According to the data, on May 19, 2021* ST Zhongtai received the "Inquiry Letter Regarding the 2020 Annual Report of Zotye Automobile Co., Ltd." from the Shenzhen Stock Exchange (Company Department Annual Report Inquiry Letter [2021] No. 144) . The company attaches great importance to it, and has carefully analyzed and checked the enquiry items. On June 10, *ST Zotye responded to the annual report inquiry letter and stated that although the company's vehicle business basically stagnated in 2020, some of the company's auto parts business and door business are still operating normally. The company has formulated and evaluated relevant measures to improve the ability to continue operations for the 12 months since the end of the reporting period. Therefore, although the company’s stocks are subject to delisting risk warnings and superimposed on other risk warnings, the company adopts continuing operations assumptions as the basis for preparing 2020 The basis of the annual report is sufficient.

　　*ST Zotye’s 2021 net profit loss attributable to 10.801 billion yuan

　　On April 29, 2021, *ST Zotye’s 2020 annual report shows that in 2020, *ST Zotye’s operating income was 1.338 billion yuan, a year-on-year decrease of 55.18%; the net profit loss attributable to the parent company was 10.801 billion yuan, except for huge losses. *ST Zotye's auto production bases are basically in a state of suspension, and the company's main product, automobile production and sales are not large. Therefore, *ST Zotye has made a large amount of asset impairment and bad debt provisions. In addition, due to a net asset loss of 4.423 billion yuan at the end of 2020, *ST Zhongtai has been continuously implemented delisting risk warning; because *ST Zhongtai has a situation where production and operation activities are severely affected and it is expected that the company cannot return to normal within 3 months, there is a company The main bank account is frozen, and there is a situation where the company’s controlling shareholder occupies the company’s funds for non-operating purposes. *ST Zhongtai’s stock has been superimposed on other risk warnings since April 29.

　　The advance payment of 2.393 billion yuan disappeared

　　It is worth noting that in 2020, the top five prepayment objects of Zotye Automobile according to the prepayment objects have a book value of 2.393 billion yuan, accounting for 80.35%, and the company has entered bankruptcy reorganization procedures or operations. Due to difficulties and failure to fulfill the contract, a full provision for impairment is made. This means that Zotye Automobile’s advance payment of up to 2.393 billion yuan is so gone.

　　In response to this, the Shenzhen Stock Exchange issued the "Annual Report Inquiry Letter" in late May, requiring the company to supplement the name of the arrears of the aforementioned advance payment, the transaction background, the aging, whether it is a related party of the company, and the full provision of bad debts Whether the basis for the preparation is sufficient, and the recovery measures the company has taken.

　　In addition, it is worth noting that on September 14, 2020, Zotye Automobile announced that the company received an inquiry letter from the Shenzhen Stock Exchange regarding its semi-annual report. The Shenzhen Stock Exchange also raised questions about the substantial increase in the prepayment balance of Zotye Automobile at the end of the reporting period. Zotye Automobile is required to explain the reasons for the substantial growth, whether the counterparty of the transaction has an associated relationship, whether it has commercial substance, and other issues.

　　According to Zotye Auto’s semi-annual report, as of June 30, 2020, Zotye Auto’s advance payment was 2.256 billion yuan, an increase of 189.49% compared to 779 million yuan at the end of 2019. In other words, in the first half of 2020, Zotye's output was only 574 vehicles, and while the production bases stopped production, they paid more than 1.4 billion yuan in advance to important suppliers. In the annual report, Zotye Automobile pointed out that since the production has not been resumed, the company has negotiated with the supplier to use the parts to offset the payment after the company resumes production and work. If the two parties cancel the cooperation, the company will take measures to urge the supplier to repay.

　　Although the company issued an announcement to reply that the advance payment was paid to its important supplier, it did not explain the related relationship. In the 2020 annual report, almost all the prepayments of more than 2 billion yuan on the company's books have been accrued for bad debts, because the prepayment objects are all bankrupt or difficult to operate.

　　According to the 2020 annual report, as of December 31, 2020, the original value of prepayments in the company’s balance sheet was 2.978 billion yuan, the amount of impairment provisions was 2.652 billion yuan, and the book value was only 327 million yuan. The reason is that The company has entered bankruptcy and reorganization procedures or has operating difficulties. According to related announcements, of the over 2.6 billion yuan of bad debts it accrued, 2.39 billion yuan came from the top 5 prepayment objects.

　　1.68 billion funds were not disclosed as required

　　On November 10, 2020, *ST Zotye (hereinafter referred to as "Zotye Auto") issued an announcement stating that the Zhejiang Securities Regulatory Bureau found that Zotye Auto had used a total of 1.68 billion yuan in funds and failed to implement review procedures and information disclosure obligations in accordance with regulations. As the above behavior violated relevant regulations, the company’s chairman and president Jin Zheyong, secretary of the board of directors Yang Haifeng, and chief financial officer Zhang Zhi are primarily responsible for the above violations. The Zhejiang Securities Regulatory Bureau decided to take supervisory and administrative measures to issue warning letters to the above-mentioned personnel, and to include them in the integrity files of the securities and futures markets.

　　Where does 1.68 billion funds go?

　　The 1.68 billion yuan of funds that failed to implement the review procedures and information disclosure obligations in accordance with the regulations involved two funds respectively.

　　Zhejiang Securities Regulatory Bureau stated that after investigation, it was found that as of the end of October 2020, Zotye Automobile had occupied more than 300 million yuan in the company's balance of non-operating funds by the controlling shareholder Tieniu Group. Zotye Automobile failed to perform the review procedures and information disclosure obligations of this matter in accordance with regulations.

　　On the evening of November 10th, the Zhejiang Securities Regulatory Commission issued a warning letter to Tieniu Group, stating that its non-operating occupation of Zotye Automobile’s funds exceeded 300 million yuan, and required Tieniu Group to learn lessons, actively resolve violations, and comprehensively improve compliance. Awareness of regulations, to prevent such violations from happening again, and submit a written rectification report before November 20, 2020.

　　In addition, on June 23, 2020, Zotye Automobile's 2019 annual report disclosed the acquisition of JF Transmission assets, with a total payment of 1.38 billion yuan. As a related party of Jiefu Powertrain Tieniu Group, the acquisition constitutes a related transaction. Zotye Automobile did not disclose the related relationship with Jiefu Transmission, and failed to perform review procedures and information disclosure obligations on related transactions as required; and the above-mentioned 1.38 billion yuan acquisition Among the funds, 1.3 billion yuan was generated by borrowing funds from a third party and accumulating multiple recurring payments. The company did not truly disclose the payment of funds.