Arcsoft Corporation Limited(688088) : report of Huatai United Securities Co., Ltd. on continuous supervision and tracking of Arcsoft Corporation Limited(688088) 2021

Huatai United Securities Co., Ltd

On Arcsoft Corporation Limited(688088) 2021 annual continuous supervision and tracking report

In accordance with the relevant provisions of the securities law of the people’s Republic of China, the measures for the administration of securities issuance and listing recommendation business, the Listing Rules of the science and Innovation Board of Shanghai Stock Exchange (revised in December 2020) and the self regulatory guidelines for listed companies of Shanghai Stock Exchange No. 11 – continuous supervision, Huatai United Securities Co., Ltd. (hereinafter referred to as “Huatai United Securities” or “sponsor”) as the joint sponsor of the initial public offering of Arcsoft Corporation Limited(688088) Co., Ltd. (hereinafter referred to as ” Arcsoft Corporation Limited(688088) ” and “company”), continuously supervised hongruan technology and issued this continuous supervision and tracking report:

1、 Continuous supervision

No. work content and continuous supervision

1. Establish, improve and effectively implement the continuous supervision system, and formulate corresponding work plans for specific continuous supervision work according to the fact that the recommendation institution has established, improved and effectively implemented the continuous supervision system. Supervision system, and formulated the corresponding work plan.

According to the relevant provisions of the CSRC, in the process of continuous supervision, the sponsor has signed relevant agreements with Arcsoft Corporation Limited(688088) to reach an agreement on the rights and obligations of both parties during the period of continuous supervision with the listed company or relevant parties before the beginning of 2, clarify the rights and obligations of both parties during the period of continuous supervision, and report to Shanghai stock exchange for filing.

And report to Shanghai stock exchange for filing.

The sponsor shall carry out continuous supervision through daily communication, regular return visit, on-site inspection and due diligence. The sponsor shall carry out continuous supervision through daily communication, regular or irregular return 3 inspection, etc. Visit and other means to understand Arcsoft Corporation Limited(688088) business conditions and carry out continuous supervision on hongruan technology.

During the continuous supervision, if Arcsoft Corporation Limited(688088) in 2021 did not make a public statement on the violations of the listed company in accordance with the relevant provisions, it shall make a public statement to the Shanghai health according to the relevant provisions, and report to the stock exchange on the violations of the listed company after being reviewed by the Shanghai Stock Exchange.

Announcements on designated media.

During the period of continuous supervision, the listed company or relevant parties violate the regulations

In case of violation of laws, commitments and other matters, a report shall be submitted to Shanghai Stock Exchange within five working days from the date of discovery of Arcsoft Corporation Limited(688088) and relevant parties in 2021. There is no violation of laws and regulations or breach of commitments during the supervision period of Shanghai Stock Exchange. The contents of the report include the matters of listed companies or relevant parties.

The specific conditions of violations of laws and regulations, breach of commitments and other matters shall be guaranteed

Supervision measures taken by recommendation institutions, etc.

Supervise the listed company and its directors, supervisors and senior managers. During the continuous supervision, the recommendation institution shall supervise Arcsoft Corporation Limited(688088) compliance with laws, regulations and departmental rules, and the Shanghai Stock Exchange and its directors, supervisors and senior managers to comply with laws, 6 issued business rules and other normative documents, and earnestly implement laws, regulations and Departmental rules and the commitments made by the bank issued by Shanghai Stock Exchange. Business rules and other normative documents, and earnestly fulfill its commitments.

No. work content and continuous supervision

Supervise listed companies to establish, improve and effectively implement corporate governance, and the recommendation institution shall urge Arcsoft Corporation Limited(688088) to improve the corporate governance system in accordance with relevant regulations, including but not limited to the general meeting of shareholders, the board of directors and supervisors, and strictly implement the rules of procedure of the corporate governance meeting and the management system of directors, supervisors and senior managers.

Code of conduct, etc.

Supervise listed companies to establish, improve and effectively implement internal control systems,

Including but not limited to financial management system, accounting system and recommendation institution, urging the company to strictly implement the internal control system, 8 internal audit system, as well as the use of raised funds, related party transactions and standardized operation.

External guarantee, external investment, derivatives trading, and to subsidiaries

Procedures and rules for major business decisions such as control of.

Supervise the company to establish, improve and effectively implement the information disclosure system,

Review the information disclosure documents and other relevant documents, and have sufficient recommendation institutions to urge Arcsoft Corporation Limited(688088) strictly implement the information disclosure system submitted by the listed company to the Shanghai Stock Exchange, and review the information disclosure documents and other relevant documents to ensure that there are no false records, misleading statements or major relics.

Leak.

Information disclosure documents of listed companies and to the CSRC

Other documents submitted by the Shanghai Stock Exchange

Before review, the information disclosure documents with problems shall be timely reviewed

Urge listed companies to make corrections or supplements, and listed companies do not

Any correction or supplement shall be reported to Shanghai Stock Exchange in time

report The recommendation institution entered 10 of the information disclosure documents of Arcsoft Corporation Limited(688088) and did not review the information disclosure documents of the listed company in advance. There is no situation that it should report to the Shanghai Stock Exchange in time and should report to the stock exchange five months after the listed company fulfilled its obligation of information disclosure.

Complete the review of relevant documents within one day, and check the existing problems

The information disclosure documents of the title shall urge the listed company to correct them in time

If the listed company does not make corrections or supplements, it shall promptly

Report to Shanghai Stock Exchange.

Pay attention to the listed company or its controlling shareholders, actual controllers and directors

In 2021, Arcsoft Corporation Limited(688088) and its controlling shareholder, the actual 11 punishment, the disciplinary action of Shanghai Stock Exchange, or the failure of Shanghai Securities controller, directors, supervisors and senior managers to issue a letter of regulatory concern by the stock exchange, and urge them to complete such matters.

Improve the internal control system and take measures to correct it.

Continue to pay attention to listed companies, controlling shareholders, actual controllers, etc

12. Performance of commitments: if the listed company, its controlling shareholders, the actual year 2021, Arcsoft Corporation Limited(688088) and its controlling shareholders, actual controllers and other matters fail to fulfill their commitments, they shall report to the Shanghai Securities International controller in time. There is no failure to fulfill their commitments. Exchange report.

Pay attention to the reports of public media on listed companies and timely target them

Check market rumors. After verification, it is found that the listed company was kept in 2021. After verification by the recommendation institution, Arcsoft Corporation Limited(688088) 13 in case of major matters that should be disclosed but not disclosed or the information that should be reported to Shanghai Stock Exchange in time is inconsistent with the facts, the listed company shall be urged to disclose the information truthfully in time.

Or clarify; If a listed company does not disclose or clarify, it shall

Report to Shanghai Stock Exchange in time.

14 in case of any of the following circumstances, the recommendation institution shall urge the listed company to report to the public in 2021, Arcsoft Corporation Limited(688088) no relevant circumstances have occurred. The company shall make explanations and make corrections within a time limit, and report to Shanghai Securities Exchange at the same time

No. work content and continuous supervision

Reported: (I) the listed company is suspected of violating the Listing Rules

And other relevant business rules of Shanghai Stock Exchange; (II) securities

Professional opinions issued by service institutions and their signatories may

There are false records, misleading statements or major omissions

Violation or other improper circumstances; (III) listing of listed companies

Now it is stipulated in articles 71 and 72 of the recommendation measures

The situation of the; (IV) the listed company does not cooperate with the recommendation institution for continuous

Supervision; (V) Shanghai Stock Exchange or recommendation institution

Other circumstances deemed necessary to be reported.

Where a listed company is under any of the following circumstances, the recommendation institution

The recommendation representative shall be 15 days from the date of knowing or should know

Special on-site inspection of listed companies within days: (I)

Suspected of major financial fraud; (II) in 2021, Arcsoft Corporation Limited(688088) there was no need for special inspection by actual controllers, directors, supervisors or senior managers.

Suspected of embezzling the interests of listed companies; (III) possible heavy

Guarantee for major violations; (IV) capital transactions or cash flow deposits

In case of major abnormality; (V) requirements of Shanghai Stock Exchange

Other circumstances.

16. Continue to pay attention to the performance of commitments of listed companies. In 2021, Arcsoft Corporation Limited(688088) continuously fulfilled its commitments as required.

2、 Problems found by the recommendation institution and the recommendation representative and their rectification

None.

3、 Major risk matters

The main risk factors faced by the company are as follows:

(I) core competitiveness risk

1. Technology upgrade iteration risk

The visual artificial intelligence industry in which the company is located has rapidly upgraded its technology. It is a typical technology driven industry. Its products are updated frequently. The market demand for technology and products is increasing. More visual artificial intelligence technologies are being applied to all kinds of intelligent terminals. The company is an enterprise with R & D and technology as the core driving force. If the company cannot correctly judge and timely grasp the development trend of the industry and the evolution route of technology, and invest sufficient R & D force to layout the R & D of the next generation of visual artificial intelligence technology, the company may not be able to maintain the current technology leadership, which will have an adverse impact on the company’s future operation.

The demand of smart phone market changes rapidly, and the iteration cycle of related technologies is short, which is about 1-2 years. If the company fails to update and upgrade relevant technologies in time or successfully develop new products according to market demand, the company may have backward technology and untimely technical iteration, resulting in a sharp decline in market share. In other mobile intelligent terminal fields, although the company has developed some products to meet the needs of customers by integrating existing technologies, if it cannot seize the opportunities emerging in the future market and obtain customers as soon as possible, it may lead to the risk of missing development opportunities. In the field of intelligent driving, the company’s current front fixed-point projects are mainly aimed at software algorithms in the cockpit. However, with the continuous evolution of the industry, if the company cannot develop competitive products and technologies related to automatic driving, the company may face the risk of missing development opportunities.

2. Market competition risk

The company’s industry has broad prospects for development. In recent years, the number of participants has increased, resulting in intensified industry competition. Many enterprises participate in the competition in various vertical application fields by virtue of their advantages in specific subdivided fields. If the company cannot continuously and effectively formulate and implement business development plans and maintain the leadership of technology and products, it will be challenged by other competitors in the industry, thus facing the risk of decline in gross profit margin and market share caused by intensified market competition, which will affect the company’s business performance and development potential.

3. Risk of core technology disclosure

All kinds of products sold by the company are based on a large number of computer vision core technologies independently developed and accumulated by the company. In order to protect the company’s core technology, the company has formulated a strict confidentiality system, but the above measures still can not completely avoid the risk of disclosure of the company’s core technology. In the future, if the company’s relevant core technology internal control system cannot be effectively implemented, or the company’s core technology is leaked due to gross negligence, malicious collusion, fraud and other acts, it will pose a risk to the company’s core competitiveness.

(II) operational risk

1. Risk of new business development and expansion

After decades of development, the company has accumulated a large number of bottom algorithms of visual artificial intelligence. These bottom algorithms are universal and extensible. In addition to being widely used in smart phones, they can also be used in notebook computers, smart wearable devices and other consumer electronic products, as well as smart driving, smart insurance, smart retail, smart home, medical health and other fields.

In the field of intelligent driving, as of the end of the reporting period, the company’s front fixed-point projects have involved a number of mass-produced models of great wall, Chang’an new energy, Chang’an, SAIC, ideal, FAW, Dongfeng Nissan, lantu, Hezhong new energy and other car factories. The success of these new businesses of the company is affected not only by the development of the industry, changes in market demand and market competition, but also by the company’s understanding, cognition, promotion and cooperation with partners. In addition, due to the epidemic situation and the uncertainty of international trade, the shortage of chips may affect the development of consumer electronics industry and automobile industry in the future. Therefore, the company’s new business development and expansion may not be as expected. If the company’s product development or market promotion in new areas is not effective, or there are other adverse factors, it may lead to the failure of the company’s new business development, which will have an adverse impact on the company’s future operating performance.

2. Risk of reduction in procurement volume of major customers

During the reporting period, the sales of the company’s top five customers were 339682600 yuan, accounting for 59.28% of the total sales. If the shipment of smart phones declines, the business development strategy of major customers is adjusted, and major customers are short due to the short supply chain

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