"Science and Technology Board Daily" on October 14 (Reporter Huang Xiumei) Zhongheng Technologies issued two announcements this evening (October 14) : one being the company received a warning letter issued by the Sichuan regulatory authority of the China Securities Regulatory Commission; the other being the company and its wholly-owned subsidiary involved in litigation.

There are issues such as recognition of some income across periods.

The warning letter issued by the Sichuan Securities Regulatory Bureau pointed out that Zhongheng Technologies has two major issues of insufficient provision for bad debts for some accounts receivable and recognition of some income across periods, which do not comply with relevant regulations of the 'Regulations on the Disclosure of Information by Listed Companies' and the 'Enterprise Accounting Standards'.

Specifically, with regard to the insufficient provision for bad debts for some accounts receivable, by the end of 2023, Zhongheng Technologies had not recovered 2.226 million yuan of accounts receivable from a customer. In a situation where the customer showed signs of inability to repay, Zhongheng Technologies only made a bad debt provision of 0.1113 million yuan, resulting in an under-provision of bad debts by 2.1147 million yuan in 2023.

As for the recognition of some income across periods, Zhongheng Technologies had cases where some products were accepted in 2023 but revenues were recognized in advance in 2022, leading to an over-recognition of income by 2.076 million yuan in 2022, and an under-recognition of income by 2.076 million yuan in 2023.

The warning letter indicated that Zhongheng Technologies and related responsible persons, the company's chairman and general manager Ren Bin, CFO Liu Peng, and Board Secretary Li Xiaoyan are responsible for the above-mentioned issues. The Sichuan Securities Regulatory Bureau has decided to issue a warning letter to Zhongheng Technologies and the mentioned individuals as an administrative regulatory measure, and to include it in the integrity file of the securities and futures market.

Zhongheng Technologies responded that the company will actively rectify the issues, strengthen learning on securities laws and regulations, improve the quality of information disclosure and the level of standardized operation, promote the healthy, stable, and sustainable development of the company. "This administrative regulatory measure will not have a significant impact on the company's daily production and operation management activities."

Dispute escalates! Yuan Du Technology demands compensation of 11 million yuan.

Zong Heng shares also announced tonight (October 14) the latest developments in the dispute with Beijing Yuan Du Internet Technology Co., Ltd. (referred to as 'Yuan Du Technology').

The announcement shows that the plaintiff Yuan Du Technology recently sued Zong Heng shares and its wholly-owned subsidiary Chengdu Zong Heng Dapeng Unmanned Aerial Vehicle Technology Co., Ltd. (referred to as 'Zong Heng Dapeng') for unfair competition, demanding compensation of 11 million yuan.

Zong Heng shares and Zong Heng Dapeng have recently received relevant materials such as 'Civil Summons' and 'Civil Complaint' delivered by the People's Court of Shijingshan District, Beijing. The case has been accepted by the court but has not yet been scheduled for trial.

From the content submitted by both parties, Yuan Du Technology believes that Zong Heng shares and Zong Heng Dapeng forged materials and spread false information, damaging its competitive rights and interests, constituting unfair competition. Zong Heng shares responded by stating: 'Will legally defend its own and shareholders' interests, with the final impact subject to the court's judgment.'

The dispute between Yuan Du Technology and Zong Heng shares originated on May 7th this year. At that time, Yuan Du Technology declared on its official WeChat account that Dapeng UAV Company had engaged in acts such as forging quality inspection reports, forging Yuan Du Technology's official seals, and evading administrative penalties.

Zong Heng shares responded on May 9th this year in its official account, stating that the company's counterclaim against Hebei Xiong'an Yuan Du Technology Co., Ltd., and Beijing Yuan Du Internet Technology Co., Ltd., for unfair competition dispute has been accepted by the Chengdu Intermediate People's Court, demanding Yuan Du Technology to compensate 9 million yuan.

Sun Yuhao, a member of the Young Lawyers Committee of the Shanghai Bar Association and Senior Partner of Shanghai Hai Hua Yong Tai Law Firm, stated in an interview with 'Star Daily' reporters that based on the progress of the above case, the Chengdu Intermediate People's Court and the People's Court of Shijingshan District, Beijing have both accepted the case, indicating that the two courts have preliminarily confirmed jurisdiction when reviewing the case. If one party raises an objection to jurisdiction, after the court's review, it may be transferred to a court with jurisdiction for trial.

Sun Yuhao explained that under normal circumstances, when one company files a lawsuit as a plaintiff in a court with jurisdiction, the defendant involved in the case also has the right to counterclaim in the litigation, thus achieving the trial of the main claim and the counterclaim by the same collegiate bench.

"However, in the litigation dispute between Zongheng Shares and Yuandu Technology, both parties filed lawsuits in their own company's locations, taking into account litigation strategy and commercial interests. Since both local courts have accepted the litigation, the lawsuits on both sides will proceed independently, with Beijing reviewing Beijing's case and Chengdu reviewing Chengdu's," Sun Yuhao said.

From the demands of both parties in the litigation, Zongheng Shares requested compensation of 9 million yuan, and Yuandu Technology requested compensation of 11 million yuan. "However, it is not the amount requested by the company for compensation that the court will ultimately determine. The final People's Court will comprehensively determine the relevant losses based on specific facts and case circumstances," said Sun Yuhao.