Hengshuo semiconductor (Hefei) Co., Ltd
Zbit Semiconductor, Inc.
(building 11, alumni enterprise innovation park, Luyang University of science and technology, northwest, the intersection of Tianshui road and Taihe Road, Luyang District, Hefei) reply to the second round of examination and inquiry letter on the application documents of hengshuo semiconductor (Hefei) Co., Ltd. for IPO and listing on the science and innovation board
Sponsor (lead underwriter)
(No. 18, Meishan Road, Hefei, Anhui)
February, 2002
Shanghai Stock Exchange:
We have received the second round of examination and inquiry letter on the application documents of hengshuo semiconductor (Hefei) Co., Ltd. for initial public offering and listing on the science and Innovation Board (szksh [2022] No. 22) (hereinafter referred to as the “examination and inquiry letter”) issued by your exchange on January 14, 2022, Hengshuo semiconductor (Hefei) Co., Ltd. (hereinafter referred to as “hengshuo shares”, “issuer”, “company”) and the sponsor Guoyuan Securities Company Limited(000728) (hereinafter referred to as “sponsor”, “000728}”), Beijing Guofeng law firm (hereinafter referred to as “issuer’s lawyer”) Rongcheng Certified Public Accountants (special general partnership) (hereinafter referred to as “reporting accountant”) and other intermediary institutions have implemented and verified the problems listed in the audit inquiry letter one by one. The reply is as follows. Please review.
Unless otherwise specified, the abbreviations or terms used in this reply are consistent with the prospectus of hengshuo semiconductor (Hefei) Co., Ltd. for initial public offering and listing on the science and Innovation Board (application draft) (hereinafter referred to as the “prospectus”).
The font in this reply represents the following meanings:
Review the questions listed in the inquiry letter in bold
Reply to the questions listed in the audit inquiry letter
Updated disclosure of prospectus in italics (BOLD)
In this reply report, if the mantissa of the total count is inconsistent with the mantissa of the sum of the listed values, it is caused by rounding.
Question 1: about Wuhan Xinxin technology licensing
According to the application materials and inquiry replies: (1) the amount of F103 technical authorization for MCU products is 20 million yuan, and the payment time shall be agreed by both parties. According to the project samples and the R & D Progress of mass production, the issuer will confirm the payment of the above authorization at the time when the subsequent R & D resources can achieve mass production, or the progress of mass production does not meet the verification standard before December 31, 2022, The issuer shall determine the amount of authorization fee payable and the time point of payment according to the further negotiation results of both parties; (2) The technical service fee of NOR flash authorized by the issuer is US $500000 and the technical use fee is US $50 / wafer. The technical service fee shall be paid to the issuer in stages according to the research and development progress of the technology of each authorized product, and the technical use fee shall be paid to the issuer quarterly according to the sales of its own brand products using the authorized technology; The technology licensing fee of Wuhan Xinxin MCU is 40 million yuan, and the sales amount is raised to 500 yuan / wafer. The company pays the licensing fee (royalty) in stages according to the licensing agreement, and the sales commission is directly included in the cost; (3) According to the issuer, Wuhan Xinxin and other OEM customers also have arrangements to share product technology intellectual property rights and license sales. Guoxin technology and chuangyao technology listed by the issuer belong to cases of agreeing to share intellectual property rights with customers.
The issuer is requested to explain: (1) whether Wuhan Xinxin has delivered relevant technical materials to the issuer according to the contract of F103 product technology licensing fee of 20 million yuan, the company will confirm the rationality of the licensing fee payable at the time of subsequent mass production, and whether the relevant accounting treatment meets the provisions of the accounting standards for business enterprises; (2) The time point and specific basis for phased payment of authorization fee and collection of technical service fee, the pricing basis and accounting process of sales commission and technical service fee, and whether there are differences with comparable companies.
The recommendation institution and the reporting accountant are requested to verify the above matters and express clear opinions.
reply:
1、 Issuer description
(I) according to the contract of F103 product technology licensing fee of 20 million yuan, whether Wuhan Xinxin has delivered relevant technical materials to the issuer, the company will confirm the rationality of the licensing fee payable at the time of subsequent mass production, and whether the relevant accounting treatment meets the provisions of the accounting standards for business enterprises
1. Specific agreement on MCU product technology license contract
The issuer and Wuhan Xinxin signed the supplementary agreement II of MCU product R & D, license and sales agreement (hereinafter referred to as “MCU supplementary agreement II”) in May 2021, which made a supplementary agreement on the license fund for Wuhan Xinxin to license MCU product technology. According to the introduction of relevant personnel of the issuer who participated in the signing of the contract, interviews and letters with relevant personnel of Wuhan Xinxin, the authorized content includes the product technology corresponding to the two products L003 and F103. Among them, L003 product technology basically meets the mass production conditions when delivered, and individual bugs need to be revised and repaired to meet the application conditions; F103 product technology only completes the design and preliminary streaming work at the time of delivery, and the design and chip verification process is incomplete. It still needs subsequent R & D resources to realize engineering samples and mass production, and the results may be uncertain.
Therefore, with regard to L003 product technology licensing fee, The MCU supplementary agreement II stipulates as follows: “a) the first authorization fee is 10000000 yuan only (in words: RMB ten million yuan only); Party B shall pay it within (10) days after the signing of this supplementary agreement II; b) Party B shall pay the second authorization fee of 10000000 yuan only (in words: RMB ten million yuan only) before the end of December 2021.”
About F103 product technology license fund, The MCU supplementary agreement II stipulates as follows: “C) before the end of December 2022, Party B plans to pay the remaining authorization fee of 20000000 yuan only (in words: RMB 20 million yuan only). The payment time of F103 remaining authorization fee is determined by the research and development progress of F103 project samples and mass production agreed by both parties (see Annex L003 & F103 data review for details) , if the engineering samples and mass production progress of F103 fail to meet the verification standards before December 31, 2022, Party A and Party B shall separately agree on the payment time, amount and further R & D plan. “
To sum up, the F103 product technology authorization fund shall not exceed 20 million yuan. The specific payment time and amount shall be determined according to the F103 project samples and the R & D Progress of mass production.
2. Wuhan Xinxin has delivered relevant technical materials to the issuer
In May 2021, Wuhan Xinxin has delivered all technical materials related to F103 product technology agreed in MCU supplementary agreement II to the issuer.
3. The company will confirm the rationality of the authorization fee payable at the time of subsequent mass production of products, and whether the relevant accounting treatment complies with the provisions of the accounting standards for business enterprises
(1) Reasons for the issuer’s failure to carry out accounting treatment when obtaining the relevant technical data of F103 product
Since F103 product technology only completes the design and preliminary streaming work at the time of delivery, and the design and chip verification process is incomplete, it still needs to invest subsequent R & D resources to realize engineering samples and mass production, and the results may be uncertain. If the progress of engineering samples and mass production of F103 does not meet the above reasons before December 31, 2022, and the issuer is unable to accurately measure and estimate the amount and time of payment of F103 product technology licensing fee at the time of delivery of F103 product technology, the issuer intends to make a decision according to the R & D Progress of subsequent F103 engineering samples and mass production, Relevant accounting treatment shall be carried out after the amount and time of F103 authorization payment are determined.
(2) Adjustment on accounting treatment of F103 product technology authorization fund
Although the issuer cannot accurately measure and estimate the amount and time of payment of F103 product technology licensing fee at the time of delivery of F103 product technology, considering that Wuhan Xinxin has delivered F103 product technology related materials to the issuer, in order to fully reflect the transaction in the financial statements, The issuer has provisionally estimated that the F103 product technology authorization fund of 20 million yuan has been included in the accounting of other non current assets according to the contract amount, and the provisionally estimated payable F103 product technology authorization fund of 20 million yuan has been included in the accounting of other non current liabilities.
The issuer has adjusted the relevant statement items, and the relevant adjustments have no impact on the net assets and net profits of the issuer in each period of the reporting period. The corrected accounting treatment complies with the relevant provisions of the accounting standards for business enterprises. The issuer adjusted the financial statements from January to June 2021 according to the above matters, as follows:
Unit: 10000 yuan
Amount before and after adjustment of financial statement items
Other non current assets 186.04 2000.00 2186.04
Other non current liabilities – 2000.00 2000.00
The correction to the accounting treatment of F103 Product Authorization fund is not caused by the company’s weak accounting basis, major defects in internal control, earnings manipulation, major accounting omissions without timely audit adjustment, abuse of accounting policies or accounting estimates, malicious concealment or fraud, and does not have a direct impact on the company’s daily operation. This correction and adjustment does not intentionally omit or fabricate transactions, events or other important information, abuse accounting policies or accounting estimates, manipulate, forge or tamper with the accounting records on which the financial statements are prepared, and does not constitute a situation in which the company does not meet the issuance conditions in terms of basic accounting standards and relevant internal control, Comply with the relevant provisions of the accounting standards for business enterprises and answers to some questions about initial business.
The company held the seventh meeting of the first board of directors on January 28, 2022, deliberated and approved the proposal on correcting the company’s financial statements from 2018 to January June 2021, and corrected the accounting treatment of F103 Product Authorization fund.
(II) the time point and specific basis for the phased payment of authorization fee and the collection of technical service fee, the pricing basis and accounting process of sales commission and technical service fee, and whether there are differences with comparable companies
1. Time point and specific basis for phased payment of authorization fee and collection of technical service fee
(1) Time point and specific basis for phased payment of MCU authorization fee
Serial No. specific time point and specific basis of payment agreed in the contract
1. Pay 10 million yuan within 10 days from the date of signing the agreement. Signing time of the agreement in August 2021
2. Pay 10 million yuan before the end of December 2021, as agreed in the agreement in December 2021
The specific payment time at the end of 2022 depends on the R & D Progress of F103 project samples to be paid and mass production before the end of 2022. The unpaid project samples and mass production progress of F103 meet the verification standard. If the technical authorization of 3 products is completed before the end of December 2022 work
Gold 2000.00 process samples and mass production progress failed to meet the verification, and the negotiation results have not been paid
If the standard is 10000 yuan, the payment shall be made separately by both parties
Time, amount and further R & D plan
(2) Time point and specific basis for charging nor flash technical service fee in stages
According to the technology R & D and license agreement signed between the company and Wuhan Xinxin in December 2015, the company authorizes Wuhan Xinxin to six nor flash product technologies based on 65nm process, and the technical service fee is US $500000. The specific charging time and basis are as follows:
Serial number time point specific collection time specific basis
1. The payment shall be made within 30 days after the signing of the agreement, which is about the signing time of the agreement in March 2016
RMB 140000
In March 2016, after the first release of each authorized product, about 35000 US dollars were paid for the first release of two products within 30 days after the first release of the first product, and 70% was charged according to the agreement
RMB 10000 (35000 * 2); Remaining 29
Each authorized product meets the verification standard and will be delivered in September 2018
Within 30 days after March 3, the payment of about 2.5 items shall be verified with Wuhan Xinxin settlement products
RMB of 10000 US dollars
2. Pricing basis and accounting process of sales commission and technical service fee
Project type determination
