In response to these inaccuracies, the CSRC Jiangsu Bureau issued two warning letters.
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In addition, the SZSE issued a public criticism decision on August 1, 2022, and a regulatory letter on July 19, 2022, noting that the related restatement breached applicable listing rules and reminded our Board to prevent recurrence.
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According to the Company's PRC legal advisor, the public criticisms, warning letters and regulatory letters described above do not constitute administrative penalties or public censure under PRC laws and regulations.
In the 2022 Interim Report on the Deposit and Use of Proceeds, certain cooperative R&D expenses incurred for the year ended December 31, 2021 were mistakenly recorded under the "Industrial 4.0 intelligent equipment production project" instead of the "Industrial 4.0 intelligent equipment R&D project."
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This misclassification resulted in an inaccurate disclosure of the cumulative investment amount by sub-projects, though the total amount of proceeds utilized was unaffected.
Yuanjiesheng oversaw the procedure of share disposal and failed to publish a pre-disclosure announcement at least three trading days before this disposal, as required by the undertaking given in our A-share prospectus.
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Our PRC Legal Advisor is of the view that such disposal did not breach any then-applicable prohibitive provisions under PRC laws or regulations governing disposals of shares by controlling shareholders, directors or senior management, including those relating to insider dealing, market manipulation, market misconduct and black-out period restrictions.
Under these agreements, if within a specified period we (or our designated entities) failed to acquire the equity interests in Feikong Taike, FSG, and FAG, or if agreed return targets were not met, Yuanjiesheng, Mr. Dai, or Mr. Wang Hongjun would repurchase the relevant equity interests or provide a return guarantee/compensation to such shareholders.
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In January 2025, the SZSE Listing Review Centre required us to make supplemental disclosure of such arrangements, following which we updated the restructuring report (draft) and related documents.
We were subject to a verbal warning imposed by the SZSE in November 2025 (the "Verbal Warning").
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Due to an inadvertent administrative error, there was an error in the disclosure of the top 10 free float shareholders, in which the shareholding information of Mr. Dai was omitted from such table.
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As advised by our PRC Legal Advisor and confirmed by the SZSE, according to the applicable PRC laws and regulations, the Verbal Warning is considered the least severe type of "self-regulatory measure" imposed by the SZSE under the Measures, and it does not constitute an administrative penalty imposed by regulatory authorities.
The FTC has been conducting an investigation into our U.S. business operations, and we are actively cooperating with the FTC in connection with such investigation.