no major differences in the model regulatory agreement. The company strictly supervises and manages the use of raised funds in accordance with the existing fund-raising management system and approval authority to ensure that the raised funds are used in strict accordance with the "Stock Issuance Plan".
The company’s first stock issuance in 2017 did not have the controlling shareholder, actual controller or other related parties occupying or transferring the funds raised from the targeted issuance. The company obtained the National Share Transfer System Letter [2017] No. 7414 in December 2017. Regarding the letter concerning the registration of shares issuance of Shanghai Yan’an Pharmaceutical Yangpu Co., Ltd., before the company obtains the share registration letter, there is no situation in which the raised funds are used in advance before obtaining the share registration letter of the stock transfer system.
As of June 30, 2021, the balance of the company's special storage account for raised funds is as follows:
currency: RMB

Note: The above account balance includes interest income from bank deposits.

3. Actual use and balance of funds raised this year
The use and balance of the funds raised from the company's first stock issuance in 2017 are as follows:
The company issued shares in September 2017 to raise funds of 60 million yuan. According to the agreement of the stock issuance plan, the raised funds of 60 million yuan were used for drug consistency evaluation, loxoprofen sodium, and diclofenac series product technology transfer after deducting intermediary fees. , Equity investment (increased capital to Shanghai Yan'an Pharmaceutical Co., Ltd., Shanghai Yan'an Pharmaceutical Co., Ltd. and Shanghai Yan'an Pharmaceutical (Hubei) Co., Ltd.) and a joint laboratory project of drug research and development engineering. As of June 30, 2021, the company has used a total of 57,441,299.80 yuan of raised funds and interest, of which 1,500,000.00 yuan of raised funds were used in the first half of 2021, and the balance of raised funds was 2,715,168.01 yuan. The details are as follows:
currency: RMB

Fourth, the use of funds to change the use of raised funds
The company's first stock issuance in 2017 had two changes in the use of raised funds.
1. Change of the first raised funds
The sixteenth meeting of the first board of directors and the seventh meeting of the first board of supervisors held on November 23, 2018, reviewed and passed the "Proposal on Changing the Use of Raised Funds". The 2018 Second Extraordinary General Meeting of Shareholders deliberated and approved.
The changes are as follows:

(1) After the original equity investment in Shanghai Yan'an Pharmaceutical Co., Ltd., the "purchase of 8 preparation approval projects" has now changed the use of raised funds involved in the three preparation approval transfer projects totaling 2.61 million yuan and still invests in Shanghai Yan'an Pharmaceutical Co., Ltd. Among them, 1.45 million yuan was used for the change of purpose for the remaining 5 preparation approval transfer projects to pay for fixed asset investment and pilot test costs, and the other 1.16 million yuan for change of purpose was used for the Norfloxacin Capsule Product Consistency Evaluation Project to pay for BE clinical costs and pilot test costs .
(2) After the original equity investment in Shanghai Yan'an Pharmaceutical (Hubei) Co., Ltd., it was planned to "obtain the right to use industrial land." Now the use of the raised funds involved in the above project is changed to Shanghai Yan'an Pharmaceutical (Hubei) Co., Ltd. Supplement working capital.
2. Changes to the second raised funds
The third meeting of the second session of the board of directors of the company held on June 20, 2019, reviewed and approved the proposal of "Change the Use of Raised Funds", and passed the review and approval of the 2019 First Extraordinary General Meeting of Shareholders held on July 11, 2019 .
The changes are as follows:

(1) After the original equity investment in Shanghai Yan'an Pharmaceutical Co., Ltd., the use of the raised funds involved in the "5 preparation product approval transfer" of 8.5 million yuan was changed to supplement the working capital.
(2) After the original equity investment in Shanghai Yan'an Pharmaceutical (Hubei) Co., Ltd., the purpose of the raised funds involved in the "4 preparation product approval transfer" was changed to supplementary working capital.

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5. Problems in the use and disclosure of raised funds
After self-inspection, the company has disclosed relevant information about the raised funds in a timely, true, accurate and complete manner, and no violations of regulations have been found in the storage, use, management and disclosure of raised funds. The deposit and use of the funds raised by the company in the first half of 2021 are in line with the "National Small and Medium-sized Enterprise Share Transfer System Shares Directed Issuance Rules", "National Small and Medium-sized Enterprise Share Transfer System Shares Directed Issuance Guide", "Frequently Asked Questions about Stock Issuance of Listed Companies (3)— — Management of raised funds, special clauses in subscription agreements, and financing of special types of listed companies" and other relevant laws, regulations and regulatory documents, disclose relevant information in a timely, true, accurate and complete manner, and there is no illegal deposit and use of raised funds Situation.
In the future, the company will strictly follow the "Company Law", "Securities Law", "National SME Share Transfer System Directed Issuance Rules", "National Small and Medium Enterprise Share Transfer System Directed Issuance Guide", "Frequently Asked Questions about Stock Issuance of Listed Companies ( Three)-Raised funds management, special clauses in the subscription agreement, financing of special types of listed companies, relevant laws and regulations of the China Securities Regulatory Commission, and the company’s "Raised Funds Management System" regulations and requirements for the use of raised funds in a timely, true, accurate, and timely manner Completely perform relevant information disclosure work.
Special announcement.

Shanghai Yan'an Pharmaceutical Yangpu Co., Ltd.
Board of Directors
August 19, 2021