Recently, the information disclosed by the Shenzhen Stock Exchange shows that when the China Securities Regulatory Commission reviewed the listing application documents of Anhui Jingqi Network Technology Co., Ltd. (hereinafter referred to as "Jingqi Network"), the company and its sponsor Guoyuan Securities withdrew the registration application documents. As a result, the SFC decided to terminate the registration process for the Company's issuance.
According to Bedo Finance, Jingqi Network submitted a prospectus in December 2020 to be listed on the Growth Enterprise Market of the Shenzhen Stock Exchange. In this sprint listing, Jingqi Network originally planned to raise 216 million yuan, which will be used for the upgrading and industrialization of the national health information platform based on the county-level medical community, the upgrading and industrialization of the comprehensive medical security management platform, etc.
In August 2021, Jingqi network meeting was approved. In October of the same year, Jingqi Network submitted a prospectus (registration draft) and entered the registration submission stage. Since then, the company has updated its submission registration several times, with the latest version being in January 2024. Now, Jingqi Network has chosen to terminate the IPO.
It is worth mentioning that the Listing Committee meeting mainly focused on the situation that some projects of Jingqi Network started earlier than the contract signing time and the bidding time was earlier than the bidding time, and asked it to explain whether the start of construction before the project bidding time is a sales strategy and whether it is in line with industry practices.
At the same time, explain the reasons and reasonableness of the situation that the contract signed with the customer includes both software products and system integration, and whether it conforms to industry practice and whether it is consistent with the requirements of the customer's bidding; Whether it constitutes contract consolidation, whether the sales of software products and system integration constitute a single performance obligation, and whether the revenue recognition complies with the provisions of accounting standards.
As of the end of 2020, the total amount of overdue accounts receivable of the top ten overdue accounts receivable of Jingqi Network reached 31.7912 million yuan, of which the accounts receivable of a single major customer were 12.2695 million yuan, and the overdue accounts receivable of more than 2 years reached 12.2356 million yuan. In this regard, the Listing Committee requested Jingqi Network to explain whether the reasons for not needing to make a separate provision for bad debts are sufficient.
In addition, according to the VAM agreement signed by the shareholders of Jingqi Network, Leng Hao and others need to compensate institutional investors with 14.9175 million yuan in cash, of which 30% of the total amount of compensation must be paid before June 30, 2021. In this regard, the Listing Committee requested Jingqi Network to explain whether the phased performance had been completed as of June 30, 2021, and whether there were potential risks in the subsequent performance.
Jingqi Network said that Leng Hao, Lu Dongliang and Liu Quanhua have paid the first compensation of 1.49175 million yuan to institutional investors, which comes from their own funds, and the remaining outstanding amount of 13.42575 million yuan is expected to come from self-raised funds such as wages and salaries, family accumulation, and loans of each compensation entity.
As of June 30, 2021, Leng Hao, Lu Dongliang and Liu Quanhua did not pay the second compensation as agreed, but in July and August 2021, Leng Hao, Lu Dongliang and Liu Quanhua had paid the second compensation to institutional investors in a timely manner totaling 4,475,250 yuan.
As of December 31, 2021, Leng Hao, Lu Dongliang and Liu Quanhua did not pay the third compensation as agreed, but in January 2022, Leng Hao, Lu Dongliang and Liu Quanhua had paid the third compensation to institutional investors in a timely manner totaling 8.9505 million yuan. At the same time, institutional investors have issued confirmation letters and do not claim any liability for breach of contract for delay compensation.
Fundamentally, this is directly related to the substandard performance of Jingqi Network. According to the previous prospectus, the revenue of Jingqi Network in 2017, 2018 and 2019 was about 106 million yuan, 159 million yuan and 159 million yuan respectively, and the net profit was 22.4443 million yuan, 24.5068 million yuan and 38.7257 million yuan respectively.
In the same period, the net profit of Jingqi Network after deducting non-profits was 19.7659 million yuan, 21.0965 million yuan and 31.5728 million yuan respectively. According to the VAM agreement signed by the company's shareholders Leng Hao, Lu Dongliang and Liu Quanhua with Anyuan Fund, Panqi Investment, Zixu Investment and Xingtai Optoelectronics in October 2017, it was agreed that their net profit after deducting non-profits in 2017 and 2018 would not be less than 65 million yuan.
According to the calculation, the audited net profit of Jingqi Network in 2017 and 2018 after deducting non-profits totaled 41.1512 million yuan, which was lower than the VAM target. Based on this, Leng Hao and others need to compensate institutional investors with 14.9175 million yuan in cash, of which 30% of the total compensation amount needs to be paid before June 30, 2021.
Jingqi Network explained that due to the impact of the company's intentional orders tracked by government agencies and financial budget arrangements, the customer's informatization construction was delayed, so that the operating performance in 2018 did not meet the management's expectations, resulting in the failure to complete the business objectives determined through consultation with external investors.
According to Bedo Finance, in September 2020, Leng Hao, Lu Dongliang and Liu Quanhua signed a supplementary agreement with the above-mentioned institutional investors, changing the cash compensation clause and the listing time VAM clause for performance failure to meet the standard, stipulating that if Jingqi Network fails to complete the IPO before December 31, 2022, or is acquired by a listed company, the investment institution has the right to request a repurchase.
With the agreement and confirmation of both parties, the relevant VAM clause shall be automatically rescinded and terminated after the listing application submitted by Jingqi Network and accepted, but shall resume its effect on the date of occurrence of any of the following circumstances: the company's public offering of shares and listing application is dissuaded, voluntarily withdrawn, or has not been approved, approved and registered by the China Securities Regulatory Commission.
Now, Jingqi Network has withdrawn its listing application, and it has also announced that Leng Hao, Lu Dongliang and Liu Quanhua will directly face repurchase pressure. According to the prospectus, Leng Hao is the chairman of the company, directly holding 32.32% of the shares; Lu Dongliang is the director and deputy general manager, directly holding 21.15% of the shares; Liu Quanhua is a director and deputy general manager, directly holding 10.47% of the shares.
In addition, Leng Hao is also the executive partner of Yunkang Partnership, a shareholder of Jingqi Network. Prior to this listing, Yunkang Partners held 5.48% of the company's shares. Accordingly, Leng Hao directly and indirectly controls a total of 37.80% of the voting shares of Jingqi Network and is the actual controller of the company.