On Shanghai Titan Scientific Co.Ltd(688133) application documents for issuing shares to specific objects
Reply to the second round of audit inquiry letter
Dxbz [2021] No. 4-00079
About Shanghai Titan Scientific Co.Ltd(688133)
Reply to the second round of examination and inquiry letter on the application documents for issuing shares to specific objects
Dxbz [2021] No. 4-00079 Shanghai Stock Exchange:
We have received the second round of examination and inquiry letter on Shanghai Titan Scientific Co.Ltd(688133) application documents for issuing shares to specific objects (szkss (refinancing) [2021] No. 107) (hereinafter referred to as “examination and inquiry letter”) issued by Shanghai Stock Exchange (hereinafter referred to as “your exchange”) on November 25, 2021. As the audit institution of Shanghai Titan Scientific Co.Ltd(688133) (hereinafter referred to as “issuer” or “company” or ” Shanghai Titan Scientific Co.Ltd(688133) “), Daxin Certified Public Accountants (special general partnership) (hereinafter referred to as “reporting accountant” or “we”) has carefully verified the issues mentioned in the audit inquiry letter that need to be explained or commented by the reporting accountant, The verification of relevant issues and verification opinions are now explained.
explain:
1、 Unless otherwise specified, the abbreviations or terms in the reply report of this inquiry letter shall have the same meanings as those in the prospectus (draft declaration).
2、 The font in this reply report represents the following meanings:
Bold (not bold): the questions listed in the inquiry letter
Arial (not bold): reply to the questions listed in the inquiry letter
Italics (BOLD): amendments and supplements to the prospectus and other application documents
Quotation of application documents such as prospectus in regular script (not bold)
Question 2 About financial investment
According to the first round of inquiry replies and public information, (1) the industrial fund invested by the company is Shanghai Titan Heyuan phase I private investment fund partnership (limited partnership), which mainly invests in science and technology enterprises in scientific services and related industries, including but not limited to high-end reagents, high-end instruments, high-end consumables, biomedicine and other fields, At the same time, give consideration to the industrial direction supported by policies of other countries; (2) The target raising scale of the fund is no less than RMB 107 million, of which the company will subscribe RMB 31 million as a limited partner, accounting for 28.97% of the minimum target raising amount of the fund. When there is a conflict between the listed company and the fund, it can not ensure that it can protect the interests of the listed company. Xie Yingbo, chairman of the company, is the actual controller of Heyuan private placement. The company has not made capital contribution, and the capital source of this investment is the company’s own capital; (3) Since the company’s investment in the industrial fund does not take obtaining investment income as the main purpose, the fund is not recognized as a financial investment. In addition, in the next 12 months, the company may make additional investment in the industrial chain coordination fund, including but not limited to Heyuan phase II fund.
The issuer is requested to explain: (1) the purpose, investment direction and investment decision-making mechanism of the company’s investment industry fund, and in combination with the situation that “when there is a conflict between the listed company and the fund, it can not ensure that it can protect the interests of the listed company”, explain how the company will ensure that the investment direction of the private placement fund is related to the company’s main business and strategic development direction in the future; (2) Whether the investment field of the fund “takes into account the industrial direction supported by the policies of other countries” meets the requirements of “focusing on the upstream and downstream of the industrial chain for the purpose of obtaining technology, raw materials or channels”, and whether it is prudent and reasonable to recognize it as a financial investment; (3) Whether there are potential interest arrangements for the investment of self owned funds into the industrial funds controlled by the actual controller; In combination with the issuer’s monetary fund balance and gap, future capital expenditure plan, etc., explain whether the raised funds are used in disguised form to invest in the private placement funds, and analyze the necessity of this financing in combination with the foregoing; (4) In combination with the situation that “the company may make additional investment in the industrial chain coordination fund in the next 12 months, including but not limited to Heyuan phase II fund”, explain the amount of financial investment newly invested and proposed to be invested by the issuer in the first 6 months of the board of directors, and whether the relevant financial investment has been deducted from the total amount of funds raised.
The recommendation institution, the reporting accountant and the lawyer of the issuer are requested to check and express clear opinions in combination with question 5 of the examination and answer of securities issuance and listing of listed companies on the science and innovation board.
reply:
2.1 description of the issuer
(I) the establishment purpose, investment direction and investment decision-making mechanism of the company’s investment industry fund, combined with the situation that “when there is a conflict between the listed company and the fund, it can not ensure that it can protect the interests of the listed company”, explain how the company can ensure that the investment direction of the private placement fund is related to the company’s main business and strategic development direction
1. Purpose of establishment of Industrial Fund
The company’s investment in Shanghai Titan Heyuan phase I private investment fund partnership (limited partnership) (hereinafter referred to as “Heyuan phase I fund”) is mainly to build an industrial investment fund management platform with industrial synergy with listed companies, which is conducive to the improvement of the main business and long-term development of listed companies, and has relevance, synergy and Products and services in line with the company’s development strategy. By investing in industrial funds, on the one hand, the company can leverage more social capital to participate in industrial investment with a small part of the company’s funds, which reduces the risks brought by the company’s investment in medium and early projects to a certain extent; On the other hand, with investment in local innovation enterprises as the main target, the development of projects through the investment of industrial funds will become long-term stable business partners and play a greater synergy effect.
2. Investment direction of industrial funds
According to the revised Partnership Agreement (Draft) of Heyuan phase I fund, it is clear that the investment field and scope of Heyuan phase I fund are enterprises in the field of high-end reagents, high-end instruments, high-end consumables, equipment, consumables and reagents in the development process of biomedicine; It also defines the cooperation mode between the investment enterprises of Heyuan phase I fund and Shanghai Titan Scientific Co.Ltd(688133) , that is, after Heyuan phase I fund invests in enterprises in the above fields, the invested enterprises will carry out business cooperation with Shanghai Titan Scientific Co.Ltd(688133) , including technical consultation and guidance, raw material supply, sales channel expansion, etc.
The company’s main business is to meet the scientific research related needs of scientific researchers, analysis and testing and quality control personnel by providing customers with scientific research reagents, special chemicals, scientific research instruments and consumables, laboratory construction and scientific research information services. The fund investment fields of the above high-end reagents, high-end instruments, high-end consumables, equipment, consumables and reagents in the biomedical development process are related and synergistic with the company’s main business, which is conducive to the company’s layout of projects upstream and downstream of the industrial chain and in line with the company’s development strategy.
After listing, the company has made foreign investment around the upstream and downstream of the industrial chain. In the process of investment, the upstream product companies are the main and the downstream customers are the auxiliary. While investing, upstream product companies will form product level cooperation, including product companies providing OEM production services for Shanghai Titan Scientific Co.Ltd(688133) independent brands, or Shanghai Titan Scientific Co.Ltd(688133) directly selling products on behalf of product companies.
Downstream customers can form cooperation by purchasing Titan’s products or services.
For example, Ningbo Cuiying invested by the company in March 2021 is a leading enterprise in the production of deuterated products in China, providing OEM production for the deuterated reagent product line of the company’s own brand adamas. After the company invested in Ningbo Cuiying, the deuterated products purchased from Ningbo Cuiying effectively enriched the company’s deuterated product line and stable inventory, and also brought a good driving force for the revenue growth of the company’s own brand products.
Fuxiang optoelectronics, invested by the company in May 2021, is an advanced spectral equipment manufacturer in China. It provides customers with spectral detection products and solutions in the fields of scientific research and innovation and semiconductor. The company is promoting the application of spectral detection instruments in the laboratory and OEM production, Through the cooperation with Fuxiang optoelectronics, it lays the foundation for the company’s own brand instrument to launch a series of spectral detection product lines.
Hanhai new enzyme invested by the company in July 2021 is a high-tech enterprise integrating the R & D, production and service of biopharmaceutical raw materials, vaccine preparation raw materials and in vitro diagnostic raw materials. It has the cooperation between microfluidic ultra-high throughput screening and artificial intelligence enzyme molecular structure product line, which has a synergistic effect on the enrichment of the company’s own brand biological reagent adamas life products.
It can be seen from the above cases that the company’s investment aims to give full play to the advantages of the company’s platform and enhance the collaborative value of the industrial chain. Through investment and business cooperation, the company’s product matrix and independent brand influence have been improved. After the investment of Heyuan phase I fund in the future, the company will also carry out similar business cooperation with the invested enterprises to promote the development of the company’s main business.
Therefore, after Heyuan phase I fund invests in enterprises in the field of high-end reagents, high-end instruments, high-end consumables, equipment, consumables and reagents in the development process of biomedicine, the company will cooperate with the invested enterprises through business cooperation methods such as OEM production, cooperative R & D of new products, technical guidance and sales channel expansion, Promote the relevance and synergy with the company’s main business.
After Heyuan phase I fund selects the invested enterprise, it will achieve a win-win situation between the company and the invested enterprise through the following cooperation mode, and promote the formation of Industrial Synergy with the company: the invested enterprise can provide OEM production for the company’s own brand products, enrich the product types of the company’s own brand, and enhance the market influence of the company’s own brand; The company provides the invested enterprise with customer resources, sales channels and offline storage and distribution service capabilities, so as to promote the rapid business development of the invested enterprise. The cooperation mode between the company and the invested enterprise is clearly agreed in the partnership agreement (Draft): after Heyuan phase I fund invests in enterprises in the above fields, the invested enterprise will carry out business cooperation with Shanghai Titan Scientific Co.Ltd(688133) , including technical consultation and guidance, raw material supply, sales channel expansion, etc. The specific cooperation mode and cooperation effect will be determined according to the business cooperation needs of both parties.
Therefore, the investment direction of Heyuan phase I is related to the company’s main business and strategic development direction, and the investment direction and cooperation mode of the fund are clearly agreed in the partnership agreement, which can effectively ensure that the future investment direction of the fund is related to the company’s main business and strategic development direction.
3. Investment decision-making mechanism of Industrial Fund
According to the partnership agreement (Draft), the investment decision-making committee of Heyuan phase I fund is composed of four people, namely Xie Yingbo, Zhang Qing, Ding Gaoxiang and Zhijiang. The investment decision-making of Heyuan phase I fund adopts the principle of more than three out of four votes. Xie Yingbo is the actual controller and chairman of the company; Zhang Qing is the actual controller, director and general manager of the company; Gao Xiang is appointed as the deputy general manager and Secretary of the board of directors of the company. Therefore, the actual controller, directors and executives of the company can control the investment decision of Heyuan phase I fund, and the company can have an indirect impact on the investment decision of the fund through the actual controller, directors and executives.
Xie Yingbo, Zhang Qing and Ding Gaoxiang, the actual controllers of the company, have an in-depth understanding of the upstream and downstream industrial chain of the scientific service industry, judge the market space, competitive pattern and competitive advantage of the investment target, contribute to the success of the investment, and ensure that the investment direction of Heyuan phase I fund is related to the main business and strategic development direction of the company.
4. Other measures to protect the interests of the company
① The company has formulated internal control systems such as foreign investment management system and related party transaction decision-making system, which defines the review process and review authority of foreign investment and related party transactions. The company reviews foreign investment and related party transactions in strict accordance with the internal control system, and timely performs the obligation of information disclosure.
The company and its directors, supervisors and senior managers will strictly implement the company’s internal control system, earnestly implement the company’s risk prevention measures, check the association filing and bank custody of investment funds, and regularly consult the fund’s financial statements, financial books and relevant information disclosure, Urge relevant personnel to perform their duties and other means to effectively protect the interests of all shareholders. ② Shanghai Titan Heyuan Private Equity Fund Management Co., Ltd. (hereinafter referred to as “Heyuan private equity”), the manager of Heyuan phase I fund, has established a comprehensive and effective risk management and internal control system with independent departments, clear rights and responsibilities, mutual constraints.
③ According to the arrangement of the agreement, the company will appoint relevant personnel to continuously follow up the fund operation, regularly investigate the actual situation of the investment object, urge the fund management team to strictly standardize the fund operation, timely report the investment progress, strengthen post investment management, etc., effectively reduce the company’s investment risk and ensure the safety of the company’s funds.
④ For the joint establishment and investment of Heyuan phase I fund with the company, Heyuan private placement promises as follows:
“1. Our company will choose the investment direction in accordance with the limited partnership agreement (Draft) of Shanghai Titan Heyuan phase I private investment fund partnership (limited partnership) (the partnership agreement is to be finally signed), that is, enterprises investing in high-end reagents, high-end instruments, high-end consumables, equipment, consumables and reagents in the development process of biomedicine.
2. There is no interest transfer and potential interest arrangement between the listed company and our company in this joint investment, and there will be no interest transfer and potential interest arrangement between the investment and operation activities of Heyuan phase I fund and the listed company or the actual controllers and senior managers of the listed company in the future.
3. During the operation, investment and operation of Heyuan phase I fund in the future, it will not damage the interests of the listed company, and ensure that the investment activities of the future industrial fund will continue to have relevance and synergy with the main business of the listed company, so as to protect the interests of the listed company. ” ⑤ For the joint establishment and investment of Heyuan phase I fund with the company, Xie Yingbo, Zhang Qing and Ding Gaoxiang, the actual controllers of the company, promise:
“1. The investment direction will be selected in accordance with the Shanghai Titan Heyuan phase I private investment fund partnership (limited partnership) limited partnership agreement (Draft) (hereinafter referred to as the” partnership agreement “), that is, enterprises investing in high-end reagents, high-end instruments, high-end consumables, equipment, consumables and reagents in the development process of biomedicine.
2. There is no interest transfer and potential interest arrangement in this joint investment, and there will be no interest transfer and potential interest arrangement between Heyuan phase I fund and myself in the future.
3. During the operation, investment and operation of Heyuan phase I fund in the future, it will not damage the interests of the listed company, and ensure that the investment activities of the future industrial fund are continuously relevant and synergistic with the main business of the listed company, so as to protect the interests of the listed company. 4. If there is interest transfer, potential interest arrangement or failure to choose the investment direction in accordance with the partnership agreement in the operation, investment and operation of this joint investment and future Heyuan phase I fund, and the above matters cause losses to the listed company, I will bear the above losses. “
In conclusion, on the basis of the investment purpose, investment direction, investment decision-making mechanism and partnership agreement of Heyuan phase I fund, and through the establishment and implementation of internal control system and the appointment of relevant personnel to continuously follow up the fund operation and the actual controllers of the company, Xie Yingbo, Zhang Qing, senior executive Ding Gaoxiang and Heyuan private placement
