July 27, Goodbaby Pet Food Group Co., Ltd. (hereinafter referred to as Goodbaby Pet) will debut on the meeting, the sponsor (lead underwriter) for the China Pacific Securities Co., Ltd., the sponsor on behalf of the Chen Fenghua, Sun Xiyun, co-lead underwriter for the China International Capital Corporation Limited. Goodbaby Pet is to be listed on the GEM Board of Shenzhen Stock Exchange, and plans to issue no more than 40,045,000 shares (without taking into account the over-allotment option) and accounting for no less than 10% of the total share capital after the issuance. The company intends to raise 600 million yuan, respectively, for pet food production base expansion construction project, intelligent warehousing upgrade project, R & D center upgrade project, information technology upgrade construction project, supplement working capital.
From 2018 to 2021, Goodbaby Pet realizes operating income of 1,221,124,000 yuan, 1,403,141,700 yuan, 2,013,038,900 yuan, and 2,575,163,100 yuan, of which the income from main business is 1,218,552,900 yuan, 1,409,901,000 yuan, 2,0, 4,616,900 Yuan, 2,560,773,000 Yuan.
During the reporting period, the Company's net profit attributable to the owners of the parent company was RMB 44,520,000, RMB 4,160,200,000, RMB 11,148,400,000, RMB 140,274,100,000, RMB 140,929,100, RMB 200,461,900, RMB 256,007.73,000, respectively, and the net profit attributable to the owners of the parent company after deduction of non-recurring gains and losses was RMB 42,416,600,000, RMB 34,020,000, RMB 104,942,200,000, respectively, 12,290.71 million Yuan.
During the reporting period, the net cash flow from operating activities of the company was RMB 99,770,800,000, RMB -36,954,300,000, RMB 175,130,400,000, RMB 93,934,200,000, and the cash received from the sales of commodities and the provision of labor services was RMB 1,260,375,100,000, RMB 1,510,683,700,000, RMB 2,090,843,500,000, RMB 2,096,435,000, RMB 259,660,000, and RMB 2,596,760,000 respectively. million yuan, and 2,596,472,000 yuan.
Calculated, the company's net-to-cash ratio is 2.24, -8.88, 1.57 and 0.67, respectively.
From 2019 to 2021, Behavioral Pets' gross profit margin from its main business will be 28.87%, 33.12% and 32.79%, and its net profit margin will be 0.30%, 5.54% and 5.51%, respectively. The company's net profit margin has not exceeded 6% in the past three years.
Overseas market is an important source of the company's operating income.From 2019 to 2021, the company's revenue from overseas business accounted for 46.07%, 48.17% and 47.88% of its main business revenue, respectively, and changes in demand in overseas markets have a significant impact on the company's business development.
From 2018 to 2021, the book balance of inventories of Good Pet will be 195,396,700 yuan, 285,250,500 yuan, 39,819,700 yuan and 585,192,200 yuan, respectively, and the book value of inventories will be 194,985,600 yuan, 284,972,500 yuan, 39,468,500 yuan and 58. 322.16 million yuan, accounting for 38.88%, 38.05%, 48.03% and 48.02% of current assets, respectively.
From 2018 to 2021, the capacity utilization rate of Behavioral Pet staple food will be 67.51%, 96.99%, 80.97% and 67.40%, respectively, and the production and sales rate will be 97.98%, 93.86%, 99.34% and 96.20%, respectively; and the capacity utilization rate of snacks will be 96.75%, 90.55% and 92.05%, respectively, 93.94%, and production and sales rates were 93.77%, 97.77%, 99.90% and 96.89%, respectively.
From 2018 to 2021, the sales ratios of Goodbaby Pet Snacks are 71.91%, 64.93%, 64.65%, 63.67%; the sales ratios of Staple Foods are 27.91%, 34.53%, 34.70%, and 35.62%; and the sales ratios of Health Care Products and Others are 0.18%, 0.54%, and 0.65%, respectively, 0.71%.
From 2018 to 2021, the sales expenses of Goodbaby Pets will be RMB 166,670,200, RMB 245,915,600, RMB 34,080,800 and RMB 459,326,500, respectively. During the reporting period, the Company sponsored famous variety shows such as "Aspiring Life" and "The New Forbidden City" and hired Nicholas Tse as spokesman, and the Company's business promotion expenses for each period of the reporting period amounted to RMB 49,963,500,000, RMB 79,015,700,000, RMB 124,268,800,000 and RMB 173,245,400,000 respectively, which was on an upward trend.
From 2019 to 2021, the company's sales expense ratio is 17.53%, 13.12% and 13.82%, respectively, and the average value of sales expense ratio of comparable companies in the same industry is 8.42%, 5.79% and 5.05%, respectively, which makes the company's sales expense ratio the highest among comparable companies.
Reporting period, the good pet and the domestic holding subsidiary by *** count 4 administrative penalties, involving penalties *** count 290,000 yuan. The overseas subsidiary Goodbaby USA was subject to 2 administrative penalties.
As of the signing date of the prospectus, Goodbaby Pet and its subsidiary Goodbaby USA, Goodbaby Pet's actual controller Qin Hua and R&D director Li Zhaowei are involved in pending litigation. In addition, the prospectus disclosed an appearance patent infringement dispute.
Engaged in the production and sale of pet food to raise 600 million yuan
Goodbaby Pet is engaged in the research and development, production and sale of pet food, mainly for pets with dogs and cats with a variety of categories of pet food, the main products include scientific nutritional formulations of the staple food series, livestock and poultry, fish and other major raw materials, snacks and snacks series and freeze-dried lecithin, calcium lactate and other functional raw materials. The main products include staple food series with scientific nutritional formula, snack series with animal and poultry meat and fish as main raw materials, and health food series with freeze-dried lecithin, calcium lactate and other functional raw materials. The company's main products are pet food for dogs and cats, covering staple food series, snack series and health care products series, etc., *** counting more than 1,000 individual products.
As of the signing date of the prospectus, natural person shareholder Qin Hua directly holds 50.8496% of the shares of Goodbaby Pet, and through Liaocheng Huaju and Liaocheng Huazhi control the company's 2.0912% and 0.7430% of the shares of the voting rights, respectively. In addition, Qin Xuanang, a party acting in concert with Qin Hua, controls the voting rights of 7.7045% of the Company's shares through Liaocheng Haiang. Qin Hua is the managing partner of Liaocheng Huaju and Liaocheng Huazhi, and Qin Xuanang, the managing partner of Liaocheng Hai'ang, is the son of Qin Hua and a party acting in concert with Qin Hua. Therefore, Qin Hua and his concert parties together control 61.3883% of the voting rights of the shareholders of the Company, and Qin Hua is the controlling shareholder and de facto controller of the Company.
Beauty Pet intends to be listed on the GEM board of the Shenzhen Stock Exchange, and plans to issue no more than 40,045,000 shares (without taking into account the over-allotment option) and no less than 10 percent of the total share capital after the issuance. The sponsor (lead underwriter) of the issue is China Pacific Securities Co., Ltd. and the sponsor representatives are Chen Fenghua and Sun Xiyun, and the co-lead underwriter is China International Capital Corporation Limited.
The company intends to raise 60,000.20 million yuan, of which 367,374,100 yuan will be used for the pet food production base expansion project, 71,905,000 yuan for the intelligent warehousing upgrading project, 30,604,800 yuan for the research and development center upgrading project, 25,112,600 yuan for the informationization upgrading project, and 10,500.00 million yuan for supplemental working capital.
During the reporting period, there was no dividend distribution.
2019 Net Profit of RMB 4,160,200,000
From 2018 to 2021, Behavioral Pets realizes operating revenues of RMB 1,222,112,400,000, RMB 1,403,141,700,000, RMB 201,303,800,000 and RMB 2,575,163,100,000, of which the main business Revenues amounted to RMB1,218,522,900, RMB1,400,901,000, RMB2,046,669,000 and RMB2,560,773,000 respectively.
During the reporting period, the Company's net profit attributable to the owners of the parent company amounted to RMB 44,520,000, RMB 4,160,200,000, RMB 11,148,400,000, RMB 140,274,100,000, RMB 140,274,100,000, RMB 140,829,100, RMB 2,001,669,000, RMB 256,007.73,000, and the net profit after deducting the non-recurring gain or loss attributable to the owners of the parent company amounted to RMB 42,461,600,000, RMB 34,020,200,000, RMB 104,942,000, and RMB 12,290.71 million Yuan.
During the reporting period, the net cash flow from operating activities of the company was RMB 99,770,800,000, RMB -36,954,300,000, RMB 175,130,400,000, RMB 93,934,200,000, and the cash received from the sale of commodities and provision of labor services was RMB 1,260,375,100,000, RMB 1,510,683,700,000, RMB 2,090,843,500,000, RMB 2,096,435,000, RMB 259,660,000, and RMB 2,596,760,000 respectively. million yuan, and 2,596,472,000 yuan.
Calculated, the company's net-to-cash ratio is 2.24, -8.88, 1.57, and 0.67, respectively.
None of the net profit margins in the last three years has exceeded 6%
From 2019 to 2021, Behavioral Pets' main business gross margins will be 28.87%, 33.12%, 32.79%, respectively. Net profit margin is 0.30%, 5.54% and 5.51%, respectively.
During the reporting period, direct materials accounted for 80.48%, 81.81% and 83.84% of the production cost respectively, which were all over 80%. Due to the fact that raw materials accounted for a larger proportion of the cost in the pet food industry, price fluctuations of the main raw materials, such as chicken breast and duck breast, would have a greater impact on the company's gross profit margin.
Reporting period, the company's selling expenses were 245,915,600 yuan, 340,878,000 yuan, 459,326,500 yuan, accounting for 17.53%, 16.93%, 17.84% of operating income in each period.
The prospectus said that in recent years, the company is actively promoting the domestic business, increase the investment in marketing publicity and promotion, the company's operating profit scale has a certain impact; international trade friction and exchange rate fluctuations will have a greater impact on the company's export business, the depreciation of the U.S. dollar on the company's export business gross margin will form a greater negative impact, weakening the profitability of the export business; the global epidemic of new Crown pneumonia The development of the global epidemic of XKP has adversely affected the normal development of international trade and cross-border logistics; at the same time, the XKP epidemic may profoundly affect people's living habits and lead to changes in the scale or structure of people's demand for pet food, which will bring uncertainty to the development of the pet food industry. The company faces the risk of profit fluctuation or even loss.
Overseas business revenue accounted for 47.88%
Overseas market is an important source of the company's operating income. 2019 to 2021, the company's overseas business revenue accounted for the proportion of the main business income of 46.07%, 48.17%, 47.88%, respectively, the change in demand for the overseas market on the company's business development. There is a significant impact.
The products exported by the Company are mainly sold to North America, Europe, Asia and other regions. The United States is the main exporter of the Company's products.From 2019 to 2021, the proportion of the U.S. market to the Company's revenue from its overseas business will be 65.69%, 71.24%, and 62.67%, respectively.Since May 2019, the United States has levied a tariff of 25% on pet food imported from China. As a result of this, the price advantage of products manufactured within the Company's territory for export to the U.S. has been weakened.
If trade restrictions such as tariffs or non-tariff barriers persist or escalate in the company's major export markets in the future, the company's export business faces the risk of a decline in market demand and damage to operating results.
The Company adopts OEM/ODM mode to produce pet food for overseas customers, which has a high demand for labor resources and a high degree of product homogenization among similar manufacturers. With the advancement of the global economic integration process and the deep integration of the industrial layout, emerging economies such as Thailand and Vietnam may gain a greater advantage in the competition in the pet food market by virtue of their low labor costs, which will cause a certain degree of impact on the Company's overseas market demand, and the Company's overseas business is subject to the risk of intensified competition in the overseas market.
In addition, compared with its major competitors, the company's OEM/ODM business entered some overseas markets at a later stage, with a lower market share, facing the risk of unfavorable market development.
Inventory of 590 million yuan in 2021
From 2018 to 2021, the book balance of Goodbaby Pet's inventory will be 19,539.67 million yuan, 28,525.50 million yuan, 398,191.17 million yuan, and 585,192.2 million yuan, respectively, and the book value of inventory will be 19, respectively. 4,985,600 Yuan, 28,497,500 Yuan, 39,546,500 Yuan and 583,221,600 Yuan, accounting for 38.88%, 38.05%, 48.03% and 48.02% of the current assets, respectively.
Of which, the balance of inventory goods was RMB91,861,200, RMB117,949,900, RMB132,304,800 and RMB259,385,300, accounting for 47.01%, 41.35%, 33.23% and 44.32% of the book balance of inventory, respectively.
From 2019 to 2021, the company's inventory turnover ratio will be 4.15, 4.16 and 3.73, respectively, and the average inventory turnover ratio of comparable companies in the same industry will be 4.82, 5.15 and 3.78, respectively.
Staple food capacity utilization rate of 67.40% last year
From 2018 to 2021, the sales ratio of Goodbaby pet snacks will be 71.91%, 64.93%, 64.65% and 63.67% respectively; the sales ratio of staple food will be 27.91%, 34.53%, 34.70% and 35.62% respectively; and the sales ratio of health care products and other sales will be 0.18%, 0.54%, 0.65% and 0.71% respectively.
During the reporting period, the production capacity of Goodbaby Pet Staple Food was 51,265.26 tons, 51,546.97 tons, 83,106.37 tons, and 124,260.07 tons, respectively, and its capacity utilization rate was 67.51%, 96.99%, 80.97%, and 67.40%, and production and sales rate was 97.98%, 93.86%, 99.34% and 96.20% respectively.
During the reporting period, the production capacity of the Company's snack foods was 21,988.68 tons, 25,509.36 tons, 32,944.25 tons and 36,842.48 tons, respectively, and its capacity utilization rate was 96.75%, 90.55%, 92.05% and 93.94%, and production and sales rate was 93.77%, 97.77% and 99.90%, respectively, 96.89%.
Sales expense ratio of 13.82% highest among comparable companies
From 2018 to 2021, the sales expenses of Goodbaby Pets will be 166.6702 million yuan, 245.9156 million yuan, 340.878 million yuan, and 459.3265 million yuan, respectively.
The Company's selling expenses were mainly business promotion expenses, sales and service fees, employee compensation, freight and courier fees.
The Company's business promotion expenses were mainly derived from domestic business expansion, which mainly included brand promotion expenses such as sponsorship fees for variety shows, advertising fees for TV dramas and celebrity endorsement fees, as well as online promotion expenses for e-commerce platforms such as Tmall and Jingdong.
During the reporting period, the Company sponsored famous variety shows such as "Aspiring Life" and "The New Forbidden City", and hired Nicholas Tse as the spokesman, and the Company's business promotion expenses were RMB 49,963,500, RMB 79,015,700, RMB 124,268,800 and RMB 17,324,400 in each of the reporting period, which were on an upward trend respectively.
During the reporting period, employee remuneration in the Company's selling expenses amounted to RMB 31,032,000, RMB 44,616,800, RMB 58,361,700 and RMB 66,500,000, which gradually increased with the expansion of the Company's sales scale.
From 2019 to 2021, the company's sales expense ratio will be 17.53%, 13.12% and 13.82%, respectively, and the average sales expense ratio of comparable companies in the same industry will be 8.42%, 5.79% and 5.05%, respectively, and the company's sales expense ratio is the highest among comparable companies.
Domestic and foreign ***6 administrative penalties
Reporting period, Goodbaby Pet and domestic holding subsidiary by ***counting 4 administrative penalties, involving penalties ***counting 290,000 yuan. The overseas subsidiary Goodbaby USA was subjected to 2 administrative penalties.
1, Liaocheng Customs Violation Word [2020]0003 shows that Goodbaby Pet mortgaged 2 sets of tax-exempted equipment puffing machines still under customs supervision under the customs declaration to Qilu Bank Liaocheng Development Zone Sub-branch during the period of July 9, 2019, to May 12, 2020, without the permission of the Customs, in violation of Article 37 of the Customs Law of the People's Republic of China*** and the State of China, and was fined 290,000 yuan. The penalty was dated July 8, 2020, and the rectification measures showed that the fine had been paid and rectified as required, and a certificate of law-abidingness had been obtained from Liaocheng Customs, which determined that the matter was not a material violation of the law.
2. Liaocheng Housing and Urban-Rural Development Bureau issued the Notice of Ordering (Deadline) Rectification to Shandong Haichuang on September 10, 2019 (Liaocheng Building and Urban-Rural Development Bureau, Correction of the Word [2019] No. 49), showing that Shandong Haichuang constructed an office building and a restaurant project that did not construct an air-raid basement or pay the fee for the construction of an air-raid basement in an off-site location in accordance with the relevant state regulations. It ordered it to correct its illegal behavior before September 25, 2019; Shandong Haichuang recognized the existence of illegal facts, and paid the full amount of human defense off-site construction fee payable on October 29, 2019; on November 20, 2019, Liaocheng City Housing and Urban-Rural Development Bureau issued Administrative Penalty Decision (Liaocheng Building and Urban-Rural Development Bureau [2019] No. 49), and, in view of Shandong Haichuang's slight illegal situation , it was given an administrative penalty of warning and exemption from fine penalty. The penalty was dated November 20, 2019, and the corrective measures showed that the full amount of the human defense off-site construction fee due had been paid.
3. Liaocheng Housing and Urban-Rural Development Bureau issued the Notice of Ordering (Deadline) Rectification to Shandong Haichuang on September 10, 2019 (Liaocheng Construction Limit Change [2019] No. 50), which showed that the office building project constructed by Shandong Haichuang had not constructed an air defense basement or paid the fee for the construction of the air defense basement offsite in accordance with the relevant state regulations, and ordered it to September 25, 2019 to correct its illegal behavior; Shandong Haichuang recognized the existence of illegal facts, and on October 29, 2019, it paid the full amount of human defense off-site construction fee payable; on November 20, 2019, Liaocheng City Housing and Urban-Rural Development Bureau issued the "Decision on Administrative Penalty" (Liaocheng Construction and Urban-Rural Development Bureau [2019] No. 50), and in view of the slight violation of law by Shandong Haichuang, it was given a administrative penalty of warning and exemption from fine penalty. The penalty was dated November 20, 2019, and the corrective measures showed that the full amount of the human defense off-site construction fee due had been paid.
4. Chat Construction and R&D Department [2019] No. 51 shows that the research and development center and living center project constructed by Goodbaby Supplies did not construct an air defense basement or pay the air defense basement offsite construction fee in accordance with the relevant national regulations, and the Liaocheng Municipal Bureau of Housing and Urban-Rural Development issued the "Notice of Ordering (Time-Limited) Rectification" (Liaocheng Construction and R&D Department Correction [2019] No. 51) to Goodbaby Supplies on September 10, 2019 On September 10, 2019, the Liaocheng Municipal Housing and Urban-Rural Development Bureau issued the Notice of Order (Deadline Rectification) (聊建限字改[2019]51号) to Goodbaby Supplies, ordering it to correct its illegal behavior before September 25, 2019; Goodbaby Supplies recognized the existence of illegal facts, and made up the full amount of human defense off-site construction fee payable on October 29, 2019. s violation of the law was minor, it was given an administrative penalty of warning and exemption from fine penalty. The penalty was dated November 20, 2019, and the corrective measures showed that the full amount of the human defense off-site construction fee due had been paid.
During the reporting period, the overseas controlled subsidiaries of Goodbaby Pets were subject to administrative penalties as follows:
Goodbaby USA: (1) Goodbaby USA was fined by InternalRevenueService for failing to timely file and withhold a sum of US$30,636 in taxes in the year 2017 (Failure to file penalty of US$6,. 893.10 and a failure to pay penalty of $1,378.62) as of March 18, 2019 in the amount of $8,271.72 and interest (late fees) payable in the amount of $1,501.90; Behavioral America's penalties payable ($8,271.72) plus accrued interest payable as of October 24, 2019 as a result of failure to make timely payments **** 10,093.34 dollars. Goodwill U.S.A. has completed payment of the foregoing penalties and interest (late fees). (2) On February 14, 2019, Goodbaby USA was ordered by the California Employment Development Department (California Department) to pay $4,395.47 due to noncompliance in the areas of wages, hours of employment, employee insurance and personal taxes, and Goodbaby USA has paid such amounts as required.
Litigation Pending in the U.S.
As of the date of the Prospectus, Goodbaby Pets, its subsidiary Goodbaby U.S.A., Goodbaby Pets' actual controller Qin Hua, and its director of research and development Li Zhaowei are involved in pending litigation.
About the NPIC case.In April 2017, Goodbaby Pet established Goodbaby USA, which planned to manufacture and sell products in the United States, mainly in the categories of staple food and dried jerky.In November 2017, Goodbaby USA hired Jay Zhu, a former employee of NaturalPolymerInternationalCorp.(hereinafter referred to as NPIC), to serve as the COO. Along with that, Zhu Jie introduced PinghuaLei, then an employee of NPIC, and Dr. Shin-Shi Chen and ChiungYing Chen, former employees of NPIC, to join Goodbaby USA, with PinghuaLei serving as the head of research and development, and NiungYing Chen and ChiungYing Chen serving in the quality control department.
In April 2018, NPIC filed a lawsuit against Jie Zhu, Pinghua Lei and Qiongying Chen in a Texas state court claiming that these former NPIC employees breached the corresponding non-compete agreements and/or confidentiality agreements with NPIC; in June 2018, NPIC filed additional lawsuits against Xinxi Chen, Goodbaby America and Goodbaby Pets claiming that Xinxi Chen breached the non-compete agreements with NPIC. and claimed that Goodbaby Pet and Goodbaby USA, through Jay Zhu and Pinghua Lei, misappropriated NPIC's trade secrets. The case is Case No. 199-01725-2018 in the 199th District Court of Collin County, Texas (hereinafter referred to as the state court action). Goodwill America terminated the employment of Jie Zhu, Pinghua Lei, Xinxi Chen, and Qiongying Chen in September 2018.
Goodie Pets never answered in the State Court Action, and Goodie U.S.A. objected to the Court's jurisdiction and asserted a special appearance (specialappearance) under Texas law seeking dismissal of the case.On May 22, 2020, the NPIC withdrew all of its claims against Goodie Pets and Goodie U.S.A. in the State Court Action, but retained all of its claims against the all claims in the lawsuit against NPIC's former employees.
On May 15, 2020, NPIC filed a complaint in federal court against Goodie Pets, Goodie USA, Qin Hua and Zhaowei Li (U.S. District Court for the Eastern District of Texas Case No. 4:20-cv-401, hereinafter referred to as the NPIC Case) alleging that the Defendants (1) have misappropriated trade secrets in violation of federal and Texas law; (2) have improperly interfered with a non-compete and non-solicitation agreement NPIC claims to have entered into with its former employees; and (3) conspired to misappropriate NPIC's trade secrets.NPIC seeks damages from Defendants totaling not less than $225,000 (the scope of NPIC's claimed damages includes, but is not limited to, any actual, direct, indirect, incidental, and consequential damages, losses related to Defendants' improperly obtained benefits, NPIC's loss of market value, disgorgement of Defendants' earnings or profits, reasonable attorneys' fees and court costs, and other expenses), and asserting the application of punitive damages under local law; in addition, NPIC seeks a permanent injunction prohibiting Defendants from using NPIC trade secrets (including that Defendants may not continue to possess, disclose, use, or sell or transfer NPIC's Confidential Information and Trade Secrets to any third party, and that Defendants may not sell any product manufactured using NPIC's confidential information or trade secrets).
According to the NPIC case memorandum provided by the Yertkelman firm, the case is in its early stages due to the impact of the New Crown outbreak and the fact that the court has not yet resolved a series of motions filed by the defendants, and Yertkelman has not yet obtained the underlying data from NPIC that would enable it to independently assess the amount of potential damages; if NPIC can establish liability on the part of any of the defendants, the ultimate damages will depend on the extent to which NPIC can prove the value of the misappropriated trade secrets. However, based on Yeat Coleman's knowledge of the facts of the case, Yeat Coleman believes that the most likely range of damages in this case would be between $500,000 and $1.5 million, if NPIC ultimately prevails.
According to the Company's investigation (by comparing the ingredient lists of the products) of the teeth cleaning bone products sold during the reporting period as well as the products currently on sale (the trade secrets claimed by NPIC are the formulas and processes of producing teeth cleaning bones), the Company confirmed that there is no use of the formulas of NPIC's products in the products that it used to produce and is currently producing and selling and there is no use of any other trade secrets of NPIC.
The Company commenced the research and development of teeth-cleaning bone products in 2014 and realized sales in 2016, and the equipment and technology for the production of teeth-cleaning bone products have long been in use in the PRC, and the relevant technology and process have matured. During the reporting period, the company's sales revenue of teeth-cleaning bone products were 9.969 million yuan, 9.799 million yuan and 7.780 million yuan, accounting for 0.71%, 0.48% and 0.30% of the main business income of the current period, which accounted for a relatively small proportion.
According to the prospectus, the company's de facto controller Qin Hua has issued a written commitment: in the United States NaturalPolymerInternationalCorp. sued Goodbaby Pet, Goodbaby Pet's overseas subsidiary Goodbaby Pet (USA) Limited (GambolPetUSAInc.), myself and Li Zhaowei, and the resultant attorney's fees, as well as any I promise to bear all the losses and liabilities with my personal property and guarantee that Goodbaby Pet will not suffer any financial loss as a result. I will not exercise any right of recourse against Goodbaby Pet in respect of such expenses after assuming the aforesaid indemnity.
The prospectus said Good Pet did not use NPIC's trade secrets. Even if the final judgment requires the company to permanently prohibit the use of NPIC's trade secrets, it will not have a material adverse effect on the company's continuing operations.
Pending dispute over appearance patent infringement
On January 27, 2022, Goodbaby Pet and its subsidiary Shandong Hongfa received a Civil Ruling ((2022) Lu 01 Zhenbao No. 1) issued by the Jinan Intermediate People's Court of Shandong Province ((2022) hereinafter referred to as the Jinan Intermediate Court) on January 6, 2022, which records that the applicant (hereinafter referred to as Alice China Pet) applied to the Jinan Intermediate Court to take preservation measures on the evidence related to the alleged infringement of the design patent of pet food (meat skewer) (Patent No. ZL201530150238.8) (hereinafter referred to as the Patent-in-suit) owned by Behavioral Pets and Shandong Hongfa, and the Jinan Intermediate Court ruled that the following preservation measures (hereinafter referred to as the Patent-in-suit) be taken against Behavioral Pets and Shandong Hongfa (hereinafter referred to as the preservation of evidence): to obtain from Jinan Customs of the People's Republic of China the export data of meat skewers with the commodity code 23091090 (hereinafter referred to as the product in question) from November 30, 2018 to November 30, 2021 (including information on the owner of the goods, the time of export, the quantity of export, the specifications, the amount and the region of sale), and to collect information on the export of meat skewers from Jinan Customs of the People's Republic of China (hereinafter referred to as the product in question). exported to the region, etc.), and sampling of the above exported products. The Civil Ruling also states that if the applicant does not file a lawsuit within 30 days after the people's court has taken the preservation measures according to law, the Jinan Intermediate People's Court will lift the preservation according to law.
The Company has taken active measures to respond to the lawsuit and has engaged Beijing Chaocheng Law Firm (hereinafter referred to as Beijing Chaocheng) to provide legal services for the response to the appearance patent infringement dispute. Beijing Chaocheng has requested the State Intellectual Property Office (SIPO) to declare the patent invalid on behalf of Goodbaby Pet. The State Intellectual Property Office has accepted the request for declaration of invalidity on March 15, 2022, after formal examination in accordance with the relevant provisions of the Patent Law and its Implementing Rules and Examination Guidelines.
On April 6, 2022, Goodbaby Pet and Shandong Hongfa received from Jinan Intermediate Court the "Civil Suit", "Summons to Trial" and "Notice of Response to Complaint" of the case No. 295 (2022) Lu 01 Zhi Min Chu. According to the Civil Complaint, Alice China Pet, as the plaintiff, sued Goodbaby Pet and Shandong Hongfa (hereinafter referred to as the two Defendants), claiming that the two Defendants' acts of manufacturing, selling, promising to sell, and exporting products infringing on the Plaintiff's patents in the case without permission infringed on the Plaintiff's patent for design, and filed the following lawsuit requests: (1) ordering the two Defendants to stop infringing on the Plaintiff's patents in the case, i.e., to immediately Cease to manufacture, sell, promise to sell the infringing products; (2) order the two defendants to