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Securities Times reporter Zang Xiaosong

A litigation dispute that lasted for nearly two years has hindered the implementation of Nanovita Technologies (688690)'s equity incentive plan.

Nanotech announced on the evening of August 1 that the company received a "Civil Ruling" and "Property Preservation List" from the Suzhou Intermediate People's Court. Former employee Han Han applied to freeze 303 million yuan of bank account funds under Suzhou Nabai Management Consulting Co., Ltd. (hereinafter referred to as "Suzhou Nabai") or to seal and seize other property of corresponding value. The announcement shows that Han Han applied to the court for property preservation totaling 426 million yuan in this case.

Back in 2022, Han Han, the former sales director of Nanovita, sued Nanovita, Suzhou Nabai and Jiang Biwang, chairman of the listed company, in court, demanding that the above defendants pay the purchase price of the incentive shares and bear the loss of capital occupation. After that, in 2023, after Han Han changed the lawsuit request, Nanovita was no longer the defendant in the case, but participated in the case as a third party.

When the city gate is on fire, the fish in the pond will be affected. The latest disclosure shows that the lawsuit has affected the company's equity incentive plan. "The freezing of the above Suzhou Nabai shares has caused the company's original plan to grant employee stock ownership platform shares to 26 incentive targets to be unable to proceed normally. The company needs to wait for the court's judgment to make subsequent arrangements."

A Securities Times reporter contacted Nanotech, and the relevant person responded on August 5 that considering that the case is in the trial stage, the company, as a third party in the case, is not convenient to accept interviews for the time being.

The plaintiff was the sales director

In April 2017, Han Han was hired by Nanovita Technologies and served as sales director and general manager of the biological business unit.

In November of the year when Han Han joined the company, Nanotech formulated and issued the Employee Equity Incentive Plan, and established two employee shareholding platforms, namely Suzhou Nazhuo Management Consulting Partnership (Limited Partnership) (hereinafter referred to as "Suzhou Nazhuo") and Suzhou Nayan Management Consulting Partnership (Limited Partnership) (hereinafter referred to as "Suzhou Nayan"), which only hold company shares. The executive partners of Suzhou Nazhuo and Suzhou Nayan are both Suzhou Nabai, and Chairman Jiang Biwang holds 100% equity of Suzhou Nabai.

Before Nanovita Technologies went public, the company implemented two equity incentives.

On December 18, 2017, Lin Shengyue, Hua Xiaofeng and other equity incentive targets signed an agreement with Nanovita Technology, Suzhou Nano Research and Suzhou Nabai, to acquire a total of 22.97% of the investment shares of Suzhou Nano Research held by Suzhou Nabai (one of the incentive targets later resigned and transferred his share to Suzhou Nabai); on January 2, 2019, Lin Shengyue, Hua Xiaofeng and other equity incentive targets signed an agreement with Nanovita Technology, Suzhou Nano Research and Suzhou Nabai, to acquire a total of 15.16% of the investment shares of Suzhou Nano Research held by Suzhou Nabai (two of the incentive targets later resigned and transferred their shares to Suzhou Nabai).

As of the date of signing of the prospectus, Suzhou Nabai still holds 60.33% of Suzhou Nanoin (corresponding to 17.1931 million shares of the company) and 35.40% of Suzhou Nazhuo (corresponding to 5.0445 million shares of the company), which are reserved for future equity incentives for employees. As of now, Suzhou Nanoin holds 28.5 million shares of Nanovita Technology, accounting for 7.07% of the shares; Suzhou Nazhuo holds 14.25 million shares of the company, accounting for 3.53% of the shares.

In the initial "Civil Complaint", Han Han also listed Nanovita as a defendant. On the evening of December 6, 2022, Nanovita issued an announcement stating that it had received a "Civil Complaint" from the court in which Han Han, a former employee, sued the listed company, Suzhou Nabai and the company's chairman Jiang Biwang. Han Han asked the company to pay the purchase price of the incentive shares and bear the loss of capital occupation. In August 2023, after Han Han's lawsuit request was changed, Nanovita was no longer a defendant in the case, but participated in the case as a third party.

Equity incentives are hindered

Nearly two years after the lawsuit was initiated, Nanovita Technologies disclosed the latest developments.

On July 31, Nanotech received the "Civil Ruling" and "Property Preservation List" delivered by the court. The plaintiff Han Han requested to freeze 303 million yuan of funds in Suzhou Nabai's bank account or to seal and seize other property of corresponding value. According to the "Property Preservation List", a total of 3.702 million yuan in bank account deposits under Suzhou Nabai's name were frozen; Suzhou Nabai's 60.3267% (9.5015 million yuan) partnership share in Suzhou Nano Research was frozen; Suzhou Nabai's 35.88% (2.8256 million yuan) partnership share in Suzhou Nazhuo was frozen. So far, the plaintiff Han Han has applied to the court for a total of 426 million yuan in property preservation in this case.

Nanotech said that the company participated in the case as a third party, and the plaintiff did not require the company to bear responsibility as a third party. This lawsuit will not affect the company's production and operation and the operating profit of this period or the operating profit after the period. However, this lawsuit has affected the advancement of the company's equity incentive plan.

On September 24, 2022, Nanovita Technology issued the "Announcement of Suzhou Nanovita Technology Co., Ltd. on Granting Property Shares of the Employee Stock Ownership Platform to Incentive Targets". The company decided to grant a total of 23.76 million yuan of property shares of the employee stock ownership platform to 26 incentive targets including Mou Yiping, Zhao Shun, and Jin Baisheng, corresponding to 4.2994 million shares of the company. Among them, Suzhou Nanoyan's granted share is 1.8178 million yuan, corresponding to 3.2894 million shares of the company; Suzhou Nazhuo's granted share is 558,200 yuan, corresponding to 1.01 million shares of the company.

After the above-mentioned property shares are granted, they will be transferred to the incentive targets through Suzhou Nabai, the executive affairs partner of the shareholding platform Suzhou Nazhuo and Suzhou Nayan. The relevant share transfer plan will be handled 36 months after the company's initial public offering is listed.

On June 23, 2021, Nanovita Technologies was successfully listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange. Today, it has been 36 months since Nanovita Technologies' initial public offering, but this lawsuit has delayed the implementation of the equity incentive plan. In the latest announcement disclosed by Nanovita Technologies, it was stated that the freezing of Suzhou Nabai's equity has caused the company's original plan to grant employee stock ownership platform shares to 26 incentive targets to be unable to proceed normally, and the company needs to wait for the court to make a judgment before making arrangements.

Market value shrunk by 80%

In addition to this pending lawsuit, Nanovita Technologies' operating conditions have also attracted attention.

Public information shows that Nanovita Technology is a national high-tech enterprise and a national specialized and innovative "little giant" enterprise that focuses on the research and development and production of high-precision, high-performance and high-value-added microsphere materials, providing core microsphere materials and related technical solutions to customers in the fields of biomedicine, flat panel displays, analytical testing and in vitro diagnostics.

After going public in 2021, Nanotech's performance has soared. In 2021, Nanotech achieved operating income of 446 million yuan, an increase of 117.74% over the same period last year; net profit attributable to shareholders of listed companies was 188 million yuan, an increase of 158.75% over the same period last year. In 2022, the company achieved operating income of 706 million yuan, an increase of 58.14% over the same period last year; net profit attributable to shareholders of listed companies was 275 million yuan, an increase of 46.27% over the same period last year.

However, in 2023, affected by the fluctuations in the macroeconomic environment, the tightening of the biopharmaceutical investment and financing environment, and the intensified competition in the industry, Nanotech's performance declined. In 2023, the company achieved operating income of 587 million yuan, a decrease of 16.86% from the same period last year. In 2023, the company achieved a net profit of 68.5663 million yuan, a decrease of 75.08% from the same period last year; the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was 31.5865 million yuan, a decrease of 83.97% from the same period last year.

Looking back at the first day of listing, Nanotech's stock price rose by more than 1,200%, setting a new record for the first-day increase on the Science and Technology Innovation Board, and its market value on that day exceeded 40 billion yuan. As of the close of August 5, 2024, the company's total market value was less than 7.3 billion yuan, a decrease of more than 80% in three years.