Zongheng Communications disclosed its reply to an annual report inquiry, stating that its subsidiary Hangzhou Direction Sense E-commerce Co., Ltd. engaged in significant unusual transactions in a specific project cooperation, causing the company to fully provision asset impairment losses of 150 million yuan in 2025, which became a major factor in the substantial loss of 163 million yuan for the period. The matter has entered judicial proceedings. The company reported the case to the public security authorities in March 2026 and it was accepted; relevant personnel have been subjected to criminal coercive measures. The Shanghai Stock Exchange required the company to explain the reasons for the judicial proceedings and their progress, and to self-examine whether there are material deficiencies in internal control. The company responded that no material deficiencies in internal control over financial reporting were found, but identified the relevant weak control links as general deficiencies in non-financial reporting internal control, and has taken multiple rectification measures.
Hangzhou Zongheng CommunSubsidiary's unusual transactions led to 150 million yuan impairment and 163 million yuan loss; internal control weakness and judicial proceedings.
Engaged in significant unusual transactions causing losses; under judicial proceedings and criminal coercive measures.