The Dispute Of New Space Technology A-Share "Three Into The Palace" To Avoid "Share Based Payment" Remains Unresolved

On May 21, Beijing New Space Time Technology Co., Ltd. (hereinafter referred to as "New Space Time Technology"), a lighting engineering system integration service provider, will attend the meeting and accept the test of the 78th Development and Review Commission meeting, which will also be the A-share "three into the palace" of New Space Time Technology.

The A-share road of New Space Technology can be described as a bumpy one: as early as June 5, 2017, it submitted a prospectus (application draft) and planned to apply for listing on the Shenzhen Stock Exchange. However, whether the IPO was successful on February 7, 2018, the CSRC focused on its problems such as purchasing labor from units without labor subcontracting qualifications, contracts signed that should not perform bidding procedures, and outsourcing labor from related parties.

After the first defeat, in October 2018, New Space Technology signed a recommendation guidance agreement with CSCI, and the second time rushed to A shares. In April 2019, New Space Technology disclosed that it planned to apply for listing on the Shanghai Stock Exchange, with a public offering of no more than 17.73 million shares and raised funds of 2.013 billion yuan.

However, New Space Technology, which was originally scheduled for the conference on April 16, 2020, was announced on the eve of the conference that "there are still relevant matters that need further verification", and the announcement will fail.

It is worth mentioning that, in addition to the application for the change of listing place, the proposed amount of new space-time technology IPO reached 2.013 billion yuan, compared with the proposed amount of 533 million yuan at the time of the first application, the size of raised funds increased by nearly 1.5 billion yuan in just two years; The intermediary agency also changed from China Merchants Securities to CSCI with more prominent overall strength.

Suspected of evading disputes caused by "share based payment"

As an enterprise providing lighting engineering system integration services, New Space Technology is mainly engaged in lighting engineering design, research and development and sales of lighting products, which are applied to cultural tourism light shows, conventional landscape lighting and other fields.

In February 2018, the issuance supervision department of the Securities Regulatory Commission focused on five major issues: whether New Space Technology was first invited to the meeting or not. They were: New Space Technology purchased labor from companies without labor subcontracting qualifications. Among the top 10 labor subcontracting companies in 2015, the purchase amount from companies without labor subcontracting qualifications accounted for 50.84%; There are contracts signed that should not perform the bidding procedures, there are no bid winning documents for the two projects that should perform the bidding procedures in the fourth quarter of 2017, and some projects have incurred project costs before winning the bid; Outsourced labor is purchased from the related party Beijing AIA Jian'an Labor Subcontracting Co., Ltd; During the reporting period, the growth rate of operating revenue and net profit was inconsistent; At the end of each reporting period, the net inventory increased year by year, and New Space Technology did not accrue inventory falling price reserves.

In April 2020, before the second meeting, New Space Technology was suspected of evading "share based payment" by the media.

According to the disclosure of the prospectus in April 2019, New Space, which was established in February 2004, is limited, and the sixth equity transfer was carried out in April 2015. Before that, the founder, Paopahai, held 70% of the shares and Yang Yaohua, 30% of the shares.

On April 17, 2015, New Space Co., Ltd. held a shareholders' meeting, and it was agreed that the founder Gong Dianhai would transfer the capital contributions of 1.4056 million yuan, 92368 million yuan and 1606400 yuan held by New Space Co., Ltd. to natural persons Yuan Xiaodong, Yan Shi and Xing Xiangfeng at the prices of 7 million yuan, 4.6 million yuan and 800 thousand yuan respectively. At the same time, Yang Yaohua would transfer the capital contributions of 5220800 yuan, 3614400 yuan, 321800 yuan The contributions of 321.28 million yuan, 321.28 million yuan and 160.64 million yuan were transferred to natural persons Liu Jixun, Chi Longwei, Wang Zhigang, Tang Zheng, Jiang Huapeng and Wang Yue at the price of 2.6 million yuan, 1.8 million yuan, 1.6 million yuan, 1.6 million yuan and 0.8 million yuan respectively. The above equity transfer amount was determined to be 4.98 yuan per share through negotiation.

In September 2015, the above equity transfer passed the industrial and commercial registration of change.

The 9 natural persons who received the above capital contributions are all senior executives of New Space Technology, such as Yuan Xiaodong, Yan Shi, Xing Xiangfeng as the deputy general manager of the company, and Wang Yue as the supervisor of the company.

Three months later, in December 2015, New Space Co., Ltd. launched the joint-stock system reform, set up a joint-stock limited company with the net assets of New Space Co., Ltd. of 112.6 million yuan equivalent to 2008000 shares as of September 30, 2015, and officially launched the road to listing. One month later, in January 2016, the capital increase of New Space Technology completed by restructuring was 20 million yuan, which was subscribed by all shareholders in the same proportion according to their original shareholding ratio, and the subscription price was 1 yuan/share.

It can be inferred that the above nine executives of New Space Technology invested 2.99 yuan per share on the eve of the company's IPO.

In contrast, in March 2016, when New Space Technology Co., Ltd. increased its capital for the second time and introduced the external investors China Belgium direct equity investment fund and Shanghai Huiru Venture Capital Management Partnership (Co., Ltd.), the two institutions subscribed for 4.008 million shares and 801.6 million shares of its newly increased capital at the price of 40 million yuan and 800000 yuan, respectively, with the investment cost of 9.98 yuan/share.

If nine executives of New Space Technology obtained 8977920 shares at 2.99 yuan per share, and external investors bought shares at 9.98 yuan per share as the market fair price, it means that the accrued expenses of equity payments required by New Space Technology in 2015 amounted to 62.7556 million yuan. However, in 2015, the net profit of New Space Technology after deducting non profits was only 32.51 million yuan.

As early as December 2017, a feedback from the CSRC focused on this and asked New Space Technology to explain, "In September 2015, the price of equity transfer and capital increase from the actual controller to the employees of the company was lower than the price of capital increase from the Zhongbi Fund and Shanghai Huiru to the issuer in 2016, whether the above equity transfer and capital increase involved share based payment, and whether the corresponding accounting treatment was carried out."

In this regard, New Space Technology said that in September 2015, the employees' equity participation was based on the actual business situation of New Space Limited at that time and the original net assets of 2014 (the reference price was 2.74 yuan/contribution amount of 1 yuan). Considering that the issuer has no market circulation price as a reference, there are not many large contracts under construction, and it is impossible to predict the large projects that can be obtained in the future, Therefore, both parties negotiated and determined that the transfer price was 4.98 yuan/capital contribution, which was 82% higher than the reference price. The intermediary also said that the equity transfer in 2015 was not for the purpose of obtaining employees to provide services to the issuer, and the relevant provisions of the Accounting Standards for Business Enterprises No. 11 - Share based Payment were not applicable.

In October 2019, the CSRC's second feedback on New Space Technology was still directed at the issue of share based payment, "In April 2015, several directors and senior managers of the issuer received part of the issuer's equity held by the actual controller; in March 2016, Shanghai Huiru increased its capital and became a shareholder. Please add whether the relevant equity change involves share based payment, and whether the accounting treatment of share based payment complies with the relevant provisions of the Accounting Standards for Business Enterprises."

In this regard, on May 18, the reporter called New Space Technology, but as of press release, no reply was received.

High accounts receivable

From the perspective of performance, New Space Technology performed well. From 2016 to March 2019, its realized revenue was 601 million yuan, 887 million yuan, 1.159 billion yuan and 259 million yuan, respectively. In 2018, its revenue reached 1 billion yuan; The corresponding net profits were 69.9821 million yuan, 134 million yuan, 229 million yuan and 340.296 million yuan respectively.

"The company has three important qualifications in the industry: Grade I qualification for professional contracting of urban and road lighting engineering, Grade A qualification for special lighting engineering design and Grade A qualification for design and construction of waterscape fountains." The prospectus disclosed that New Space Technology has successively undertaken the landscape lighting improvement project of T-shaped open space in the core area of Hangzhou Qianjiang New City, the Bailuzhou music and painting visual interpretation show Brightening and upgrading along the important road of "Beautiful Qingdao Action", and the landscape lighting and upgrading project of the Central Business District in Honggutan New Area.

However, the other side of the coin is that as a design and construction party in the engineering field, the balance of accounts receivable of New Space Technology is high.

From 2016 to March 2019, the book value of accounts receivable of New Space Technology was 279 million yuan, 319 million yuan, 479 million yuan and 507 million yuan respectively, accounting for 53.93%, 35.74%, 34.84% and 37.11% of the total assets.

According to New Space Technology, downstream customers are concentrated in local governments, enterprises and institutions, and commercial real estate developers.

A person involved in PPP project construction in Zhejiang told the 21st Century Economic News reporter, "In the field of project construction, generally advance payment, installment settlement and collection are required in the early stage, and then the remaining amount is collected after completion. This industry characteristic also determines that the construction unit will have a large number of deposits, advances and other situations."

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