Sechuang Information Received "Administrative Penalty Decision Notice," Fined 1.5 Million Yuan

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（Source: Beijing Business Today）

Beijing Business Today News (Reporter Ma Huanhuan, Li Jiaxue) on the evening of March 17, Kechuang Information (Rights Protection) (300730) announced that the company and relevant responsible persons received an “Administrative Penalty Decision” issued by the Hunan Securities Regulatory Bureau.

The “Administrative Penalty Decision” shows that, upon investigation, Kechuang Information was found to have violated laws. In April 2023, Kechuang Information engaged in server and application software sales with Dayou Digital Technology (Beijing) Co., Ltd. (hereinafter referred to as “Dayou Tech”). During this business, Kechuang Information did not have control over the goods but still recognized revenue using the total amount method despite knowing the business model, which does not comply with Article 34 of “Enterprise Accounting Standards No. 14—Revenue.” Additionally, Kechuang Information incorrectly adjusted the amounts related to this business when preparing consolidated financial statements. These actions led to an overstatement of the company’s revenue by approximately 46.32 million yuan in the first half of 2023, accounting for 33.57% of the disclosed revenue; an overstatement of cost of goods sold by about 32.60 million yuan, also 33.57%; and an overstatement of profit by approximately 12.79 million yuan, accounting for 71.94% of the total disclosed profit. On April 27, 2024, Kechuang Information disclosed an “Announcement on the Correction of Previous Accounting Errors” to amend its prior financial data.

The Hunan Securities Regulatory Bureau decided to issue a warning to Kechuang Information and impose a fine of 1.5 million yuan; it also warned and fined the then Chairman Fe Yao Ping, Director, General Manager, and CFO Li Jie, and Financial Manager Long Zhong, with fines of 800,000 yuan, 800,000 yuan, and 600,000 yuan respectively.

Kechuang Information stated that as of the date of this announcement, all of the company’s operations and business activities are proceeding normally, and the above issues will not have a significant impact on the company’s production and operations.