Gu Di Technology's 216 Million Yuan Engineering Payment Joint and Several Liability Case Remanded for Retrial in Second Instance; Expected to Have Significant Impact on Profits

Gudi Technology Co., Ltd. (Stock Code: 002694, Stock Name: Gudi Technology) recently announced an update on litigation matters. The company received a Civil Ruling from the Inner Mongolia Autonomous Region Higher People’s Court, which remanded the second-instance case involving Zhejiang Jinggong Steel Structure Group Co., Ltd. (hereinafter referred to as “Zhejiang Jinggong”) regarding the addition of a respondent to re-examine the case. The case involves principal amount of 216.1695 million yuan, along with penalties and litigation costs, which are expected to have a significant impact on the company’s profits.

The announcement states that the case originated from a construction contract dispute between Zhejiang Jinggong and Alxa Dream Car Culture and Tourism Development Co., Ltd. (hereinafter “Dream Car”). Dream Car was a wholly owned subsidiary of Gudi Technology but was fully divested in May 2023 and is no longer included in the consolidated financial statements. Zhejiang Jinggong applied to add Gudi Technology as a respondent and jointly liable for repayment, claiming that Dream Car failed to settle debts confirmed by legal documents (principal of 216.1695 million yuan and corresponding penalties), and that Gudi Technology, as the sole shareholder during the debt’s formation and existence, could not prove independent assets.

The case has gone through a complex litigation process. In July 2025, the Intermediate People’s Court of Alxa League, Inner Mongolia, supported Zhejiang Jinggong’s request in the first instance, ordering Gudi Technology to be added as a respondent and jointly liable. Gudi Technology appealed the decision. On March 16, 2026, the Higher People’s Court of Inner Mongolia issued a ruling to revoke the first-instance judgment and remand the case to the Alxa League Intermediate Court for retrial, also returning the 1.2189 million yuan paid as the second-instance case acceptance fee.

Gudi Technology stated in the announcement that the company has always strictly adhered to enterprise financial accounting standards. During the period when Dream Car was a wholly owned subsidiary, both parties commissioned qualified accounting firms to produce annual audit reports, which have comprehensively and accurately reflected the independent financial status of both parties, with no commingling. The company has engaged a professional legal team to actively respond and will take relevant legal measures to protect the legitimate rights and interests of the company and shareholders.

Regarding the impact on the company, Gudi Technology said that, based on the principle of prudence, it has made appropriate accounting treatments in accordance with laws, regulations, and accounting standards. The final impact on the company’s profits will be based on the case’s enforcement results and the data confirmed by auditors. Since the case has been remanded for retrial, the final judgment and enforcement situation are uncertain. Investors are advised to be cautious of investment risks.

Additionally, the announcement disclosed progress on other cases related to Dream Car involving personality confusion, some of which have been concluded and enforced. The case where Ningxia Construction Group Co., Ltd. Second Branch applied to add Gudi Technology as a respondent has received a first-instance judgment, and the company is liable for joint repayment (involving 109.4535 million yuan and enforcement costs).

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