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Reply to the Audit Inquiry Letter Regarding the Issuance of Shares to Specific Targets by Toread Holdings Group Co., Ltd.
Letter No. [2026] ZG057 from BDO China Shu Lun Pan
Shenzhen Stock Exchange:
BDO China Shu Lun Pan Certified Public Accountants LLP (hereinafter referred to as the "Reporting Accountant" or "we") received the "Audit Inquiry Letter Regarding the Application of Toread Holdings Group Co., Ltd. for Issuance of Shares to Specific Targets" (Audit Letter [2026] No. 020030) (hereinafter referred to as the "Inquiry Letter") issued by your exchange on April 20, 2026. We have conducted an inspection of the issues involving the accountant in the Inquiry Letter in accordance with relevant laws and regulations and have formed our relevant judgments. The company is responsible for providing true, legal, and complete accounting information. We hereby reply as follows:
Question 1
The application materials show that the total funds to be raised from this issuance of shares to specific targets do not exceed 1.858 billion RMB, all of which will be used to supplement working capital. The issuance targets are Beijing Tongyu Heying Investment Management Co., Ltd. (hereinafter referred to as Tongyu Heying) and Beijing Minghongyi Technology Service Co., Ltd. (hereinafter referred to as Minghongyi), both controlled by Li Ming, the actual controller of the issuer. Minghongyi was established on October 29, 2025. The subscription funds for Tongyu Heying and Minghongyi come from self-raised funds. Tongyu Heying expects to pledge all the issuer's shares it holds after this issuance as collateral to apply for loans. The issuer's controlling shareholder is Beijing Tongyu Zhonghe Technology Development Center (Limited Partnership) (hereinafter referred to as Tongyu Zhonghe), and Tongyu Zhonghe and its persons acting in concert hold 13.68% of the company's shares. At the end of the reporting period, the issuer's cash and cash equivalents balance was 764 million RMB, the balance of trading financial assets was 186 million RMB, and the asset-liability ratio was 26.79%. On October 17, 2025, the issuer's board of directors reviewed and disclosed that it intended to use idle self-owned funds not exceeding 800 million RMB to purchase high-safety, high-liquidity, and low-risk wealth management products, with a term of 12 months from the date of approval by the board of directors. On August 25, 2025, the issuer disclosed its refinancing plan for the first time. On October 31, 2025, the issuer revised the plan, involving the issuance targets, price, and amount. The amount of funds raised from the company's previous non-public issuance to supplement working capital was 1.2713848 billion RMB (including interest), accounting for 90.58% of the total actual funds raised.