熵基科技：2023年第三季度报告(英文版)

Stock Code: 301330 Abbreviation of Securities: ZKTECO Announcement No.: 2023-075

ZKTECO CO., LTD.2023 3

rdQuarter ReportThe Company and all members of the Board of Directors guarantee thatthe information disclosed is true, accurate, and complete, without any falserecords, misleading statements or material omissions.

Important content tips:

1. The Board of Directors, the Board of Supervisors, directors, supervisors, and senior management guaranteethat the information presented in this report is true, accurate and complete without any false records, misleadingstatements or material omissions, and will undertake individual and joint legal liabilities.

2. The Company's legal representative, the person in charge of the accounting work, and the person in chargeof accounting institution (accounting supervisor) hereby declare that the financial information in this report is true,accuracy, and complete.

3. Whether the 3

rdquarter report has been audited

□ Yes ?No

I. Key Financial Data(I) Main Accounting Data and Financial IndicatorsWhether the Company performed a retroactive adjustment or restatement of the previous accounting data?Yes □ NoReasons for retroactive adjustment or restatement of the previous accounting dataAccounting policy change

Reasons for changes in accounting policies and situations of correction of accounting errorsOn November 30, 2022, the Ministry of Finance issued and implemented the "Interpretation No. 16 of the Accounting Standards forBusiness Enterprises", which stipulates that "deferred income tax related to assets and liabilities arising from individual transactionsshall not be subject to the accounting treatment of initial recognition exemption". The Company shall implement it from January 1,2023. For the lease liabilities and right-of-use assets recognized due to the application of this regulation in the earliest period of financialstatement presentation for the first time, as well as the estimated liabilities and corresponding assets related to the disposal obligationrecognized, which generate taxable temporary differences and deductible temporary differences, the Company shall adjust thecumulative impact to present the initial retained earnings and other related financial statement items for the earliest period in thefinancial statements in accordance with this regulation and the provisions of "Accounting Standards for Enterprises No. 18 - IncomeTax".

(II) Items and Amounts of Non-recurring Gains and Losses

?Applicable □ Not applicable

Unit: RMB

Details of other profit and loss items that meet the definition of non-recurring profits and losses:

□ Applicable ?Not applicable

The Company does not have other specific conditions of profit and loss items that meet the definition of non-recurring profit and loss.Explanations on classifying any non-recurring gain/loss item mentioned in the "Explanatory Announcement for Information Disclosureby Companies that Issue Securities to the Public No. 1 - Non-recurring Gains and Losses" as recurring Gain/loss item.

□ Applicable ?Not applicable

The Company does not classify any non-recurring gain/loss item mentioned in the "Explanatory Announcement for InformationDisclosure by Companies that Issue Securities to the Public No. 1 - Non-recurring Gains and Losses" as recurring gain/loss item.(III) Changes and Reasons for Changes in Key Accounting Data and Financial Indicators

?Applicable □ Not applicableDuring the reporting period, the operating revenue and gross profit increased by RMB 24.3779 million and RMB 34.0113 millionrespectively compared to the same period last year, an increase of 5.10% and 16.16%, respectively. However, the net profit attributableto shareholders of the listed company decreased by RMB 14.1465 million or 22.09% compared to the same period last year, mainlydue to the following reasons:

(1) The recognized share-based payment amount generated by equity incentives during this reporting period is RMB 10.7791million, which was not included in the same period last year;

(2) During this reporting period, the Company further increased its R&D investment, with R&D expenses (excluding share-basedpayment) increasing by 13.40% compared to the same period last year;

(3) During this reporting period, the sales department's advertising and promotional expenses, exhibition expenses, and personnelcompensation expenses for expanding the market increased significantly, with sales expenses (excluding share-based payment)increasing by 8.26% compared to the same period last year;

(4) The USD to RMB exchange rate increased significantly during the same period last year, resulting in significant exchangegains. However, during this reporting period, the fluctuation of USD to RMB exchange rate was relatively small, and there were certainexchange losses.

Other income

Losses from creditimpairment

Net increase in cashand cash equivalents

II. Shareholder Information(I) Table of the Total Number of Common Shareholders and the Number of Preferred Shareholders withResumed Voting Rights and Information about Top Ten Shareholders

Unit: share

(II) Total Number of Preferred Shareholders and information about Top 10 Preferred Shareholders

□ Applicable ?Not applicable

(III) Changes in Restricted Shares

?Applicable □ Not applicable

Unit: share

III. Other Important Events

?Applicable □ Not applicable

1. Listing and circulation of some shares already issued before the initial public offering and strategic placement shares in theinitial public offeringSome of the shares already issued before the Company's initial public offering and the strategic placement shares in the initialpublic offering were lifted from restrictions and listed for circulation on August 22, 2023. The specific situation is as follows: there area total of 9 shareholders for which the restrictions were lifted, and the number of restricted shares listed for circulation is 19,079,298,accounting for 9.8836% of the Company's total share capital. Among them, there are 7 shareholders for which the restrictions havebeen lifted on shares issued before the initial public offering, and the number of shares is 16,472,577, accounting for 8.5333% of theCompany's total share capital. There 2 shareholders for which the restrictions on the initial public offering of strategic placement shareshave been lifted, and the number of shares is 2,606,721, accounting for 1.3504% of the Company's total share capital.

2. Bank Credit

On September 19, 2023, Dongguan Tangxia Sub-branch of Agricultural Bank of China Ltd. issued a "Credit Statement", grantingthe Company a credit line of RMB 280 million, with a validity period from September 19, 2023 to September 18, 2024. Among them,RMB 60 million is other exclusive credit lines, occupied by bank acceptance and guarantee deposits; RMB 40 million is a low riskcredit line, and 100% deposit is required for low risk businesses; RMB 180 million is a general credit line, RMB 5 million is used forhandling capital business on behalf of customers in branches, and the remaining RMB 175 million is used for handling bank acceptancebills, short-term working capital loans and trade financing business. Among them, RMB 80 million is used for credit, and the guaranteeway of the other RMB 100 million is pending. The specific use of credit shall be implemented in accordance with the managementmeasures for individual business, and the loan interest rate shall be implemented in accordance with the relevant regulations ofAgricultural Bank of China. The proportion of deposit for handling bank acceptance bills and letter of guarantee business shall not beless than 30%, with the bank acceptance bill handling fee within three months being 0.025% of the total invoicing amount.

IV. Quarterly Financial Statements(I) Financial Statements

1. Consolidated Balance Sheet

Prepared by: ZKTECO CO., LTD.

September 30, 2023

Unit: RMB

Legal Representative: Jin Hairong Person in charge of accounting work: Wang Youwu Person in charge of accounting institution:

Fang Li

2. Consolidated income statement

Unit: RMB

In the event of a merger of enterprise under the same control in the current period, the net profit realized by the combined partybefore the merger is RMB 0.00, and the net profit realized by the combined party in the previous period is RMB 0.00.Legal Representative: Jin Hairong Person in charge of accounting work: Wang Youwu Person in charge of accounting institution:

Fang Li

3. Consolidated Cash Flow Statement

Unit: RMB

(II) Implementation of new accounting standards adjustment for the first time starting from2023. Relevant project information on financial statements at the beginning of the year

?Applicable □ Not applicableAdjustment description

According to the relevant provisions of the "Interpretation No. 16 of the Accounting Standards for Business Enterprises",the Company has made the following adjustments to the beginning balance of 2023 for certain accounts in theconsolidated balance sheet:

Adjustment of some accounts involved in the consolidated balance sheet

Unit: RMB

(III) Audit ReportWhether the 3

rd

Quarter Report has been audited

□ Yes ?No

The Company's Q3 Report has not been audited.

ZKTECO CO., LTD.Board of DirectorsOctober 27, 2023