Suzhou ousheng Electric Co., Ltd
Suzhou Alton Electrical & Mechanical Industry Co., Ltd. (north of Linhu Avenue and east of laixiu Road, FenHu high tech Development Zone, Jiangsu Province) about Suzhou ousheng Electric Co., Ltd
Initial public offering and listing on GEM
Reply to the inquiry letter for the second round of examination of application documents
Sponsor (lead underwriter)
(No. 86, Jingqi Road, Shizhong District, Jinan City, Shandong Province)
December, 2001
catalogue
1. About brand authorization mode 32. About industry and gem positioning 123. About labor dispatch 244. With regard to the actual controller 285. On sales model and revenue recognition policy 336. About ODM and brand authorization model 587. About overseas sales 758. With regard to operating costs 919. About the top five suppliers 9910. About gross profit margin 15711. With regard to inventory 18812. About dividends 19613. Correction of accounting errors 20214. On the main financial data after the audit deadline 205 Shenzhen Stock Exchange:
We have received the second round of examination and inquiry letter on the application documents for initial public offering and listing on the gem of Suzhou ousheng Electric Co., Ltd. (hereinafter referred to as the "examination and inquiry letter") audit and inquiry letter audit and inquiry letter [2021] No. 010566 issued by your exchange on May 19, 2021. Zhongtai Securities Co.Ltd(600918) (hereinafter referred to as the "sponsor") as the sponsor and lead underwriter, together with Suzhou ousheng Electric Co., Ltd. (hereinafter referred to as "ousheng electric", "issuer" or "company"), Guohao law firm (Shanghai) (hereinafter referred to as the "issuer's lawyer") Lixin Zhonglian Certified Public Accountants (special general partnership) (hereinafter referred to as "the issuer's accountant" and "Lixin Zhonglian") have implemented the issues listed in the audit inquiry letter one by one. The reply is as follows. Please review.
Note:
1. Unless otherwise stated, the abbreviations and definitions of terms used in this reply report are consistent with those in the prospectus.
2. Any discrepancy between the total amount and the mantissa of the sum of the sub item values in this reply report is caused by rounding.
The font in this reply report represents the following meanings:
Review the questions listed in the inquiry letter in bold (BOLD)
Responses to the questions listed in the inquiry letter (not bold)
Amendments and supplements to the prospectus (BOLD)
1. About brand authorization mode
The reply to the audit inquiry shows:
(1) During the reporting period, the issuer obtained the brand use rights of Stanley Black & Decker and its subsidiaries for Stanley (Stanley Fatmax), Porter cable, DeWalt (guaranteed high), black & Decker (beyond by black & Decker) and craftsman brands in small air compressors and wet and dry vacuum cleaners, and obtained Briggs & Stratton tech, LLC's right to use Briggs & Stratton brand in small air compressors. The above brand licensing methods are non transferable, non sublicensable and non exclusive. During the reporting period, the brand authorizer licensed the same authorized brand to a third party and sold similar products of the authorized brand in the same authorized area;
(2) Since Briggs & Stratton tech, LLC is in the state of bankruptcy and reorganization, the issuer intends not to continue cooperation after the expiration of the brand license agreement between the two parties (the brand license agreement is valid until December 31, 2023). In 2020, the issuer's Briggs & Stratton brand authorization model revenue accounted for 3.01% of the main revenue.
Please the issuer:
(1) During the supplementary disclosure reporting period, whether the issuer, as a brand licensee, failed to perform its obligations in accordance with the licensing agreement, whether it failed to obtain the approval of the brand Licensor, and whether it affected the stability and sustainability of brand licensing;
(2) In combination with the situation that the brand authorizer licensed the same authorized brand to a third party and sold similar products of the authorized brand in the same authorized area during the reporting period, supplementary disclosure shall be made on whether the cooperation between the issuer and the brand authorizer is stable, whether the issuer is replaced, or whether the authorized use rate of the brand is increased; (3) During the supplementary disclosure reporting period, the issuer's revenue amount and gross profit margin from selling Briggs & Stratton tech, LLC licensed trademark products, whether the issuer will still sell products of the above brands and pay corresponding brand royalties during the validity of the licensing agreement, analyze and disclose Briggs & Stratton tech, The specific impact of LLC's current bankruptcy and reorganization on the continued performance of the brand licensing agreement between the two parties, whether the issuer will face the risk of significant decline in the sales volume of the licensed brand products, and make supplementary disclosure of relevant risks in combination with the above situation;
(4) Supplementary disclosure of whether the issuer's other authorized brand parties and ODM customers have business difficulties or other major business risks except Briggs & Stratton tech, LLC.
Ask the sponsor and the issuer's lawyer to express clear opinions.
reply:
1、 During the supplementary disclosure reporting period, whether the issuer, as a brand licensee, failed to perform its obligations in accordance with the licensing agreement, whether it failed to obtain the approval of the brand Licensor, and whether it affected the stability and sustainability of brand licensing
The issuer has made supplementary disclosure in "(III) permitted use of assets" of "VI. major assets" of "section VI business and technology" of the prospectus as follows:
“……
6. During the reporting period, the issuer, as a brand licensee, did not perform its obligations in accordance with the licensing agreement
After consulting the brand authorization agreement signed between the issuer and the brand Licensor, the chronological account and bank statement of the issuer, according to the confirmation letter issued by the issuer and the legal opinion issued by law offices of Howard A. Davis on June 30, 2021 The legal opinion issued by Hong Kong Xulin law firm limited liability partnership on November 8, 2021, the legal opinion issued by Japan Da Vinci defense law firm on November 9, 2021 and the interview with the brand Licensor were confirmed by the sponsor and the issuer's lawyer through China judicial document network, the national court's information query system for the executee During the reporting period, the issuer, as a brand licensee, was able to comply with the licensing agreement and perform corresponding obligations without breach of contract.
During the reporting period, there was no litigation, arbitration or other disputes between the issuer and the brand Licensor Stanley Black & Decker, Inc. ( Stanley Agriculture Group Co.Ltd(002588) Baide) and its subsidiaries and Briggs & Stratton tech, LLC (Briggs & Stratton). 7. During the reporting period, the issuer did not reach an agreement with the brand Licensor on the scope of authorization, but it did not affect the stability and sustainability of brand authorization
Through interviews with the relevant personnel of the issuer's sales department, the issuer and the brand licensors Stanley Black & Decker, Inc and Briggs & Stratton tech, LLC, in the past cooperation, the scope of authorized trademarks, authorized products, authorized areas and authorized channels of the cooperation between the two sides have signed relevant trademark licensing agreements after reaching an agreement through consultation. The brand Licensor decides the scope of authorization to the issuer according to the issuer's production capacity, sales scale, mastered sales channels and the issuer's future sales plan. The issuer will also decide whether to accept the authorization according to the brand Licensor's proposed licensed trademark and the market influence of the licensed products. In the historical cooperation between the issuer and the brand Licensor, there are situations in which the two parties fail to reach an agreement on the type and scope of the authorized trademark during the negotiation process, so they fail to sign an agreement. However, this situation is the authorized brand of the normal commercial negotiation licensing agreement, and the issuer has renewed the license with the brand Licensor for many times after obtaining the use right of the authorized brand, No interruption of brand authorization occurred. According to the brand use right agreement signed between the issuer and the brand party, the brand Licensor has the right to audit the quality of the licensed products. During the reporting period, for the authorized brands that have reached cooperation, the issuer has no situation that the product quality has not passed the audit of the brand Licensor.
Through interviews, the relevant personnel of the issuer's sales department and Stanley Black & Decker, Inc. the issuer has a stable cooperative relationship with the brand Licensor Stanley Black & Decker, Inc. After consulting the brand licensing agreement signed between the issuer and the brand Licensor during the reporting period, the brand licensing scope of Stanley Black & Decker, Inc obtained by the issuer also shows a gradual expansion trend.
In conclusion, the issuer fails to reach an agreement on the scope of authorization with the brand Licensor, but it will not affect the stability and sustainability of the issuer's obtaining the brand authorization of Stanley Black & Decker, Inc. for the authorized brands that have reached cooperation, the issuer does not have the situation that the product quality has not been reviewed by the brand Licensor. "
2、 In combination with the situation that the brand authorizer licensed the same authorized brand to a third party and sold similar products of the authorized brand in the same authorized area during the reporting period, supplementary disclosure shall be made on whether the cooperation between the issuer and the brand authorizer is stable, whether the issuer is replaced, or whether the authorized use rate of the brand is increased
The issuer has supplemented the following disclosures in the "section VI business and technology", "VI. main assets", "III) permitted use of assets", "5. Stability of cooperation and potential risks or disputes between the issuer and the brand party" and "9. There is little risk that the issuer will significantly increase the authorized use rate of the brand" of the prospectus:
“……
(1) Stability of cooperation between the issuer and brand Briggs & Stratton tech, LLC
According to the confirmation of the issuer and the interview with the brand Licensor, the brand Licensor Briggs & strattontech, LLC (Briggs & Stratton) did not authorize the trademark licensed to the issuer to other third parties, nor did it sell the same kind of products under the same application scenario as the issuer in the authorized area of the issuer. According to the issuer's description, the business situation of Briggs & Stratton tech, LLC, the brand Licensor cooperating with the issuer, has changed significantly due to the bankruptcy and reorganization in 2020. At the same time, in view of the small sales of authorized brand products under the cooperation between the issuer and Briggs & Stratton Tech, LLC, the issuer plans to terminate the brand licensing agreement with Briggs & Stratton tech, LLC on December 31, 2021, No further cooperation.
To sum up, according to the analysis of the current situation, the cooperation between the issuer and the brand Licensor Briggs & Stratton tech, LLC is unstable. The issuer expects to terminate the cooperation with the brand Licensor Briggs & Stratton tech, LLC in the future, but the sales of brand products under the cooperation between the issuer and Briggs & Stratton tech, LLC are small. Terminating the cooperation is the issuer's active business strategy, It will not adversely affect the issuer's ability to continue as a going concern.
(2) Stability of cooperation between the issuer and Stanley Black & Decker, Inc
……
According to the trademark use right agreement signed between the issuer and Stanley Black & Decker, Inc, the confirmation letter issued by the issuer and the interview with the brand Licensor, Stanley Black & Decker, Inc. licensed the same authorized brand to a third party and sold the same authorized products in the same authorized region during the reporting period.
In the field of wet and dry vacuum cleaners, Stanley Black & Decker, Inc. has authorized the craftsman brand to other third parties, but due to the small scope of the above authorization channels for the craftsman brand obtained by the issuer and the relatively low proportion of the revenue of the craftsman brand of the issuer, The overall competitive relationship between the issuer and other third-party similar products authorized by craftsman brand is weak. In the field of small air compressors, although the brand Licensor Stanley Black & Decker sells or authorizes a third party to sell similar products of craftsman brand in the same authorized area, the products sold or authorized by Stanley Black & Decker are different from those sold by the issuer in terms of product positioning and application scenarios, and do not form a direct competitive relationship with the issuer.
The cooperative relationship between stanley Black & Decker, Inc. and the company belongs to the strategic relationship of complementary cooperation. The issuer has successfully established a relatively perfect sales network in well-known retailers, which can help Stanley Black & Decker, Inc better promote its brand products to the market. Stanley Black & Decker, Inc authorizes the brand to the issuer, According to the (net) sales of the issuer, the trademark use right fee is charged, so that the brand Licensor can benefit from brand promotion and brand licensing revenue, and has the prospect of long-term cooperation
